Canada’s economy continues to evolve

Last week, Canada’s employment figures for November were released and although it was a mixed bag of news, one particular data point was very interesting. For this November, some industries reported job gains while others reported losses. For most industries, the spotty Canadian economy is the reason for the job gains and losses across the various industries. However, one important industry seems to have an additional reason for its performance. Manufacturing.

The Canadian manufacturing industry is not doing well at the moment. In fact, it has been struggling for some time now. The economy is definitely partly to blame for this, along with a strong Canadian dollar which hurts exports to the US. However, there is another important reason why manufacturing in Canada is and has been going down. It is because the Canadian economy is evolving and becoming less of a manufacturing base and more of a knowledge and service base.

As highlighted in a recent Toronto Star article (click here to read it), the manufacturing industry in Canada as a percentage of the job market has steadily decreased from 19% in 1976 to 10% today. Some of this drop is due to technological advances that allowed companies to use machines in place of human workers, but the over-arching reason for this decline is because of how the world and Canada have evolved. Products are being made in China and other developing countries today more than in the past. These manufacturing jobs used to be in Canada and other advanced nations but instead, Canada now has more service based jobs that are tough to outsource and higher paying office jobs that are often in management and strategy positions instead of actually making the products that are sold.

Although the transition can be quite difficult for those losing their manufacturing jobs and businesses, it is a natural evolution of an advanced country in a globalized world. Manufacturing will never completely disappear, only the simpler manufacturing will and in the long run, this is good for Canada and world.