Canadian manufacturers faced a rough ride in 2003

by Canadian Shipper

Manufacturing shipments slipped 1.0% to $513.2 billion in 2003, following a gain of 1.9% in 2002, according to a year-end report from Statistics Canada.

As well, by year’s end, manufacturers’ books were significantly lighter. Unfilled orders were at their lowest level in over six years. (Unfilled orders are a stock of orders that will contribute to future shipments.)

On the positive side, inventories are down substantially (-5.3%) since December 2002, and in recent months, orders booked by manufacturers have been on the rise.

In contrast to Canada’s slowdown in production, manufacturers south of the border muscled their way through 2003. US factory shipments increased 2.7% by year-end, as a steady stream of new orders were placed on manufacturers’ books.

Several negative events affected Canadian manufacturers and the economy as a whole in 2003. Most global economies were held at bay during the first part of the year, as the war in Iraq unfolded. The SARS virus devastated the service and tourism sectors of the Toronto region, while the single case of BSE (mad cow disease) in Alberta closed international borders to Canadian beef.

Much of Canada’s manufacturing heartland in Ontario was darkened by the electrical blackout of August 14. During the following week of energy conservation, many factories operated at reduced capacity. Meanwhile, fires consumed forests in British Columbia, and the Canada-US softwood lumber dispute trade remained in the courts of law. These events cut into what could have been a more prosperous year for the wood products industry, as North American demand for new housing boomed.

In addition to all of these factors, the Canadian dollar closed the year at a 10-year high against its US counterpart.

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