On the heels of the global pandemic, extensive supply chain disruptions and ongoing geopolitical conflict, the U.S. economy is enjoying a resurgence in manufacturing as companies increasingly bring production back home. Canada isn’t seeing the same effects, at least not yet, according to a new report from TD Economics.
In its report, TD said that, since the onset of the pandemic, an estimated 800,000 manufacturing jobs have returned to the U.S. as a trend to “reshoring” production accelerated.
The same trend isn’t evident in Canada, it said.
In fact, the manufacturing sector has declined as a share of overall employment, the report noted — dropping from 9.2% pre-pandemic to 8.8% currently.
That decline reflects long-standing and increasing labour shortages in the manufacturing sector, with the pandemic “accelerating the number of baby boomers who retired and leaving many industries at a net loss from an employment perspective in the post-pandemic world.”
While reshoring has yet to spark a bump in manufacturing sector employment in Canada, there are signs of optimism, TD suggested.
For instance, it reported that “foreign direct investment into Canada’s manufacturing sector has accelerated in the last year-and-a-half, offering some hope that future gains may already be in the pipeline.”
At the same time, Canadian investment in offshore manufacturing has declined, “which may suggest domestic investors are pivoting and instead investing domestically.”
In particular, Canada is well positioned to capitalize on the shift to a low-carbon economy, specifically in the production of electric vehicles, the report said.
“If North America is to become a leading player in the global production of electric vehicles, developing fully integrated supply chains on both [vehicle assembly and battery manufacturing] is an essential first step,” it said.
The federal government’s latest budget included targeted investments in the extraction and processing of critical minerals, which are essential to battery production. Governments have also committed investments to the semiconductor and photonics industries, it noted.
“Given its abundance of natural resources, Canada is well positioned to becoming an integral piece of North America’s battery supply chain, which also has the potential to bring other aspects of high-skilled electronic manufacturing industries to Canadian shores,” the report concluded.