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Canada’s manufacturing momentum moves West

Ottawa, ON -- The shift in momentum to the West in Canada's manufacturing sector intensified in 2005, according to ...


Ottawa, ON — The shift in momentum to the West in Canada’s manufacturing sector intensified in 2005, according to a new report from Statistics Canada.

Alberta and Saskatchewan led growth in shipments for the second consecutive year on the strength of dramatic gains in resource-based industries.

This report analyzes trends in manufacturing in 2005, focusing on shipments by industry and provinces. It also examines recent movements of other key variables such as employment, profits, capital investment, capacity utilization and productivity.

Increases in manufacturing shipments from the two Prairie provinces far exceeded growth in the industrial heartland of Central Canada.

Shipments rose only slightly in Ontario, due, in part, to a weaker auto sector. Factories in Quebec fared somewhat better as the aerospace industry continued to rebound and the province’s petroleum refining and the chemical products industry made large gains.

Nationally, manufacturers closed the year with shipments hitting $611.5 billion. This was a 3.0% gain from 2004 on the heels of the healthy 8.5% boost posted in the previous year. Newfoundland and Labrador was the only province to report a decline in shipments in 2005.

There were clear winners and losers in the manufacturing sector last year. Soaring industrial prices contributed to record high shipment values for most resource-based industries, such as petroleum products and primary metals.

On the other hand, wood products and clothing manufacturing, coupled with the all-important motor vehicle industry, posted sharply lower shipment activity in 2005.

Alberta led all provinces with a 12.0% jump in shipments. Although resource-based industries contributed to the gain, the province’s well-diversified manufacturing sector improved substantially overall, thanks to its general economic boom.

Manufacturers in Saskatchewan came a close second with an 8.2% increase, also largely the result of resource-based industries.

Labour productivity in manufacturing increased 5.7% last year, but it came, in part, at the cost of jobs. On average, there were 85,000 fewer jobs in manufacturing in 2005 than there were a year earlier, equivalent to a 3.7% decline.

A 5.4% rebound in investment in plant and machinery contributed partly to this increased labour productivity.

Despite last year’s gain in shipments, profits for manufacturing companies fell 6.9%, compared with exceptional growth of 34.8% in 2004.

Factories faced myriad challenges on several fronts last year. Not the least was the Canadian dollar, which, relative to the US dollar, sailed past a 14-year high in December 2005, hurting exporters of Canadian manufactured goods in particular. These challenges continued during the first part of 2006.