Today’s release of the latest manufacturing data poked a hole in a narrative that was beginning to take hold of late, the one about a renaissance of manufacturing in Canada. After four straight months of improving sales, the latest numbers for December showed a decline of 0.9 per cent from the month before.
Many have been quick to point out that on a year-over-year basis, sales were still 2.7 per cent higher than the year before. But before getting too carried away with the story of manufacturing’s comeback, it’s worth looking at where the gains are coming from. And where they’re not.
Among Canada’s four biggest manufacturing provinces, the only ones to see gains last year were out west. And while Alberta’s growth wasn’t spectacular, the province has emerged as the biggest driver of Canada’s manufacturing sector in recent years. Over the last decade manufacturers in Alberta, a province with a factory sector less than one-third the size of Ontario’s, have more than made up for the declines in Canada’s largest province. The problem, for those hoping for a blue collar job renaissance, is Alberta factories have accomplished that sales feat without adding any additional manufacturing jobs.
While manufacturing sales in Ontario in 2013 were $25.9 billion lower than they were a decade ago, Alberta factories boosted their sales by $26.7 billion. This really is astonishing when you consider manufacturing is a $270 billion industry in Ontario, compared to just $75 billion in Alberta. But while there are 323,000 fewer workers in Ontario factories today than in 2003, there are 10,000 fewer in Alberta, too.
Part of Alberta’s jobless factory boom comes down to higher productivity in Alberta, but the biggest difference is the types of manufacturing that goes on in Ontario compared to Alberta, where two-thirds of factory business is tied to the energy sector. Building trains, planes and automobiles is simply a lot more labour-intensive than constructing pipes and processing raw materials.
Manufacturing isn’t a zero-sum game. Ontario didn’t lose because Alberta won. But if you’re in the camp hoping that improving manufacturing sales in Canada will revive job growth in that sector, history isn’t on your side.