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 has overlooked the continuing and vital importance of manufacturing in creating Canada’s wealth, and providing good, well-paying 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 to the economy of competitive manufacturing. This reality was driven home during the 2008-2009 global recession, 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 with 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 14 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 “pro-manufacturing” policies are especially important as Canada seeks to compete against foreign jurisdictions for future investment capital.

Making Manufacturing a Priority for Government Policy

  1. 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.
  2. The federal government’s Budget 2013 made an important contribution by announcing certain pro-manufacturing measures, reaffirming scheduled tax cuts, further extending the Accelerated Capital Cost Allowance (ACCA) for an additional two-year period and proposing new measures to help offset the costs of training. The ACCA is a targeted measure that provides a direct incentive to investment, innovation, and productivity improvement. Especially for large industries like steelmaking, this is an important measure that strengthens the case for industrial innovation in Canada, leading to investments in advanced technologies, more efficient processes, and environmental technologies.
  3. Canadian industry operates primarily in a NAFTA context. The call for continued “pro-manufacturing” policies is shared by industry in all three countries. To provide strong impetus to this overarching policy direction, future NAFTA Leaders summits should make this a shared policy priority for their respective governments.
  4. 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. The first “Beyond the Border” Implementation Report was released in December 2012, summarizing progress that has been made. The work continues on future deliverables. It is important that the two governments continue an aggressive timetable to implement improvements.
  5. For Canada’s steel production, a healthy and growing industrial customer base is essential. Steel is present in some 75% of all industrial products, and steel is a critical component of major industrial supply chains. Therefore, steel producers advocate government policies that will strengthen major steel-consuming industries, such as automotive, energy and resource development, and construction.

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