Canadian Manufacturing Outlook 2023

The last three years have created new challenges for businesses in Canada and globally across most industries, including manufacturing. When KPMG surveyed 50 small- and medium-sized Canadian manufacturers, and 182 large global manufacturers, coming out of the pandemic, Canadian businesses were confident or very confident about the prospects for their companies and the industry (78% and 74% respectively), and global organizations were even more so (84% and 83% respectively).

In fact, almost three quarters of Canadian manufacturers (72%) say that over the next three years they expect their companies’ earnings to increase between 2.5% and 9.9%, and they anticipate increasing headcount by up to 10%.

Their optimism is understandable. Manufacturing is a mainstay of Canada’s economy and has huge potential for our economic future. It accounts for approximately $174 billion (10%) of Canada's total GDP; manufacturers export more than $354 billion each year, representing 68% of Canada's merchandise exports; and the industry provides over 1.7 million full-time jobs across the country.

Canadian manufacturers cite organic growth (18%) (e.g., innovation, R&D investments, new products, and recruitment) and geopolitics (18%) as the most important strategies to achieve their growth objectives over the next three years, likely due to supply chain issues during COVID that led to re-shoring activities as manufacturers explore new options for vendors and suppliers closer to home.

When asked about the greatest threat to growth prospects over the next three years, Canadian manufacturers indicate economic factors (18%), followed closely by Cybersecurity (16%) and Talent (16%).

While the last two years of economic uncertainty, talent scarcity, and increased regulatory changes around everything from cyber to ESG have posed many challenges, Canadian manufacturers have their views fixed on the opportunities of the future. In this report, we outline their perspectives on their operations and the industry, and provide insights on how manufacturers can take advantage of all the opportunities ahead of them, especially with respect to digital transformation, talent, and ESG.

Canadian manufacturers continue to grapple with challenges around digital transformation, talent, and ESG, yet they realize these areas represent important building blocks for growth in today’s post-pandemic world. Knowing where to start on each front can seem overwhelming, but adopting a strategic focus is the key first step.

Whether it’s introducing new technology to drive efficiencies, gain competitive advantage, or reduce risk; finding and sustaining the right talent to grow with the organization for the long term; or making inroads in ESG to support strategic goals and meet stakeholder expectations, starting with understanding the “why” of any of these initiatives is the only way to ensure success. It confirms you’re focused on the issues that resonate most with your organization, people, and purpose; sets a clear benchmark for achievement; and allows you to measure your success. And it’s the only way to experience the bright future we hope for manufacturing in Canada.