Ontario’s budget will be presented today in the wake of new GDP numbers from Statistics Canada showing that Ontario’s real GDP growth was amongst the poorer performers in the country in 2013 (Quebec, NS, & NB were lower). Manufacturing was again singled out as one of the sectors in which Ontario is doing rather badly with a decline in output in 2013 of 2.3% as “computer and electronic products, motor vehicle and motor vehicle parts, machinery, and iron and steel mills and ferro-alloy products all declined.” However, 2013 saw an increase in manufacturing output in Saskatchewan of 3.4 percent with the gains in the areas of chemical, food and wood products. Alberta also saw an increase in manufacturing output of 1.1 percent. It would appear that the news in manufacturing is not all bad even if one considers employment.
The manufacturing picture is a key element in Ontario's poor performance. Manufacturing employment in Canada in particular is quite interesting but needs to be placed in a longer-term perspective. Since 1990, total employment in Canada has grown by 36 percent while manufacturing employment has shrunk by 15 percent. As a result, manufacturing’s share of total employment has dropped from approximately 16 percent in 1990 to just below 10 percent in 2013.
In 1990, almost half of Canadian manufacturing jobs were in Ontario and Ontario has seen the biggest loss of manufacturing jobs. Between 1990 and 2013, the numbers show Canada losing 315,900 manufacturing jobs – most in the period since 2000 – with Ontario accounting for 215,300 or about two thirds of those lost jobs. Ontario’s share of total employment in manufacturing has plummeted from 19.1 percent in 1990 to 11.3 percent in 2013. Yet, there is some interesting stuff in this data.
I used annual employment data from Statistics Canada (Table-2820012) to plot two figures. As Figure 3 shows, Ontario has not been alone in the shrinking of its manufacturing employment over the 1990 to 2013 period. However, three prairie provinces- and PEI - have actually seen an increase since 1990 (though only Alberta and Saskatchewan have seen total manufacturing employment increase since 2000 – a poorer period for manufacturing even in Manitoba).
Compared to where they stood nearly a quarter century ago, Manitoba, Saskatchewan and Alberta all have more people employed in manufacturing. Moreover, as Figure 4 shows, this employment growth has largely kept pace with overall employment growth resulting in only a small change in the manufacturing share of total employment. The manufacturing share of employment in these three western provinces was always much lower than in Ontario and Quebec (and still is) but has not declined very much even with their strong resource sectors.
I would imagine that this is tied to the nature of manufacturing in these provinces. Food and agricultural product processing is manufacturing and may certainly explain some of what has happened in a province like Manitoba where the manufacturing share of employment was 11 percent in 1990 and still 10.1 percent in 2013. Similarly, Saskatchewan dropped slightly from 5.5 percent to 5.1 and Alberta from 7.5 percent to 6.3 percent. This suggests that food and agriculture based manufacturing has proven to be a fairly stable activity in these changing times. At the same time, this stability is relative to the early 1990s. Manitoba in particular also saw a substantial decline in total manufacturing employment between 2000 and 2013.
Ontario is performing poorly in manufacturing and also in general relative to the rest of the country though the rest of Canada should not consider resting on its laurels. The fact remains that the manufacturing sector in the West is still too small to pick up the slack from Ontario’s decline.