Rough road ahead for Canadian manufacturers, says CME economist
Ottawa -- Manufacturing shipments will continue to fall into the summer, said Jayson Myers, chief economist of Cana...
Ottawa — Manufacturing shipments will continue to fall into the summer, said Jayson Myers, chief economist of Canadian Manufacturers & Exporters in a presentation on the Outlook for Manufacturing and the Canadian Economy delivered May 30, 2001, to the House of Commons finance committee.
"We are seeing strength in the Canadian domestic market including services, construction and oil & gas, but a continued downturn in manufacturing," Myers said. "In particular, we expect to see a continuing decline in the automotive and electronic sectors.
"A recovery in key U.S. markets is not expected until 2002. With high levels of corporate and consumer debt in both Canada and the U.S., profit margins cut in half, and a sharp decline in capital investment we are not looking for a recovery in Canada’s industrial sector until around this time next year."
Looking specifically at the outlook for manufacturing, Myers observed that production levels have fallen five per cent since the beginning of the year and new orders continue to fall. "In addition, inventories are high and must be reduced, and suppliers are facing financing difficulties. Manufacturers, in particular, are continuing to be hit with downward price pressures and escalating energy costs," he noted.
Myers also outlined the key challenges facing industry: the management of new technology, improving design, engineering and service capabilities, access to adequately skilled labour, the regulatory environment, access to international markets, and availability of financing.