Manufacturing

A lot of 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 what's happening to the economy down east. However, the auto industry is a very minor player in BC's manufacturing industry.

So what do we manufacture here? The province's manufacturing industry 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 industries are becoming more prominent.

A large-and growing-share of BC's manufacturing industry isn't related to the resource sector at all. Manufacturers in the province are engaged in a lot of different activities. They build ships and aircraft parts, and make traffic light switching systems, signs, fibre-optic cables and plastics. They print books and brochures, and make furniture, pottery, machinery and clothing. BC firms produce vitamins and other health care products, and they make computers and other electronics, as well as a host of other types of goods.

BC's manufacturing industry is a significant player in the economy. It's the biggest employer in the goods sector, and the third biggest 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?

What is manufacturing? It's 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.

What's happened since 1990?

The manufacturing sector has lost ground since 1990, but has experienced periods of growth as well as decline

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. A sharp upturn at the turn of the century [1] reversed the decline, but even so, manufacturing accounts for a smaller share of both GDP and employment than it did 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. It remains dominated by resource-based production, but the focus is gradually shifting to a greater emphasis on other products such as computers, electronics, plastics and clothing. 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 in order to take advantage of changes in technology, and shifting consumer and business demand for various types of products.

Resource-based activities still account for the lion's share of total manufacturing in the province. Wood, paper, food, beverages, non-metallic minerals, primary and fabricated metal and petroleum and coal production generates about two-thirds of the industry's GDP, and employs six out of ten manufacturing workers. However, the dominant role of resources is being eroded. Since 1990, the share of manufacturing GDP that originates in non-resource industries has climbed from about just under 19% to 33%. These industries now provide four out of every ten manufacturing jobs.

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

Employment and GDP in non-resource based industries have grown a lot more than in the traditional manufacturing activities

The extent to which this change has occurred is highlighted in Figure 77. Between 1990 and 2004, GDP in manufacturing increased 44%, while the number of jobs rose 20%. The growth was primarily concentrated in non-resource based industries, where employment jumped 46% and GDP more than doubled, rising 150%. Employment in resource industries rose just 5% during this period, while GDP grew 19%, well below the average for all industries (a 53% increase in GDP and a 32% rise in employment from 1990 to 2004).

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 eight times the 1990 figure. Miscellaneous manufacturing, chemicals and plastic and rubber products have all more than doubled their GDP. Beverages and tobacco is the only resource-related industry that has seen similarly strong growth. In contrast, GDP in industries such as paper, clothing, wood and printing grew by 10% or less during this period.

Employment in some of the fast-growing industries has not risen nearly as much as GDP. In the computer industry, for example, there were 60% more workers in 2004 than in 1990. The industries with the fastest job growth were miscellaneous and clothing manufacturing, where the number of jobs in 2004 was about double the 1990 level.

There have been some very positive developments in both sectors of the industry. They have experienced considerable (and higher than average) improvements in productivity, as measured by the difference between employment and GDP growth during this period. In fact, the labour productivity gains have been stronger in resource-based manufacturing than in the non-resource-based industries. Some of that's due to investment in capital equipment, but it may also reflect more efficient use of labour.

The biggest employers in manufacturing are still resource-related industries.

Within manufacturing, wood, food processing, metal fabricating and paper are the biggest employers. Over half of the manufacturing industry's GDP, and 47% of the workers, have jobs in these industries. However, that's down from 52% of employment at the beginning of the 1990s. The remaining resource-based manufacturers are relatively small employers.

Wood and food processing are the biggest employers

Most other large employers are non-resource- related manufacturers

Other significant employers in the manufacturing industry are non-resource related industries. These include manufacturers of machinery, miscellaneous products, and transportation equipment, which each employ about 5% of the manufacturing workforce.

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. Nearly half (48%) of the workers in this industry are in occupations specific to manufacturing. Many of them are machine operators, who run pulp and paper or sawmill machines, as well as other types of equipment such as sewing machines or food and fish processing equipment.

