The past decade saw Canadian manufacturing gross domestic product (GDP) fall by 12% and the number of firms in this sector drop by 20%, but it may be time for the emergence of a different, stronger manufacturing sector, according to a CIBC World Markets report released April 1.
While some sectors didn’t make it through the past difficult years, the report said, those that did have come out better than ever.
“A different manufacturing sector is rising from the ashes,” said CIBC deputy chief economist Benjamin Tal. “Though some failed to survive, many who did are stronger, leaner and more productive.
“The long and painful adjustment is starting to pay off, with many industries better positioned to take advantage of the weaker dollar to regain positions in U.S. markets and to better integrate into global supply chain opportunities.”
In particular, said the report, wood products manufacturing is poised to see significant growth. A lower Canadian dollar will lead to growth in exports to the United States in this area, with capacity utilization being the only major constraint.
Primary metals also have great potential, according to the report, which will also benefit from a lower Canadian dollar.
Other manufacturing sectors bound for better days include machinery, aerospace, computer and electronic and paper.
One sector the report did not see as being on the verge of growth is food manufacturing.
“In recent years that industry has been a winner, primarily in the domestic market sense, but has had a less impressive net export ranking,” Tal said.
“Furthermore, because it has fared better than most of its peers, it has not had to increase its productivity as fast as others, marking a slight two per cent gain since 2009.”
The full report can be found here.
