Local manufacturing sector stable, report shows

Published in the Ottawa Business Journal newspaper and website.
Nov. 20, 2006

Click here to view this article on OttawaBusinessJournal.com.

Although it’s no secret that the strong Canadian dollar is squeezing the manufacturing sector all across the country, a new survey indicates that Ottawa’s manufacturing industry is still performing solidly.

The Ottawa Manufacturers’ Network (OMN) released a report this week on the state of the city’s manufacturing industry.

The report notes that the industry employs approximately 41,000 people in 700 companies in Eastern Ontario and Western Quebec, out of a total labour force of 673,400 in the Ottawa-Gatineau area. Of the 700 companies, computer and electronics manufacturers represent 27 per cent of manufacturing firms and nearly half the employment in the sector.

OMN spokesperson Roy Sunstrum says a focus on specialized electronics manufacturing – rather than consumer electronics such as personal computers – has helped cushion the local industry from the woes of the rest of the country. The region’s manufacturers tend to focus on telecommunications and optical products, he adds.

“We don’t produce really high-volume consumer products which are very price-sensitive,” explains Mr. Sunstrum. “Our products are newer and unique, and producers are able to sell them at higher margins, with less cost pressure.”

He notes that the specialized skills required to produce these products have meant that Ottawa’s manufacturers are not feeling the labour pinch as much as in other areas, where fewer young people are choosing careers in the sector.

“Ottawa’s not immune to the risks and to the fact that young people are not choosing manufacturing; I don’t want to paint an overly rosy picture,” says Mr. Sunstrum. “But we are insulated because our products are more innovative and require high-skilled workers.”

He adds that the other types of manufacturing firms – including metals and fabricated metal products which represent 16 per cent of manufacturing companies, and the wood products and furniture companies which make up eight per cent – help support the computer and technology sector in Ottawa, using the example of how sheet metals and machine parts could be used for computer enclosures. As such, the companies’ symbiotic relationship helps keep the struggling sector afloat.

Ottawa’s manufacturing industry has even been showing some growth in terms of employment and company expansion, Mr. Sunstrum says.

“This the third time we’ve done this survey, and the industry has been stable since we started this survey,” he says. “There have been similar numbers of employees and companies, and a slight net gain, if anything.”

The report shows that 68 per cent of manufacturing employment is concentrated in the top three sectors, with 49 per cent of manufacturing workers in the computer and electronic products industry, 12 per cent in metals and fabricated metal products, and seven per cent in the wood products and furniture sector.

Mr. Sunstrum says about 75 per cent of all manufacturing firms employ less than 50 people each, but notes that these small companies only make up about 20 per cent of the total manufacturing workforce.

On the other side of the spectrum, about four per cent of the 700 firms in Ottawa employ 250 or more people, but represent about 44 per cent of manufacturing employment.

“It’s a bit of a risk,” says Mr. Sunstrum of the significant number of people employed by the few medium or large companies. “All it takes is one medium or large company to hit the employment picture.”

However, he says it’s also a good thing that there are so many smaller companies, some of which will grow to medium- or larger-sized companies with their product, and some of which support larger companies with the services they provide.

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