Home Month and Year December 2021 Recommendations for An Alberta-Made Manufacturing Strategy

Recommendations for An Alberta-Made Manufacturing Strategy

David McLean

After an incredibly difficult year and a half of living in the present, putting immediate health and safety concerns above all else, it’s a tremendous relief to think about the future. For manufacturers, the Alberta government’s Budget 2021 commitment to develop a manufacturing strategy provides an opportunity to do exactly that.

The manufacturing sector is long overdue for some attention because it lives in the shadow of Alberta’s largest industry – oil and gas –  despite being an essential component of it. The reality is a strategy with the goal of boosting manufacturing output in Alberta that will benefit all sectors, including oil and gas. With more than 121,000 Albertans working in manufacturing, bolstering the sector has big upside.

We at Canadian Manufacturers & Exporters (CME) have been calling on the province to shine a light on manufacturing for years, so naturally we’ve put some thought into what such a strategy should look like.

First and foremost, we need to stimulate investment in equipment and technology to complete globally. For inspiration on how we can do that, we can look south of the border where many US states have recently implemented investment support regimes tied to the tax system. The Gulf Coast states, for example, provide a range of tax credits to companies making major investments, decreasing the effective tax burden on companies as they scale up production. Michigan has adopted a similar system to attract new auto assembly plants, and this approach has been successful. The tax credits are applied against all taxes (including payroll, property, and corporate) to secure the investment and guarantee a longer-term return for taxpayers. They are open to all who invest, regardless of size of investment or company and do not require pre-approval. To become a more competitive jurisdiction for manufacturing investment, the Alberta government must also introduce modern investment attraction mechanisms.

We recommend a 30 per cent “Alberta Made” investment tax credit to assist companies with plant expansion, upgrades, onshoring, re-tooling, technology adoption, improving environmental performance, and exporting.

Another key concern for manufacturers is attraction and retention of skilled labour. As we emerge from the pandemic, severe labour shortages are quickly resurfacing. Manufacturers need help with the tremendous cost of training and upskilling their workforce. We recommend the Alberta government implement a 50 per cent employer tax credit against Alberta’s corporate tax rate that offsets company costs for new hires during the first five years of employment. Special emphasis should also be placed on management training, particularly for women.

Finally, it’s time to celebrate the wide range of products made in Alberta. Alberta should follow Ontario’s lead (the CME-driven Ontario Made program) and a launch campaign to draw awareness to Alberta-made goods. An Alberta Made campaign would be backed by a web portal connecting certified Alberta sellers with buyers interested in supporting local supply chains. It would surprise many how self-sufficient Alberta can be.

These are just a few of the suggestions we made to the Alberta government for their upcoming manufacturing strategy. You can read the rest on our web site at www.cme-mec.ca. After a tough couple of years, it feels good to think of ways to grow and diversify Alberta’s economy. Let’s hope the province delivers an ambitious plan to grow the manufacturing sector.

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.