Deindustrialization of Canada

[Altair]

It's an interesting experiment.  What happens when you yank out the reasons communities came to be in the first place - is the local service economy self-sustaining?  This plays out differently depending on community size; at one extreme are the large cities which barely notice the loss of a major employer, and at the other are the company towns.  Either a contraction can be absorbed, or it can't.

Service industries cover transportation, education, health care, construction, banking, communications, retail services, tourism and government.

5 out of 9 of those are wealth creators. 75 percent of Canadians have jobs in the service industry today.

So if a town loses a mill but has a tourism industry, then I would say the local service industry is self sustaining.

Not all service jobs are low paying starbucks jobs.

 

[daftandbarmy]

Service industries cover transportation, education, health care, construction, banking, communications, retail services, tourism and government.

5 out of 9 of those are wealth creators. 75 percent of Canadians have jobs in the service industry today.

So if a town loses a mill but has a tourism industry, then I would say the local service industry is self sustaining.

Not all service jobs are low paying starbucks jobs.

But most of them are non-unionized which means short term, lower than a sawmill job paid by about half at least, low benefits, low support, low prestige....

 

[Altair]

We have lost some major strategic industrial and national infrastructure capabilities, and along with that the skills to recover and re-establish the same:

- railway locomotives
- significant reduction in steel production
- forestry is rapidly receding
- do we produce heavy construction equipment, heavy haul transport trucks anymore?
- specialist welding and metal fabrication facilities are shuttering daily. Cannabis grow ops are not anywhere near a suitable replacement for a car factory, a plywood mill or the family farm.

It’s a situation that makes us far too dependent on foreign suppliers, which harms our national self sufficiency and our security.
Not everybody can be a real estate agent, personal support worker, blogger, civil rights lawyer, social worker or software gaming developer. We need industries and people who can build things, and we need these people to come from our own institutions, not from foreign populations.  Our blue collar roots have been outsourced at a time when these things are needed more than ever. Just my 0.02.

Welcome to globalization I guess. It's happening all across the west. Fact of the matter is manufacturing like this can be done in the 3rd world at much cheaper costs which drive costs down and drive local companies out of business or to automate in order to compete. But by that same token, the savings are passed on to consumers.

We have seen down south a large effort by the current president of the USA to turn back the clock, fight the forces of globalization, and the results have been less than encouraging.

https://www.cbc.ca/news/business/trump-tariffs-steelmakers-1.5348012

U.S. President Donald Trump's move last year to tax imported steel triggered jeers but also cheers. Its goal — to raise steel prices — threatened to hurt the legions of U.S. manufacturers that depend on steel.

But at least it would benefit steel companies and the Americans who work for them. That was the idea, anyway.


Yet Trump's 25 per cent tariffs, it turns out, have done little for the people they were supposed to help. After enjoying a brief tariff-induced sugar high last year, American steelmakers are reeling. Steel prices and company earnings have sunk. Investors have dumped their stocks.

The industry has added just 1,800 jobs since February 2018, the month before the tariffs took effect. That's a mere rounding error in a job market of 152 million and over a period when U.S. companies overall added nearly four million workers. Steelmakers employ 10,000 fewer people than they did five years ago.

So it begs the question, is it better to fight the tide and try to isolate local markets from global competition or just accept that there is a bountiful amount of low cost manufactured goods available on the global market?

 

[Altair]

But most of them are non-unionized which means short term, lower than a sawmill job paid by about half at least, low benefits, low support, low prestige....

Construction, Banking, communications, health care, education, and government jobs do not fit the definition of what you just said.

 

[Blackadder1916]

But most of them are non-unionized which means short term, lower than a sawmill job paid by about half at least, low benefits, low support, low prestige....

Construction, Banking, communications, health care, education, and government jobs do not fit the definition of what you just said.

The change from a "blue collar" to a "white collar" economy.  Those well paying entry level opportunities for high school graduates (or more likely dropouts) are not the same as when I started in the workforce (though of course for us Newfoundlanders that usually meant going away to a T.O. factory job or joining the army - see film "Going Down The Road").

 

[The Bread Guy]

... Maybe they can do like the Brits and convert it to burning Georgia pines ...

