New study reviews Canada’s manufacturing sector last year
Ottawa, ON -- Key indicators of the Canadian manufacturing sector's health declined on nearly every front in 2008, ...
Ottawa, ON — Key indicators of the Canadian manufacturing sector’s health declined on nearly every front in 2008, from the volume of sales to employment and labour productivity, Statistics Canada reports in “Manufacturing: The year 2008 in review.”
For commodity-based industries, such as petroleum products and primary metals, the first half of the year was marked by unprecedented price increases and sustained demand. However, by the third quarter, both domestic and foreign demand, as well as the affect of soaring prices, had disappeared as the scope of the global downturn deepened.
On the other hand, in industries driven by discretionary consumer spending, such as motor vehicles and wood products (residential construction), sales fell throughout much of 2008.
Total factory sales remained relatively stable in 2008, decreasing by a modest 0.4% from 2007 to $604.7 billion, but that was only because of the price increases in energy earlier in the year.
When the impact of prices was eliminated, the volume of goods sold fell 6.7% to $546.4 billion, their lowest level since 2001. It was the third successive annual decline in sales volume.
Employment in the manufacturing sector continued to decline in 2008, according to the Survey of Employment, Payroll and Hours. It fell by about 84,800 to 1.7 million. Employment has declined at an annual average rate of 2.4% since peaking at 2.0 million in 2000.
Labour productivity in manufacturing fell 0.7% in 2008, the first decline since 2001. At the same time, there were decreases in both investments in plant and equipment, and in the rate of capacity use by factories. Operating profits of manufacturing corporations remained almost unchanged in 2008 compared with one year earlier, amounting to $46.3 billion.
In 2008, 13 of the 21 manufacturing industries posted sales declines. Most notably, sales of motor vehicle manufacturers fell 22.0% to $47.3 billion in 2008, a 14-year low. In the wood products industry, sales fell 13.1% to $21.7 billion. This was nearly 40% below their most recent high of $35.8 billion in 2004.
For the first time, Canada’s petroleum and coal products industry vaulted to number one in terms of manufacturing sales in the wake of higher energy prices. Sales rose 22.2% to an unprecedented $81.5 billion. But by the close of 2008, industrial prices for petroleum and coal products had fallen by almost 50% from their peak in July.
Large gains in petroleum, primary metal and chemical products industries boosted factory sales in several provinces. Newfoundland and Labrador, New Brunswick, Nova Scotia, Saskatchewan and Alberta reported increases.
Declines in sales of industries driven by discretionary consumer spending continued to directly impact Ontario, the nation’s industrial heartland. In this province, sharply reduced sales of motor vehicles, auto parts, plastics and rubber products contributed to a 4.6% drop in sales to $278.3 billion, the lowest since 1998.
In 1999, Ontario accounted for 55% of Canada’s total manufacturing sales. By the end of 2008, its share had fallen to 46%.
In Quebec, factory sales rose 1.8% to $150.9 billion, in part to robust growth in the aerospace and petroleum products industries.
In the West, sales in British Columbia declined 6.8%, as the province’s important wood products industry fell victim to the downturn in the North American housing market.
Manufacturing employment fell in Ontario by 45,500, in Quebec by 30,000 and in British Columbia by 7,300.
The analytical article “Manufacturing: The year 2008 in review” is now available online in the Analysis in Brief (11-621-MWE2009077, free) series, from the Publications module of the Statistics Canada website at www.statcan.gc.ca.