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Manufacturing employment has fluctuated during the past 30 years

Despite a rising Canadian economy, there was a decline in overall manufacturing employment in the 2001 to 2008 period

From 2001 to 2004, rural and small town areas had stronger growth of manufacturing employment compared to larger urban centres; after 2004, it declined similarly to the decline in larger urban centres

Resource manufacturing employment is larger than "other" manufacturing employment

Employment in resource manufacturing is more important within rural and small town areas, compared to larger urban centres

In rural and small town areas, wood processing provides the most employment within the resource manufacturing group

In three provinces, over one-half of resource manufacturing employment is found in rural and small town areas

Rural and small town manufacturing employment is relatively dependent on resource manufacturing

Resource manufacturing contributed less than 10% to the total rural and small town employment in most provinces, in 2008

Summary

Appendix tables

Manufacturing employment has fluctuated during the past 30 years

Since 1976 in Canada, the level of employment in manufacturing reached historically high levels in 1980 and 1981 (2.1 million workers), in 1989 (2.1 million workers) and again in 2004 (2.3 million workers) (Figure 1). But manufacturing employment, as a percent of total employment, has declined. At each historically high level, the share of the total workforce that was employed in manufacturing was lower (1981: 19%; 1989: 17%; 2004:14%). In 2008, manufacturing employment had declined to 2.0 million workers – representing 12% of Canada's workforce (Bernard, 2009).

Rural and small town (RST) areas have been losing manufacturing jobs since 2004. This mirrors the pattern of decline in larger urban centres (LUC) over the same time period.

Figure 1 In 2008, 386,000 workers were employed in manufacturing in rural and small town areas, Canada

Generally, however, when overall manufacturing employment is increasing, it increases faster in RST areas and when manufacturing employment is declining, it declines more slowly in RST areas. Over time, the share of Canada's total manufacturing employment located in RST areas has been increasing  over   time (Figure 2). In  the  sense that RST areas are increasing their share of Canada's manufacturing employment relative to LUCs, RST areas are therefore 'competitive' in terms of employment in manufacturing jobs, relative to LUCs¹.

Figure 2 Rural and small town Canada has been gaining manufacturing employment, relative to Canada as a whole

Despite a rising Canadian economy, there was a decline in overall manufacturing employment in the 2001 to 2008 period

In Canada between 2001 and 2008, a strong economy emerged with an employment increase of 15% – representing a 2.2 million employment increase over this period. This growth occurred during a period of rising commodity prices, increasing energy prices and expanding domestic demand for goods and housing in a milieu of historically low levels of inflation and interest rates and government current account surpluses.

However, manufacturing did not keep pace with this employment growth. During the mid to late 1990s, manufacturing was the major contributor to increasing employment. But this ended in 2001 when the high-tech melt down led to major lay-offs from which the high-tech manufacturing sector never recovered (Ferrao, 2006).

Also, at this time, there was the attack on the World Trade Center in New York City and a USA recession when the economy contracted and factories ran below capacity (Bowlby, 2002).

The years 2002 and 2004 were the only two years during the 2001 to 2008 period when total manufacturing in Canada saw employment gains. During 2002, Canada's economy strengthened further as housing and exports picked up considerably. Manufacturing had the largest employment gains (5.6%) of all industries, mainly seen in food and machinery (Bowlby, 2003).

Canada also saw a manufacturing employment gain in 2004, albeit a slight gain of 0.7%. Manufacturing exports increased despite a continuing rise in the Canadian dollar that made Canadian goods more expensive for American buyers. The strongest growth in manufacturing exports was for steel and wood products, the latter due largely to USA housing construction demand. Overall, in 2004, Canada saw economic growth of 5.1% which was the largest rate of growth in 27 years (Cross, 2005).

However, by 2005, the increasing value of the Canadian dollar caught up to manufacturing and factories trimmed their workforce to remain competitive. This was a significant period of manufacturing employment contraction with a 174,400 employment decline over the 2004 to 2006 period. These two years represented the two largest annual average declines in manufacturing employment since 1992, a year in the midst of a recession (Kowaluk, 2006).

After 2005, overall manufacturing employment declined. By 2008, manufacturing employment was 12% lower compared to 2001 (1.97 million compared to 2.22 million). From the employment peak year of 2004 (with 2.29 million employed), manufacturing employment had declined by 14%.

This pattern of change in manufacturing employment occurred in the context of an overall employment increase of 15% for all industries in Canada between 2001 and 2008. The employment increase for all sectors excluding manufacturing was 19% from 2001 to 2008.

