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Shifting manufacturing into higher gear can alleviate the impact of demographic challenges

Author: UNB Newsroom

Posted on Sep 11, 2019

Category: UNB Fredericton

University of New Brunswick researchers studying New Brunswick’s manufacturing sector say manufacturing is still the engine of New Brunswick’s economy and could be the answer to economic challenges posed by declining demographics.

Dr. Herb Emery, the UNB Vaughan Chair in Regional Economics, launched a multi-year research project to study New Brunswick’s manufacturing sector in early 2019 and will present the team’s findings in a public forum on September 25-26 at the Fredericton Convention Centre.

“Manufacturing represents a very large share of New Brunswick’s GDP relative to other provinces but it’s not something we hear about every day,” says Dr. Emery. “There seems to this pervasive belief that the sector is old, tired, and even on its way out. But that’s not what the evidence says and that’s not what other jurisdictions say that are fighting to get those same manufacturers to relocate to their regions.”

Dr. Emery says that New Brunswick’s manufacturing sector today employs as many people today as it did 20 years ago and is often the best source of high-paying jobs for many residents, particularly in rural New Brunswick. “New Brunswick’s manufacturing sector has an underlying resilience and stability but it hasn’t transitioned yet to embrace and seek out productivity-improving investments. That represents pretty significant opportunity,” says Dr. Emery.

“We’ve done pretty well with an outdated productivity formula. Imagine what we could do if we embraced the changes that other regions have made,” says Dr. Emery.

“We need to figure out how to produce more with fewer people because the bottom line is we will have fewer people. Productivity improvements in manufacturing will help us maintain the income levels that pay for services like healthcare and education, even in the face of a shrinking tax base,” says Emery.

“This isn’t a unique conversation in Canada. Every province in Canada is looking at how to increase productivity and maintain their income in the face of demographic challenges. For New Brunswick, manufacturing represents our best chance of doing that.”

The team’s research also reveals that New Brunswick’s manufacturing sector is particularly sensitive to trade conditions. “We’re the most trade-exposed manufacturing sector in Canada. Even more so than Ontario. Over 90 per cent of goods produced in New Brunswick are destined for export markets, making us particularly vulnerable to changes in currency value, foreign market conditions, and trade instability.”

Dr. Emery says that having a robust export economy based on high value-added sectors like manufacturing should be a goal for New Brunswick and economic policies should be aligned with that objective. “Policies designed for an economy with a robust domestic market don’t work for an export economy like New Brunswick. You can’t just take a Quebec policy aimed at capturing domestic market share for local producers and apply it to New Brunswick. When you are selling globally, your domestic cost structure has a much more profound impact on your ability to survive because your competitor is not down the street or even subjected to the same rules and regulations.”

Dr. Emery says that lagging business investment and a deteriorating trade environment are worrisome but disaster isn’t inevitable. “At the JDI Roundtable on Manufacturing Forum at the end of the month, we’re bringing policymakers, producers, experts and the public together to talk about what solutions will work not just to maintain the jobs we have but to drive even more growth.”

“With the right policies, regulations and business conditions, the manufacturing engine has another gear.”

Dr Emery says New Brunswick’s manufacturing sector is at a crossroads. “They need to invest to stay competitive. To date, our policies and business climate have worked against that investment, often undermining federal government programs intended to spur investment.”

Media contact: Mara Mallory