Canada’s 2024 manufacturing outlook appears bright

Have you caught yourself saying this recently? I’d buy a new machine if I could find someone to run it.

If you have, you’re not alone.

A startling revelation from a survey by Canadian Manufacturers & Exporters (CME) showed that one-third of Canadian manufacturers identified the skilled labour shortage as one of the biggest barriers to new technology adoption.

Another recent report backs this up. The Statistics Canada “Labour Force Survey” stated that manufacturing companies would indeed hire more workers if qualified candidates could be found in the nation’s labour pool.

The sector’s workforce is also aging out. That’s a problem.

It puts more pressure on companies to find skilled labour, increase investment in training current staff, and pay higher wages to retain workers.

And this is all happening when the industry is pretty healthy and happy. In fact, the same Stats Canada report indicated that we should expect “moderately favourable” conditions through the end of 2024.

While “moderately favourable” may actually be a humble Canadianism that really means “doing great,” we still have some hurdles to clear. A few key trends will affect the near-term outlook of the metal manufacturing sector. In my opinion, they fall into three broad categories.

1. Big Spending. Large investments in automotive vehicle and parts manufacturing, EV battery production, and aerospace manufacturing will create demand for locally made parts and assemblies. This is the Field of Dreams theory.

Investments by GM, Honda Canada, Stellantis, and others to produce electric vehicles and parts is a boon for manufacturers all along the Canadian supply chain. Also, additional investment in aerospace, mining, and infrastructure will do nothing but help strengthen the manufacturing space.

2. Big Questions. Uncertainty in future economic conditions, high inflation, and a high interest rate still threatens near-term growth.

Recent projections of an economic slowdown have affected consumer demand and sparked whispers of recession. Ongoing high interest rates caused by the Bank of Canada's strict monetary policies are designed to fight inflation but continue to be unpopular.

3. Big Shortages. Raw material shortages and a skilled labour shortage are chokepoints to growth, as is a lack of commercial/industrial space in many cities across the country.

However, the last point may be easing soon. According to commercial real estate services and investment firm CBRE, 11 million sq. ft. of new builds were delivered in Q3 alone, putting Canada on track for a record-breaking year of 43.8 million sq. ft. of newly built industrial space.

It all comes back to the workforce. If you build it, they will come … hopefully.