Winnipeg Free Press - PRINT EDITION

Manufacturing decline must be addressed

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Manufacturing industries in Canada continued their slow decline in 2013, Statistics Canada reported this week. The total value of manufacturers' sales dropped by one-half of one per cent or $2.9 billion in 2013 compared to 2012, continuing a trend. Industry Minister James Moore and his provincial counterparts should figure out why this is happening and support expansion of manufacturing to brighten job prospects for young Canadians.

In the U.S., manufacturing has been recovering nicely from the depths of the 2009 recession. Economists attribute the recovery to low energy costs, rising wage rates in China and devaluation of the U.S. dollar relative to other currencies.

The same factors should apply in Canada now that the loonie has dropped to about 90 cents U.S. Through most of 2013, our dollar was close to parity, which could help explain the difficulties of exporters who were supplying U.S. customers and paying their workers with Canadian dollars.

Canada has suffered a few dramatic losses of manufacturers -- Caterpillar's locomotive plant and Kellogg's breakfast-cereal plant, both in London, Ont., Heinz' ketchup plant in Leamington, Ont. These companies had their own reasons for reorganizing production in their worldwide operations. Canada cannot expect to keep every plant in operation indefinitely. But as old ones close, we need new ones to take their place. The aggregate manufacturing sales figures suggest this is not happening.

It seemed a dozen years ago that Research in Motion, the Waterloo, Ont., inventor and maker of BlackBerry smartphones, was taking Canada into a brave future of dominance in the rapidly growing world of mobile computing. But RIM could not keep ahead of Apple and other competitors and hit the skids. Today's BlackBerry is a shadow of the former RIM superstar.

The experience of Germany and the U.S. suggests conditions may be ripe for manufacturing growth in Canada. Chinese workers will no longer accept pay of $1 a day. The huge advantage China once enjoyed has been eroded by exchange-rate movements, wage rates and transport costs.

The bright lights in this week's StatsCan report on manufacturing sales were manufacturers of wood products and chemicals. Aerospace products and parts, important in Winnipeg, also did well in 2013, both through improved volumes and higher prices. Gains in these industries were not, however, sufficient to offset declines in manufacturing of petroleum and coal products, primary metals and auto parts.

So much production has shifted to Asia that Canada is unlikely to recover the manufacturing strength it enjoyed 20 and 30 years ago. We should not, however, passively accept continued decline.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Gerald Flood, Catherine Mitchell, David O’Brien and Paul Samyn.

Republished from the Winnipeg Free Press print edition February 27, 2014 A14

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