VANCOUVER—The one-time heavyweights of the Canadian economy are lagging behind—a new Conference Board of Canada report says—and to keep up growth, they must invest in new capacity.
According to the report, which was commissioned by HSBC Bank Canada, the wood products sector, the pharmaceutical and clothing industries, as well as aerospace, vehicle and other transportation parts companies have enjoyed a long string of historical exporting success, but have failed to spend enough over the past decade to continue growing.
“Business investment has stagnated over the last several years, leading to a situation where key manufacturing sectors are unprepared to capitalize on growing U.S. demand,” Danielle Goldfarb, director of the Global Commerce Centre at the Canadian think tank, said. “These ‘least prepared’ industries need to make investments in human and/or physical capital to boost capacity.”
Despite recent protectionist sentiment from politicians in the U.S. and Europe, freer trade between the U.S. and countries around the world has made exporting to the U.S. tougher for Canadian companies over the past two decades—a trend that’s expected to continue.
Canadian exports south of the border were largely stagnant through the 2000s, but that is poised to change as the American economic engine begins to turn over. Bolstered by a lower Loonie, Canadian manufacturers and service companies are expected to benefit from fresh opportunities in the U.S.—so long as they are willing to scale up.
“Why look beyond our borders? Because doing so allows our country to regain lost ground in productivity, innovation and competitiveness—all key indicators of a healthy, prosperous economy,” Linda Seymour, executive vice-president and Head of Commercial Banking at HSBC Canada, said. “The more Canadian firms tap into the world’s opportunities—including those in the U.S.—the greater the odds of ensuring our long term economic health.”