Recent reports reveal the drastic decline in Canada’s factory employment as it hit a 35 year low. The decline in the sector is a key reason why the Canadian economy had only slight improvement in reducing the ranks of the unemployed and consequently is adversely affecting the entire population.
The outlook for manufacturers is bleak. The combination of sluggish growth beyond our borders and the relative strength of the Canadian dollar compared to our trading partners emphasizes the difficulties confronting our manufacturers. From 1976 to 1990, the manufacturing sector was the single largest employer in the country, but now it has declined to third place.
So far our economy has been able to survive as demand for our exports has continued.
The slide in the manufacturing part of our economy reflects many factors such as the global competition that limited gains in productivity, branch plant factories, a smaller economy, so large runs from big volumes have been limited.
Our governments have taken some remedial steps such as reducing taxes, the GST, and trying to pry open the barriers to our export markets that were further hindered by the higher level of the Canadian dollar in recent years.
Clearly, what is at stake here is very important. What should be changed now? Canadian firms have not kept up with their counterparts south of the border. We have lagged in adopting the newest technology, like computerization or robotics or plant equipment that increases the ability of workers to improve their ability to produce more economically. Certainly, the elevated level of our dollar should have enabled companies to import new, efficient machinery and equipment to increase productivity.
Technology should allow firms to offshore back office tasks.
Pattern recognition software should be used to do work previously accomplished by teams of workers or even lawyers.
The displaced workers have been slow to find new uses for their labour made available.
Those left unemployed simply will have to struggle to retrain and catch up with the economy’s needs. Technology can help cut all kinds of costs.
The industrial revolution ultimately improved living standards of workers at all levels. Unions should be enlisted to embrace new ways to improve efficiency and welcome them even if temporarily some jobs are lost.
The government should take more steps to enhance worker training, perhaps provide some transportation discounts for manufacturers, and even stabilize the external value of the Canadian dollar.
The situation is far from hopeless unless we ignore the remedial steps that are so necessary.