Alberta’s manufacturing sector has been slowly recovering in recent years, but still has a distance to travel before it matches the output and employment levels it enjoyed before the oil and gas downturn gutted its largest market.
In 2018 Alberta manufacturing sales were valued at $76 billion – up nearly 8 per cent from 2017 but still 4 per cent below their 2014 peak. In 2018 the number of manufacturing jobs in Alberta increased by 8.9 per cent to 129,800. While our manufacturing sector is growing faster than any other province, we still employ 10.1 per cent fewer Albertans than we did in 2014.
Manufactured goods exports are performing well with the total value of exports 20 per cent higher than in 2014. This positive trend has been led by petroleum refinery exports (up $1.5 billion), vegetable oils (up $1.1 billion), and engineered wood products (up $489 million).
The bottom line is Alberta manufacturing is trending in the right direction and has been for a few years. Now, with a new UCP government holding the reins, there are a few policy changes we think could help stimulate more manufacturing growth in the province.
Announced in the early days of the election campaign, the UCP commitment to reduce the corporate tax rate from 12 per cent to 8 per cent over four years is one of most significant economic reforms this province has ever seen. Cutting corporate taxes by a third sends a strong signal to the global investment community that Alberta is open for business and rewards Alberta companies for sticking with it through a difficult downturn. Economist Jack Mintz predicts the corporate tax reduction will create some 55,000 jobs.
In addition to that major move, the UCP has committed to reducing regulatory red tape and even assigned Associate Minister Grant Hunter to oversee the effort.
While slashing corporate taxes and reducing red tape are great policies that will inevitably drive new growth, there’s plenty more we can do to boost manufacturing. For example, we know that investment in equipment and technology drives long term competitiveness. Our friends in the United States certainly understand this and implemented an accelerated capital cost allowance to allow manufacturers there to immediately write off capital expenditures. The Trudeau government, with some encouragement from manufacturers, followed suit last fall and the Ford government in Ontario mirrored those changes in their most recent budget.
A similar tax benefit should be implemented provincially to ensure Alberta maintains an investment advantage.
During the election campaign, Canadian Manufacturers & Exporters (CME) ran a manufacturing matters social media campaign aimed at persuading politicians that Alberta needs a strategy to grow the sector. Red tape reduction and corporate tax reductions are a great start, but we think we can go much further toward making Alberta a manufacturing powerhouse.
Canadian Manufacturers & Exporters (CME) is the voice of Canadian manufacturing. CME represents more than 2,500 companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports.