Thank you very much, Madam Chair.
Thank you for the opportunity to address the committee about the growth of Canadian businesses and their contributions to global supply chains. Before I touch on supply chains, I would like to point out a few facts about the domestic and global economic contexts.
Madam Chair, with regard to supply chains and manufacturing matters, industries that produce goods provide high-wage jobs, especially for those who would otherwise earn lower wages. They also contribute to commercial innovation by developing and adopting leading-edge technologies. They are foundational to domestic economic resilience, growth and competitiveness, and are material to our ability to attain environmental sustainability. Finally, they are often the nodes by which domestic industry is connected to other markets through R and D activities and the production of intermediary goods and final products, which cross borders regularly and often.
No nation is manufacturing self-sufficient. This includes the largest economies like the United States and smaller economies like Canada.
Today we are in a period of a heightened protectionism, whereby with whom a country trades has become increasingly more of a factor in industrial policies and incentive-based investment around the world and, by consequence, this is informing how Canadian business and Canadian industrial policy are situated to respond.
The contribution of manufacturing to Canada's economy is in slow decline, falling to 9% of GDP in 2022, down from 15% 20 years ago. While this trend can be in part explained by increased contributions of the financial services and real estate sectors to GDP, Canada's industrial outcomes are directly connected to how well we compete for share in our domestic market and in the global marketplace. If our competitors are taking steps to improve their advantage and Canada falls behind, this is and will be evident in our economic performance and quality of life.
Even though Canada has lost some industrial ground in aggregate, it is evident across all industrial sectors that Canada is a nation of innovators.
For example, Canada has a high-performing digital sector that is top of the charts in business R and D, which in turn supports the performance of all other industries and the growth of new sectors like AI and quantum, and, while oft referred to as “traditional”, our aluminum sector is the fourth-largest globally and is advancing technology to become the first in the world to smelt carbon-free aluminum.
We have a highly innovative textile industry that contributes sustainable high-quality inputs to many other sectors, such as the auto industry, aerospace, apparel, construction, medical devices and so on.
Canada's largest manufacturing sector, food and beverage processing, is making strides in developing forward-leading products in plant-based proteins, which will help with global food security.
Canada's industrial sectors generate 59% of Canada's non-commodity exports and are highly connected to global value chains, but we can be doing better. As Canada continues to make strides to better position our economy and our firms to deal with new supply chain shifts and heightened competition, there are several considerations worthy to bring forward to the committee's attention in the context of global supply chains.
First, pay-to-play dynamics are increasing, meaning that access to clean energy and a strong climate regulatory framework could differentiate Canada as a location of choice for investment.
Second, decarbonization is an emerging international competitiveness concern, and it will determine market access in the years to come.
Third, economic and security concerns are reshaping global alliances and resulting in protectionist policies, many of which can harm Canadian industry. We are not guaranteed protection by our integration in the North American market, but we can make choices that will help support all Canadian industrial sectors in their areas of strength to reinforce their global relevance and competitiveness.
Fourth, there are still gains to be made in innovation and commercialization. If adequate support is offered for advanced technology development and adoption, this will be increasingly significant to competitiveness in a changing environment.
Finally, concerns around material and energy security are increasing in prominence. Canada and like-minded countries are seeking to diversify mineral supplies to address growing uncertainty regarding the security of material resources from countries with hostile trade policies. Canada's resource wealth and manufacturing acumen can be the basis to build global relevancy in this regard while at the same time developing domestic industrial capacity across multiple industrial supply chains.
It also seems an unfortunate circumstance that global conflicts, beyond their terrible human cost, will continue to disrupt the reliability of supply chains and put pressure on costs. The degree to which this will continue is unknown and unknowable at this time.
There are a myriad of market failures that limit private sector business from being able to compete on its own. For this reason, there are government policies and programs. Without government consideration and support, firms could not address structural issues that limit value creation and growth potential. More than ever, Canada needs to be bold and ambitious, lest we lose further ground to those who are raising the stakes to favour their outcomes and market advantage.
Thank you very much.
