1. Canadian Manufacturing Competitiveness and a Trump Presidency
Mike Holden
Chief Economist, Canadian Manufacturers & Exporters
February 9, 2017

2. About CME Canada’s leading business network and advocacy organization
Directly represents more than 2,500 leading companies nationwide. More than 85 per cent of CME’s members
Through its various initiatives, CME touches more than 100,000 companies across Canada.
CME’s membership network accounts for an estimated 82 per cent of total manufacturing production and 90 per cent of Canada’s exports.

3. Presentation Overview
Challenges in Canadian Manufacturing
CME’s Industrie 2030 Initiative
Impact of a Trump Presidency

4. Canada’s position is slipping
Canada’s manufacturing challenges pre-date Trump’s arrival
Canada is losing ground to its foreign competitors
Not simply a case of production moving to low-cost jurisdictions.
Canada’s Ranking in Global Manufacturing Output:
1984: 8th
1994: 9th
2004: 10th
2014: 14th

5. Productivity growth lags...
Productive jurisdictions are competitive and attract investment.
Since 2002, productivity growth has been half the US rate.

6. ...as does investment.
M&E investment closely tied to productivity growth.
Canada has one of the worst records in the OECD.
US manufacturers dramatically out-invest Canadian businesses.

7. Industrie 2030 Strategic Plan
A strategy to double manufacturing output and value-added exports by 2030
Leverage the opportunities of the Fourth Industrial Revolution
Consultation with more than 1250 industry leaders in person and on-line across the country
Action Plan for Growth – Manufacturing Growth, Innovation and Prosperity for Canada

8. Industrie 2030: Five Issues
Individual strategies and recommendations developed in each of five key areas:
Labour and skills shortages
Adoption of advanced manufacturing technologies
Innovation and new product commercialization
Domestic and foreign market access
Competitive business climate

9. Impact of Trump Presidency
Labour and Skills
Opportunity to attract people to Canada
There is an upper limit on absorption
Federal policy needs to focus more on economic migrants

10. Impact of Trump Presidency
Business Climate
Major risk to Canada’s investment competitiveness
Tax and regulatory burden moving in opposite directions
Government policy must support new investments and tech adoption

11. Impact of Trump Presidency
Market Access
Access to US market likely to deteriorate
Softwood, wine, supply management, procurement all at risk
NAFTA: renegotiation? Or reversion to Canada-US FTA?

12. BC Perspective BC exporters are outperforming the Canadian average.
Record year for BC exporters in 2016.
Exports to the US up 11.6%, compared to 1.8% for Canada.

13. BC Perspective Post SLA: Wood products manufacturing up 10.9% in 2016.
Wood products exports up 20% in 2016 and account for about 56% of BC’s export gains.
Lower growth expected in 2017

14. Strategy for the Trump Era
Domestic Approach
Issues unchanged, but urgency on improving manufacturing competitiveness is magnified
Tax and regulatory burden needs to be lowered
Significant new incentives needed to promote innovation and investment in M&E

15. Strategy for the Trump Era
Foreign Approach
Canada’s views do not matter. Must emphasize integration of Can/US economies
Canada is the top export destination for 35 US States
Must work with US associations and corporations – especially those operating in both countries

16. Canadian Manufacturers & Exporters
Mike Holden
Chief Economist
Canadian Manufacturers & Exporters
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