Home Regular Contributors David MacLean Manufacturing Month: Celebrating Wins and Driving Growth

Manufacturing Month: Celebrating Wins and Driving Growth

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David MacLean

There are more than 9,000 manufacturing operations in Alberta, responsible for $71 billion in sales – of which $27.6 billion is exported. The manufacturing sector is a huge contributor to Alberta’s economy, but often gets overshadowed by our massive oil and gas industry.

While Alberta manufacturers suffered along with their key clients in the oil and gas industry in recent years, the industry has been steadily recovering. In fact, in 2017 manufacturing output increased by a whopping 16.5 per cent over the previous year.

Every October, Canadian Manufacturers & Exporters (CME) and our partners across Canada celebrate Manufacturing Month. We host plant tours, hold special events (including our national conference held in Ottawa on November 7th) and engage in an honest conversation about how to expand the manufacturing sector.

The key to growing Canada’s manufacturing sector is capital investment. A steady and increasing flow of investment dollars into the sector drives innovation and enhances competitiveness. On this measure, sadly, Canadian manufacturers aren’t keeping pace with trade partners around the world.

Since 2011, Canadian capital investment growth has been 2.5 times lower than the OECD average and three times slower than the United States. Foreign direct investment flows into Canada in 2016 were 50 per cent lower than the pre-recession levels of 2005-2007 while globally, investment has increased by 20 per cent.

Since 2013, United States’ investment in Canada has dropped by nearly half, while Canadian investment in the States has more than tripled.

In other words, there is investment flowing into manufacturing around the world, but the level of investment in Canada is not where we want it to be.

What can policymakers do to boost investment in Canadian manufacturing? For starters, we can’t ignore our neighbours and biggest competitors to the south. For a time, in terms of how our tax systems treat capital investment, Canadian firms enjoyed an advantage over international competition, but that advantage has now disappeared.

That’s why CME is calling for federal and provincial combined corporate tax rates to be immediately lowered from about 28 per cent to 20 per cent. In addition, the Government of Canada should match the accelerated capital cost allowance provisions now in place in the United States, giving businesses an immediate 100 per cent tax write off on qualifying capital asset purchases.

Finally, the Canadian tax system should be reviewed and modernized by tax and economic policy experts with the goal of increasing innovation, investment and economic growth.

The state of Alberta’s manufacturing sector is strong and getting stronger, but there is much that can be done to boost investment, innovation and further diversify the economy. This October let’s celebrate the great work being done in Canadian manufacturing and think about how we can work together to make it even stronger.

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.

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