From 2001 to 2004, rural and small town areas had stronger growth of manufacturing employment compared to larger urban centres; after 2004, it declined similarly to the decline in larger urban centres

Between 2001 and 2008, manufacturing employment as a percent of total employment in Canada dropped from 15% to less than 12%² (Figure 3) – due both to an overall increase in employment levels and a 12% decline in manufacturing employment. RST areas saw their manufacturing employment decline as a share of their total employment from 15% to 13%. Similar to the situation at the Canada level, this decline in share was due to an overall increase in employment in all sectors, but also a decline (-4%) in the number employed in manufacturing.

However, between these years, RST areas had greater employment variability. In 2004, RST manufacturing employment peaked with a 10% increase over the 2001 level. LUC manufacturing employment also peaked in 2004 but it was only 1% higher than the 2001 level.

Figure 3 Rural and small town areas had a greater share of their total employment in manufacturing employment, 2001 to 2008

From 2004 to 2008, RST manufacturing employment had a drop of 14%, equal to the decline in LUCs over this period.

Despite the variability in manufacturing employment, RST areas maintained a slightly increasing share of Canada's total manufacturing employment – approaching 20% in 2008³ (Figure 2 and Table 1).

Table 1 Within rural and small town areas, resource manufacturing employment is larger than "other" manufacturing employment

Resource manufacturing employment is larger than "other" manufacturing employment

Using the concept of a value chain for each resource sector, we assigned manufacturing sub-sectors to the value chain of each resource sector, as follows:

• Food processing (as part of the agricultural and fishing value chain);
• Wood processing (as part of the forestry value chain);
• Petroleum processing (as part of the oil and gas value chain); and
• Metal processing (as part of the mining value chain).

As a group, they are referred to as resource manufacturing and all other manufacturing is referred to as "other" manufacturing (see Appendix 1 for details).

In 2001 in Canada, both resource manufacturing and "other" manufacturing were almost evenly split in terms of their employment levels, each with about 1.1 million workers (Figure 4 and Table 1). By 2004, resource manufacturing employment increased by 92,000 or 8%, but by 2008, employment had decreased by 66,000 (-6%) returning to an employment level of about 1.1 million.

"Other" manufacturing had a less variable and steady employment decline of 205,000 (-18%) from 2002 to 2008. By 2008, Canadian employment in "other" manufacturing had declined to 905,000. Thus, by 2008, resource manufacturing accounted for slightly more than half of all manufacturing jobs at the Canada level (54%).

Employment in resource manufacturing is more important within rural and small town areas, compared to larger urban centres

The net losses in Canadian resource manufacturing employment mainly occurred in LUCs, rather than in RST areas (Figure 4 and Table 1).

In 2001, the level of resource manufacturing employment was 275,000 in RST areas. This was followed by an employment gain of 36,000 (13%) to a 311,000 employment peak in 2004. The following four years saw a 45,000 employment loss (-14%). By 2008, resource manufacturing employment in RST areas was 266,000.

Resource manufacturing followed a similar employment pattern in LUCs with an employment level of 857,000 in 2001, a 2004 employment peak 914,000 jobs (or a gain of 7%) followed by a four year employment loss of 114,100 but with a slightly smaller rate of decline (-12%), compared to RST areas. By 2008, resource manufacturing employment was 800,000 in larger urban centres.

Therefore, both RST areas and larger urban centres gained and lost resource manufacturing employment and by 2008, there was a net loss of resource manufacturing employment for both. But the rate of decline over the study period was relatively less in RST areas (-3%⁴) compared to the decline in larger urban centres (-7%).

In RST areas, the employment in "other" manufacturing ranged from a 2003 peak of 136,000 to a low in 2008 of 120,000 which was a decline of 12%⁵. However, for LUCs, employment in "other" manufacturing decreased by 20%, which corresponds to an employment decline of 193,000 since 2002. 

In RST areas, resource manufacturing was relatively more important than "other" manufacturing (Figure 4); in fact, in 2008, resource manufacturing represented over two-thirds of total RST manufacturing employment. This share was essentially maintained during the study period. Resource manufacturing also represented 9% of rural employment in all sectors in 2008, a drop of 2 percentage points since 2004 (Appendix 2A). Employment in "other" manufacturing represented 4% of the total rural employment and essentially remained unchanged throughout the study period.

In 2001 in LUCs, resource manufacturing employment represented 47% of their total manufacturing employment. By 2008, it had increased to 50% of manufacturing employment in LUCs. In regard to total employment in larger urban centres, both resource manufacturing and "other" manufacturing employment marginally lost employment share (1 to 2 percentage points). By 2008, resource manufacturing and "other" manufacturing provided an equal share (6%) of total LUC employment.

