Manufacturing holds a place as a cornerstone of Canada’s modern economy. The Canadian manufacturing sector is not only the source of 14% of our gross domestic product; it’s the backbone of many other industries and essential services that keep Canada moving.

It’s responsible for producing many of the goods and appliances we use in our homes, the processed food and beverages we consume, our vehicles, and the communication devices we use on a daily basis. Manufacturers in Canada also produce equipment necessary to explore and extract natural resources, produce renewable energy, and distribute other manufactured goods.

Since its inception nearly four hundred years ago, the Canadian manufacturing sector has faced economic challenges, political pressure, and significant technological change. But manufacturing remains a key part of the Canadian economy. And after a period of economic downturn in the early 21st century, many of Canada’s largest manufacturing industries are experiencing growth through innovation and ‘re-shoring’ of some wayward manufacturing firms.

History of Manufacturing in Canada

Manufacturing traces its history in Canada back to the 17th century, long before Confederation. French and English colonists at the time built grist mills to process grain into flour. Later, the need for armaments, stoves, and household utensils saw the growth of iron smelting in the fledgeling nation. By the 1800s, there were over 400 grist mills and many smelting plants in Upper and Lower Canada.

With Confederation in 1867 came geographic expansion westward, fuelling the growth of new manufacturing industries in Canada. Factories to process domestic goods such as lumber and animal products became prominent in the 1870s and 1880s. Once electricity was discovered, Canada harnessed its ample rivers to produce low-cost hydroelectricity, giving manufacturers another boost.

Manufacturing in Canada reached a turning point during the Great War. With industry hampered in Europe and a growing demand for ships, steel, and pulp/paper, Canada’s manufacturing industries stepped up to fill the gaps. By 1920, manufacturing directly employed 600,000 Canadian workers.

While production slowed during the Great Depression, the Second World War gave it a needed shot in the arm. Heavy industries, like vehicles and aircraft, flourished. Over a million Canadians worked in manufacturing in the 1940s. These industries would continue to play a significant role in the manufacturing sector in Canada for decades to come.

The latter half of the 20th century brought winds of change. New trade policies and practices had a big impact on manufacturing, and Canada benefitted from greater production and productivity, along with lower prices to Canadian consumers. However, it also saw increased competition from Japan and Europe (which had rebuilt from the war by the 1960s) as global industrial powers. China, once a lesser player, also emerged as a manufacturing powerhouse. Sectors like clothing, textiles, footwear, and consumer electronics in Canada suffered a near-fatal blow.

The manufacturing sector further declined in the 21st century, with economic and regulatory pressure eliminating one in seven Canadian manufacturing jobs between 2004 and 2008. Nearly all sectors saw a downturn (with the exception of transportation equipment, oil and coal, and electronics). The global financial crisis also took its toll on Canada from 2008 to 2010.

However, manufacturing industries are on the rebound in Canada. As the Chinese economy rises, and wages grow to match it, Canada is once again becoming relatively competitive in terms of labour costs. Land is also less expensive in Canada than it is in China and other industrial powerhouses.

The Future of Canadian Manufacturing

Rapid globalization left an unprecedented impact on manufacturing in Canada. The global economy is more competitive than ever, and though some industries have bowed beneath the weight of growing competition, others have found new opportunities in the global marketplace.

Moving forward, innovation will likely be a key Canadian advantage. Canadian manufacturers have long been leaders in investing in research, looking to bolster and refine their operations using information technologies, automation, nanotechnology, and biotechnology. Canada’s highly educated and skilled workforce will continue to be an asset.

However, the workforce in Canada is also set to shrink as the population ages. To avoid a skill gap, many firms are investing in training, apprenticeships, and programs at post-secondary institutions that teach necessary skills.

Firms must also stay up-to-date with the latest manufacturing processes in order to compete. This is especially important in industries like automotive manufacturing, which is on the cusp of a shift towards electric and self-driving vehicles.