Trades, transportation and equipment operators such as machinists, welders, mechanics, tailors, delivery drivers or materials handlers make up 19% of the total workforce. Business, finance and administration (12%) and occupations in natural and applied sciences (7%) or management (7%) 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.

Most of the jobs are in processing occupations

One in four people in science-related occupations work in the computer, electronics and electrical products industry. These occupations are also commonly found in the rubber, plastics and chemicals, and fabricated metals industries.

Common occupations for manufacturing workers in the arts 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 198,200 people in 2005. Wood (45,800), food (26,400), metal fabricating (18,100) and paper (12,300) manufacturing were the biggest employers, together providing nearly half of the jobs in the industry.

The usual work week in manufacturing is just under 40 hours, and workers in the industry earn an average wage rate of $20.31 per hour.

Not all manufacturing workers are equally well-paid. Within the industry, average hourly wage rates are highest in primary metal ($27), paper ($27) and computer and electronic products ($24) manufacturing. Workers in the wood products industry earn an average wage of $21 per hour. Average hourly wages are lowest in clothing manufacturing, where workers typically earn about $13 an hour, and in furniture ($14) and food ($15) manufacturing.

Workers spent the most time on the job each week in the metal fabricating, plastic and rubber and machinery industries. The shortest work week was in beverage and tobacco product manufacturing.

What are the characteristics of the work force?

Full-time employment is the most common work arrangement in manufacturing, with 94% of the workers spending at least 30 hours a week on the job. Miscellaneous manufacturing (11%) and printing and related manufacturing (10%) are the industries with the biggest percentages of part-time workers.

One in three workers in the manufacturing industry has union coverage, which is about the same as the average 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 averaged 6.6% during the period from 1990 to 2004. This was well below the average for all industries (8.4%). The average unemployment rate in resource-based manufacturing (6.7%) was marginally higher than the rate in non-resource-based industries.

High start-up costs for many types of manufacturing mean that self-employment isn't that common. About 9% of the people who work in manufacturing were self-employed in 2005. This work arrangement is most common in industries such as textiles, leather, furniture and miscellaneous manufacturing where the nature of the product makes it possible to work in a small facility. It's less frequently seen in other types of industries where production occurs in factories that make use of costly equipment, but even in these types of manufacturing industries there are some people who work for themselves.

In general, manufacturing establishments tend to be larger than those in other industries. This reflects the fact that many types of manufacturing activities require an initial investment in equipment, which can be costly. This means that small operations are less likely to be practical, given the financial and other resources that are required to purchase, operate and maintain the necessary equipment.

Manufacturing establishments are typically larger than those in other industries

Where are the jobs located?

Six out of ten manufacturing jobs in BC are located in the Lower Mainland

Most of the manufacturing jobs in BC are located in the Lower Mainland, 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 why the Interior and North Coast/Nechako regions of BC account for a bigger share of employment in manufacturing than in the province as a whole.

Ten percent of the jobs in manufacturing are located in Vancouver Island/Coast, considerably less than the region's share (16%) of total employment in the province.

What's the outlook to 2014?

Employment in manufacturing is expected to grow at about the same rate as in the rest of the economy during the next few years. In terms of GDP, the industry is forecast to slightly outpace overall economic growth. Industries within manufacturing that are forecast to show stronger-than-average growth include food, beverage and tobacco, computers and electronic products, transportation equipment and miscellaneous manufacturing.

The industry's share of total GDP is expected to increase to 13% by 2014

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[1] The spike in GDP that shows up in this chart is a little misleading, since it's partly related to a change in the way the data for manufacturing is collected. It's likely that the industry's GDP increased in 2000, but probably not by as much as the graph suggests. It should be viewed as an anomaly.

Similarly, it's likely that the decline in employment that is seen in 2005 is a one-off event: sources of information other than the Labour Force Survey suggest that manufacturing employment did not plunge in 2005.