Ontario manufacturing has rebounded from the pandemic but remains vulnerable to U.S. protectionist measures and competition subsidies says CME in asking the province to protect the sector's gains. PHOTO by Pexels.
Canadian Manufacturers & Exporters (CME) is calling for Ontario’s Ministry of Finance to use its 2022 Fiscal Economic Statement to protect recent manufacturing investments and strengthen the province’s competitive position.
“As we recovered from the pandemic lockdowns and the instability of border blockades, Ontario has begun to reap the benefits of its commitment to our sector, for example the $16 billion in combined investments for the automotive supply chain,” said Dennis Darby, President and CEO of CME. “When government puts the right incentives in place and works with industry, we answer the call.”
Despite those gains, Darby cautioned that the work to maintain them remains. “Ontario’s manufacturing sector is deeply integrated with the United States and is vulnerable to an expected economic downturn, as well as aggressive policies to attract Canadian manufacturers with protectionist procurement, property tax abatements and nearly half a trillion dollars in clean tech investment subsidies in recent legislation, especially the Inflation Reduction Act.”
Another top concern is the availability of labour. Released last month, CME’s 2022 Labour and Skills Survey highlighted the persistent impact of shortages. Over the past year, 34% of Ontario manufacturers have lost or turned down contracts and postponed or cancelled investment projects because of a lack of workers, costing the Ontario economy almost $4 billion. “Efforts to promote skilled trades to young Ontarians must connect with manufacturing employers to ensure they are not left behind in the global race for talent and process automation,” concluded Darby.
To lay a foundation for an advanced manufacturing strategy, CME says Ontario should act on three urgent priorities:
1) Get Manufacturers the Workers We Need
- Introduce a new tax credit to support employer-led training and the shift to automation (covering 50% of expenditures).
- Deepen youth skilled trades outreach with financial support for workplace school visits and an online single window matching prospective apprentices with manufacturing employers.
- Introduce Regional Industry Councils to bring together employers, government, and educators to coordinate skills training and education programs based on regional needs.
- Consult employers on remaining COVID-19 era measures, such as the Infectious Disease Emergency Leave (IDEL) with consideration of the impact on absenteeism.
2) Further Reduce the Cost of Doing Business
- Build on the Industrial Conservation Initiative (ICI) to mitigate escalating hourly electricity charges (up 340% since 2020) in support of investment and the energy transition in manufacturing.
- Commit to further reducing regulatory red tape by $700M in the next four years – a 20% increase over the $576M reduction achieved in the last mandate.
- Eliminate the Business Education component of property tax and phase-in annual assessments for greater predictability.
3) Champion Ontario Manufacturing to Build Investment
- Expand the Ontario Made program by making it permanent, increase funding to broaden its reach, and link to provincial procurement.
- Leverage Ontario’s $29 billion in annual purchasing power by implementing the Building Ontario Businesses Initiative (BOBi).
- Extend the Ontario Job Creation Investment Incentive at the current rate for three more years, allowing companies to continue investing in productivity-enhancing machinery, equipment, software, and technology.
- Allow manufacturers to access proceeds from the new Emissions Performance Standards (EPS) to fund the adoption of clean technology and reduce greenhouse gases (GHG) in their business, supporting Ontario’s economic prosperity and environmental performance.