To summarize, the contraction of the number employed over the 2001 to 2008 period in resource manufacturing in RST areas was small (-3%) (this is statistically insignificant) compared to the decline in LUCs (-7%). Within RST areas over this period, resource manufacturing employment provided more jobs than "other" manufacturing. In 2008, resource manufacturing represented 69% of all manufacturing employment and 9% of total employment within RST areas. Within larger urban areas, resource manufacturing employment was relatively less important. In 2006, it represented half of those employed in manufacturing and 6% of overall employment in LUCs.

Figure 4 Employment in resource manufacturing peaked in 2004 in Canada

In rural and small town areas, wood processing provides the most employment within the resource manufacturing group

In 2008 in RST areas, the level of employment in wood processing (114,000) represented 43% of RST resource manufacturing employment (Figure 5 and Appendix 2.A). Food processing accounted for 26% (69,000 employed) and metal processing another 23% (with 61,000 employed) of resource manufacturing jobs. Lastly, 8% (22,000) of the employment in resource manufacturing was contributed by petroleum processing.

Figure 5 In rural and small town areas in 2008, wood processing provided 43% of resource manufacturing employment

From 2001 to 2008, in RST areas, when we look across the four resource manufacturing groups, only metal processing had an increasing employment trend⁶ (Appendix 2.A). Nationally and in LUCs, only food processing had a positive employment trend.

In three provinces, over one-half of resource manufacturing employment is found in rural and small town areas

Across Canada as a whole, 25% of resource manufacturing employment was found in RST areas in 2008 (Figure 6). This is a slightly higher intensity than the RST share of Canada's total employment (21%). However, there was considerable variation across the provinces

Atlantic Canada has a particularly high share of their resource manufacturing employment located in their RST areas. Newfoundland and Labrador (66%), New Brunswick (58%) and Prince Edward Island (53%) had more than one-half of their resource manufacturing employment in RST areas.

Only three provinces had a lower share of resource sector jobs in RST areas compared to Canada as a whole – Alberta (20%), Ontario (16%) and British Columbia (15%).

In absolute numbers, Quebec had the largest number of resource manufacturing workers in RST areas (104,000 workers) (Appendix Table 2F) followed by Ontario (66,000 workers) (Appendix Table 2G).

Figure 6 In Newfoundland and Labrador, 68% of resource manufacturing employment was located in rural and small town areas, 2008

Rural and small town manufacturing employment is relatively dependent on resource manufacturing

Above, Figure 6 showed that, within some provinces, a relatively small share of resource manufacturing is located in RST areas. However, within RST areas in Canada, resource manufacturing contributes more than two-thirds (69%) of the total manufacturing employment (Figure 7).

With the RST area of each province, resource manufacturing accounted for more than one-half of all manufacturing employment, ranging from a high of 87% in RST Newfoundland and Labrador to a low of 53% in the RST areas of Saskatchewan.

Figure 7 In the rural and small town areas of three provinces, over 80% of manufacturing employment was in resource manufacturing, 2008

Moreover, resource manufacturing employment is also important in LUCs. In 2008, 50% of manufacturing employment in LUCs was in resource manufacturing. Nine provinces had over 50% of larger urban manufacturing employment involved in resource manufacturing – ranging from 82% in the LUCs of New Brunswick (Appendix Table 2E) to 52% in the LUCs of Quebec (Appendix Table 2F). Only Ontario had a minority (44%) in their LUCs (Appendix Table 2G).

Resource manufacturing contributed less than 10% to the total rural and small town employment in most provinces, in 2008

In regard to the total employment in RST areas, resource manufacturing is most important in Quebec. In this province, resource manufacturing contributed 14% of the total RST employment (Figure 8). New Brunswick followed with an 11% employment contribution from resource manufacturing. All the other provinces' resource manufacturing employment contributions in RST areas were below the Canada average of 9%. In Saskatchewan, 2% of RST employment was in resource manufacturing.

Figure 8 In rural and small town Quebec, resource manufacturing contributed 14% of total employment, 2008

Summary

Over the last 30 years, the highest peak in manufacturing employment in Canada occurred in 2004. This sector has been declining since then in both rural and small town areas and in larger urban centres. In recent decades, rural and small town manufacturing has grown faster than or declined slower than manufacturing employment in larger urban centres. Over time, rural and small town areas have increased their share of Canada's manufacturing employment.

Within rural and small town areas in 2008, manufacturing employment represented 13% of total employment. Within the rural and small town areas of each province, the range was from 19% in Quebec to 5% in Saskatchewan.

