Manufacturing and Job Growth Trends in Canada

With manufacturing making up 11 percent of Canada’s GDP in 2017, it is projected to grow exponentially until at least 2026. Not only is manufacturing expected to expand, but it is also making up a major portion of Canada’s employment share. Because the manufacturing sector is expected to grow steadily over the next eight years, many companies are looking for ways to streamline their manufacturing and distribution processes. Cloud-based ERP software is one of the best ways to identify and close gaps in the manufacturing line and make production more efficient overall.

Manufacturing business owners and CEOs should be taking steps to safeguard their place in the Canadian manufacturing sector over the next eight years and beyond. While the manufacturing market seems set to continue on a path of steady growth, competition, a dwindling skilled labor force and improvements in technology can threaten a company already in a tenuous state. 

Business owners and CEOs should be proactive in taking steps to protect their company from economic downturns, labor shortages and technology advancements by using technology to reduce costs and improve quality, and use competitive training programs to attract underrepresented populations.

From 2004 – 2008, manufacturing jobs in Canada experienced a significant downturn. One in seven manufacturing jobs were lost during this period, leading to a total loss of almost 322,000 jobs in total. Central Canada was hit the hardest during this economic downturn, with Ontario and Quebec taking the brunt of the job losses. The economic depression that ensued through 2008 – 2010 continued to hurt manufacturing jobs all over the world, and Canada was no exception.

From 2011 – 2017, manufacturing jobs have remained steady, with not much increase in employment; however, manufactured goods produced per person is higher than most other sectors of business. On average, manufacturing productivity has steadily increased by 2.8 percent per year since 1961. This data suggests that while the manufacturing sector has decreased in Canada’s national GDP, it has been a significant boost to the goods-producing sector overall. 

In the future, Canada is projected to see an increase in the manufacturing aggregate sector by at least 1.5 percent from 2017 until 2026. This is good news for those who are looking for employment, as many distributors and manufacturers see labor shortages ahead.

Twenty-two percent of Canada’s industrial workers are at least 55 years old, making up one-fifth of the industrial population. Only 376,000 are 24 or younger. In fact, the labor force in the manufacturing sector is older than the rest of the overall labor force in Canada. This means that a labor shortage is forthcoming in the next few years as aging workers retire. Already, manufacturers are feeling the strain with 56 percent reporting difficulty finding quality laborers in 2018. While this causes complications for many manufacturers, including being unable to fulfill or having to refuse new orders, the workers who are skilled in manufacturing tasks are in high demand. 

Additionally, while Canada’s national unemployment rate hovers around 6.8 percent, unemployment in the manufacturing industry is only 3.4 percent. Laborers who work in the manufacturing industry have a high degree of job security, provided their companies can continue to supply laborers to the business. 

Many businesses are finding themselves having to become more competitive to draw in the skilled, dependable workers. Other companies are finding they need to utilize technology to automate more of their manufacturing processes while reducing the need for manual labor and increasing efficiency.

Technologically speaking, Industry 4.0 has turned regular factories into ​“smart factories.” These manufacturing powerhouses are mostly or fully automated, with sensors, analytics and manufacturing software which communicates with manufacturing supervisors and customers. 

Not only are these factories increasing speed and decreasing manual labor, but they are also increasing customer satisfaction. According to the BDC, partial and full digitization of manufacturing plants makes up 39 percent of Canada’s manufacturing entrepreneurial businesses. 

Not only is digitization improving efficiency, but it is also improving the quality of the materials being produced. Digitized manufacturers are better able to compete against plants in Asia, but with higher-quality materials. 

While many business owners and employees may be reluctant to accept technology, fearing it will make the human component obsolete, there are plenty of mechanized operations that require human interaction, cooperation and inspection. The skilled labor with machines changes to professions such as data analysts, tech specialists and maintenance professionals. Companies also still need leaders, innovators, problem solvers and employees who can connect with customers on a human level. 

Men hold three times the industrial jobs that women do, which is not surprising but may be an area of underutilized labor that manufacturers can begin to target. The numbers of women have increased in the tech and financial worlds, but they continue to make up only one-third of the industrial jobs in Canada. Manufacturers can create competitive packages geared toward women to help attract dependable, quality labor. 

Furthermore, manufacturing jobs offer more full-time opportunities than in other industries. This is attractive to women who are looking to support their families or who are also career driven. Women who are looking for opportunities to advance may find manufacturing to be the industry where they can ascend the ladder quickly, with plenty of on-the-job training and experience to guide their transition into management positions.

Industrial work makes up 17 percent of Canada’s jobs, with manufacturing making up 9.4 percent of all of Canada’s labor force. While manufacturing is not projected to increase exponentially over the next eight years, it is expected to maintain steady growth. This bodes well for people searching for steady employment and new careers, while also highlighting the expectations manufacturing’s role will continue to play in the Canadian economy and employment arenas. 

The manufacturing sector received the highest foreign direct investments (FDI) in 2016, with 47 percent coming from the United States. If trends continue and the United States continues to see an increase in construction, exports and other trade improvements, Canada’s manufacturing sector will continue to benefit as a whole.

Canada leads the way in smart investments for entrepreneurs looking to improve or build their businesses and technologies. In 2016, manufacturing made up 32 percent of development investments and business enterprise research. Investors know that manufacturers are always assessing the bottom dollar and looking for ways to increase efficiency while decreasing labor costs. With new technologies, manufacturers can cut labor costs without compromising quality.

Ontario is Canada’s largest manufacturing province, accounting for 12.6 percent of gross value added (GVA) in 2016. The three primary exports of Ontario include automotive production, machinery production and electrical equipment. Following close behind Ontario is Quebec, which accounts for 13.9 percent of Canada’s GDP. Their primary export is aerospace equipment and machinery.

Over the coming years, with increases expected in the manufacturing industry and the continued primary export recipient to be the United States, manufacturers should be looking for more ways to attract skilled laborers and quality labor. This means that manufacturers will have to look into underrepresented populations, including women and immigrants. Manufacturers should also be looking into providing training and support to give dependable laborers more qualifications. They should also be preparing for ways to make their company more appealing in the job market than their competitors.

Urbanized areas tend to have higher immigrant populations, while women make up 48 percent of the Canadian workforce. The gaps in the labor force left behind by retiring workers can easily be made up if these two populations are more utilized. Some members of the Canadian government are suggesting a national skill program for immigrants to help them transition into skilled labor jobs. Manufacturing business owners should begin to lobby for these kinds of programs to help take the cost of training out of their budgets.

Canadian manufacturers should also be making a move to digitizing their manufacturing and distribution processes by implementing automation and manufacturing ERP software. Small- to medium-sized businesses may want to consider cloud-based ERP systems which do not have to be housed on-site and come with additional technical support built in.

ERP systems utilize IoT sensors and analytics to automate a lot of the steps in the manufacturing process. Larger businesses may want to incorporate premise-based ERP manufacturing software if they have the IT department to maintain and control it.

Becoming a ​“smart factory” will improve production rates and quality while decreasing labor costs. An initial investment in Industry 4.0 technology will pay off immensely in a relatively short amount of time. This will also allow Canadian manufacturers to remain competitive with cheaper manufacturing plants in Asia, without compromising the quality of the materials to save on cost.

Canadian manufacturers also need to keep the new U.S. Tax Cuts and Jobs Act tax laws that could potentially undercut the Canadian manufacturing industry. Under these new tax laws, foreign and domestic industries may find the United States a more competitive prospect for their manufacturing needs. Under the new tax law, the statutory corporate income tax rate will be 21 percent, as opposed to the previous 35 percent.

Currently, automobiles and light-duty vehicles are the largest Canadian manufacturing exports. With the introduction of self-driving and electric vehicles to the market in the last 10 years, this may be a feasible market to begin offering competitive manufacturing rates. The Green Aviation market also addresses the concerns of aerospace machinery contributing to greenhouse gases and global warming. 

The European Union has introduced the ​“Flightpath 2050” plan which aims to reduce nitrogen oxide emissions, carbon dioxide emissions and noise pollution levels in the airways by 2050. Canada moved to join the EU’s plan by implementing their own Green Aviation Research and Development Network. The need for more efficient materials, alternative fuels and more quiet engines are driving some of the new fields of manufacturing in Canada.

Smaller plants have also become a renewed trend, mirroring what is occurring in the United States. This trend mirrors the manufacturing boom in the 1970s and then in the early 1990s. While the small-plant boom ended in the 1990s, the resurgence has piqued the interest of analysts. This study suggests that perhaps smaller companies can outsource some of their in-house tasks, allowing them to remain cost-efficient and still productive.

Canadian manufacturers – in particular CEOs – should also be mindful of cyber security risks. In an age where data breaches are becoming all too common, customers want guarantees that their information will not be leaked. Additionally, any vendor offering manufacturing software should be ready to safeguard it against cyber attacks and other digital threats.

The Canadian manufacturing sector looks to hold steady with slight increases over the next eight years. Impending problems could spell disaster for some companies if they are not addressed or avoided beforehand. Canadian manufacturers should first be looking to make manufacturing jobs more enticing and available to women and immigrants, who will help to fill the gaps left behind by retiring workers. They should also be lobbying for government-sponsored training programs to reduce the cost of training in their budgets.

Manufacturers should also be investing heavily in smart software which will make their manufacturing and distribution processes much more efficient. Not only does this software make things more streamlined in the factory, but many often communicate with the customers simultaneously, leading to increased customer satisfaction overall.

Finally, manufacturers must keep in mind that a steep slip in the global market, mirroring 2008, may have a significant impact on their industry. It’s important for companies to be getting grants for research for new technologies so that they can stay ahead of economic slumps. If new technology is being produced in these companies, it will help insulate them against some of the more devastating downturns the stock market can take.

At Top10 ERP, we provide trustworthy and unbiased ERP software decision support and product information to help grow and streamline your manufacturing and distribution business. If you are seeking information on the best ERP solutions, we can provide detailed comparisons of the top software available so you can determine the most suitable option for your needs and budget.