The manufacturing sector is a huge contributor to Ontario economy. It accounts for 30 per cent of economic activity, 28 percent of employment and 80 per cent of exports. Manufacturing is not only critical to Ontarians’ jobs and prosperity today, it has the potential to play a much bigger role, providing innovation and sustainable jobs that will drive long-term growth in this province.
The key to growing our manufacturing sector is capital investment. A steady and increasing flow of investment dollars into the sector drives innovation and enhances competitiveness. On this measure, sadly, Ontario manufacturers aren’t keeping pace with trade partners around the world.
Since 2013 US investment in Canada has dropped by nearly half, while Canadian investment in the US has more than tripled. In other words, there is investment flowing into manufacturing around the world but the level of investment in Canada is not where it needs to be for manufacturers to remain competitive on the global stage and be positioned for future growth opportunities. And, it is getting worse. Capital investment in Ontario manufacturing is down almost 20 per cent over the last decade.
This is concerning for all businesses, regardless of their sector. The lack of investment puts Ontario’s future prosperity at risk because of the leading role of the manufacturing sector in long-term wealth creation. By not investing and re-investing in capital and technology, manufacturing business spending drops, and with it sectors it supports and feeds like natural resources, retail or real estate.
While its convenient put the blame on others, like the NAFTA re-negotiations, increased competition from other countries, or changes in the US corporate tax regime, the problem arises from the fact that over the past decade the economic contribution of our sector, and the broader business community, was taken for granted.
The good news is that — with a lot of effort — this can change. We need a government who is willing to partner with Ontario’s business community and create a positive vision for change and growth. If Premier Ford is serious about his campaign commitment to restore Ontario to its historical spot as the economic engine of the country, manufacturers will need movement on four core elements:
1. Ontario needs to better leverage its competitive advantages and use energy policy to drive economic growth. The development of electrical generation at Niagara Falls in the early 1900’s was critical to establishing Ontario as Canada’s industrial heartland. Today, a competitive industrial electricity rate is critical in attracting manufacturing investments.
2. Ontario’s regulations and the affiliated processes must be reviewed and improved to encourage growth and investment. Issues like unnecessary duplications with federal systems or delays in permit awards that are significantly longer than in competing jurisdictions drive investments away.
3. The need for the labour regulations under Bill 148 to be applied to manufacturing should be put in question. Bill 148 is a significant burden on Ontario industry that makes it unnecessarily costly and complicated for companies to employ Ontarians. Manufacturers compete for talent, and the jobs they provide are overwhelmingly among the best in the province in terms of pay, benefits and working conditions.
4. The biggest issue Ontario will have to face is the skilled labour shortages. It limits investments in additions to impacting product development and expansion. The current review of Ontario’s curriculum should be used to address the lack of youth entering technical education and the mis-alignment of skills when youth leave the system from post-secondaries. At the post-secondary level, much greater emphasis on work-integrated learning and greater supports for company-lead training is essential to developing the workforce we need to compete with the best jurisdictions in the world.
These steps are not easy but, in Ontario, manufacturing has tremendous advantages due its scale and historic strength, and it is time to seek to further leverage and develop those advantages to ensure future economic prosperity.
Canadian Manufacturers & Exporters (CME) is the voice of Canadian manufacturing. CME represents more than 2,500 companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports. Find out more by visiting www.cme-mec.ca.