Our manufacturers waiting for better days

A bit like the gloomy weather of recent days, the Quebec Industrial Barometer tells us that our manufacturers will still have to maneuver in a context of gloom in 2024 because the slowdown in activity recorded in 2023 has not yet faded. . They expect a wind of recovery for the end of 2024 and still foresee a good year 2025.

Published at 12:58 a.m.

Updated at 7:30 a.m.

For the fifteenth year in a row, STIQ (Industrial Subcontracting Quebec), an association which brings together more than 500 multi-sector companies, publishes its Quebec Industrial Barometer carried out among a pool of 2,900 manufacturing companies with 10 to 500 employees.

The figures compiled by STIQ tell us that manufacturing activity recorded a slowdown compared to 2022, with manufacturing GDP having fallen by 0.8% in 2023 compared to an increase of 2.8% in 2022.

And for the fifth year in a row, the share of the manufacturing sector in Quebec’s overall GDP is down slightly. In 2019, manufacturing represented 13.6% of GDP, before falling to 13.1% in 2022 and 12.9% in 2023.

Quebec’s very weak economic growth in 2023 (0.1% increase in GDP) has therefore affected the activity of manufacturers and they now estimate that with expected economic growth of only 0.5% in 2024, it will be necessary wait until the end of the year to see some light.

“But we also need to put things into perspective,” says Richard Blanchet, CEO of STIQ. Activity may have been slow, but 55% of our manufacturing SMEs say they have recorded an increase of at least 5% in their turnover in 2023. This is not 70% as in 2022, but we still have a majority of SMEs which are showing good growth. »

In 2022, only 9% of SMEs experienced a drop of at least 5% in their turnover, while this percentage rose to 18% in 2023, which confirms the context of gloom mentioned by manufacturers.

The rise in interest rates and inflation affected manufacturing companies which, for the second year in a row, delayed equipment investment projects while they had to increase their prices and reduce their profit margins.

The growth in revenues obtained from the sale of goods manufactured in Quebec remained neutral in 2023, at 213 billion, the same level as in 2022, but if we take into account inflation, revenues fell by 4.5 % in 2023, while they jumped 15.7% in 2022.

If manufacturers are responsible for 85% of the total value of Quebec exports, they only increased by 4.4% in 2023 to reach 118.4 billion (in current dollars), compared to increases of 16 .4% in 2021 and 13% in 2022.

Productivity gains

The latest Quebec Industrial Barometer reveals some frankly interesting data that should fill Prime Minister François Legault and his Minister of the Economy with joy, both men, as we know, being particularly concerned about reducing the wealth gap between Quebecers and Ontarians.

This is because the Quebec manufacturing sector has made serious catch-up in terms of the productivity of its sector of activity compared to the rest of Canada and more particularly to Ontario.

In 2022, the productivity of the Quebec manufacturing sector was $66.50 per hour worked, a significant increase of 6.9% compared to 2018.

The negative productivity gap of Quebec manufacturing companies with Canada increased from 8.9%, in 2018, to 4.5%, in 2022, while the gap with Ontario increased from 10.5%, in 2018, to 4.9%, in 2022.

These productivity gains do not overly impress the CEO of STIQ because the comparison with Canada is not a very serious reference.

“Yes, we have made productivity gains compared to Canada, but Canada is at the back of the pack in this area, ranking 18e rank among OECD member countries and dead last among those of the G7,” observes Richard Blanchet.

Another Source of improvement that should be highlighted, Quebec manufacturing SMEs recorded notable gains in terms of personnel recruitment and workforce retention, while the unemployment rate in the manufacturing sector increased slightly in 2023 due to notably layoffs carried out in large companies.

In 2023, one in two SMEs increased their workforce by at least 5%, while 12% reduced their workforce by at least 5%.

“Companies are telling us that they are now receiving a few CVs for posted positions, which they have not seen for a while,” explains Richard Blanchet.

In 2023, the manufacturing sector employed more than 441,000 employees in Quebec, which represents 11.1% of jobs in the province and 28% of manufacturing jobs in Canada.

In 2022, 93% of manufacturing SMEs had fewer than 100 employees and 31% had fewer than 5 employees; these small businesses, such as those with more than 500 employees, were not included in the Barometer.



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