Canadian government report highlights manufacturing productivity gap in Ontario: Strategies to close the divi

A recent report from Ontario’s Ministry of Economic Development, Job Creation, and Trade offers new recommendations on how to close the province’s ongoing productivity gap in manufacturing.

Released on Oct. 9 and authored by the Ministry’s Advanced Manufacturing Council, the report is a response to the 14 per cent decline in output from the Ontario manufacturing sector over the past 20 years, compared to a three per cent rise in the United States, resulting in a productivity gap. During the same period, Ontario’s manufacturing exports increased at a slower rate than those of all provinces except Prince Edward Island, according to the Council, while nearly 300,000 jobs have been lost.

“Ontario needs to return to the business of being a global leader in the manufacturing sector. Those who invest in manufacturing and innovation will prosper. Those who do not will be left behind,” the report read in its introduction. “The results of this growing productivity gap are alarming.

“Fortunately, there are emerging signs of a manufacturing revitalization,” the report continued. “In recent years, the Ontario government has taken meaningful actions to position manufacturers for success in a new economic era.”

The five general areas in which the report made recommendations for addressing the productivity gap: accelerating technology development and adoption; encouraging investment, while boosting exports; building a green economy; investing in jobs and skills for the future; and creating an ongoing role for industry in policy making.

The report also outlined a vision for the province, to be achieved over the next decade – to increase Ontario’s manufacturing sector to new production heights, and to secure a status for manufacturing as the province’s economic engine.

“Ontario must pursue an all-of-government strategy to close the productivity gap with the U.S. by 2035,” the report read.

Following the report’s release, Dennis Darby, president and CEO of Canadian Manufacturers & Exporters (CME), issued a press statement urging the Ontario government to implement the Council’s recommendations as soon as possible. Darby is a member of the Council.

“Ontario is the engine of Canada, and the province has delivered tremendous support for our manufacturing sector, ending the erosion seen over two lost decades – by lowering the cost of doing business and attracting production mandates in strategic supply chains,” said Darby, as quoted in a CME press release obtained by Frasers.

“But our competitors have been more aggressive, and there is no ‘most improved’ medal in the global race for investment. We must continue to raise our game and bring all industrial sectors along.”

Darby also noted that the release of the report had coincided with CME’s celebration of Manufacturing Month and the announcement of the finalists for the fourth annual Ontario Made Awards.

“We thank all CME members who contributed through surveys and roundtables that shaped our involvement in the Council,” said Darby.

The Advanced Manufacturing Council was formed in April of last year to help develop a strategy for advanced manufacturing to address the productivity gap, according to the Ministry. The Council was made up of leaders from across the industry, selected based on their ability to offer expert guidance on key manufacturing challenges and to ensure coverage across all regions of Ontario.

Created from May to Oct. 2023, the Council’s Advanced Manufacturing Strategy was built off the success of Driving Prosperity, Taking Life Sciences to the Next Level, Ontario’s Critical Minerals Strategy, and other past provincial initiatives. The new plan is expected to help reduce the productivity gap and increase the industry’s long-run competitiveness and resilience, partly by positioning it to take advantage of opportunities from global technological and economic transitions that are currently happening.

Other industry representatives on the Council included former Magna International CEO Don Walker (who served as chair), Ontario Mining Association issues and policy manager Aynsley Foss, and Ontario Aerospace Council CEO Natasha Gagnon.