A recently released research paper from the United Steelworkers (USW), The Case for Canada’s Steel Industry, raises a couple of concerns that need to be part of any decision around supporting the steel industry in Canada.
Last week RBC announced that its Canadian Manufacturing PMI (Purchasing Managers’ Index) had hit a new low in September. The index, based on a survey of manufacturers, found employment and new business were both falling.
A recent Bank of Canada discussion paper found that exports in half the categories surveyed would benefit from the decline in the value of the Canadian dollar. The paper also listed many of the sectors the Bank of Canada views as being key to Canada's economic recovery.
One of the arguments for a modern industrial strategy is that it would make it easier to ensure the long-term needs of the whole economy come before short-term considerations. The trade deal that the federal government just signed with South Korea is a good example of why we need a modern industrial strategy.
Economist Jim Stanford questions why it took so long for the over valuing of the Canadian dollar to end, given the consensus that the drop in its value is a good thing.
In the space of a month, it was announced that two major employers in Southwest Ontario – the Heinz plant in Leamington and the Kellogg's plant in London – will close. In both cases, the news might have been very different if federal and provincial governments had adopted an industrial strategy that made good jobs and protecting the environment a priority.
Danger of Leamington plant closing known since 1990
An article in the National Post this week by Steelworkers leaders Leo Gerard and Ken Neumann showed how lack of a steel strategy or broader industrial strategy is hurting Canada.
Even though Canada has many comparative advantages when it comes to steel production, in 2012 Canada imported $12.2 billion worth of steel and had a trade deficit in steel of $4.6 billion. Many of the countries from which Canada imports steel have industrial strategies that have helped their industry succeed.
Bank of Canada Senior Deputy Governor Tiff Macklem blamed the increase in the Canadian dollar for Canada's loss of competitiveness in a recent speech to the Economic Council of Canada. A second factor was weak productivity growth, which can be traced back to lack of investment in research and development.
A report from the U.S. BlueGreen Alliance is calling for measures to improve energy efficiency in the manufacturing sector. These would help achieve the benefits identified in a 2009 report from McKinsey and Company that found improved energy efficiency would reduce energy consumption by 21% and save U.S.