Manitoba economy on a roll

August 7, 2008
Winnipeg Free Press
Written by: Martin Cash

Expected to see second-fastest growth in 2008

On the same day that two of Winnipeg's largest manufacturers posted significant increases in sales, the Conference Board of Canada, in its latest provincial outlook, touted Manitoba's economy as the second strongest for 2008.

It is forecasting 3.6 per cent growth in Manitoba in 2008 and 1.7 per cent for Canada. It says the national economy will be dragged down by weakness in demand from the U.S. for the southern Ontario and Quebec auto industries.

The Ottawa think -tank really couldn't ask for better examples to illustrate some of the underlying strengths in the Manitoba economy than Buhler Industries (the only Canadian tractor maker left in the country) reporting a 54 per cent increase in sales and New Flyer Industries (the largest bus company in North America) up more than 13 per cent for the quarter compared to the year before.

As if to further show it knows what it's talking about when it says the province's resilient manufacturing sector is led by strong orders in buses and aircraft parts, Standard Aero has scheduled a groundbreaking ceremony for its new 80,000-square-foot turbine engine overhaul facility expansion for today.

Sabrina Browarski, an economist with the Conference Board, said, "The Manitoba economy has side-swiped the U.S. slowdown."

That is clearly a nifty feat to accomplish and one that is not easily duplicated.

A certain amount of serendipity is certainly required. A spike in natural resource prices like base metals (Manitoba is a large producer of nickel, zinc and copper) has been driven by the industrial growth in China, India, Russia and Brazil. That growth came about partly by the global economy seeking lower cost production (which usually means lower-cost labour) which has then led to increased quality of life for those very same labourers, which led to demand for higher quality diets, which has driven up the price of agricultural commodities.

Manitoba is also a large producer of agricultural commodities.

So Manitoba's economy has been able to benefit from those dynamics. They are the same ones that have helped Buhler Industries sell a lot more tractors (and with the help of its new Russian owners, a lot more in Russia and eastern Europe). The increasing demand for air travel by the burgeoning middle class around the world has increased the demand for the servicing of aircraft engines, which has meant an increase in demand for the specialized services in which Standard Aero has now become a world leader.

But after the New Flyers and the the Standard Aeros and the large financial services companies and communication corporations like Canwest and MTS, the Manitoba economy is dominated by small and medium-sized enterprises.

It is much harder for such entities to survive when their largest export market is approaching a recession and the domestic currency has increased by more than 50 per cent.

Ron Koslowsky, the Manitoba vice-president of Canadian Manufacturers and Exporters, does not have the temerity to say his provincial manufactures have dodged any bullet yet. If you ask him, his members still have their sleeves rolled way up and are busy with their shoulders to the wheel.

"In the past, you would hear people say there's no way they could survive an 80 or 85-cent dollar," he said.

The dollar soared past that ages ago now, it seems, and that grim prospect encouraged many Manitoba companies to buy into the CME's advanced manufacturing or lean manufacturing initiative. Manitoba's metal bashers, parts makers, food processors and equipment makers became much more productive and, over time, more selective when it comes to product mix, dropping items they were no longer competitive in.

"It has allowed a lot of companies to stay in the game and remain competitive, but it has also squeezed the profit picture," he said.

Now, Koslowsky's group is encouraging its members to focus on expanding their trade horizons and use technology and innovation.

The only other province that is expected to grow faster than Manitoba this year is Saskatchewan at 4.2 per cent.

The advantage there is a much more substantial oil patch, a global dominance in potash and a substantial share of the world's uranium supplies.

martin.cash@freepress.mb.ca

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