Manufacturing

Many people think of manufacturing in terms of vehicles rolling off production lines in Windsor and Oshawa. Automakers in Ontario dominate the news about Canada's manufacturing sector because they play such a big role in the economy of Canada's largest province. However, the auto industry is a very minor player in BC.

So what do we manufacture here? The province's manufacturing industry originally developed around processing the abundant natural resources harvested or extracted in the province: canning salmon, processing fruits and berries, producing lumber and paper, and smelting and refining ores. These activities still dominate manufacturing in BC, but their role has been diminishing over time as other manufacturing industries have become more prominent.

A large - and growing - share of BC's manufacturing industry isn't related to the resource sector at all. These manufacturers are engaged in many different types of activities, including shipbuilding, making aircraft parts and traffic light switching systems, or manufacturing signs, fibre-optic cables and plastics. They print books and brochures, build furniture, and make pottery, machinery and clothing. BC firms produce vitamins and health care products, computers and electronic products, and a host of other types of goods.

BC's manufacturing industry is a significant player in the economy. It's the second-largest employer in the goods sector, and ranks fourth in the economy as a whole. And it's an industry that has seen a lot of changes over the last few years.

What's included in this industry?

Manufacturing is the process of converting raw materials into a finished product that can be traded or sold. This can be done by mechanical, physical or chemical means.

Plants, factories and mills that use power-driven machinery and equipment are typical in the manufacturing industry. However, it also includes home-based businesses that make hand-crafted goods, as well as bakeries, candy stores and custom tailors that produce and sell their goods onsite.

BC manufacturers make a broad range of products, including pharmaceuticals, computers, aircraft, food, lumber and paper

The province's manufacturing industry is quite diverse, but resource-based activities remain dominant. Wood, food processing, metal fabricating and paper producers are the biggest employers. Forty-seven percent of manufacturing workers have jobs in these industries. That's down from 52% at the beginning of the 1990s. The remaining resource-based manufacturers are relatively small employers. Other significant employers include manufacturers of miscellaneous products, transportation equipment, furniture and printed matter, all of which employ at least five percent of the workforce in this industry.

Four of the five biggest employer industries in manufacturing are resource-based¹⁷

What's happened since 1990?

The manufacturing sector has lost ground since 1990

The manufacturing industry has seen its fortunes rise and fall during the last decade and a half. The industry lost a lot of ground during the 1990s, with its share of GDP dropping about two percentage points. The decline was briefly reversed after the turn of the century¹⁸ but the industry has since resumed its downward path as some key players, including wood and paper producers, have faced challenges in recent years. Manufacturing now accounts for a smaller share of both GDP and employment than was the case in 1990.

Manufacturing is becoming less resource-oriented

During the last decade and a half, the composition of BC's manufacturing industry has been changing. Most of the industry's GDP (70%) and employment (57%) still originates in resource-based manufacturing, but the focus is gradually shifting to a greater emphasis on other products such as electrical equipment, chemicals, plastics, clothing, and computers & electronics.

This has partly been fostered by free trade agreements, which have opened up new markets for Canadian products. As well, new types of manufacturing have emerged, as companies have responded to changes in technology, together with shifting consumer and business demand for various types of products.

Since 1990, the share of manufacturing GDP that originates in non-resource industries has climbed from 22% to nearly 31%. These industries now provide four out of every 10 manufacturing jobs.

Non-resource-based manufacturing accounts for a growing share of total GDP and employment

The rising importance of non-resource-based activities in BC's manufacturing industries is the result of strong growth in these manufacturing activities, combined with slow growth (and even decline) in some of the large resource-based industries, such as the wood and paper industries.

Between 1990 and 2008, GDP in manufacturing increased 24%, while the number of jobs in the industry grew just 6%. The job growth was due to a 28% increase in the number of people working non-resource based manufacturing industries. GDP growth in these industries was even stronger (+77%).

Employment and GDP in non-resource based manufacturing has expanded significantly since 1990, but resource-based manufacturers have not fared as well

In contrast, the number of people working in resource-based manufacturing shrank 6% between 1990 and 2008. Job losses in wood and paper manufacturing, which for many years were the main drivers in manufacturing, played a key role in the decline. Most of the job losses in the wood industry occurred during the last four years of this period, but employment in the paper industry has been falling since the turn of the century.

The drop in total resource-based employment was not matched by a similar decline in GDP. The value added to the economy by resource-based manufacturing industries rose 10% over the longer term, again largely due to gains made prior to 2006. GDP in resource-based manufacturing shrank in both 2007 and 2008.

Employment growth in some types of manufacturing, including resource-based industries such as metal fabricating and food processing¹⁹, has either outpaced or matched total job growth in BC. The number of jobs in miscellaneous products manufacturing (which includes a variety of activities ranging from manufacturing medical equipment to making jewellery, sporting goods, toys, games, office supplies, candles and umbrellas) has more than doubled since 1990. Employment in other types of manufacturing has also increased quite significantly.

The number of jobs in miscellaneous manufacturing has more than doubled since 1990, and job growth in some other types of manufacturing has equalled or exceeded the all industry average

Employment in other manufacturing industries has increased, but at a slower-than-average rate...

...but there have been substantial job losses in wood and paper manufacturing²⁰

However, six industries, including wood and paper manufacturing, have seen employment fall below 1990 levels. One in four workers in manufacturing is employed in a facility that is producing either wood or paper.

Using GDP as a basis for comparison, most of the fastest-growing industries in manufacturing are non-resource based. These include the computer and electronics industry, where GDP has increased to more than nine times the 1990 figure. Other fast-growing industries include miscellaneous manufacturing and electrical & electronic products. Beverages & tobacco is the only resource-related industry that has made big gains over the same period. In contrast, GDP in industries such as wood and paper manufacturing has declined since 1990.

