Saskatchewan manufacturing jobs shrink, earnings rise

After losing5,000 jobs over the past six years, Saskatchewan manufacturers are hoping they can bounce back.

Pulp and paper plants have shut down in northern Saskatchewan. Meat packing plants moved to bigger locations in other provinces. By 2010, the slowdown from a global recession cut the earningsof Saskatchewan manufacturersby $2.5 billion.

Since then, manufacturing sales have crept back up, reaching $14 billion last year. But the jobs haven't come back.

'There are opportunities to expand manufacturing'

Economist and former Saskatchewan NDP leadership candidate Erin Weir says manufacturing has consistently maintained a stable share of Saskatchewan's economic output. He says the high Canadian exchange rate left manufacturersat a competitive disadvantage.

"I'd really like to see the province focus on developing manufacturing as a means of diversifying the economy," said Weir. "I don't think that Saskatchewan can take anything for granted. Certainly the province has lost some capacity in the forestry sector and in food processing. But at the same time there are opportunities to expand manufacturing."

Industrial construction slowing

"Right now the issue is a lack of work in the construction sector," said Ross Fraser, the general manager at Supreme Steel's plant north of Saskatoon. "That's a combination of a lack of projects and increased competition."

Fraser says his company can produce 100,000 tonnes of steel in a year. His Saskatoon workers make and erect steel "super-structures" that hold up buildings and bridges. They were hired to work on some of the billion-dollar expansions at PotashCorp's Saskatchewan mines.

Currently, Supreme Steel is working on steel frames for Regina's Co-Op Upgrader, for Moose Jaw's new hospital, and for headframes at the proposed BHP Billiton potash mine near Jansen, SK.

But Fraser says procurement policies that force municipal and provincial governments to acceptthe lowest-priced bids have become problematic.

"There's no new competition in Saskatchewan, but there's certainly a lot of interest coming from out of province and out of country," he said.

Fraser said those policies are the reason Supreme Steel recently laid off 40 steel fabricating workers. He now buys that steel from a Chinese company.

"It's made me more cost effective," said Fraser. "I can take more work on here. And I can keep the 80 people I have here working. If I don't do anything, those 80 people might go home. I need work. So it's a bit of a catch-22."

Skilled workers take oil, mining jobs

Other employers have cut jobs due to lower demand for manufactured products. Many say during the slump, skilled workers in Saskatchewan gravitated to the oilpatch and to the mining sector.

Today, finding enoughworkers is the biggest challenge for Gavin Semple, at Brandt Industries. He employs 500 people at his manufacturing plants in Regina.

He says his company is constantly hunting for machinists, engineers, technicians, and welders.

"Our first focus is always to hire locally," said Semple. "But we've been hiring from across the country and other parts of the world, bringing workers from the Phillipines and Ukraine, and from other places."

"Limited success"hiring from central Canada

He says Brandt has had "limited success" in attracting workers from central Canada. As a result, he says his business expansion would be limited, unless Ottawa allows more immigrants into Saskatchewan.

'There seems to be a reluctance on the part of eastern Canadians to move to the west, for whatever reason.' Gavin Semple, Brandt Industries

He said wages have increased dramatically in Western Canada. Last month Statistics Canada reported average weekly earnings in Saskatchewan were $967 per week. The only province with higher-paid workers is Alberta.

"We would far sooner hire Canadians than foreign workers," said Semple. "It's easier, it's less expensive, it's quicker. But we have not been successful in attracting enough people to keep up with our growth."

Productivity rising

According to Canadian Manufacturers & Exporters (CME), the sales-per-employee of Saskatchewan manufacturers - a key measure of productivity performance - has increased 23 per cent since 2008.

"Manufacturing is an industry that is by no means dying," said Derek Lothian, a spokesman for the CME. "We are, however, becoming much better at doing more with less, as workers opt for often higher paying jobs in the more lucrative, but more volatile, resource and construction sectors."

But Supreme Steel's Ross Fraser predicts the years ahead will be challenging for his business.

"It's sort of pulling the rug out from under somebody to send them to technical school for four years, because you're going to achieve a better lifestyle, a better income," he said. "And then go back on the other hand and say by the way, we only give work to the lowest price."

"We're going to train a whole bunch of people in these technical programs at SIAST, they're going to get out, and I think most of them are going to leave the province again."