Pro-tip:  don't do it this way ...

High cost, lack of use shutters Thunder Bay Generating Station ... Following the Liberal government’s vow in 2013 to phase out all of the province’s coal-fired plants, the Thunder Bay Generating Station was shut down and, by 2015, had been converted to a biomass-fired facility, with the capacity to produce up to 306 megawatts of power, at a cost of $5 million.  Before the boiler failure, the plant was burning torrefied wood pellets imported from the Norwegian company Arbaflame ...

 

[Humphrey Bogart]

Welcome to globalization I guess. It's happening all across the west. Fact of the matter is manufacturing like this can be done in the 3rd world at much cheaper costs which drive costs down and drive local companies out of business or to automate in order to compete. But by that same token, the savings are passed on to consumers.

We have seen down south a large effort by the current president of the USA to turn back the clock, fight the forces of globalization, and the results have been less than encouraging.

https://www.cbc.ca/news/business/trump-tariffs-steelmakers-1.5348012

So it begs the question, is it better to fight the tide and try to isolate local markets from global competition or just accept that there is a bountiful amount of low cost manufactured goods available on the global market?

Deloitte disagrees with you.  Since 2010,  competitiveness of countries like the US, Germany, Japan and South Korea has risen.  In fact, in 2016 Deloitte predicted that the US would overtake China in manufacturing competitiveness through innovation and leveraging of technology.

Read the report(s) here:

https://www2.deloitte.com/global/en/pages/manufacturing/articles/global-manufacturing-competitiveness-index.html#

Canada's competitiveness is declining though.  Mostly due to the fact our labour & associated costs are as high as the US but our productivity per worker is about $30k lower.

Here are some key findings from that report:

Report highlights:

China and the United States jockey for top honors while Germany holds firm

China is the most competitive manufacturing nation…for now:

Consistent with the previous 2010 and 2013 Global Manufacturing Competitiveness Index studies, China is again ranked as the most competitive manufacturing nation in 2016, but is expected to slip to second position as global executives provide their perspective on how the next five years will play out.

The United States is expected to take over the number one position from China by the end of the decade while Germany holds firm at number three:

The US continues to improve its ranking from 4th in 2010 to 3rd in 2013 to 2nd in this year’s study. Moreover, executives expect the US to assume the top position before the end of the decade while Germany holds strong and steady at the number three position now through the end of the decade.

Shifting dynamics among global manufacturing nations

CEOs say advanced manufacturing technologies a key to unlocking future competitiveness: As the digital and physical worlds converge within manufacturing, executives indicate the path to manufacturing competitiveness is through advanced technologies.

Shift to higher value, advanced manufacturing tilts the advantage to developed nations in the future:

As the manufacturing industry increasingly applies more advanced and sophisticated product and process technologies and materials, traditional manufacturing powerhouses of the 20th century (i.e. the United States, Germany, Japan, and the United Kingdom) are back toward the very top of the 10 most competitive nations in 2016.

Two regional clusters of strength emerge:

Out of the top 10 manufacturing competitive nations, two regions, North America and Asia Pacific dominate the competitive landscape. All three North American countries in the top 10 today and are expected to remain in the top 10 ranking five years from now. As many as five Asia Pacific nations (China, Japan, South Korea, Taiwan and India) are expected to factor in the top 10 by 2020, leaving only two spots remaining for Germany and the United Kingdom to represent Europe in the top 10.


BRIC breaks down:

Of the BRIC countries (Brazil, Russia, India and China), only China is viewed by executives as a top manufacturing nation in 2016. The other three BRIC nations have experienced a decline in their rankings over the last few years.

The rise of the “Mighty Five":

The five Asia-Pacific nations of Malaysia, India, Thailand, Indonesia and Vietnam (MITI-V or the “Mighty Five”) are expected to be included into the top 15 nations on manufacturing competitiveness over the next five years.

So countries like Germany, Japan, South Korea and the US can be even more competitive than any developing country but it takes the right set of Government policies and initiatives to fuel that competitiveness.  We are seeing none of that in Canada. 

