So, softer employment.
Evidence of meeting #72 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was dollar.
A video is available from Parliament.
Evidence of meeting #72 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was dollar.
A video is available from Parliament.
9:20 a.m.
Deputy Chief, Canadian Economic Analysis, Bank of Canada
Of course there would have been an impact on employment also.
9:20 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Do you see slow growth as a secular trend in Canada, in terms of there being a slow-growth economy for the foreseeable future?
9:20 a.m.
Deputy Chief, Canadian Economic Analysis, Bank of Canada
We see the trend underlying real growth in Canada as just below 2%. That is somewhat slower than, say, before the global economic and financial crisis in the mid-2000s, but a lot of it is due to just the fact that we have slower labour force growth because of an aging population.
9:20 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Mr. Myers, you've said that there are some positive impacts and negative impacts as a result of lower oil prices. What is the timing that you see for the positive impacts, and what is the delta between the timing for the positive impacts and the timing for the negative impacts?
9:20 a.m.
President and Chief Executive Officer, Canadian Manufacturers and Exporters
I wish I could forecast like that—
9:20 a.m.
President and Chief Executive Officer, Canadian Manufacturers and Exporters
—but I think we're already seeing the positive impacts in terms of stronger consumer buying power in the United States, as well as and to some extent correlated with, a stronger U.S. dollar and a weaker Canadian dollar. Those are impacts that are being felt right now, and they are very positive. The question is, where is that going?
I would say one thing. When you see a plunge in the price of oil or any commodity such as we have seen over the last six months, it is not a good signal, particularly when it is being triggered by such a rapid appreciation of the U.S. dollar and such a plunge in other currencies. It's a signal, if not in the oil market, that we have very severe financial imbalances in the global economy. I think that's where the danger is, going ahead.
9:20 a.m.
Conservative
9:20 a.m.
Conservative
Joyce Bateman Conservative Winnipeg South Centre, MB
Thank you to all of our witnesses this morning. I really appreciate the discussion we're having.
We heard yesterday from a number of economists. Some of them were speaking about the fact that this is just a volatile industry. Several of them spoke to the fact that in 1998 we had a major adjustment and in 1986 we had an adjustment, and the outputs from those adjustments were always greater innovation, greater investments in technology, more effectiveness and efficiency in the industry, and so industry came out much stronger from the “crisis”.
I'd like to have your views on that. Perhaps we could start with Mr. Myers.
9:25 a.m.
President and Chief Executive Officer, Canadian Manufacturers and Exporters
If you look at the macroeconomic statistics, I think you can draw those conclusions. In the meantime, if you look from 2002 to 2012, we've seen 20,000 manufacturing operations go out of business as part of that adjustment. So it's not an easy adjustment there, and it has very important employment effects, of course—600,000 fewer people employed in manufacturing—although we're at record levels of production right now.
Those adjustments while they take place are extremely painful, but of course the overall trend is right. That's why there's the importance of investment in new technology, the importance of investment in new products, the importance of investment in skills, making sure that we're able to attract or retain the product mandates here in Canada. That's why all of that is so important; it is what eases that adjustment.
9:25 a.m.
Conservative
Joyce Bateman Conservative Winnipeg South Centre, MB
Would you care to speak to that?
No, that's not your area.
Mr. Nantais?
9:25 a.m.
President, Canadian Vehicle Manufacturers' Association
Yes.
As you know, in the auto industry we came out of the dark years of 2008 and 2009 hurting very badly. It's true that we made some very hard decisions that resulted in job losses, to the tune of about 40,000 jobs, in the auto industry. We took out unused capacity. We became much more productive. We came out being stronger, yes, but it was with a great deal of pain.
Also, and I'll talk about the relativity of what's going on, so did other jurisdictions go through that phase, and they too now recognize the value of an auto industry, and of the spin-off jobs at 9:1, for instance, which is why they're so aggressively seeking new investments.
Yes, we did come out stronger, but as we go forward and we want to keep the mandates here, we're going to have to up our game. Nothing is static in this world anymore. The competition for investment has never been greater than we have seen.... I've been around long enough to have gone through a number of these cycles, and I've never seen a cycle as deep as 2008 and 2009, but we run the risk of losing more, if we don't up our game.
9:25 a.m.
Conservative
Joyce Bateman Conservative Winnipeg South Centre, MB
Thank you.
I want to follow up on a point.
Mr. Myers, you mentioned the impact, saying that a 0.3% impact is marginal. You spoke after that about the need to continually invest in innovation and technology. Could you expand on that 0.3% impact?
9:25 a.m.
President and Chief Executive Officer, Canadian Manufacturers and Exporters
Sure. I think in terms of potential cost savings from a lower price of oil, the number one assumption is that it would lower energy costs for manufacturing, but energy costs from oil represent only 0.3% of total costs in manufacturing.
9:25 a.m.
Conservative
9:25 a.m.
President and Chief Executive Officer, Canadian Manufacturers and Exporters
That is not really going to mean a big cost savings on the energy side; there are potentially greater cost savings as a result of lower feedstock costs, plastics, petrochemicals, and refined petroleum products for some industries in particular.
I have to say, we're not seeing the trucking industry or the rail industry passing along the lower energy costs that they're incurring to their customers yet. That may occur over time, but we're certainly not seeing it yet.
9:25 a.m.
Conservative
Joyce Bateman Conservative Winnipeg South Centre, MB
No, the point is well taken.
Are you passing on the differences?
9:25 a.m.
President and Chief Executive Officer, Canadian Manufacturers and Exporters
Right now, probably many of those cost savings are going to be reinvested in better capacity and better productivity and in more people working.
9:30 a.m.
Conservative
Joyce Bateman Conservative Winnipeg South Centre, MB
Okay, thank you.
Mr. Walker, you mentioned that you're doing a lot of consumer consultation. I know that people in my constituency are pretty darn happy to have $20 to $30 more in their jeans after they fill up than they had previously. I just wanted to give you a chance to broaden your comments on that.
9:30 a.m.
Vice-President, Public Affairs, Canadian Automobile Association
There's no doubt that most Canadians are feeling quite good about the fact that they're saving money. It's giving them positive feelings in what we'll call the microeconomic context. The question in their minds is, how long will this last? They haven't thought a lot about the macroeconomic, outside of—
9:30 a.m.
Conservative
Joyce Bateman Conservative Winnipeg South Centre, MB
We heard yesterday from experts that it's not going to last forever. I mean, this is a cyclical industry. Could you speak to that?
