OTTAWA, May 18 /CNW/ - Despite a strong dollar, manufacturing industries
covered in the Spring 2011 edition of the Canadian Industrial Profile- such as electrical equipment, fabricated metals, and machinery - can
expect continued growth in production and profits this year.
Published by The Conference Board of Canada in association with Business
Development Bank of Canada, the Canadian Industrial service provides a
five-year (2011-2015) production, revenue, cost and profitability
forecast. In addition to Electrical Equipment, Fabricated Metal
Products, and Machinery Manufacturing, the Spring 2011 outlook has forecasts for Oil and Gas Support Activities, Professional
Services and Textiles and Apparel Manufacturing.
"The reasons for optimism in these industries include a rebound in
demand in the construction and broader manufacturing sectors, as well
as a revival in American, European and Asian export markets," said
Michael Burt, Associate Director, Industrial Economic Trends. "On the
downside, the strong dollar poses a threat to industries that depend on
exports for growth. This is especially true in some of the
manufacturing industries covered in the Spring 2011 outlook, which are
largely composed of smaller firms that need to continually invest to
"Corporate profits are also rising and this signals an increased
willingness by businesses to spend on professional services," said Jérôme Nycz, Senior Vice President, Strategy and Corporate
development. "The strongest performing segment of this industry is
likely to be architectural and engineering services, as the pace of
non-residential construction activity accelerates and high commodity
prices drive investments. Information like this should help businesses
with their planning."
The electrical equipment manufacturing industry - which produces
products ranging from lighting equipment to electric motors and
batteries - can expect profits to more than quadruple this year, to
$223 million. Rising non-residential construction activity and strong
telecom investments, which support demand for wiring are supporting the
industry's recovery. However, despite this rebound, profits will remain
well below their pre-recession peak of $577 million in 2007.
The industry is currently experiencing double digit growth in sales,
with improving vehicle production and rising investment in the oil
patch being key contributors to the growth. However, a more modest 6.9
per cent increase in profitability is forecast, bringing profit levels
to $1.4 billion in 2011. Surging metal prices are challenging the
industry's bottom line.
The ongoing global economic recovery will boost export demand and
benefit domestic sales of machinery and equipment. Higher commodity
prices will increase demand for machinery in the resources sector and
create incentives for the industry's customers to invest in
fuel-efficient equipment. At the same time, the strong dollar will
affect the price of Canadian products in global markets, especially in
an industry with fierce international competitors. Nevertheless, the
industry is expected to see almost a 40 per cent increase in profits
this year, to $920 million - up from just $261 million three years ago.
Oil and Gas Support Activity
Industry activity is highly dependent on energy prices, and although
weak gas prices are detracting from growth, high oil prices are
encouraging new drilling activity. As well, the unconventional drilling
techniques that are increasingly in use are more intensive users of
industry services. The net result is that the industry is experiencing
strong growth, and industry profits are forecast to increase - from a
low of $45 million in 2009 - to $225 million in 2011.
The industry covers a wide range of services, from legal and accounting,
to waste management. The architectural and engineering segment of the
industry is expected to perform particularly well in the short term,
thanks to increasing construction and mining activity. The industry
posted a 13 per cent increase in profitability last year and profits
are forecast to slip by a modest four per cent this year to $8.4
Textiles and Apparel
After two years of losses, the textiles and apparel industry is expected
to post a modest profit of $13 million in 2011. Production, which grew
last year for the first time since 2000, will increase again in 2011.
Canadian demand has been rising since 2009, and exports are expected to
increase for the second consecutive year.
The Canadian Industrial Profile Service is part of The Conference Board
of Canada's Industrial Economic Trends research. In all, 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
can contact their BDC account manager.
BDC is Canada's business development bank. From more than 100 offices
across the country, BDC promotes entrepreneurship by providing highly
tailored financing, venture capital and consulting services to
entrepreneurs. For more information, visit www.bdc.ca.
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Brent Dowdall, Media Relations
The Conference Board of Canada
Tel.: 613- 526-3090 ext. 448
Geoffrey King, Director, Public Relations
Business Development Bank of Canada
Tel : 514-496-4351,
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