What are the most common occupations?

The variety of products produced by this industry means that its workers have a broad range of skills and occupations. Labourers, millwrights, pulp and paper or sawmill machine operators, welders, sales representatives, operators of food processing equipment, and truck drivers are among the most common occupations in this industry.

Nearly half (48%) of the workers in this industry are in occupations specific to manufacturing. These include operators of industry-specific machinery and process control systems or assemblers of electronic products, as well as labourers.

Nearly half of the workers are in processing occupations

Trades, transportation and equipment operators such as machinists, welders, mechanics, tailors, delivery drivers or materials handlers make up 23% of the total workforce. Business, finance and administration (9%), management (8%), and natural and applied sciences (6%) occupations are also fairly common. Natural and applied sciences occupations include engineers, especially mechanical engineers, computer programmers and information systems professionals, and workers such as engineering or chemical technicians.

One in three manufacturing workers in science-related occupations is employed in the computer, electronics and electrical products industry. The wood, paper, rubber, plastics and chemicals, and fabricated metals industries also employ workers in this occupational group.

Common arts-related occupations for manufacturing workers include graphic designers and illustrators, as well as artisans and craftspeople. The printing and miscellaneous manufacturing industries are the main employers for people in these occupations. Miscellaneous manufacturing produces, among other things, jewelry and silverware as well as signs and displays.

How many people work in manufacturing, and how much do they earn?

BC's manufacturing industries employed 187,400 people in 2008. Wood (34,300), food (24,500), metal fabricating (16,400) and paper (13,200) manufacturing were the biggest employers, together providing nearly half of the jobs in the industry.

The usual work week in manufacturing is 40 hours in length, and workers in the industry earn an average wage of $22.33 per hour. That's a little higher than the average ($21.46) for all industries in the province.

Not all manufacturing workers are equally well paid. Within the industry, average hourly wage rates are highest in electrical equipment manufacturing ($32.26), paper ($29.46), primary metal ($27.49) and printing ($26.30). Workers in the wood products industry earn an average wage of $22.95 per hour. Average hourly wages are lowest in clothing manufacturing, where workers typically earn about $13.45 an hour, and in food ($17.02) and furniture ($18.28) manufacturing.

On average, manufacturing workers are relatively well paid

What are the characteristics of the work force?

Full-time employment is the most common work arrangement in manufacturing, with 93% of the workers spending at least 30 hours a week on the job. Miscellaneous manufacturing (10%), printing (11%) and clothing (12%) manufacturing are the industries with the biggest percentages of part-time workers.

There's not a lot of seasonality in manufacturing employment

Employment levels usually remain stable throughout the year, with a modest peak in the summer months. Most workers in manufacturing are hired on a permanent basis. On average, about 6% are employed as temporary help.

Twenty-nine percent of workers in the manufacturing industry have union coverage, which slightly less than the average (31%) for all industries in the province.

While three out of four workers in manufacturing are male, there are differences among industries within manufacturing. For example, most of the workers in clothing and textile industries are women. Women are also well represented in printing, electronics, chemicals and miscellaneous manufacturing.

Unemployment rates in manufacturing are usually lower than in other industries, but 2008 was an exception

Unemployment rates in manufacturing averaged 6.2% during the period from 1990 to 2008, considerably less than the rate for all industries (7.8%). However, as a result of the recent downturn in some manufacturing industries, the unemployment rate has been rising and inched ahead of the all-industry average in 2007. This was the first time in at least 20 years²¹ that the jobless rate in manufacturing has been higher than the average rate for the province. The average unemployment rate in resource-based manufacturing is somewhat higher than the rate in non-resource-based industries.

Self-employment is not common in most types of manufacturing, but there are some exceptions

High start-up costs for many types of manufacturing mean that self-employment isn't prevalent in this industry. About 7% of the people who work in manufacturing were self-employed in 2008.

This work arrangement is most common in industries such as metal fabricating, clothing, printing, furniture and miscellaneous manufacturing where the nature of the product makes it possible to work in a small facility. It's less frequent in other types of industries where production occurs in factories that make use of costly equipment. There are few, if any, self-employed workers in the paper, primary metals and petroleum & coal products industries.

In general, manufacturing establishments tend to be larger than those in other industries. Many types of manufacturing activities require the construction of buildings or purchases of equipment which can be costly. This means that small operations are less likely to be practical, given the financial and other resources required to purchase, operate and maintain the necessary equipment used by producers.

Manufacturing establishments are typically larger than those in other industries

Thirty percent of the workforce is employed at establishments with 100 to 500 workers, well above the 19% average for all industries in the province. At the same time, just 28% of workers are employed in small establishments (fewer than 20 workers), considerably less than the average for all workers in BC.

Where are the jobs located?

Most (65%) of the manufacturing jobs in BC are located in Mainland/Southwest, which is home to 61% of the province's total workforce. Many resource-related manufacturers locate their production facility close to the source of their raw materials, which is one reason why the Thompson-Okanagan, Cariboo and North Coast & Nechako regions of BC account for a bigger share of employment in manufacturing than their share of total employment. Eleven percent of the jobs in manufacturing are located in the Vancouver Island/Coast region, considerably less than the region's share (17%) of total employment in the province.

Six out of 10 manufacturing jobs in BC are located in Mainland/Southwest

What's the outlook to 2017?

Employment in manufacturing is expected to grow slightly more than total employment in the province during the next few years, and the industry is forecast to regain its position as the largest employer in the goods sector. In terms of GDP, manufacturing is forecast to slightly outpace overall economic growth, and its share of total GDP is expected to rise from just over 9% to just over 10% by 2017.

The industry's share of GDP and employment is expected to increase slightly