Thank you very much, Mr. Chair.
Good afternoon. Thank you for inviting me here to participate in today's discussion.
It is my pleasure to be here on behalf of Canada's 90,000 manufacturers and exporters and our association's 2,500 direct members to discuss COVID-19 and Canada's manufacturing sector. Today I want to talk to you about how Canada's manufacturing sector has stepped up in the face of this crisis, how the government support has been critical to this ongoing effort and how we must begin charting a path out of this crisis towards recovery and prosperity for all Canadians.
CME's membership covers all sizes of companies from all regions of the country, and covers all industrial sectors. From the early days of this crisis, we've been working with our members and governments to increase the manufacture and supply of critical PPE and health care technologies needed in the response. We have also been educating and informing manufacturers on the latest developments in the crisis, including how to access government supports and how to protect their employees and supply chains. We have been working to understand the impact on our sector and advocating for policy, regulatory and program supports from all levels of government.
Throughout this crisis, the role and importance of Canada's manufacturing sector has never been clearer or as much discussed. Hundreds, if not thousands, of manufacturers have switched their production to support the making of critical PPE such as masks, ventilators, face shields and gowns. Many in our sector are aggressively working on developing better tests and a vaccine for COVID-19.
Despite the current challenging climate, unlike other sectors, most segments of manufacturing have been able to continue to operate, albeit at much lower production levels. Through the first six weeks of the crisis, through to the end of April, output had dropped by nearly 10% and actual hours worked declined by nearly 30%. Worse, roughly 300,000 Canadians of the 1.7 million directly employed in the sector had lost their jobs. These job losses were heavily concentrated in sectors where consumer demand plummeted, namely automotive, aerospace and energy-related areas. However, were it not for the actions of the federal government, those numbers would have been much worse.
In a recent survey of CME members, 85% of our respondents supported government actions. The most important action taken was the wage subsidy program, with nearly 55% of respondents using the CEWS. This is far and away the most used program, with tax deferral programs coming in second with roughly 30% use. The heavy use of this program can be linked back to the reality that manufacturing can continue to operate, but it is operating with significantly reduced volumes and sales. Sustaining its workforce would have been impossible without the wage subsidy, given the high overhead costs of maintaining manufacturing operations. Today, we're hearing from our members who are rehiring thousands of Canadians as they look to restart and ramp up their production.
While there are a few outstanding issues with the CEWS program, along with the myriad of other programs that have been introduced to support Canadians and the economy, by our count the government actions have been a massive success. At the same time, we believe it is time to plan the next phase of action. We must start scaling back some of these programs and reopening the economy and rebalancing the country's finances.
As the country begins to make the shift, there will be a natural inclination of governments of all stripes to focus on raising taxes to increase revenues to rebalance the finances. This would be a mistake as it would do further harm to the economy, undermine the already fragile business environment and weaken long-term economic activity. Instead, CME is calling on governments to implement a manufacturing-led growth strategy for the country that would expand economic activity, grow government revenues, job creation and exports. Next week, CME will be releasing our prosperity strategy that aims to set this framework for the country.
This three-phase strategy can be summed up the following way. First, governments must reopen the economy and begin to shift support to consumers to get them spending again.
Second, we must focus attention, investment and government procurement with actions that will support long-term economic growth and competitiveness. Specifically this must include trade infrastructure such as roads, railways, pipelines and digital infrastructure, and it must support companies to invest in new technologies to improve their productive capacity. Also, as part of this, we must include and implement some type of “made in Canada” strategy that increases marketing efforts and raises awareness of Canadian-made goods for consumers, businesses and government, as well as our trading partners.
Third, it is time for Canada to get serious about our industrial future and implement a comprehensive manufacturing strategy that can lead Canada's prosperity. Canada's business environment is simply not competitive. Two data points underscore this: first, business investment ranks fifth worst in the OECD and is roughly one-third of OECD averages; and second, Canada's share of global trade in manufactured goods has been cut in half since the early 2000s, a rate of decline that far exceeds other western industrialized nations.
This prosperity agenda must have three priorities. First, focus on driving investment by lowering operating costs, directly supporting technology adoption and fixing skills gaps. A key part of this must be to lower the tax burden and focus on growth rather than company size.
Second, Canada must reduce its complex regulatory system, which often looks like we are actively seeking to stop investment from coming to Canada through actions like the years-long investment approval processes and banning the use of commonly used and needed inputs like zinc, copper and plastics.
Next, we must focus on areas where we have competitive advantages. Creating a natural resources development strategy—
