Few businesses survived Central Canada’s manufacturing downturn.
That’s because it was a tough era that was largely brought on by fierce competition from China and a high dollar. Most notably, it devastated the Ontario manufacturing sector and enabled West Canada’s energy fields to become our main driver of growth.
But with the rapid fall of oil prices, the tumbling loonie and renewed U.S. demand, Ontario is being called on to once again boost economic activity. But the question remains: can the hobbled region pick up the slack?
So far, experts predict smaller, more-specialized companies may play a big part in any Central Canada revival. Problem is, some of these companies depend on imports from the U.S., which means the lower dollar may hurt their bottom lines.
Still, Canadian Manufacturers and Exporters president Jayson Myers is optimistic about improvements in production and sales across the country. He says, “There’s no reason […] why Ontario manufacturing sales cannot exceed where we were back before the recession.”
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Going forward, Ontario’s industrial landscape will be different than before, he suggests, but that simply means many of the huge, mass-producing facilities of yesteryear will be replaced with operations that produce higher-value goods, such as customized bar fridges and furniture.
He adds, “It’s not going to be business as usual and [that] will […] require companies to focus more on very specialized products. The money today is made in design, engineering [and] innovation and customer service—not necessarily made in manufacturing itself.”
So far, Ontario’s economy is waiting to see if the more-inviting economic environment will attract investment. Peter Hall, Export Development Canada’s chief economist, says, “Demand is firing up now, [so] businesses are becoming more convinced that this is the real thing,” and that now is the time to invest.
Hall expects it will take about a year before Ontario starts to see significant new investments, but he’s convinced they’ll come pouring in if current conditions last. In his view, the province is attractive because it boasts a clustered, highly developed manufacturing sector close to the U.S. market.
Myers says one challenge will be that many of the skilled workers of the past either left the province or retired during the long downturn. The education system, he adds, is no longer training enough young people in the necessary practical skills, so has struggled to keep up with development and newer technologies.
He also notes that Alberta oil sands projects, which are expected to suffer from the low oil prices, have typically been buyers of new products, such as valves, steel and pumps.
As such, Central Canada may not outperform West Canada in 2015. Instead, experts say the two regions may keep pace with one another and, together, keep the country afloat.