Canadian Manufacturers Top Issues: a Look Back at 2022 and a Look Ahead to 2023

 Canada is continuing to navigate historically high job vacancies, according to today’s Job Vacancy and Wage Survey, underscoring Canadian Manufacturers & Exporters (CME) calls for increased immigration and strong government actions to help manufacturers get the workers they need.

While job vacancies in manufacturing declined 8.7 per cent to 78,500 in the third quarter of 2022, they remain significantly higher than before the pandemic. In fact, they were more than double their level of 2017. As a result, close to five per cent of all manufacturing positions were open in this year’s third quarter, up from under three per cent in the same quarter of 2019.

Upping the immigration levels, is just one of CME’s asks of government as it takes stock of 2022 and looks ahead to the new year.

“This year has once again highlighted the resilience of the Canadian manufacturing sector,” said Dennis Darby, President and CEO of CME. “Despite disruptions in supply chains, border blockades, galloping inflation, and critical labour and skills gaps, our manufacturing sector is strong and producing the goods Canadians need.”

2022: THE YEAR THAT WAS FOR CANADIAN MANUFACTURERS

1. Labour and skills shortages – The CME’s fall 2022 survey of manufacturers revealed that, in the last year alone, labour and skills shortages in the manufacturing sector cost the Canadian economy $13 billion, a consequence of lost sales, penalties for late delivery, and cancelled or delayed capital projects.
2. Inflation – Canada’s inflation rate rose from 5.1 per cent in January to a high of 8.1 per cent in June. It is on track to average 6.8 per cent in 2022, a 40-year high. The large and volatile price swings are squeezing the profitability of many manufacturers and making it harder to plan for the future.
3. Geopolitics and supply chain issues – War in Ukraine, increasing incidents of extreme weather, and China’s zero-COVID policy and blockades at vital border crossing policy created the perfect storm, leading to massive supply chain issues that in a global economy found their way to Canada’s shores. According to a CME survey conducted early this year, nine of 10 manufacturers were affected by supply chain disruptions during the course of the pandemic, resulting in $10.5 billion in lost sales. 

2023: THE YEAR THAT WILL BE FOR CANADIAN MANUFACTURERS

1. Recession – Economists are predicting a mild recession early in the new year. That means lack of predictability and project of investment that could be put on hold, at exactly when Canada needs to be investing to compete in the North American and global markets. We will look to encourage incentives and other measures from governments to help de-risk investments.
2. Competitiveness in Canada vs Inflation Reduction Act (IRA) –Manufacturers are also dealing with the consequences of the IRA on the other side of the border. U.S. President Joe Biden’s legislation offers massive consumer and manufacturing production incentives that will act as a magnet to investment, thus limiting the attractiveness of Canada as a place to set up manufacturing operations. Canada must respond with its own suite of incentives in the next federal budget. While we encouraged by the intentions signaled in the Fall Economic Statement, it is critical that we act quickly to attract the investment needed for the energy transition.
3. Friend-shoring – Federal politicians on both sides of the border are talking about the concept of “friend-shoring” – encouraging companies to invest in democratic countries and away from those with authoritarian regimes. For Canada’s manufacturers, who are already heavily integrated across North America, this means strengthening those bonds by a Buy North American.

“CME’s focus for 2023 is ensuring manufacturers are set up for success and that means continuing to press the government on increasing immigration, and developing an industrial strategy so that our sector does not fall behind,” said Darby. “We are excited about the year ahead and the potential for manufacturing, which provides stable, well-paying jobs for so many hard-working Canadians.”

QUICK FACTS

• The manufacturing sector accounts for nearly 10 per cent of Canada’s real gross domestic product.
• Manufacturers employ 1.7 million people in Canada.
• Total manufacturing sales hit a record high of $718.4 billion in 2021.

SOURCE Canadian Manufacturers & Exporters