Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please "contact us" to request a format other than those available.
1 The Year 2010 in Review
1.1 Manufacturing sector begins recovery
Manufacturing sales increased 8.9% to $529.8 billion in 2010, after posting a decline of 17.8% in 2009. It was the largest single year advance since 2000 as the sector regained approximately 40% of 2009's decrease. Conversely, the 2009 drop in sales was the largest on record. Constant dollar sales posted an 8.7% gain in 2010, after a 15.6% drop in 2009. This was the first increase in the volume of sales since 2005.
Gains in 2010 were widespread as current dollar sales advanced in 19 of 21 industries representing 95.4% of total Canadian manufacturing. The three largest increases in dollar terms came in the motor vehicle (+29.9%), petroleum and coal product (+15.2%) and primary metal manufacturing (+23.8%) industries.
Sales were strong across the country with advances in 7 of 10 provinces representing 95.0% of total manufacturing. Growth was the greatest in Ontario (+11.2%), Alberta (+11.3%) and Quebec (+4.6%).
The sales growth in 2010 was consistent with gains in a number of related indices. Capacity utilization rates increased by 7.5% compared to 2009, the largest single year gain in more than 20 years. Prices posted a modest 1.0% gain in 2010, and productivity advanced by 4.6%.
On the other hand, the Survey of Employment, Payrolls and Hours reported that employment in manufacturing dropped by 20,000 jobs (-1.4%) to 1.465 million in 2010. Also, the value of the Canadian dollar rose 10.8% versus the US dollar (Canada's largest trading partner),the seventh annual increase in the last eight years.
1.1.1 Industries recovering from 2009 declines
At the national level, 19 of 21 industries reported increased sales in 2010. The strongest sales gains in 2010 were in the transportation equipment, petroleum and coal products, and primary metal manufacturing industries. The chemical, wood products, and food manufacturing industries also posted stronger dollar value increases than most other industries.
Transportation equipment sales increased 14.3% in 2010 to $85.3 billion, on the strength of gains in the motor vehicle industry which reported a 29.9% increase in sales after falling 25.4% in 2009. This increase was also reflected in advances in the motor vehicle body and trailer (+19.6%) and the motor vehicle parts (+13.2%) industries. These advances offset a 12.5% decline in aerospace product and parts production.
In 2009, the Canadian government provided financial support to the automotive industry, as many motor vehicle and motor vehicle parts companies suffered significantly from the general downturn in the industry. Growth in 2010 made up for nearly one-half of 2009's declines.
The growth in sales by transportation equipment manufacturers was generally reflected in the capacity utilization rate which climbed to 78.6% in 2010 from 63.9% in 2009. However, average annual employment declined by 3,000 jobs to 163,000 in 2010, the ninth year of the past ten without employment growth in the transportation sector.
Petroleum and coal products
Sales by producers of petroleum and coal products rose 15.2% in 2010 to $68.1 billion in 2010, regaining more than one-third of 2009's declines. The increase largely stemmed from a 12.3% rise in prices. This was the twelfth year of the past fifteen that sales in this industry increased, on the strength of both price and volume increases. In 2009, sales declined 28.4% reflecting a 27.8% drop in prices.
Sales by primary metal manufacturers advanced 23.8% in 2010 on strength in both price and volume. It was the largest percentage increase in the industry since 1974. This was reflected in gains in both capacity utilization (+6.8%), and employment (+2.8%). Labour disputes in 2009 in the industry were largely resolved in 2010 which also helped contribute to the higher sales. Of particular note was a 27.5% increase in primary metal sales in Quebec.
Primary metal sales had declined 37.0% in 2009, reflecting both a 12.3% drop in prices and lower volumes stemming from falling world-wide demand. The sales increase in 2010 equalled roughly 40% of 2009's declines.
Growth of 6.9% in the chemical manufacturing industry stemmed from a recovery in volume, and price (+4.3%) which led to increased capacity utilization (+6.6%). Sales advances occurred despite the fact that employment in the industry dropped 1.8% in 2010 to 79,200, the fifth consecutive year of employment declines. In 2009, sales had dropped 15.6%.
Wood product sales increased by 12.9% to $18.9 billion in 2010, regaining more than 40% of 2009's decline of 22.4%. Gains were achieved largely on strong volume increases as prices rose 1.5% compared to 2009. Capacity utilization rates also increased by 12.4%. This was the highest annual percentage gain in sales since 1999. Sales had declined every year from 2005 to 2009. Employment in the industry declined for the sixth consecutive year in 2010 to 88,300 (-1.2%).
