Canadian autoworkers earn about $50 an hour. It’s hard to compete when Mexican counterparts earn about $10.

Canadian autoworkers earn about $50 an hour. It’s hard to compete when Mexican counterparts earn about $10.
Photo Credit: Frank Gunn/Canadian Press

Why so few products are made in Canada

The manufacturing decline in Canada is ‘very distressing,’ says Warren Everson of the Canadian Chamber of Commerce which represents businesses. Even though the Canadian dollar is down making exports cheaper, and petroleum costs are down making it cheaper to ship goods, there was still a contraction in manufacturing sales over three of the last five months.

Experts are surprised that Canadian manufacturing has not expanded in spite cheap energy and a weak dollar.
Experts are surprised that Canadian manufacturing has not expanded in spite cheap energy and a weak dollar. © Frank Gunn/Canadian Press

Decades-long decline in manufacturing

“The Canadian manufacturing sector has been in decline, has been in retreat, for the better part of a couple of decades now,” he says. “And we’ve seen a very significant reduction both in the number of different kinds of products made in Canada and in the volumes.”

This is the result largely of a competitive marketplace that has been much more open with globalization and trade agreements that have exposed Canada to competition on cost, says Everson.

‘Canada is a high-cost place’

“Canada is a high-cost place to do business for the most part. We have very, very extensive social programs, we have a lot of regulation for safety and the environment, and so forth. It’s also physically a large area—it’s expensive to move products and goods around the country. So generally, Canada’s been a high-cost player.”

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Salaries are high in Canada, too. For example, the auto manufacturing sector which was so strong in Canada for decades now finds it hard to compete when it pays workers $50 an hour and Mexico pays them $10.

Bright future in design, marketing

On the brighter side, Everson says Canada will be a very significant player in manufacturing in the future but it will be “very upstream. We’ll be the designers, we’ll do the prototype. We might do some of the marketing and market assessment and so forth…but the actual production is going to happen in the lower-cost environments.”

So there are bright spots for the long term, but Everson is still shocked by how bad things have been recently.

‘We can’t have this’

“The last few months have not been good for manufacturing in Canada even though the dollar came down. We haven’t seen a lot of growth in that sector…so governments have a very urgent issue now to look at what are the competitive factors that are keeping investment in the sector low and driving down our sales.

“We can’t have this. We need to have a successful manufacturing sector.”

Canada’s trade deficit jumped to a record high of $3.4 billion in March 2016. Exports declined steeply in almost every industry.
Canada’s trade deficit jumped to a record high of $3.4 billion in March 2016. Exports declined steeply in almost every industry. © Jerry Lampen/Reuters
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