Thank you, Chairman Easter.
This evening we'd like to speak to this committee about the significant opportunities for investment and economic growth within Canada's chemistry sector, along with our thoughts on what budget 2018 can do to help ensure this opportunity is realized in the coming months and years.
Our industry is a vital component of the Canadian economy. We're the third-largest manufacturing sector, with over $53 billion of annual shipments. Nearly 73% of that is exported, and that makes us the second-largest manufacturing exporter. Like many people, I'm sure most of you don't give much thought to the role of chemistry in your lives, but if you look around this room, 95% of everything we touch every day is impacted by the business of chemistry. It's everywhere.
Our industry is also very highly skilled. We employ more than 86,000 Canadians, and 38% of those are university graduates. That places us with the second-highest percentage of university graduates, the first being the IT sector. More importantly, perhaps, for this committee, our sector has a tremendous track record in providing economic and wage growth across the entire business cycle. In its recent report, the House of Commons Standing Committee on Industry, Science and Technology acknowledged this and identified chemistry as one of the strongest performing manufacturers in employment growth since 2010. Globally, the chemistry industry is very large and very fast-growing, with annual growth rates well in excess of global GDP in each of the last 10 years. Moreover, with growing populations in Asia, demands for middle-class lifestyles, and demands worldwide for more sustainable outcomes, the chemistry industry is poised to triple its volume of shipments in the next 20 years.
Much of that production growth has taken place in Asia, but in the United States, chemistry is also the fastest-growing manufacturing sector. In the last five years, there have been over 300 global-scale investments in the chemistry business in the United States, totalling over $250 billion U.S. The National Association of Manufacturers says that's the single, largest, fastest-growing sector of the manufacturing economy and is responsible for over half of the investment.
Our concern is that we share many of the same benefits that the American chemistry industry does, and if you look at our historical track record over the last 40 years, we should have expected to see 10% of that investment. We should have seen 25 to 30 projects worth $25 billion to $30 billion of new investment. Unfortunately, however, we've lagged well behind our historical share. We've seen more like 1%, or $2.5 billion to $3 billion of investment. In our view, this should be a concern to this committee.
Though we have missed out on the past wave of investments, the global growth I've talked about is continuing, and we do think that Canada is better poised to capture part of the next wave. The reason I say that is that the governments of Ontario and Alberta have prioritized investment growth in the chemistry sector. There are currently three major projects, accounting for nearly $12 billion, under active consideration in those jurisdictions, and those are only the projects that are publicly announced.
Over much of the last year, we have urged the federal government to heed the investment opportunity in our sector and take note of those provinces' determination to capture this new investment. We continue to stress the importance of ensuring that Ottawa's economic priority sectors align with those of the important provinces of Ontario and Alberta—and British Columbia and Quebec—so that all our oars are pulling in tandem in the same direction.
Budget 2017 did provide some important signals that the government was listening. We were pleased to see the launch of the strategic innovation fund and its broadening to include high-growth, advanced manufacturing sectors, including chemistry. While welcome, the strategic innovation fund alone will not be sufficient to attract sustained investment growth as seen south of the border. To that end, we've submitted to this committee our recommendations, i.e., the four factors we believe are necessary to help secure investments, both those awaiting final decision and also future opportunities under consideration. These recommendations relate specifically to the second objective of your study. I'll mention them briefly, and then we'll look forward to your questions to elaborate further.
First, we do believe the strategic innovation fund is important. We're asking for increased investment by the Government of Canada to ensure that this fund is capable of matching funding from the provinces' own strategic funding initiatives.
Second, we're requesting that the 10-year extension of the accelerated capital cost allowance currently in place be made permanent for manufacturing and processing, and moreover, that it be broadened to include additional eligible activities, at least to match what's available to our sector south of the border.
Third, in part to attract that additional foreign investment that Minister Morneau and his Barton advisory council have called for, we are recommending that a 100% accelerated capital cost allowance be introduced for a minimum of one full business cycle of seven years, to specifically apply to resource and manufacturing upgrading.
Last, we recommend implementing a special manufacturing and processing tax rate in the form of a two-point M and P reduction.
I'll stop there. Thank you very much for your interest. We look forward to elaborating on and providing some justification for our recommendations.