Thank you for the opportunity to make a presentation today. I do have a few limited copies of my presentation, which unfortunately, due to some last-minute changes, are in English only. I have provided them to the clerk, so I understand they will be distributed later on. But if anyone would like a copy, I certainly have some that I can distribute.
Historically, plastics has always been a vibrant industry, and over the past 10 years plastics GDP has grown at twice the rate of general manufacturing. However, today we find ourselves at a crossroads. One path leads to a substantially decreased presence for the plastics industry in Canada; the other one leads to a path to prosperity. The reality is that in order to achieve prosperity, we need a partnership between industry and the federal government. Here today we want to talk about that partnership.
Before we get into the issues and all the detail, I want to provide a quick overview of the industry. In 2005 it was a $51.5 billion industry, employing over 100,000 people across Canada. We have over 2,400 plants, and our manufacturing growth rate has been twice that of general manufacturing. Over the past year we have had substantial positive growth in the areas of polystyrene foam, plastic pipes, and plastic bags. Overall, year over year, the industry has grown by about 4.3%.
In terms of the end use for plastics, 34% of all plastic products go into packaging, followed by construction at 26% and transportation at 18%. Transportation includes automobiles, auto parts, and everything that goes into that, so I think it surprises people that the number comes in third and is not in a higher place. Construction is an area where we have seen a lot of growth, and we're expecting to see a lot more growth within that sector. Compared to other countries, 26% is a historically larger number for the use of plastics in construction than in other countries. Packaging continues to be number one.
CPIA represents the total value chain in plastics. It includes plastic processors, the resin producers, mould makers, and machinery makers. The industry is a $50-billion-plus one in Canada, and plastic processing occurs in virtually every riding across the country. The industry is widespread and very diversified. The primary components of the $50 billion value chain is processors, which comprise $39 billion, mould makers at $2.5 billion, resin producers at $8.7 billion, and machinery makers at $1.3 billion.
According to Statistics Canada, plastic products manufacturing ranks fourth overall among manufacturing industries. In front of it are automotive industries, auto parts manufacturing, and petroleum refining. Also according to Statistics Canada, the plastics industry is the number one manufacturing sector employer in Canada, just ahead of vehicle parts. I'll get into some of the numbers a little bit later.
According to Statistics Canada, motor vehicles is about a $70 billion industry, petroleum refining is at about $55 billion, with $32 billion for motor vehicles parts, followed by plastics at $22.5 billion. Right behind plastics is pulp and paper at $22.3 billion. In 2004, pulp and paper and plastics exchanged positions, so we were number five and we've moved up to number four.
As to the top five industries by employment, number one is plastics, employing 93,138 people; vehicle parts is at just under 93,000; printing is at 67,000; meat products is at 65,000; and household furniture is at 58,000. So that gives you a sense of where we are compared to the rest of the industries.
About 15 years ago, society began talking about the end of the smokestack industry--which generally referred to manufacturing--and the beginning of a new knowledge-based economy. The reality is that manufacturing is the original knowledge-based economy and continues to be an important part of the Canadian economy. Plastics is a key component of the knowledge-based manufacturing sector. One of the key roles for government is to show that it recognizes the important contribution made by manufacturing to the Canadian economy.
To continue to facilitate the growth and the knowledge-based component of manufacturing, we would recommend that the government re-look at SR and ED tax credits and make them more accessible so that more companies could take advantage of them. This will in turn bring new and innovative products to market.
In terms of the value of manufacturing, most plastic products are based on the refining of natural gas. If you took a dollar of natural gas at the wellhead, you could turn it into a $15 plastic product. We've got a 15-times multiplier in the industry, which is very healthy and very strong. We want to continue to maintain that.
Contrary to popular belief, we don't use a lot of natural resources. Out of the oil and gas sector, plastics consumes about 4%: 88% goes to fuel; about 6% goes to other uses; and about 2% goes to synthetic rubber, paints, and synthetic fibres, which is, I guess, our tie-in to the apparel industry.
One of the key issues of concern to us is the protection of our feedstock. As I've just talked about, we rely very strongly on oil and natural gas. We need an energy strategy to ensure an adequate supply of feedstock for the industry to continue to prosper. You can see that while we only need 4% to produce all plastic products, we still need access to the feedstock to ensure that the manufacturing sector continues within Canada.
CPIA would like to see an end to the non-strategic use of natural gas. The plastics industry is in a unique position in which natural gas and oil are both our feedstock and our source of energy. This is important because as energy prices increase, you hit the cost of production for companies within the plastics industries at two points: one, on the cost of energy and the price of electricity through the use of burning of natural gas, which raises the price of electricity; and also on the cost of resin as well, since natural gas is used as the primary source for the resin.
The industry is at a crossroads. In the next couple of minutes, I'm going to highlight how we've reached this crossroads and what course of action we could take to help determine its future.
The GDP for plastic products has escalated from $4.5 billion in 1996 to $8.1 billion in 2005. However, we've seen a stagnation in the growth rate in the last few years. The year-over-year growth rate for the industry in 2003 and 2004 was equivalent to that of all manufacturing. If you will recall, at the beginning, I said that historically we've been at two times the rate of manufacturing. We've gone from two times the rate to being equivalent in 2003 and 2004. The real cause of concern for us is the fact that the rate of growth for plastics in 2005 has gone below that of all manufacturing. This is a great cause for concern for us. We believe that action needs to be taken; however, it will require the involvement of the federal government.
I will highlight some of our recommendations in detail.
When talking about international trade, as for almost every other product, the United States has been and continues to be the largest trading partner for the plastics industry. For the past several years, there has been a positive balance of trade with the United States. This trading relationship has helped to prop up a positive balance of trade between Canada and the rest of the world. We've seen that if you take out the balance of trade with the United States, our trade balance with the rest of the world, excluding the U.S., is back in negative territory. For the past 10 years we've had a negative balance of trade with all of our non-U.S. trading partners.
We have in fact seen a levelling off of our trade balance with the U.S. in the last three years, since 2003, and we've seen our trade balance with our non-U.S. partners worsen. If this trend continues, we will continue to see declines in our overall trade balance year after year. We feel that the government must put a priority on programs and departments that are responsible for promoting international trade, primarily DFAIT, PEMD, and EDC.
In terms of our relationship with other trading partners, if we look at it from the U.S. perspective, we are the top import source for the United States market. The U.S. imports from Canada about $10.3 billion worth of plastic products, followed by China at $5.9 billion. We are also the top export market for the United States plastics industry. They export to us about $8.6 billion. These are 2004 dollars. We are followed very closely behind by Mexico, to which they export about $8 billion.