Canadian
food manufacturing are losing ground to U.S. competitors, according an analysis
and commentary by Kevin Grier of the George Morris Centre.
The
Canadian dollar has risen, making imports cheaper and exports more expensive.
Canadian
wages used to be a dollar less per hour than in the U.S.; now they are $3 an
hour more.
Productivity
is slipping. Canadian plants market $383,000 per employee; in the U.S. it’s
$500,000.
Canadian
companies are in a profit squeeze, unable to pass on all of the increased costs
for raw materials. That leaves them less money to invest.
Grier
sees two basic options – the Maple Leaf Foods Inc, route to build large new
plants that can match the U.S. competitors. Maple Leaf has built a huge bakery
and has a huge meat-processing plant under construction, both in Hamilton; it
is closing older, smaller plants.
The
other option “is one of delivering added value or innovation to buyers,” says
Grier.
“Ultimately
it is individual companies that compete within the opportunities or constraints
presented
by provincial or federal fiscal and regulatory parameters,” says Grier after
noting that industry-wide data show our trade deficit for value-added foods
went from $1 billion in 2004 to $6.3 billion in 2011.
“Canada’s
fiscal and regulatory parameters have also come under greater scrutiny in light
of the
par
dollar.,” he writes.
“In
the last five years, federal and provincial governments tried to show their
commitments
to food industry competitiveness through grants and loans. Alberta’s ALMA
program
and the federal government’s AgriProcessing Initiative are two examples.
“Given
the results so far, it suggests that federal and provincial governments need to
put their efforts
elsewhere.
“Questions
regarding the impact of fiscal and regulatory impacts on competitiveness
need to
be answered, or better yet, at least asked,” says Grier.
