Canada's Manufacturing Industry Needs A New Plan, Suggests Government Report

Adopting the report's 22 recommendations could cost government between $5 billion and $10 billion.

A report released Tuesday from Canada's House of Commons Standing Committee on Industry, Science and Technology suggests that while the Canadian economy is doing quite well, the manufacturing sector is struggling to remain competitive in the global marketplace.

Adopting the report's 22 recommendations could cost the government between $5 billion and $10 billion, which could be recovered from tax refunds.

Manufacturing is Canada's largest business sector, responsible for 17 percent of all economic activity and employing 2.1 million people.

According to the report, the challenges Canada's manufacturing industry faces include a Canadian dollar that has risen in value by more than 40 percent in just four years in comparison to the U.S. dollar, rising energy costs, increased global competition – especially from China and India, and excessive and inefficiently designed regulations.

In a foreword to the report, James Rajotte, chair of the Committee, said that because the downward trend in the manufacturing sector is a reflection of structural changes in the economy and not a cyclical downturn, the Committee is recommending different policies than those implemented in the past.

Among the report's recommendations are:

     • a two-year write-off period for machinery and equipment used in manufacturing and processing, and equipment associated with information, energy and environmental technologies

     • make investment tax credits fully refundable and provide an allowance for international collaborative R&D

     • provide tax credits to companies that offer employer-financed training to employees

     • improve the Temporary Foreign Worker Program to make it easier to hire foreign workers when there are no domestic citizens available.