Ontario’s manufacturing sector turned a corner in 2010, and will power a disproportionate share of new jobs, GDP and exports for the provincial economy in 2011 and 2012, according to a year-end report released last week in Toronto.
Provincial manufacturing shipments grew 14 percent in 2010 (based on data to late autumn), and some 10,000 manufacturing jobs were created in the province (increasing Ontario’s share of total Canadian manufacturing jobs). Manufacturing exports from the province grew 15 percent – powering the fastest growth in exports of any region in Canada, according to data from a new report released by the Ontario Manufacturing Council (OMC), an advisory body representing business, labour, and community stakeholders in provincial manufacturing.
According to Jayson Myers, president of the Canadian Manufacturers and Exporters, and vice-chair of the OMC, "This recovery is proving not only the resiliency of Ontario manufacturers, but how important manufacturing is as an anchor of value creation and high paying jobs across all sectors of the Ontario economy."
The automotive sector played an especially important role in the overall recovery of manufacturing, accounting for 15 percent of direct manufacturing output (and much more than that when indirect supply chain effects are considered). Motor vehicle assembly in Ontario rebounded by almost 50 percent in 2010.
The OMC study also presents new evidence, based on analysis performed by the Centre for Spatial Economics, regarding the continuing importance of manufacturing to Ontario’s overall economic performance. At least nine distinct sectors of Ontario’s economy depend on the manufacturing sector for more than 15 percent of their total sales, and hence the rebounding provincial manufacturing will generate spillover momentum throughout the province. The report estimates that each $1 billion increase in export-bound manufacturing output generates a total of 16,545 jobs in Ontario, a majority of which are located in non-manufacturing sectors (including construction, trade, professional services and public services).
Robin Somerville, economist at the Centre for Spatial Economics, concludes that "Ontario’s manufacturing sector will punch well above its weight in 2011 and 2012, and will be a leading source of growth for output, exports and jobs in the province."
The report predicts that the manufacturing sector will account for over one-third of Ontario’s GDP growth in the next two years, one-quarter of new jobs, and three-quarters of new exports. These shares are all disproportionate compared to manufacturing’s current role, indicating that manufacturing will be increasingly important to the provincial economy.
Manufacturing also plays a disproportionate role in financing new innovation activity by Ontario businesses. The sector accounts for over half of all business research and development spending in Canada, yet represents only 12 percent of national GDP.
"It’s a mistaken stereotype that manufacturing is a fading, ‘smokestack’ industry," said Jim Stanford, economist with the Canadian Auto Workers and the other vice-chair of the OMC. "Manufacturing has a vital structural importance, and it’s essential to Ontario’s overall prosperity that manufacturing continue to fulfill this role."
The full report, A Better Year for Ontario Manufacturing, is downloadable at http://on.cme-mec.ca/download.php?file=gi99oczy.pdf.