Stats Canada came out yesterday with a study on the decline of manufacturing in Canada. Being the lemmings that we are and the fact that the media in Canada is edited by Geraldo these days, this type of study leads the ‘experts’ to predict the fall of manufacturing in Canada and they tell us to embrace the ideas economy. Forget manufacturing, ideas and creativity are the engine of the 21st century economy. Richard Florida has got himself a new castle from which to convince us all that the future is in creative food service workers.
But I wouldn’t ring the death knell on manufacturing just yet. From 1998 to 2004 Canada added 200,000 new manufacturing jobs. It is true that we lost more from 2004 to 2008 than were created from 1998 to 2004 but look at the sub-sectors. Forestry manufacturing jobs are down 57,000 – the largest decline of any industry. That is tied almost exclusively to the U.S. housing market and recession. When that turns around – many of those jobs will be back (you can’t move the trees to China). Clothing and textile products manufacturing is down and that is likely not coming back. Auto is down but certainly not out.
How this translates into public policy is a serious concern to me. First, there will be manufacturing in North America. Millions of jobs over the next generation will be created in manufacturing in Canada and the United States. If economic development policy makers start taking Richard Florida seriously they will ignore these jobs and let them all go to Alabama with serious economic consequences. There will be many jobs in green energy, aerospace and defence, computer equipment, heavy industries, etc. that will be created. The growth rate may be slower than in the past but they will be there.
And you can’t forget the economic multiplier on manufacturing. A call centre agent needs a telephone and a computer to do his/her work (imported from China). That’s it. An automobile assembly plant needs mining, steel and aluminum production, metal plating, coating, bashing, oodles of transportation, painting and then assembly. For every paper mill job gone, drop 3 in the rest of the economy. That multiplier goes up to 4 or 5 with auto manufacturing.
The silver lining here, if there is one, is that if Ontario and Quebec decide to ignore manufacturing in favour of merging food service workers with the Cirque du Soleil, that should leave opportunities for places like New Brunswick. Virtually all of the non-natural resources based manufacturing growth has been in Ontario and Quebec over the past 20 years – and more. If NB can become a hub of green energy systems manufacturing because the big provinces don’t care than that might be a win. But it would be a win-lose. Ontario’s amazing economic growth for almost a century has been driven in large part by manufacturing.
Lastly, don’t take me to the opposite extreme. I love creative industries and think there are tremendous possibilities (although Richard Florida’s pollyannish ideas of making all work meaningful and exciting are poppycock). I would love to see New Brunswick build up its ICT and life sciences industries and create high value ideas-based work that attracts skilled workers to the province. But not at the expense of other important sectors.