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The Globe and Mail

Steep decline in manufacturing mars employment outlook

Alex Dagorio looks at the pin-up boards during the 19th edition of the National Job Fair and Training Expo at the Metro Toronto Convention Centre on Tuesday, September 27, 2011.

The Globe and Mail

Employment in the country's factories has tumbled to its lowest level on record, a shift that highlights the dramatic changes in the manufacturing sector and the impact on workers, particularly in Central Canada.

Factory employment hit a 35-year low last month, figures released by Statistics Canada on Friday show – the weakest point since the agency began collecting the data in January, 1976.

A decline in the sector is a key reason why the Canadian economy shed a surprising 54,000 jobs last month, the most since February, 2009, in the depths of the recession. The losses moved the country's jobless rate up two notches to 7.3 per cent. The slide in factory jobs reflects multiple forces at play, from global competition from countries like China to productivity improvements that have lessened the need for workers.

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"Productivity gains are a positive story, but the sadder story is that Canada has been pricing itself out of manufacturing as resource industries' success drives up our currency," said Avery Shenfeld, chief economist at CIBC World Markets. "The world is beating down our door for our resources at a greater rate than for our manufactured goods."

The outlook for manufacturing jobs is bleak, he said. "Unfortunately, the combination of sluggish growth beyond our borders and a still-elevated Canadian dollar doesn't give much promise to manufacturing as a source of employment growth."

It's a far cry from decades past: From 1976 to 1990, the manufacturing sector was the single largest employer in the country. Now, it sits in third place. Trade employs more Canadians than any other sector; health care and social assistance is second.

The October statistics reflect one of the biggest jolts the manufacturing sector has sustained since the recession – the mid-September closing of the Ford Motor Co. large car assembly plant near St. Thomas, Ont.

That wiped out more than 1,000 direct jobs in a city still reeling from several other plant closings, some of which came before the 2008-2009 recession.

Based on economic data that indicate that one well-paying job at an auto assembly plant supports another 7.5 jobs elsewhere in the economy, the St. Thomas Assembly Plant closing would mean as many as 7,500 additional jobs were vaporized. Not all of those would be in manufacturing and not all would show up in the October statistics.

"This is a dramatic reminder of why, as a country, we must move mountains to try to save every major manufacturing facility we possibly can," said Canadian Auto Workers economist Jim Stanford.

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But the October numbers also reflect a trend that's evident only below the radar. That's the closing of small factories that quietly shut their doors as a result of corporate restructurings, the high value of the Canadian dollar or soaring commodity costs, all of which have battered manufacturers in Canada for the better part of a decade.

In the past two months alone, the sector has shed 72,000 jobs, likely tied to the strong dollar and still-weak global demand.

Charles Redden has noted the trend for the past five years as president of CAW local 462, which represents workers mainly at light manufacturing facilities in a broad swath of Ontario running from Orleans along the Ottawa River to Fort Erie.

The number of members in Mr. Redden's local has plunged by more than half to 1,400 from 3,800. The number of workplaces represented by the local has dropped to 22 from 36.

The latest plant closing came in September and also showed up in the October data. San Diego-based Callaway Golf Co. outsourced about 70 jobs and closed a factory in Concord, Ont. that served as a depot for golf balls and other Callaway products and workers also customized golf clubs.

He also spent part of October dealing with another closing that will occur in December in Toronto when North Safety Products, a division of Honeywell International Inc., stops making work site safety equipment. That's another 70 jobs paying $15 to $16 an hour that will disappear.

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"I'm just holding my breath that I don't get any more announcements," Mr. Redden said Friday. "These are good contracts, with good benefits."



- Losses were biggest since February, 2009 and, as Bank of Montreal notes, the heftiest drop outside of a recession since 1996. They were all in full-time positions, in sectors from manufacturing and construction to public administration and professional services.

- Alberta has, by far, the fastest job growth in the country, with an increase of 4.3 per cent from a year ago. The province's unemployment rate now sits at 5.1 per cent.

- Ontario's manufacturing sector has shed jobs for three months in a row. October's factory losses were in the plastics and rubber industries, along with the computer and electronics sectors.

- Wage growth has ebbed to less than 2 per cent, weaker than the rate of inflation, suggesting the outlook for consumer spending is weak.

- Employment numbers have been particularly volatile of late – October's losses came after a September surge, preceded by two months of little change. A three-month average shows hiring has stalled.

Tavia Grant

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