Introduction

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Since 1976 in Canada, the level of manufacturing employment reached historically high levels in 1980 and 1981 (2.1 million workers) and again in 1989 (2.1 million workers) and again in 2004 (2.3 million workers) (Beshiri, 2010). However, manufacturing employment, as a percent of total employment, has declined over time. At each historically high level, the share of the Canadian workforce employed in manufacturing was lower (1981: 19%; 1989: 17%; 2004:14%). In 2008, overall manufacturing employment had declined to 2.0 million workers. This level is similar to the level at the end of the 1970s but this level of employment now represents 12% of Canada's workforce (Bernard, 2008).

Manufacturing jobs may be one of the few opportunities for rural communities wishing to pursue rural development (Freshwater, 2003). This is because rural areas are shedding primary-sector jobs and higher-order service jobs (such as architects, corporate lending officers, etc.) necessarily need to be located in areas with an adequate critical mass of population (i.e. metro centres). Thus, local initiatives to bolster manufacturing jobs may be one of the few proactive strategies available to rural development authorities.

However, little is known of the number and characteristics of manufacturing firms in rural and small town areas.

The objectives of this study are:

• to examine the recent changes in the number and types of manufacturing firms in rural and small town areas;
• to specifically identify the number and change in manufacturing firms that are part of the value chain of a resource sector (agriculture, forestry, fisheries, mining and oil and gas); and
• to examine the number and change in manufacturing firms located in rural resource-reliant communities (i.e. communities reliant on the value chain of a resource sector).

The short time period of the study, from 2003 to 2007, is designed to minimize the impact of changes of geographic coding of firms and to concentrate on the recent declines in employment in Canada's manufacturing sector. Throughout the study, firms will be disaggregated into various size categories based on the number of full-time equivalent employees (Box 1).

Background: the context

In an earlier bulletin, Rothwell (2010) reviewed the pattern of business establishments in rural and small town (RST) Canada (The geographic definitions are outlined in Box 2). Firms in RST Canada were smaller, in part reflecting the dispersed nature and smaller size of rural communities. RST Canada had more firms per 10,000 inhabitants than existed in larger urban centres – largely due to the larger share of firms with 1 to 4 employees in RST Canada.

In 2007, there were 11,519 manufacturing firms in RST Canada, representing 19% of Canada's total number of 59,840 manufacturing firms. Within RST Canada, manufacturing firms were more likely to be located in Strong Metropolitan Influenced Zones (MIZ) and Moderate MIZ. Moreover, it was the smaller manufacturing firms (1 to 4 employees) that were somewhat more likely to be located in Strong MIZ whereas manufacturing firms with 50 or more employees were more likely to be in Moderate or in Weak MIZ.

RST Canada has been losing manufacturing jobs since 2003. This mirrors the pattern of decline in larger urban centres (LUC) since 2004 (Beshiri, 2010).

Our approach

We use Statistics Canada's Business Register to obtain a count of firms. We consider only firms with some employees (Box 1). Firms are classified according to size, using the number of 'full-time' equivalent employees.

We use the data for 2003 and 2007. The Business Register has used the 2001 geographic coding for its data for each of the five years from 2003 to 2007¹. Thus, we can compare the number of firms within consistent geographic boundaries. The beginning of this period approximates the peak year in manufacturing employment and, as a result, we can document the change in manufacturing firms from 2003 to 2007.

Our geographic grid refers to "larger urban centres" (LUC) which are census metropolitan areas (CMAs) and census agglomerations (CAs) (Box 2). Rural and small town (RST) areas refer to areas outside CMAs and CAs. RST areas are disaggregated into census metropolitan area and census agglomeration influenced zones (MIZ) which proxy the degree of interaction with a LUC.

Note

1. Firms in the 5-year period from 1998 to 2002 were coded to the 1996 geographic structure, firms in the 5-year period from 2003 to 2007 were coded to the 2001 geographic structure and starting in 2008, firms were coded to the 2006 geographic structure.