MANUFACTURING INDUSTRIES DEPENDING ON ECONOMY-WIDE UPTURN TO RETURN TO PRE-RECESSION PERFORMANCE

OTTAWA, Feb. 15 /CNW/ - Companies in key Canadian manufacturing sectors are waiting for customers - notably other manufacturers and the construction industry - to fully recover from the recession before consistent profit growth resumes, according to the Winter 2011 edition of the Canadian Industrial Profile Service.

Published by The Conference Board of Canada in collaboration with Business Development Bank of Canada (BDC), the Winter 2011 edition provides a five-year (2011-2015) forecast of production, employment, revenues, costs and profitability for five Canadian industries:

  • Chemicals

  • Computer and Electronic Products

  • Non-Metallic Mineral Products

  • Plastic and Rubber Products

  • Pharmaceuticals

"Many manufacturing industries such as these are deeply integrated into national and global supply chains," said Michael Burt, Associate Director, Industrial Economic Trends. "The recession ended more than a year ago, but the global recovery has been slow. As such, in terms of production, profitability and employment, it will take several years for most of these industries to recover fully from the effects of the recession."

"Canada's manufacturing industries face many challenges. They need to maintain market share and margins and move up the value chain," says Jérôme Nycz, BDC Senior Vice President, Strategy and Corporate Development. "One way for companies to improve operational efficiency and product development is to make innovation an integral part of their strategies. As an example, managers need to promote innovative thinking at all levels of their organizations."

The outlooks for the five industries in the Winter 2011 edition of the Canadian Industrial Profile are:

Chemicals

The rising value of the Canadian dollar against the U.S. dollar and other currencies had taken a toll on the industry's competitiveness even before the recession. Since manufacturers are major users of chemical products, and many have not yet recovered fully from the recession, industry profits are expected to decline to about $2.1 billion in 2011 from almost $3 billion in 2008. Profit growth will remain limited in future years.

Computer and Electronic Products

Hard-hit by the recession when customers slashed spending, the improving global outlook is allowing this trade-dependent industry to recover both production and jobs. Production will increase in 2011 for the first time since 2006, and the industry should recover all of the jobs it lost during the recession by the end of the year. However, fierce international competition is preventing manufacturers from raising prices substantially. As a result, profit gains will be limited; at $1.7 billion, industry profits in 2011 are expected to rise slightly above 2010 levels.

Non-Metallic Mineral Products

Glass and cement are major products of this industry, and demand for them is highly dependent on the construction industry. Construction has a positive outlook overall, with solid increases in non-residential activity expected, but a weaker pace of residential construction will detract from the non-metallic mineral products' short-term outlook. The industry, which has seen major swings in profit levels since 2007, can expect profits to stabilize just below $1.5 billion annually for the next few years.

Plastic and Rubber Products

This industry's outlook is tied to the performance of the construction industry and transportation equipment manufacturers. Industry employment has fallen by almost 50,000 jobs since 2005. For the industry to arrest a decline in sales that began in 2006, a rebound in U.S. vehicle sales is crucial. Profits - projected to be $787 million in 2011 - will not return to 2007 levels until next year.

Pharmaceuticals

The underlying fundamentals for the pharmaceutical industry remain solid because aging populations support demand. Nevertheless, domestic and export sales slowed in 2010, and funding for research and development diminished when access to credit tightened. The industry shed more than 3,600 jobs in the second half of last year. Profit growth will also be limited by fiscal restraint on the part of governments and increased competition on price from emerging markets and generic products. Projected profits of $836 million this year will be higher than in 2010 but only slightly.

The Canadian Industrial Profile Service is part of The Conference Board of Canada's Industrial Economic Trends research. Outlooks for 23 industries are completed each year. The publications are available at www.e-library.ca. BDC clients who wish to receive a copy of the profiles free of charge should contact their BDC account manager.

About BDC

Canada's business development bank, BDC puts entrepreneurs first. With almost 1,900 employees and more than 100 business centres across the country, BDC offers financing, venture capital and consulting services to 29,000 small and medium sized companies. Their success is vital to Canada's economic prosperity. www.bdc.ca

About The Conference Board of Canada

The Conference Board of Canada is the foremost independent, not-for-profit applied research organization in Canada, building leadership capacity for a better Canada by creating and sharing insights on economic trends, public policy issues, and organizational performance.


SOURCE CONFERENCE BOARD OF CANADA

For further information:

Brent Dowdall, Media Relations
The Conference Board of Canada
613- 526-3090, ext. 448
corpcomm@conferenceboard.ca

Geoffrey King
Director, Public Relations, BDC
514-496-4351
geoffrey.king@bdc.ca

Profil de l'entreprise

CONFERENCE BOARD OF CANADA

Renseignements sur cet organisme

BUSINESS DEVELOPMENT BANK OF CANADA

Renseignements sur cet organisme


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.