Manitoba manufacturing to lead growth in 2008: forecast

March 11, 2008
Financial Post
Written by: Nicolas Van Praet

While much of the country's manufacturing sector sours under pressure from a stronger dollar and a sputtering U.S. economy, Manitoba has nurtured a mix of thriving goods makers that will help the province outpace all other provincial economies this year, says a new forecast by the Conference Board of Canada.

Strong order books for Manitoba's tractor, bus and aircraft parts makers will push the province's expansion by 3.7% for the second consecutive year, making it the fastest growing provincial economy in 2008, the Conference Board said in a report yesterday.

Companies such as Winnipeg-based New Flyer Industries Inc., the biggest maker of heavy-duty transit buses in North America, and Boeing Co., which makes composite plane structures and sub-assemblies at a facility in Winnipeg, are leading the manufacturing activity.

Orders are also growing at farm equipment makers such Buhler Industries Inc. as the booming agriculture sector shows no sign of slowing.

"The difference with other provinces is striking," said Nancy Bergeron, a Conference Board economist. "It is surprising to see just how well it is doing these days. The high agricultural commodity prices lead to increased farm machinery manufacturing, which is on top of other types of manufacturing that were already doing very well."

Goods production in Manitoba is diversified, which is helping shield it from the kind of slowdown hitting provinces with one dominant manufacturing industry. Manufacturing in Manitoba is expected to grow by an average of 5.5% over the next two years, two percentage points higher than the national average, the Conference Board said.

One out of every four jobs in Manitoba is related to manufacturing, a higher level than in Canada's industrial heartland of Ontario and Quebec, according to Scotiabank Group. For the time being, demand for the province's goods appears strong.

New Flyer's backlog sat at a record 3,090 units as of Jan.9. The company has bids on as many as 6,000 more buses worth US$2.8-billion.

Boeing Winnipeg will supply main landing gear doors and other parts for Boeing Co.'s 787 Dreamliner program. Boeing had booked nearly 600 orders for the plane as of last June, making it the fastest-selling commercial airliner in history.

Buhler was recently bought by Russian combine maker Combine Factory Rostselmash Ltd. Orders are being fuelled by healthy grain prices, said Alex Buchko, head of the financial department at the company.
"The farm community has quite a bit of money," he said. "Combined with some pent-up demand, it's all coming together quite nicely."

By contrast, new research yesterday showed further weakness for central Canada's auto belt. Statistics Canada said automotive exports from Canada sank for a second straight month, falling 9.9% to $5-billion. DesRosiers Automotive Consultants said Canadian light vehicle output plunged 24% in January from year-earlier levels, to 157,610 units. General Motors Corp., Toyota Motor Corp. and Ford Motor Co. reported the biggest cutbacks.

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