We must not let nostalgia cloud our vision for Ontario’s economic future | TVO Today

Despite bold promises and billions of dollars of support, Ontario manufacturing jobs remain around the same level as when Doug Ford’s Progressive Conservatives came to power. The province needs to move past the nostalgic view of the manufacturing sector and instead focus on an economy based on innovation and advanced technologies so it can thrive in an ever-changing global economy.

Manufacturing jobs hold a special place in Ontario’s economic, social, and political mindset because of the historical role the sector has played in driving growth, jobs, and prosperity. The sector has provided jobs across the province since the early days of industrialization in the 19th century, offering opportunities for both skilled and unskilled workers. These jobs supported families, built communities, and served as a pathway to upward mobility. Manufacturing jobs have profoundly affected Ontario’s social fabric, contributing to the growth of vibrant communities and fostering a sense of pride and identity among residents. The sector’s importance in our economic history has embedded it firmly in our provincial identity.

Perhaps seizing on this, Doug Ford has consistently emphasized manufacturing jobs, going back to his leadership bid in 2018. “This province has lost over 300,000 manufacturing jobs,” Ford said then. “And we will get them back. I guarantee you.” The theme continues, including in his government’s 2024 budget: “Under previous governments, over 300,000 manufacturing jobs were lost … We were elected on a plan to rebuild Ontario’s economy and bring back good‐paying manufacturing jobs.”

To support the creation and retention of manufacturing jobs, Ford’s government has implemented policies and financial incentives such as tax incentives, grants, labour-force skills, and a new investment agency.

But as of last month, there were only 8,300 additional manufacturing jobs in the province as compared to June 2018, when this government came to power. That’s 312,700 jobs short of the sector’s peak. In other words, in six years, the government has recovered only about 2.6 per cent of the manufacturing jobs lost under previous governments. Full recovery to past peak levels looks far-fetched.

Sources:  Statistics Canada and the United States Bureau of Labour Statistics

Ontario manufacturing employment reached its historical high point in November 2002, with more than 1.1 million people working in the sector. Employment remained close to that level when the Liberal government of Dalton McGuinty was elected in October 2003. The decline started in 2004 due to the rise of newly industrialized economies — and was hastened by the corresponding global commodity boom that raised the value of the Canadian dollar, making it more challenging to be competitive in the U.S. market.

Technological advancement and associated automation meant that, to compete in the global economy, remaining plants hired fewer workers. By the time the Ford government was elected, roughly 800,000 Ontarians worked in the manufacturing sector — down about 320,000 jobs from its peak.

Ontario is far from unique and has done well compared to peer U.S. states. Its manufacturing sector thrived between 1990 and 2004, supported by open access to the U.S. market through the Free Trade Agreement and the relatively favourable value of the Canadian dollar. Despite the sharp decline in manufacturing jobs since 2004, Ontario has experienced a much smaller decline than Michigan, Ohio, Illinois, Pennsylvania, and New York. 

Sources:  Statistics Canada and the United States Bureau of Labour Statistics

The sector’s decline has certainly been a challenge for the families of people who lost jobs and the regions where this employment is concentrated. But from a provincewide perspective, general employment has risen by 1.6 million jobs since 2004 due to gains in virtually every other sector of the economy, including health care, social assistance, finance, insurance, construction, and professional, scientific, and technical services.

While manufacturing remains a significant economic sector, especially in the central and southwestern regions of the province, it is just not as important as it once was. In 2023, 10 per cent of Ontarians reported being employed in manufacturing, down from 24 per cent in the late 1970s.

Net Change:

+ 1.6 million

Source: Statistics Canada

In recent months, the provincial and federal governments have made a slew of announcements in the sector. Volkswagen committed to a $7 billion investment in its first overseas electric-vehicle battery-cell plant, creating 3,000 associated manufacturing jobs. The NextStar Energy EV battery plant is an investment of more than $5 billion and supports 2,500 jobs. Umicore is committing $2.7 billion investment and creating 600 jobs. ArcelorMittal Dofasco is changing how steel is produced with a $1.8 billion investment in decarbonization technologies.

While these and other investments, on the surface at least, may indicate the sector is showing signs of adapting to changing global economic realities, some significant challenges persist.

Productivity (which is the value of output created for a given set of inputs like labour, capital, and other resources) is particularly important to the manufacturing sector. While overall, productivity levels have kept pace with most G7 countries, Ontario’s manufacturing productivity has grown relatively slowly.

The sluggish growth of manufacturing productivity hinders the sector’s economic potential and will ultimately lead to a decline in manufacturing competitiveness — and in the “good-paying jobs” that governments crave.

There are reasons to be hopeful. By leveraging its talent, innovation, and infrastructure strengths, Ontario can position itself as a leader in advanced manufacturing. Realizing this vision will require collaboration between government, industry, and academia. With the right policies and investments, Ontario can have a more vibrant and sustainable manufacturing industry that drives innovation, creates jobs, and contributes to the province’s economic success.

But we must not let nostalgia cloud our vision of Ontario’s economic future. As the province continues to evolve and adapt to changing economic realities, the importance of promoting manufacturing jobs over those in other high-potential economic sectors — especially in pursuit of the entirely unrealistic goal of returning to past levels of employment — needs to be re-examined. Ontario should focus on areas of value-added activity it could excel at, especially around innovation. At the very least, the province needs to move away from an à la carte approach to this crucial economic sector and instead develop a holistic economic-development strategy to serve as a foundation for the province’s economic future.