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Study forecasts strong year for Canadian manufacturing industries

By CO Staff @canadaone |

What lies ahead for manufacturers in Canada?

A five year outlook published by The Conference Board of Canada in association with Business Development Bank of Canada has positive predictions, even with the strong Loonie.

Forecasting production, revenue, cost and profitability in Canadian manufacturing sectors for 2011 to 2015, the survey predicts that profits will grow in all but one manufacturing sector.

"The reasons for optimism in these industries include a rebound in demand in the construction and broader manufacturing sectors, as well as a revival in American, European and Asian export markets," said Michael Burt, Associate Director, Industrial Economic Trends.

"On the downside, the strong dollar poses a threat to industries that depend on exports for growth. This is especially true in some of the manufacturing industries covered in the Spring 2011 outlook, which are largely composed of smaller firms that need to continually invest to compete."

At a glance, here is how each manufacturing sector is expected to perform.

Electrical Equipment

Outlook: Companies that manufacture products ranging from lighting equipment to electric motors and batteries can expect a strong year. Profits in this sector are expected to more than quadruple to $223 million, yet still stay below their pre-recession peak of $577 million in 2007.

Industry drivers: Non-residential construction activity and strong telecom investments.

Fabricated Metals

Outlook: Sales are expected to see double digit growth, but the rising price of metal will temper profits, which are expected to rise by 6.9 per cent.

Industry drivers: Vehicle production, oil patch investments on the positive side. Surging metal prices are affecting overall profitability.

Machinery Manufacturing

Outlook: The industry is expected to see $920 million in profits this year, up almost 40 per cent from $261 million three year ago.

Industry Drivers: Global economic recovery, rising export demand and domestic sales. Strong dollar will affect Canadian prices in global markets.

Oil and Gas Support Activity

Outlook: The industry is experiencing strong growth and profits are expected to increase from $45 million in 2009 to $225 million in 2011.

Industry Drivers: High oil prices encouraging new drilling activity, unconventional drilling techniques using industry services. Weak gas prices are affecting overall growth.

Professional Services

Outlook: Industry increased profitability by 13 per cent last year, but profits are expected to fall by four per cent this year to $8.4 billion

Industry Drivers: Architectural and engineering sectors expected to grow.

Textiles and Apparel

Outlook: The industry is expected to post a small profit of $13 million in 2011.

Industry Drivers: Production growth, higher domestic and export demand.

With corporate profits on the rise, so too is the willingness of businesses to spend on professional services. The engineering and architectural services sector is expected to perform most strongly, as commercial construction activity accelerates and high commodity prices drive investment.


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