The CBCs suggestion that there is capital flight from the United States doesn't hold up to the movement of the market the past couple of years.  The American Stock Market is booming right now. 

I'll be interested to see Deloitte's report next year.

 

[Altair]

Deloitte disagrees with you.  Since 2010,  competitiveness of countries like the US, Germany, Japan and South Korea has risen.  In fact, in 2016 Deloitte predicted that the US would overtake China in manufacturing competitiveness through innovation and leveraging of technology.

Read the report(s) here:

https://www2.deloitte.com/global/en/pages/manufacturing/articles/global-manufacturing-competitiveness-index.html#

Canada's competitiveness is declining though.  Mostly due to the fact our labour & associated costs are as high as the US but our productivity per worker is about $30k lower.

Here are some key findings from that report:

So countries like Germany, Japan, South Korea and the US can be even more competitive than any developing country but it takes the right set of Government policies and initiatives to fuel that competitiveness.  We are seeing none of that in Canada. 

The CBCs suggestion that there is capital flight from the United States doesn't hold up to the movement of the market the past couple of years.  The American Stock Market is booming right now. 

I'll be interested to see Deloitte's report next year.

The CBC article I quoted was focused on the US steel industry.

Check the US Steel stocks by the way, they are way lower as well, even though the US stock market is doing well. US steel is a easy target because the US President was laser focused on that industry, and the results have been less than encouraging.

You are correct that Canadian competitiveness is declining, and it hasn't been strong for quite some time, but I again question the importance of this. Is there a great need to be a manufacturing giant? Is there a need to have a domestic industry battling global giants like the USA and China when we can simply buy cheaper from a global marketplace?

 

[daftandbarmy]

You are correct that Canadian competitiveness is declining, and it hasn't been strong for quite some time, but I again question the importance of this. Is there a great need to be a manufacturing giant? Is there a need to have a domestic industry battling global giants like the USA and China when we can simply buy cheaper from a global marketplace?

Because if you're not a post-industrial economy, you are a pre-industrial economy a.k.a. poor and third world like:


Six Reasons Manufacturing is Central to the Economy

4. Global trade is based on goods, not services

A country can’t trade services for most of its goods. According to the WTO, 80% of world trade among regions is merchandise trade — that is, only 20% of world trade is in services. This closely matches the trade percentages that even the US, allegedly becoming “post-industrial,” achieves. If in the extreme case an economy was composed only of services, then it would be very poor, because it couldn’t trade for goods; its currency would be worth very little. The dollar is also vulnerable in the long-term. A “post-industrial” economy is really a pre-industrial economy — that is, poor.

https://rooseveltinstitute.org/six-reasons-manufacturing-central-economy/

By the way, I don't have a thing for the Roosevelt institute, I just Googled 'why manufacturing is important to the economy' and this was the first item that popped up....

 

[Altair]

Because if you're not a post-industrial economy, you are a pre-industrial economy a.k.a. poor and third world like:


Six Reasons Manufacturing is Central to the Economy

4. Global trade is based on goods, not services

A country can’t trade services for most of its goods. According to the WTO, 80% of world trade among regions is merchandise trade — that is, only 20% of world trade is in services. This closely matches the trade percentages that even the US, allegedly becoming “post-industrial,” achieves. If in the extreme case an economy was composed only of services, then it would be very poor, because it couldn’t trade for goods; its currency would be worth very little. The dollar is also vulnerable in the long-term. A “post-industrial” economy is really a pre-industrial economy — that is, poor.

https://rooseveltinstitute.org/six-reasons-manufacturing-central-economy/

By the way, I don't have a thing for the Roosevelt institute, I just Googled 'why manufacturing is important to the economy' and this was the first item that popped up....

This is a very simplistic take on this.

China, Vietnam, Malaysia, India, sure they are manufacturing a lot, but are they high tech, high value items? Is there value in textile manufacturing, or cheap plastic? Are these manufacturing nations creating the companies that are doing this manufacturing or are they simply providing the labour, which these companies take back to their home nation, with the profits and investment with them?

Simply manufacture more isn't an answer. Would Canada even want these jobs that so called giants like India and China have?