In 2010, sales in the food manufacturing industry rose by 2.3% to $80.5 billion dollars. This was the third consecutive annual increase in the industry. The advance reflected gains in volume, as prices were unchanged in 2010. The growth also stemmed from a 1.2% increase in the Canadian population. Employment in the industry in 2010 was 221,000, down 1,000 from 2009.
1.1.2 Seven of ten provinces advance
Sales in seven of ten provinces increased in 2010, led in dollar terms by gains in Ontario, Alberta and Quebec. Advances were also posted in New Brunswick, Nova Scotia, and Newfoundland and Labrador, all of which reported double-digit percentage increases. Sales in British Columbia also increased. Only Prince Edward Island, Saskatchewan and Manitoba experienced a drop in sales.
Ontario's 11.2% (+$24.5 billion) increase stemmed from gains in motor vehicle and primary metal industry sales which grew by 31.1% and 21.7% respectively. The gains in 2010 made up for nearly 50% of 2009's declines. Increased sales in motor vehicles and motor vehicle parts in 2010 were the first for these industries in Ontario since 2004. The motor vehicle manufacturing and motor vehicle parts industries make up approximately one-quarter of Ontario's manufacturing sector. They had reported a combined 25.7% drop in sales in 2009 on lower demand across North America for motor vehicles, and significant financial trouble at two manufacturers.
In 2009, primary metal sales had dropped 45.5% in Ontario reflecting lower prices and volumes, and prolonged labour disputes. Higher demand, price increases, and resolution of labour disputes all contributed to the 21.7% rise in Ontario's primary metal sales in 2010.
The $24.5 billion rebound was the largest dollar increase in sales in the province since 1999. Notwithstanding these gains, Ontario's manufacturing sector shed more than 9,000 jobs in 2010 (-1.4%).
Sales in Alberta rose 11.3% in 2010 after falling more than 23% the previous year. Petroleum and coal products sales, which account for more than one-fifth of Alberta's manufacturing sector, grew 19.9%, in large part related to price advances of 12.3%. In addition, machinery manufacturing sales rose 24.4% on volume increases.
A 23.1% fall in total manufacturing sales in the province in 2009 coincided closely with a 27.8% drop in petroleum and coal product prices. The overall recovery in 2010 made up for just over one-third of 2009's downturn.
Sales increased in Quebec by 4.6% in 2010 on the strength of primary metal manufacturing (+27.5%) which grew four times more (in dollar terms) than any other industry. Petroleum and coal product manufacturers reported a 6.8% rise in sales on price increases, while chemical and food manufacturing also posted gains of 11.8% and 2.5% respectively. The growth in these industries was somewhat offset by a 15.5% decline in aerospace product and parts production.
British Columbia's manufacturing sales gains were slightly below the national average in 2010, advancing 8.4%. However, gains were widespread with increases in the wood product (+20.5%), paper (+14.4%) and primary metal manufacturing (+16.1) industries. In all three instances, increases in volume played a significant role in the gains.
In particular, the wood product industry had declined 30.7% in 2009 on the continued weakness of Canadian and US housing starts. Advances in 2010 made up for 46.2% of 2009's losses as Canadian housing starts were up 27.5% and U.S. housing starts were up 5.9% in 2010. The paper manufacturing industry was down more than 18% in 2009, but 2010's increase of 14.4% made up for nearly two-thirds of that drop. These two industries make up approximately 30% of British Columbia's manufacturing sector.
Of the three provinces reporting declines, Saskatchewan posted the largest decrease. Sales dropped 4.0% (-$452 million) in 2010 compared to 2009. Declines were the greatest in the machinery (-14.2%) and fabricated metal product (-18.2%) industries. This was the second consecutive year that sales were down in Saskatchewan following sixteen years of annual growth in manufacturing from 1993 to 2008.
After a difficult year in 2009 Canada's manufacturing sector began a comeback in 2010 with widespread growth and the reversal of many downward trends.
In 2010, growth was reported in 19 of 21 industries. Similarly 7 of 10 provinces advanced in 2010. These trends have continued in the first quarter of 2011 where seasonally adjusted sales have increased 10.1% nationally compared with the first quarter of 2010.