Free trade, a strong Canadian dollar, the weak U.S. economy and a disinvestment on the part of the federal government have all been blamed for the demise of Ontario’s manufacturing sector.
But what solutions, if any, could reverse the sector’s misfortunes?
Politicians from all major parties have varying proposals to stop the sector from dying. But does its survival lie in government help? And whose plan is best suited to stop the 250,000 manufacturing job losses some economists expect in the next five years?
The answers remain unclear, but most agree the province needs a new, green and technologically advanced manufacturing sector to remain productive.
"The traditional manufacturing sector, it is a declining number," says Carol Wilding, president and CEO of the Toronto Board of Trade, adding that the province’s promotion of innovation is a step in the right direction.
"I don’t think there’s any one particular answer to these problems. Injecting cash and funds isn’t going to do it. Governments need to make incentives for innovative ideas to be produced here. That’s the new manufacturing sector. That’s the new economy."
John Cartwright, president of the Toronto and York Region Labour Council, says that while shifting to green manufactured goods and environmentally friendly innovation will create a strong, new green economy, the government must not forget about the existing manufacturing sector.
"We need strong policies that protect existing manufacturers, that include reversing unequal trade policies" that are allowing cheap imports to erode the Canadian manufacturers’ share of the Canadian market.
"Secondly, we’ve got to invest in the new economy, and there are all kinds of examples of how that can result in hundreds of thousands of jobs in the new economy," he says.
For example, if buildings were required to have stricter energy-efficiency standards, and alternative energy sources were developed, Ontario could build a manufacturing economy around that shift. Local companies could build solar energy and geothermal systems, and develop an array of new technology such as intelligent lighting systems, heat-recovery systems, "green" building materials and fuel cells. There’s no reason Ontario couldn’t mass-produce electric vehicles and the battery packs that power them.
To be sure, "we’re always going to need smokestacks in Ontario," Cartwright says. "It’s important to protect the existing manufacturers. People need furniture. People need mattresses. People need all kinds of materials that are still made here."
Meanwhile Chris Piper, associate professor at the University of Western Ontario’s Richard Ivey School of Business, says the onus is on the manufacturers themselves to assure their own competitiveness.
"It has become commonplace for manufacturers these past few years to throw up their hands and say that they just can’t find a way to compete," he says.
"But while we may lament those many factory shutterings, we would do well to wonder what at least some of those manufacturers could have done to forestall the inevitable, or even to reverse their fortunes."
He says Canadian manufacturers need to do a better job of finding niche markets where labour costs aren’t an issue.
While many manufacturers, especially those exporting their goods abroad, have been citing the high dollar as the nail being driven through their heads, TD economist Derek Burleton says it’s foolhardy to view the loonie’s recent plunge as the remedy to the manufacturing sector’s woes.
"It’s hard to get too excited about the declining Canadian dollar when it reflects global economic turmoil," he says. "The softness of the loonie will likely be temporary."
Jim Stanford, vice-chair of the Ontario Manufacturing Council, says the solution lies in a systematic strategy to address the manufacturing trade deficit that exists between the number of manufactured goods coming into Canada vs. the number leaving Canada.
"We’ve allowed resources to dictate our whole economic direction. That was a terrible approach. We need to diversify these manufacturing industries and nurture them for the future."
Last week, Premier Dalton McGuinty was criticized by political opponents for admitting he didn’t think Ontario’s lost manufacturing jobs would ever come back.
Opposition parties said this was the government’s acceptance of the loss of more than 200,000 manufacturing jobs in Ontario over the past five years.
But McGuinty’s finance minister, Dwight Duncan, says the government is trying to confront the "decline in our manufacturing sector" with a five-point plan that includes the government’s $500 million Advanced Manufacturing Investment Strategy, which provides repayable loans interest-free for up to five years to encourage companies to invest in leading-edge technologies and processes. The government has also enacted a $500 million Ontario Automotive Investment Strategy fund to try to curb the decline of the automotive sector by giving incentives to manufacture green automobiles in Ontario plants.
McGuinty and all the major federal parties seem to recognize the province’s shift away from traditional manufacturing jobs in furniture construction, textile production and assembly line work, and have each put forward plans to adjust the provincial infrastructure to be more innovation friendly.
In short, politicians see local innovators such as Research In Motion, the Waterloo-based manufacturer of the BlackBerry, as replacing factories like Gibbard Furniture – the soon-to-be-defunct Napanee-based manufacturer of Canada’s finest furniture – in the next generation of Ontario’s manufacturing sector.
The Ontario government has even set up the Ministry of Research and Innovation to help bring new, innovative manufacturers to the province.