 

[QV]

So countries like Germany, Japan, South Korea and the US can be even more competitive than any developing country but it takes the right set of Government policies and initiatives to fuel that competitiveness.  We are seeing none of that in Canada. 

That is it right there. 

The microcosm of Bay Street can't exist without base industries to fuel a country. 

 

[mariomike]

The change from a "blue collar" to a "white collar" economy.  Those well paying entry level opportunities for high school graduates (or more likely dropouts) are not the same as when I started in the workforce (though of course for us Newfoundlanders that usually meant going away to a T.O. factory job or joining the army - see film "Going Down The Road").

And when that didn't work out they pawned their rented colour TV set for money in order to make it out to Western Canada.

 

[Humphrey Bogart]

This is a very simplistic take on this.

China, Vietnam, Malaysia, India, sure they are manufacturing a lot, but are they high tech, high value items? Is there value in textile manufacturing, or cheap plastic? Are these manufacturing nations creating the companies that are doing this manufacturing or are they simply providing the labour, which these companies take back to their home nation, with the profits and investment with them?

Simply manufacture more isn't an answer. Would Canada even want these jobs that so called giants like India and China have?

We at one time had world class companies in many industries.  These were global leaders in Mining, Metallurgy, Paper & Forestry, Telecommunications, Robotics, etc.

All gone now, all allowed to be raided by marauders.  Imagine the Germans letting someone come in and smash Volkswagen to pieces?  Or the Japanese losing control of Toyota or the South Koreans Hyundai?  Can you?  I can't.

Well that's what we allowed to happen to our industrial base in this country.

 

[QV]

And when that didn't work out they pawned their rented colour TV set for money in order to make it out to Western Canada.

... for the O&G industry, oh wait!!

 

[Altair]

We at one time had world class companies in many industries.  These were global leaders in Mining, Metallurgy, Paper & Forestry, Telecommunications, Robotics, etc.

All gone now, all allowed to be raided by marauders.  Imagine the Germans letting someone come in and smash Volkswagen to pieces?  Or the Japanese losing control of Toyota or the South Koreans Hyundai?  Can you?  I can't.

Well that's what we allowed to happen to our industrial base in this country.

And yet we are still one of the richest nations on the planet,  still have had comparable GDP growth to the G8 nations,  and our standard of living hasn't dropped.  Curious,  no?

 

[Humphrey Bogart]

And yet we are still one of the richest nations on the planet,  still have had comparable GDP growth to the G8 nations,  and our standard of living hasn't dropped.  Curious,  no?

Our standard of living is dropping when you account for the increased size of our workforce and its growth due to families being dual income as opposed to single income now, don't believe me?  Look here:

https://blogs.ubc.ca/newdealforfamilies/declining-standard-of-living/

30%  larger workforce due to women now working as opposed to staying at home, but household income has basically flatlined.  Couple this with increased housing costs and you can see the problem I hope?

Then there is this little issue:

Source:  https://inflationcalculator.ca/why-canada-needs-to-pay-attention-to-inflation-and-interest-rates-south-of-the-border/

I could keep pace with Joneses to if I went out today and maxed out my line or credit and credit cards.  Canadians are living off borrowed money. 

 

[daftandbarmy]

I could keep pace with Joneses to if I went out today and maxed out my line or credit and credit cards.  Canadians, like Canada, are living off borrowed money.

There... FTFY

 

[Infanteer]

Wonder what effect this has?

 

[Humphrey Bogart]

Wonder what effect this has?

I don't really know what those numbers are measuring and I don't think they are right.

Walmart is by far the largest company in the United States followed by Exxon Mobil although Apple is catching up.

This metric is telling:

Global 100 list of the 100 biggest companies in the world:

https://fortune.com/global500/2019/search/

Canada does not have one company listed, while every other G7 Country does.  Even some non-G7 countries like Taiwan, South Korea and the Netherlands make the list.

 

[mariomike]

Those well paying entry level opportunities for high school graduates (or more likely dropouts) are not the same as when I started in the workforce

Some employers want more now. I was a high school graduate. My only work experience was the PRes.

Now they expect this,
https://utsc.calendar.utoronto.ca/specialist-joint-program-paramedicine-science