Manufacturing
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The global downturn that began in 2008 had a strong impact on Canada's manufacturing sector in 2009. Manufacturers' sales dropped 17.4% to $494.2 billion, the largest annual decrease since this data series was first collected. Most of that drop occurred in the first quarter of 2009; thereafter, sales gradually improved.
The volume of manufactured goods sold in 2009 dropped 15.2% to $458.5 billion (constant 2002 dollars), the fourth successive annual decline. Foreign and domestic demand fell sharply early in the year, contributing to the slowdown at Canadian factories. Sales volumes began to pick up in the third quarter.
In 2009, manufacturers cut their capacity utilization rate by 9.1 percentage points to 67.7%. During the economic slowdown of the early 1990s, the rate bottomed out at 74.2%.
As manufacturers faced weaker demand and reduced their capacity, they cut employment by 11.2% to 1.5 million jobs, and so the industry's share of total employment continued to shrink from 16% in 2000 to 10% in 2009.
Much of the employment decline occurred in a six-month window from the last quarter of 2008 to the first quarter of 2009. More modest decreases were reported over the rest of the year as the industry stabilized.
The big-ticket, durable goods industries—including motor vehicles and parts, machinery and wood products—cut employment at a faster pace than the non-durable goods industries.
Widespread declines
All the provinces and territories posted lower manufacturing sales, as 18 of 21 industries saw declines in 2009. The three exceptions were food (4.7%), beverages and tobacco products (2.5%) and miscellaneous manufacturing (2.5%).
The durable and non-durable goods sectors both posted sales declines, but the non-durable side outperformed—a first since this data series began in 1992. For example, food manufacturing, the largest manufacturing industry in 2009, posted sales of $81.4 billion and claimed 16.5% of total manufacturing sales, up from 13.0% in 2008. That compares with sales declines in notable durable goods industries.
The largest percentage declines in 2009 were in primary metals, down 36.9%, and the petroleum and coal products industry, down 28.1%, while chemical products' sales fell 16.0%. All are price-driven industries.
Canada's petroleum and coal products industry lost its spot as 2008's second biggest manufacturing industry, falling to third place in 2009. The decrease was predominantly price-based.
View data source for chart 23.1
Profits erode
Operating profits of manufacturers fell 31.7% to $29.9 billion in 2009, marking the second annual decrease in a row and the lowest profits level since 1994. The decline was concentrated in the final quarter of 2008 and the first quarter of 2009, then profits started to advance in the second and third quarters as the economy started turning around. By the fourth quarter, profits stood around 14% above levels of the same period in 2008.
The petroleum and coal products industry had the largest drop in 2009 as profits dropped 58% to $6.2 billion, well below 2008's high of $14.8 billion.
For a second successive year, manufacturers backed away from investment in plant and equipment. Total capital expenditures dropped 31.5% to $13.6 billion in 2009, the largest annual drop since 1991.
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