November 13, 2012
Canada’s Industrial Structure Revealed in its Foreign Trade Statistics - Part 2
It’s an increasingly integrated world economy in which Canada must compete for export sales.
It’s always been the case that Canada’s economic prospects have depended to a large extent on foreign trade. This used to be mainly with the United States.
In the future, though, we’ll be supplying more goods to other nations around the world.
In particular, we’re likely to have more trade relations with emerging nations. Their interest in our raw materials is only going to grow stronger.
The import side of the equation is also important, but this article will concentrate primarily on exports – since that’s where the greatest potential for new jobs and revenue growth lie.
What follows is a litany of statistics and percentages. They do, however, yield insight into what is currently working for us and where our best opportunities may lie.
Regionally, which of our provinces are the export powerhouses?
Ontario is by far the nation’s leader, accounting for 38% of all exports. In second place is Alberta at 22%.
The next major players are Quebec (14.3%), British Columbia (7.4%) and Saskatchewan (7.3%).
Notice how B.C. and Saskatchewan are almost tied. That’s amazing given that B.C.’s population is much larger than Saskatchewan’s and its location on the Pacific Coast gives it a natural advantage in trade with Asia Pacific.
But B.C. has been handicapped in forestry exports by a U.S. housing market that has been moribund until recently while Saskatchewan has come on strong in energy, potash and other natural resources.
In the Atlantic region, Newfoundland and Labrador (2.7% of total Canadian exports) has expanded its trade role through energy and metal exports, but it still falls behind New Brunswick (3.5% of total Canada).
Let’s look at some of the specifics on provincial export sales. This data often reveals a great deal about the industrial structure of a region.
Ontario’s exports so far this year have been led by motor vehicles and parts and by metal and non-metallic mineral products (iron, steel, aluminum, base and precious metals). The former are +19.1% while the latter are -2.5%.
By the way, Ontario has accounted for 86% of national motor vehicle and parts exports year to date in 2012.
As to be expected, Alberta’s exports are totally dominated by energy products (+5.4% year to date). A distant second are “basic and industrial chemical, plastic and rubber products” (-7.7% year to date) – in other words, the province’s petrochemical industry.
Alberta’s share of total Canadian energy exports so far this year has been 65% or nearly two-thirds.
Quebec’s exports are led by “metal and non-metallic mineral products” (-13.5%), consumer goods (+5.1%), aircraft and other transportation equipment (+5.8%) and forestry products (-1.3%).
B.C. is strong in forestry products (+1.0%) and energy products (-14.0%). While almost every province in Canada exports lumber and related products, B.C. is well ahead of all others, contributing nearly a third of the national total.
Saskatchewan’s main exports are energy products (+21.6% year to date), agricultural products (+16.6%) and metal ores and non-metallic minerals (-8.0%). Included in the latter are potash (-5.8%) and uranium (-12.2%).
In agricultural exports nationwide, the strongest performers are Ontario and the three Prairie provinces. Saskatchewan is at the head of the class, followed by Alberta. Manitoba and Ontario are about tied for third position.
New Brunswick’s main export is “energy products” (+7.7% year to date), followed by petrochemical products (-18.7%) and forestry products (+1.1%). The province has to be pleased that U.S. housing starts are finally on a more aggressive recovery path.
Thanks to its offshore oil projects, Newfoundland and Labrador has now become a major force in energy export sales (+9.7% so far this year). Backing up that success, has been a greater role played by metal ores and non-metallic mineral exports (+7.7%). The Voisey’s Bay project in Labrador deserves much of the credit on that score.
When the giant Muskrat Falls hydroelectric project is up and running, the province will make even greater gains in energy exports. Some of the power will be traveling by undersea cable to Nova Scotia and New England.
A note of caution should be introduced about that project, however. Opposition members in Nova Scotia’s parliament are beginning to question escalating cost estimates. They’re worried about how much of the bill their province will be stuck with.
As for the U.S. trade position, that nation’s goods and services exports rose 3.3% in September while imports climbed a slower 1.5%. As a result, the U.S. goods and services trade deficit fell slightly to -$499 billion USD from -$526 billion the month before.
Analysis of Canada's foreign trade position usually focuses on the Merchandise Trade Balance which is goods exports minus goods imports.