In order to learn more about the manufacturing activities in rural and small town areas with an emphasis on resource sector manufacturing, two groups of manufacturing sub-sectors were created: resource sector manufacturing and "other" manufacturing. Resource sector manufacturing was created by combining the sub-sectors in four sets of value chains: food processing (as part of the agricultural and fishing value chain); wood processing (as part of the forestry value chain); petroleum processing (as part of the oil and gas value chain) and metal processing (as part of the mining value chain). "Other" manufacturing includes the remaining manufacturing sub-sectors.

Employment in resource manufacturing is important to rural and small town areas. Directly linked to natural resources, rural and small town areas have a locational advantage and are often home to the next step in the processing of the natural resources.

In 2008, among manufacturing employment, resource sector manufacturing was a prominent employer in Canada's rural and small town areas, where it contributed more than two-thirds (69%) of Canada's total manufacturing employment in rural and small town areas.

Within rural and small town areas of each province, from 50% to 92% of total manufacturing employment was comprised of resource manufacturing. 

As a percent of total employment in rural and small town areas, resource sector manufacturing employment contributed 9% of total employment at the Canada level. This ranged from 14% in Quebec to 2% of total employment in the rural and small town areas in Saskatchewan.

Over the 2001 to 2008 period in Canada, resource sector manufacturing declined more slowly than "other" manufacturing. During the same time, resource sector manufacturing declined more slowly in rural and small town areas compared to resource manufacturing employment in larger urban centres.

Thus, resource sector manufacturing employment has continued to provide a large share of total manufacturing in rural and small town areas. In recent years, resource sector manufacturing employment has become a higher share of total manufacturing employment across Canada, and to a greater degree in rural and small town areas compared to larger urban centres.

However, while rural and small town areas are not losing their employment in resource manufacturing as fast as larger urban centres, they are nevertheless still reporting an employment decline.

Resource manufacturers tend to be relatively close to the resources they process. However, in our globalized economy, this may not economically sustain communities. Other considerations include: modernization and innovation to decrease cost and to diversify the production line; and the enhancement of their urban and international markets (Freshwater 2003). Given that a dependency on resource manufacturing may always be a reality for many rural communities, many of the present challenges driving the decline in resource manufacturing employment may be on-going.

Appendix tables

Appendix table 1 List of industrial sectors according to the North American Industry Classification System, 2007

Appendix table 2.A Employment in manufacturing in the resource sector value chain, Canada, 2001 to 2008

Appendix table 2.B Employment in manufacturing in the resource sector value chain, Newfoundland and Labrador, 2001 to 2008

Appendix table 2.C Employment in manufacturing in the resource sector value chain, Prince Edward Island, 2001 to 2008

Appendix table 2.D Employment in manufacturing in the resource sector value chain, Nova Scotia, 2001 to 2008

Appendix table 2.E Employment in manufacturing in the resource sector value chain, New Brunswick, 2001 to 2008

Appendix table 2.F Employment in manufacturing in the resource sector value chain, Quebec, 2001 to 2008

Appendix table 2.G Employment in manufacturing in the resource sector value chain, Ontario, 2001 to 2008

Appendix table 2.H Employment in manufacturing in the resource sector value chain, Manitoba, 2001 to 2008

Appendix table 2.I Employment in manufacturing in the resource sector value chain, Saskatchewan, 2001 to 2008

Appendix table 2.J Employment in manufacturing in the resource sector value chain, Alberta, 2001 to 2008

Appendix table 2.K Employment in manufacturing in the resource sector value chain, British Columbia, 2001 to 2008

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Notes

1. For the 2001 to 2008 period, the simple regression line (Figure 2) indicates that if the year advances by one year (reported as "x" in the equation), the percent of Canada's manufacturing employment located in RST areas has increased by 0.1547 percentage points. The trend line, when extended back to 1976, starts at 14.47 percentage points. The R2 indicates that 48.75% of the variation in the data is "explained" by the "x" (i.e. by the passage of time), which implies a relatively strong relationship. Thus, 51.25% of the variation in the data may be attributed to other factors.
2. For more information on manufacturing employment trends in Canada, see Bernard 2009.
3. The data for 2001 to 2008 are presented using the 2001 delineation of rural and small town areas (Box 2).
4. This loss was statistically insignificant using a coefficient of variation of 15%.
5. While the 2003 to 2008 percent decrease is statistically significant, the year-to-year decreases are not.
6. Only trends can be referred to here for RST as the change from 2001 to 2008 and the year-over-year change for most resource manufacturing sub-sectors is not statistically significant with a CV of 15%.