Federal Budget: An Opportunity to Strengthen our Canadian Manufacturing Sector

Ottawa, April 14, 2021 – As Deputy Prime Minister and Minister of Finance, Chrystia Freeland, is set to reveal the federal budget on Monday, Canadian Manufacturers & Exporters (CME) stresses the importance of seizing this opportunity to strengthen the Canadian manufacturing sector by providing the tools it needs to innovate and increase both our productivity and our global footprint.

“The COVID-19 crisis has shed light on Canada’s need for a strong manufacturing sector that can produce what our country needs, especially in times of crisis. It also showed that we must fill the gaps by investing in our manufacturing capacity and making it a priority, with a long-term plan and a commitment to attracting research, investment, and jobs. It’s time to give manufacturers the tools they need to lead the economic recovery. We cannot miss this opportunity,” says Dennis Darby, President and CEO of CME.

Addressing skills and labour shortages is the key

CME urges the federal government to address the country’s chronic skills and labour shortages. Manufacturers typically identify this as their most pressing issue, as shown by CME’s most recent survey conducted this fall, in which 60 per cent of respondents reported having immediate labour and skills shortages. Labour is the key issue if we are to ensure that our businesses have the workforce they need to meet rising demand and be fully competitive.

Ensuring the sector’s competitiveness

Canada is lagging far behind when it comes to productivity. We should recall that the growth of business capital investment in Canada over the past five years was 8.8 per cent, compared to 30.4 per cent in the United Kingdom and 28.1 per cent in the United States. This is evidence that the gap is widening, and this long-term erosion of our industrial competitiveness directly affects manufacturers’ ability to respond to the current crisis or future ones. We must act now to turn the tide.

Reigniting Canada’s manufacturing sector: 7 recommendations

To achieve this, CME calls on the federal government to work closely with the sector to implement the following recommendations:

1. That the government de-risk and encourage manufacturers to digitize, automate, adopt advanced technology, and help drive productivity growth.
2. That the government support R&D spending and scale-up of companies by improving and enhancing the SR&ED program.
3. That the government implement a patent box regime to reward commercialization and production of goods and advanced technologies in Canada, thus eliminating a key competitive disadvantage between us and a growing number of our international peers.
4. That the government provide employer incentives to upskill, hire and retain workers, thus creating jobs for unemployed Canadians and helping to address labour and skills shortages in manufacturing.
5. That the government help the manufacturing sector adapt to and advance Canada’s climate change strategy.
6. That the government increase Canadian value-added exports.
7. That the government continue actions to fight COVID-19 and prepare for future pandemics.

CME’s complete 2021 pre-budget submission detailing all its recommendations is available here.

“Reigniting Canada’s manufacturing sector — a critical engine of the economy — is essential if Canada is to build a greener and more competitive, innovative, inclusive, and resilient economy. The last year has shown us all that the Canadian manufacturing industry is an indispensable part of Canada. Let’s build on that so we can manufacture a prosperous future for everyone,” concludes Darby.