CME: Federal government takes steps to encourage manufacturing innovation in Budget 2018 but, overlooks competitiveness

February 27, 2018

Canadian Manufacturers & Exporters (CME) is pleased the federal government acted on many priorities of the manufacturing sector in the 2018 budget, including supports for innovation, exports, and skills development. However, we remain concerned by the lack of focus on major economic issues facing Canada’s economy and the manufacturing sector, specifically on issues relating to investment competitiveness.

“CME is pleased the government adopted many of our recommendations regarding the innovation agenda.” said Dennis Darby, President & CEO of CME. “Measures such as increased funding for the Natural Research Council, the Trade Commissioners Service, the Women Entrepreneurship Strategy, regulatory simplification, deferred prosecution agreements, and for supporting getting more women in trades will be major supports for manufacturers in Canada moving forward.”

“However, for Canada to capitalize on its innovation and global exports strategies, decisive action is needed to halt the erosion of Canadian competitiveness,” added Darby. “Canada is not attracting enough investment. As a result, innovation, growth and productivity are suffering. CME and our partners in Canadian Manufacturing Coalition suggested a range of reasonable tax reforms, such as enhancing accelerated capital cost allowance, that would go a long way to balance Canada and U.S. corporate tax treatment and investments.”

“With Budget 2018, the federal government regrettably missed out on the opportunity to restore Canada’s competitiveness. We will continue to put forward our ideas which we and our members know will help level the playing field with the jurisdictions we trade and compete with,” stated Darby. In the pre-budget process, CME had called on the federal to take decisive action to encourage investments and reverse alarming trends:

  • In the U.S., manufacturers invest on average 8 times more than an equivalent Canadian company in facilities, machinery and equipment.
  • Since the pre-recession period, new greenfield foreign direct investment into Canadian manufacturing has shrunk by 40 per cent, it has grown by 41 per cent in the U.S.
  • From 2002 to 2014, labour productivity in manufacturing in Canada increased by 18 per cent, compared to 49% in the U.S. increased.


Since 1871, Canadian Manufacturers & Exporters has been helping manufacturers grow at home and, compete around the world. Our focus is to ensure manufacturers are recognized as engines for growth in the economy, with Canada acknowledged as both a global leader and innovator in advanced manufacturing and a global leader in exporting. CME is a member-driven association that directly represents more than 2,500 leading companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports.


Stefi Proulx

Director of Communications & Branding

Canadian Manufacturers & Exporters

(613) 292-6070