Manufacturing Matters to Canada
There has been much attention in recent years to the concept of a “post-industrial” or “new” economy built on “high tech” and service industries. Too often, this viewpoint overlooks the continuing and vital importance of manufacturing in creating Canada’s wealth, and providing good jobs to millions of Canadians across the country. Emerging industries will play an important role in the future, but they cannot replace the multiple contributions of competitive manufacturing. This reality was driven home during the recent economic recession in Canada and globally, and many other countries are now implementing specific policies to stimulate the renewal of their industrial base.
Manufacturing creates value for Canada by combining the skills of our people and our heritage of natural resources. It helps Canada earn its way in the world. It is the manufacturing sector that provides innovative products and technologies for a greener, more efficient, more productive economy and society. Its impact goes well beyond its 13 percent direct contribution to Gross Domestic Product. Manufacturing is also the foundation and customer for many other technology and business service sectors that in turn employ millions of Canadians. The critical role of manufacturing calls for a renewed focus on policies to strengthen Canadian industrial competitiveness for greater success in domestic and export markets. Such policies are especially important as Canada seeks to compete against foreign jurisdictions for future investment capital.
Making Manufacturing a Priority for Government Policy
- Governments need to make manufacturing competitiveness a top priority in balancing policy interests. This strategic “acid test” should apply to any new government policy measures, and to forthcoming expenditure reductions so as not to undercut important programs and services for industrial innovation, skills development, and essential physical and technological infrastructure.
- The federal government’s Budget 2011 made an important contribution by reaffirming scheduled tax cuts and by extending the Accelerated Capital Cost Allowance (ACCA) for manufacturing equipment for an additional two-year period. The ACCA is a targeted measure that provides a direct incentive to investment, innovation, and productivity improvement. To provide further incentive and certainty to investment decision-making that favours Canada, the ACCA measure should be further extended for at least five additional years. Especially for large industries like steelmaking, this would provide an assured fiscal horizon to plan, develop, and implement major investments in advanced technologies, more efficient processes, and environmental technologies.
- Looking to the medium and longer term, federal and provincial governments could launch a comprehensive evaluation of the impact of their major government policies and programs on Canadian industrial competitiveness. Ministers of Industry/Economic Development could establish a blue-ribbon panel to develop recommendations on policies to strengthen industrial prospects for the medium-term. This review would cover all major dimensions of government policy affecting manufacturing, and develop specific recommended actions for action by governments, industry, and other stakeholders.
- Canadian industry operates primarily in a NAFTA context. The call for “pro-manufacturing” policies is shared by industry in all three countries. To provide strong impetus to this overarching policy direction, the next NAFTA Leaders summit should make this a shared policy priority for their respective governments.
- Canada and the United States agreed, in February 2011, to a “Shared Vision for Perimeter Security and Economic Competitiveness”. This declaration needs to be followed by concrete actions to improve trade efficiency and reduce needless regulatory impediments, while respecting national security imperatives of both countries.