Everything you wanted to know about
Canada!
Manufacturing
Manufacturing
is a key component of the Canadian economy, employing 15.3 percent of the
country’s workforce and accounting for 19 percent of the GDP and 57.5 percent
of goods exported. Manufacturing supports many other sectors of the economy by
purchasing their outputs and supplying them with products. Manufacturing is
highly sensitive to broader economic trends, especially changes in the level of
consumer spending. For example, manufacturing output shrank and the workforce
declined by 400,000 jobs or 20 percent during the recession of the early 1990s.
Since then output has rebounded, but the number of jobs has grown more slowly.
Copyright 2007 © All rights reserved. Designed By: Mays Domat
Early manufacturing in Canada, before the mid-19th century, was localized and was in support of resource production. Boats were built in Atlantic Canada, for example, and farm machinery in Southern Ontario. Modern industrialization, in the form of mass production, began on a small scale in mid-19th-century Montréal and gathered momentum in the 1870s. Canadian manufacturing was spurred by rapidly increasing resource production, the introduction of electrical generating capacity, population expansion, and the two world wars. The greatest growth in facilities and output, however, occurred after World War II (1939-1945) as consumer spending increased and most countries reduced their tariffs.
In the late 1990s Canada’s manufacturing sector was in the midst of profound technological change. Investment in machinery and equipment was increasing: Some C$14 billion was invested in 1995, C$3.6 billion in the paper industry alone. This was a marked improvement over the previous few years and was seen as a further indicator of economic recovery. The introduction of new, more advanced machines was expected to improve productivity and reduce the number of workers in the manufacturing sector. The tradeoffs between international competitiveness and employment were the cause of much concern, especially for the labor movement. The impact of the North American Free Trade Agreement (NAFTA), which eliminated tariffs among Canada, the United States, and Mexico as of 1994, was also a matter of much debate. Many Canadians believed that tariff-free access to a larger market was a positive development, while others worried that it might cause American investment, and the branch plants associated with it, to shift southward to Mexico, where wages and other production costs were lower.
Transportation Equipment
Canada’s chief manufacturing industry is transportation equipment, especially automobiles and auto parts. Subsidiaries of the American big three auto companies, General Motors, Ford, and Chrysler, are Canada’s largest manufacturers; in the 1980s Toyota, Honda, and Hyundai also established branch plants. This manufacturing sector generated C$57 billion in exports in 1995 (23 percent of goods exported). Nearly all transportation equipment is produced in southern Ontario and southern Québec.
The transportation equipment industry has evolved toward a single continental market. This is due primarily to Canada’s smaller market, which makes Canadian branch plants inefficient. In the 1960s the governments of Canada and the United States, together with executives of the automobile industry, negotiated the Canada-United States Automotive Products Agreement, which removed Canadian import tariffs as long as automakers produced as many cars in Canada as they sold in Canada. The result has been a continental integration of auto production, where particular models are built in local plants and distributed throughout North America. For example, Chrysler minivans are assembled in Windsor, Ontario, for the entire North American market, while there is no production in Canada for several other Chrysler models. This integration has led to a more efficient industry but has also meant that events that occur in one part of the North American auto industry affect the entire continent. A protracted strike at a parts plant in Ontario, for example, can cause the closure of assembly plants in Ohio, and vice versa.
Other Manufacturing
Other significant manufacturing sectors, in declining order of output, are: food processing, paper products, chemical products, primary metal processing, petroleum refining, electrical and electronic products, metal fabricating, and wood processing. Many of these manufactures rely on Canada’s vigorous resource industries. Unlike the motor vehicles and other consumer products industries, which are highly localized in the heartland, resource processing is much more widely distributed across the country.
American Investment
American involvement in Canadian manufacturing began in the late 19th century, notably in the 1880s after the Canadian government imposed higher tariffs. American-owned firms built branch plants to serve the Canadian market and thereby avoid the tariffs involved in exporting their products to Canada. This process accelerated in the 20th century. American investment in Canada reached a peak in 1970, at 47 percent of all investment (when total foreign investment was 61 percent). It declined to 34 percent in 1986 and has increased slightly since then. The level of American ownership is highest in the chemical and transportation products industries. In 1974 concern over foreign ownership prompted the Liberal government in Ottawa to establish the Foreign Investment Review Agency (FIRA), which was designed to scrutinize investment from abroad and ensure that it benefited Canada. FIRA never turned down an application, but did require modifications in many cases. The Conservative government that followed the Liberals was more supportive of foreign investment and signaled its views by changing the name of FIRA in 1985 to Investment Canada.
Energy
The production of electrical energy employs 0.6 percent of the country’s workforce, and accounts for 2.6 percent of the GDP and about 1 percent of goods exported. In 1995 Canada’s annual output of electricity was 533 billion kilowatt hours, of which 55 percent was provided by hydroelectric plants, 14 percent by nuclear power plants, and 30 percent by conventional thermal plants using fossil fuels.
Hydroelectric Power
Endowed with many fast-flowing rivers, Canada is the world’s leading producer of hydroelectricity, the electrical energy produced by falling water. More than 85 percent of the country’s hydroelectric output is generated in the provinces of Québec, Ontario, Newfoundland, and British Columbia. The largest hydroelectric complex in Canada or the United States is on La Grande Rivière, near James Bay in Québec. It has three hydroelectric stations, and is owned and operated by the public utility Hydro-Québec. Its total capacity is 10.3 million kilowatts. The powerhouses on La Grande Rivière constitute the first phase of a larger planned hydroelectric project (see James Bay Project). Churchill Falls, in the Labrador region of Newfoundland, is another major Canadian hydroelectric facility.
Nuclear Power
Since the early 1950s Canada has sought to use its abundant resources of natural uranium to generate electricity through nuclear reactions. The first nuclear power plant, a demonstration station at Rolphton, Ontario, was completed in 1962. A large nuclear plant was opened at Pickering, Ontario, in the early 1970s. In addition, a large complex of nuclear facilities on the Bruce Peninsula, in Ontario, owned and operated by the public utility Ontario Hydro, was completed in the early 1990s. In 1994 Canada had 22 nuclear facilities consuming 1.8 million kg (3.97 million lb) of uranium fuel; 90 percent of nuclear generation occurs in Ontario. The proper disposal of spent fuel is a research priority in Canada.
It is anticipated that nuclear power will decline in significance in Canada. However, a public corporation, Atomic Energy of Canada Limited, at Ottawa’s request is pursuing an export market for Canadian-designed nuclear reactors. One of these was brought into production in Romania in 1996, and three are under construction in South Korea. A proposed sale of nuclear reactors to China has raised public concern about environmental consequences and the proliferation of nuclear weapons capability among nations.
Thermal Power
Half of Canada’s thermoelectric energy—electricity produced by heat or burning—is generated in Alberta, which has extensive coal, oil, and natural gas resources. Another 20 percent is generated in Ontario, mainly using coal imported from the United States. The remainder is principally generated in Saskatchewan and British Columbia, using local coal supplies. Coal accounts for about half the fuel used in Canadian thermoelectric plants. Due to environmental concerns, most plants are introducing methods to reduce pollution. The chief pollution problem has been acid rain, in which airborne byproducts of the burning combine with moisture in the air to form toxic sulfuric and nitric acids, which then rain down on and destroy vegetation.
