Canada’s exporters are entering a new era of lower commodity prices and strong demand from a rebounding US economy, but many are not prepared to take ad- vantage of this major shift in trade patterns, says a new report by the Conference Board of Canada study, published Thursday.
Among Canadian industries best positioned to capitalize on the end of the commodities supercycle, the low-flying loonie, and stronger US demand are many service providers.
Canada Export Outlook: Conference Board
Several Canadian manufacturing industries will need to increase capacity to benefit from stepped-up demand, the analysis by Jacqueline Palladini says in a Conference Board of Canada study, published Thursday.
Five industries are singled out as being the best positioned to reap benefits from what the author calls “Canada’s next trade era”:
Canada’s Next Trade Era
- Transportation and government services
- Other commercial services (such as wholesale trade and administration)
- Computers and information services
- Food manufacturing
- Financial and insurance services.
Fastest Growing Industries
Four of these five industries are in the services category, which has been among the fastest-growing Canadian exports over the past decade.
Six industries are singled out that face strong US demand but lack sufficient capital to ramp up production in response:
- Wood products manufacturing
- Pharmaceutical and medicine manufacturing
- Aerospace product and parts manufacturing
- Other transportation manufacturing (such as rail and shipbuilding)
- Clothing
- Motor vehicle parts manufacturing
Past Layoffs
Many of the companies in these industries laid off employees, scaled back or shut down operations in the past decade, hurt by low-cost competition from China, Mexico and other countries and by the high Canadian dollar. Consequently, they face challenges ramping up operations again, the report says.
These companies are prime candidates for capital investments such as plant expansions, machinery up- grades or stepped-up hiring. But that may not always be easy, given the potential difficulties in locating financing and finding enough qualified people.
Government
This is where the government can help, notably with new policies and programs in the areas of labour mobility and skills enhancement.
“We are shifting back to a world reminiscent of the 1990s, characterized by strong growth in U.S. demand as it continues its recovery from the recession,” the report says.
Meanwhile, demand from emerging countries is slowing.
Canadian exports to the United States are expected to increase by a robust 4 per cent, on average, over the 2010-2019 period, according to the analysis.
Download the full report here:
http://www.conferenceboard.ca/e- library/abstract.aspx?did=7657