The engine of Canada’s manufacturing growth – Ontario – is 20 years past its prime with the province’s manufacturing GDP peaking two decades ago. Although there has been considerable effort over the past two years, particularly with automotive manufacturing investments, to recapture the province’s manufacturing glory, “there is a lot of lost time to make up for”, as Canadian Manufacturers & Exporters (CME) points out.
What policies are needed to reinvigorate manufacturing in Ontario is the subject of a new report published by Canadian Manufacturers & Exporters (CME), entitled Manufacturing Ontario’s Future: Leveraging an Advanced Manufacturing Strategy for Growth and Prosperity. The report includes specific recommendations on how to get there.
Shopmetaltech.com is outlining CME’s insights and recommendations in three separate instalments, closely examining each of the three pillars of investing in Ontario-made growth, expanding and upskilling the manufacturing workforce, and lowering carbon while lowering costs.
Our initial report covered the first pillar: Investing in Ontario-made growth. This report deals with the second pillar: Upskilling the manufacturing workforce.
Despite the Government of Ontario showing an “exceptional willingness” to partner with industry to offer work relevant training through the Skills Development Fund (SDF), and other initiatives, CME says labour and skills shortages remain one of the manufacturing sector’s most pressing challenges.
The issue was worsened by the pandemic, leading to record-high job vacancies in the spring of 2022. Although the number of unfilled positions in the manufacturing sector has been trending down since then, the unemployment rate still is extremely low and wage pressures are high.
The manufacturing workforce is aging rapidly—27.7 per cent of workers were aged 55 years and over in 2023 – implying that companies will continue to struggle to find workers in the years ahead as an estimated 18,500 Ontario manufacturing workers retire each year, CME points out in its report.
As employers prepare to staff large scale manufacturing projects planned in several regions of Ontario , the Ontario government will need to double down on its willingness to partner with industry to provide relevant training if the province is to secure the benefits of the manufacturing renaissance it wants to secure, CME states.
Towards that end, CME’s report provides the following solutions:
GET AHEAD OF SHORTAGES WITH A REGIONAL APPROACH TO SKILLS PLANNING
The transition to advanced manufacturing requires a massive shift in the way people are trained. Ontario should use its strength in technology in a manufacturing context and ensure educational institutions offer training adapted to the needs of the new economy, CME advises. For example, skilled trade programs should account for the growing role of advanced technologies such as robotics and artificial intelligence.
In Fall 2022, CME launched a pilot program bringing together employers and educational institutions to collaborate on finding and addressing skills gaps. Based on this experience, CME thinks the Government of Ontario should fund a broader initiative, ensuring discussions can build momentum for the long-term on a regional basis, and providing incentives for schools to integrate findings in regular curriculum and funding program reviews.
It adds that year-round support should be made available for high-school students to visit manufacturing facilities and directly experience the wealth of opportunities the sector has to offer.
CME also say Ontario must consider the province’s large Indigenous workforce as part of the solution.
“Incentivizing Indigenous workers across Ontario to explore a career in manufacturing could provide a valuable source of skilled workers, especially in regions of the province that are experiencing shortages,” CME states.
Its specific recommendations for this area are:
- Bring schools and manufacturers together, by funding initiatives like CME’s Regional Industry Council, setting up incentives for universities, colleges, and high schools to take part and to integrate findings in regular curriculum and funding program reviews.
- Increase engagement between educational institutions and manufacturers by having high school students tour manufacturing facilities.
- Invest in incentivizing more Indigenous workers to join the sector, such as through awareness programs and partnerships with companies.
BOOST PRODUCTIVITY WITH ON-THE-JOB TRAINING
To provide a truly lasting competitive advantage Ontario must overcome its long-term productivity challenge, CME states but cautions the data reveals a troubling picture: non-residential business investment per worker in the manufacturing sector is more than three times lower in Ontario than in the US. Specifically, in 2021, manufacturing investment per worker was $48,800 in the US, but only $15,800 in Ontario.
“Low capital intensity sends a worrying signal about Canada’s future productivity growth and prosperity,” CME states and provides the following recommendation:
- Introduce a 50% refundable on-the-job investment tax credit to support employer-led training and the shift to automation (covering 50% of expenditures, for the first five years on the job). This measure will increase overall business productivity while allowing workers to develop work relevant skills, giving them tools to grow their career and income.
ALIGN IMMIGRATION POLICY WITH MARKET NEEDS
With an aging population being a key factor contributing to labour and skills shortages in Ontario, CME argues that immigration must become one of the “central policies designed to replenish the workforce and meet the economy’s labour needs.”
“Considering recent challenges in aligning the supply of housing and services, a rebalancing of immigration policy is urgently needed. Part of the solution is building on the recent reforms of the Provincial Nominee Program, which by design, is more responsive to local labour needs than other economic immigration categories,” CME states.
New tailored supports for workers should be made available to address specific workforce needs, it adds.
“This will help efforts to tap into underrepresented populations – most importantly women, who are 50% of Ontario’s workforce, but make only 30% of the manufacturing workforce, and less than 10% of skilled trades,” the CME report states and offers the following recommendations:
- Ontario’s Provincial Nominee Program should be aligned to labour market needs, especially confirming key NOC codes with manufacturing employers.
- Grow direct supports to solve practical impediments for shift workers to take part in the economy, including reliable transit solutions for remote work areas, and alternative delivery options to provide round-the-clock daycare for workers who work night shifts