Canadian manufacturers hampered by shortage of skilled workers: PwC

The mining, energy and aerospace industries in Canada are booming, according to PwC analysis, but shortage of skilled workers is holding them back. 

Half of Canadian manufacturers who responded to PwC'snew third-quarter 2011 Manufacturing Barometer study said they expect positive hiring over the next twelve months. Only 5 per cent reported they are planning to reduce their workforces, resulting in a net workforce projection of plus 1.2 per cent over the next year.

"Despite some doom and gloom surrounding the manufacturing industry of late, it is not all bad news for Canadian manufacturers," says Calum Semple, Consulting partner and leader of the Operational Turnaround practice at PwC. "The mining, energy and aerospace industries in Canada are booming, creating strong demand for suppliers."

But in the mining, energy, and aerospace industry, 45 per cent said that the lack of qualified workers was a significant barrier to their growth. "While resource-rich industries are key drivers of demand, they also draw substantially on the supply of skilled workers," says Semple. "Energy and mining companies are struggling to find qualified employees and their significant draw on employment is trickling down to their suppliers."

Of the 50 per cent of companies looking to hire within the next twelve months, the most sought-after employees will be professionals/technicians, followed by skilled labour. "The Canadian economy is experiencing a significant shortage of skilled workers at all levels, from welders and engineers to HVAC technicians," says Semple. "This is an opportunity for Canadians looking for skilled employment to boost their incomes, but they may have to be willing to be retrained and relocate, as many of these job opportunities are not in the big cities."

PwC's Manufacturing Barometer is a quarterly business outlook study and includes 38 Canadian-based manufacturers. It provides a twelve-month outlook for revenue growth, M&A, new investments, hiring plans, emerging business trends, together with an outlook for US manufacturers.

Deal making is a sign of strength in a sector and in that regard, fewer manufacturers (26 per cent) are planning M&A activity and expansion to foreign markets than their US peers (35 per cent).

On the flip side, Canada continues to be an attractive place for foreign companies who are looking to new, more stable markets to grow their businesses and offset the concerns of an uncertain global economic environment. Mid-market deals in industrial manufacturing showed surprising resilience in Q3, up 7 per cent over the prior quarter. Interestingly, many industrial deals were in resource vertical sub-sectors, notable transactions included:

Canada's EdgeStone Capital Partners sold Continental Alloys & Services Inc., a US based maker of pipes, tubes and bars used by energy companies, to Reliance Steel & Aluminum Co. for $415 million.

Lufkin Industries, Inc., a US-based supplier of oil field and power transmission products, acquired the assets of privately held Quinn's Oilfield Supply for approximately $303 million. Alberta-based Quinn's manufactures specialty oilfield pumps.

A third of the Canadian manufacturers surveyed also said they are planning new and major capital investments, investments as a percentage of total sales is moderate to high at 7.6 per cent.