Thank you.
Thank you for having me here today on behalf of Canadian Manufacturers and Exporters. Since 1871, CME has been helping manufacturers grow, improving the well-being of their workers and the communities in which they operate. We are pleased to participate in your study on the contributions of Canadian companies to domestic and global supply chains.
Members of this committee will know better than most that the global supply networks that Canadian firms participate in are in a state of continuous transformation under the influence of complex technological, geopolitical and environmental factors. Amidst this ongoing change, CME continually surveys our members and the domestic and international conditions in which they operate to provide the best advice possible to policy-makers. CME recently released our latest findings and recommendations to revitalize Canada's manufacturing sector in a report entitled “Manufacturing Canada's Future”. We will share that with this committee to support your work. “Manufacturing Canada's Future” provides a comprehensive set of recommendations on how governments can help Canadian manufacturers seize the opportunities presented by the current global environment.
In the next few minutes, I will quickly touch on a couple of issues that we believe are critical to your study.
The first is that Canada must take action to change the trajectory of business investment in the manufacturing sector, which has been weak relative to our global peers for the last two decades. Capital investment is critical for long-term growth and for being competitive in global markets. Increasing our domestic manufacturing capacity will increase our exports. In fact, Canada's investment in the manufacturing sector over the last 20 years has been so sluggish that it has been unable to compensate for the depreciation of existing plants and assets. The stock of capital in Canada's manufacturing sector peaked in 2000 and has been trending down ever since, whereas it continues to climb to record highs in the United States. This is another worrying sign that Canada's manufacturing sector is becoming less competitive on the global stage.
While the federal government can take a range of tax and regulator steps to help incentivize manufacturing business investment, the single most urgent step is to accelerate Canada's response to the Inflation Reduction Act. The race to build and lead the transition to a clean economy is one of the most significant global economic transformations since the Industrial Revolution. The IRA is reordering global supply chains. As budget 2023 correctly noted, “without swift action, the sheer scale of U.S. incentives will undermine Canada's ability to attract the investments needed to establish Canada as a leader in the growing and highly competitive global clean economy.”
CME is pleased that the government has taken many of our direct recommendations and worked closely with the manufacturing sector in developing Canada's response, specifically the five investment tax credits announced in budget 2023. However, Canada must act with more urgency to get these ITCs in place, specifically implementing the clean technology, carbon capture and utilization, and clean manufacturing ITCs. Notwithstanding the eligibility dates for these tax credits, industry is still waiting for the application and policy guidelines. Businesses cannot yet apply, and this uncertainty is impacting business decisions. Global and North American supply chain opportunities are being missed, and they will continue to be until these tax credits are in place.
The second critical issue I'd like to raise, to echo some of my industry colleagues at the table, is around the challenges facing Canada's transportation networks that manufacturers rely on for their inputs and to reach their customers. Recent labour disruptions, capacity constraints and extreme weather-related events have impacted the speed, agility and resilience of our transportation infrastructure and manufacturing supply chains.
Infrastructure that enables transportation and trade is one of the single best economic investments that any government can make, because it makes all the users of that infrastructure more productive. However, unlike many of our competitors, Canada's investments in transportation infrastructure have been made sporadically rather than on a sustained and strategic basis. CME has been working with industry partners and is supportive of the proposal for a Canada trade infrastructure plan to develop an integrated and long-term transportation infrastructure investment strategy.
Lastly, as this committee considers its recommendations for net new supports, programs or other interventions, we would strongly encourage you to reconsider current government initiatives that will harm manufacturers' ability to attract and retain new customers. Specifically, we too have concerns with Bill C-58, the legislation before the House of Commons that will ban the use of replacement workers in federally regulated workplaces. Having just conducted meetings on the economic and reputational impacts of last year's work stoppage at the port of Vancouver, we hope that members of this committee will oppose this or any other measure that will create an imbalance in the collective bargaining process in this country.
Bill C-58 will result in more strikes, and strikes that last longer. These stoppages have significant costs that will be borne by Canadian manufacturers, their workers and their families. More labour disruptions that last longer will mean lost customers and a further decay in Canada's reputation as a reliable trading partner. At a minimum, we are hopeful that the report coming out of this study will acknowledge the negative impacts of Bill C-58 on the manufacturing sector's ability and contributions to global supply chains.
There is a range of other supply chain—