Canada's Reindustrialization Push Hits Manufacturing Snag

Canada's push to reindustrialize its economy is facing a significant challenge: a manufacturing gap. According to National Bank of Canada, Ottawa's policies are shifting towards reindustrialization, with a focus on supply chains and national security in mind.

The bank notes that Canada has some natural advantages, such as relatively clean electricity and high environmental and labor standards. However, the starting point is thin: manufacturing accounts for just 8% of Canada's economy, and more than two-thirds of output is in lower-value-added industries.

The bigger issue is competitiveness. Since 2000, manufacturing wages have risen faster in Canada than in the US, while productivity has grown less quickly. This makes it harder for Canadian manufacturers to match US pricing without sacrificing profit.