Canada has lost 500,000 manufacturing jobs – most of them in Ontario – over the past decade, Canadian Imperial Bank of Commerce economists noted in one of three reports by major banks this week on the devastation in the manufacturing sector. As a share of the Canadian economy, manufacturing slumped to 12 per cent from 20 per cent, while in the U.S. it held roughly steady at about 12 per cent of gross domestic product. In 2001, Canada had a $20-billion trade surplus in the Ontario-based automotive industry; that has been transformed to a $12-billion deficit. The energy sector, by contrast, has climbed to a $59-billion surplus in 2011 from $38-billion in 2001.
Not all the problems of the manufacturing sector can be laid at the feet of the dollar. Intense competition from offshore competitors, along with relatively high wages in Canada play a significant role. But few expect the disadvantage from the high dollar to abate any time soon.
“By and large, we’re going to be in a world where Canada has a strong currency for the foreseeable future,” said CIBC vice-chair Jim Prentice, noting that fast-growing Asian economies – led by China – are going to drive a growing demand for commodities ranging from oil, to potash, to iron ore, to nickel and other metals – all of which Canada has in abundance.
Mr. Prentice said the country needs a pan-Canadian industrial policy – as well as an energy strategy – to ensure domestic suppliers are prepared to meet the booming demand from the resource sector.
Jayson Myers, president of the Canadian Manufacturers & Exporters association, said the oil industry – and resource projects in general – represent a critical new source of demand for producers across the country.
“There are a number of Ontario companies that have successfully retooled themselves and either added on supply to the oil sands or used that to go after other types of energy industries,” Mr. Myers said.
Among them is Mr. Berggren’s Berg Chilling Systems. Thanks in part to the new Alberta orders, Berg is back to 71 employees and growing as it chases new business.
Several major international companies also supply the Alberta oil patch from Ontario, including 3M Co., Emerson Electric Co. and General Electric Co. GE has several Ontario operations that sell to the oil sands producers, including manufacturing, engineering and design, and fabrication and assembly. The products include large motors manufactured in Peterborough; water trailers assembled in Burlington; water-purification products assembled in Oakville, and a digital energy business in Markham.
Ontario Economic Development Minister Brad Duguid said trade missions with Alberta have helped Ontario firms win initial contracts of $246-million over the past five years, a modest amount averaging $50-million a year.
“Ontario welcomes the opportunity to work with Alberta in generating additional opportunities in our economy,” he said. “We recognize the importance of the oil sands to Alberta and to all of Canada.”