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CANADA’S COMPETITIVE ADVANTAGES

MACHINERY AND EQUIPMENT

CANADA’S MACHINERY AND EQUIPMENT SECTOR

CANADA’S KEY STRENGTHS

RESEARCH AND DEVELOPMENT: advanced

materials, machinery design, hybrid technologies,

intelligent systems design and plant design

PRODUCT DEVELOPMENT: engines, transmissions,

electronic systems, bearings, cables, pumps, sensors, valves, fasteners, stampings, castings,

forgings and extrusions

KEY SEGMENT STRENGTHS: automotive, aerospace, metalworking

machinery, extractive field machinery, construction machinery, agribusiness

machinery and equipment, environmental systems

Canada ranks among the world’s top machinery-manufacturing countries. With over 10,000 establishments and a labour force of more than 160,000 workers, Canada’s machinery and equipment industry recorded sales of goods manufactured of $42.9 billion in 2015, and exports accounted for more than 79 percent of all sales.1 Foreign investors in the machinery manufacturing sector can expect to become part of a deep value chain with strengths in a diverse range of verticals including automotive and aerospace metalworking, extractive field machinery, construction machinery, agribusiness machinery and equipment and environmental systems.

» The Canadian economy is specialized in machinery-intensive industries. The sectors of agriculture, mining, oil and gas, utilities, construction, and manufacturing (AMUCM) account for nearly 30 percent of Canada’s GDP2 and companies in these sectors spent over $31.4 billion in 2016 alone on machinery and equipment.3

» The growth of this sector is due in part to the high level of activity in the natural resources sector in Canada. The strong demand for supplies, equipment and technology in Canada’s natural resources sector fosters continuous growth in complementary industries such as machinery manufacturing.

» Between 2003 and 2016, Canada brought in 177 investment projects from foreign companies with operations in the industrial machinery, equipment and tools sector.4

» Canada offers one of the lowest cost structures among advanced economies. Metal machining and precision component operations based in Canada have the lowest business costs of any country in the G7.5

A WEALTH OF OPPORTUNITIESGlobal machinery manufacturers with a Canadian presence benefit from access to the large US market. Because of the integrated nature of the North American Free Trade Agreement (NAFTA) region, global investors can quickly achieve economies of scale in a wide range of industry verticals where Canadian supply chains are highly integrated with corresponding sectors in the US.

1 Statistics Canada, CANSIM 281-0023 using NAICS 333 and 335, 2016. Statistics Canada, CANSIM 301-0008 using NAICS 333 and 335, 2016. Innovation, Science and Economic Development Canada, Canadian Industry Statistics for NAICS 333 and 335, 2017.

2 Statistics Canada, CANSIM 379-0031, 2017.

3 Statistics Canada, CANSIM 029-0045, 2017.

4 Financial Times Ltd., fDi Markets database.

5 KPMG, Competitive Alternatives, 2016.

LBRITISH

CO UMBIA

SASKATCHEWAN

ALBERTAMANITOBA

ONTARIO

QUEBEC

YUKON

NUNAVUT

NEWFOUNDLAND& LABRADOR

PRINCE EDWARD ISLAND

NEWBRUNSWICK

UNITED STATES OF AMERICA

GREENLAND

AALASK(USA)

NOVASCOTIA

NORTHWEST TERRITORIES

Montréal

Ottawa

rTo onto

Québec City

Winnipeg

Saskatoon

Calgary

Edmonton

Vancouver

Niagara

London

Waterloo

Halifax

RECENT INVESTMENTS

MACHINERY AND EQUIPMENT

CLUSTERS are located across Canada, offering a

broad range of capabilities

MACHINERY AND EQUIPMENT CAPABILITY CLUSTERS

» Leading companies include:

WESTERN CANADA:

Black Cat Wear Parts, Buhler Industries, Cameron, Ebco Industries, Enerflex, Flexi-Coil, Hitachi Construction Machinery, Liebherr, Tarpon, Tenaris, Tesco Corporation, Thermo Design Engineering, Weir Group, Winpak

CENTRAL CANADA:

ABB, AP&C, Atlas Copco, Brandt Agricultural Products, Camso, Gerdau, Honeywell, Husky Injection Molding Systems, Illinois Tool Works, Ingersoll Rand, Precision Resource, ShawCor, Tenaris, TMI Climate Solutions, Valmet, Weir Group

ATLANTIC CANADA:

Aspin Kemp & Associates, GN Thermoforming Equipment, MQM Quality Manufacturing, SureShot Solutions, Thomas Equipment

In 2016, US-based HVAC manufacturer TMI Climate Solutions invested

$45 million to create a Canadian subsidiary and a 200,000ft2 (18,580m2) production facility, creating 250 jobs.

In 2016, AP&C, a subsidiary of Swedish-based Arcam AB,

invested $31 million in a new metal powders facility in Saint-Eustache,

Québec, creating 106 jobs.

In 2015, Swiss-based Liebherr invested $24 million in both opening a new mining remanufacturing

facility in Acheson, Alberta and expanding an existing equipment painting facility in Burlington, Ontario.

In 2015, US-based Precision Resource invested $8 million to expand its automotive parts facility

in Cambridge, Ontario, creating 19 jobs.

In 2015, Swiss-based ABB Group invested $70 million to build a

new 300,000ft2 (27,870m2) facility in Montréal, Québec, which will serve as the company’s Canadian headquarters and house both R&D and production.

CANADA’S ADVANTAGES

MARKET ACCESSCanada has highly developed transportation infrastructure and foreign direct investors in Canada’s machinery and equipment sector have duty-free access to the large North American market under the North American Free Trade Agreement (NAFTA). With provisional application of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) in force, companies operating in Canada have preferential market access to more than 40 countries with over 1.2 billion consumers and a combined GDP of over US$41.3 trillion, representing over one-half of the world’s output of goods and services.6 Canada’s free trade agreement with South Korea, its first in East Asia, came into force in 2015, providing a strategic gateway to this dynamic and fast-growing region. Canada is also engaged in trade negotiations with several other countries to strengthen its position as a global export base. These trade agreements allow investors in Canada to benefit from integrated global supply chains and seize new export market opportunities.

DUTY-FREE MANUFACTURING TARIFF REGIMECanada is the first country in the G20 to offer a tariff-free zone for industrial manufacturers, as tariffs on all industrial manufacturing inputs were reduced to zero in 2015. Investors considering their next investment destination now have the advantage of importing advanced machinery and equipment from their parent companies free of import duties. This duty-free treatment, together with Canada’s straight-line depreciation method allowed for manufacturing or processing equipment, means that foreign investors can write off their capital investments in a very short period of time, reducing the carrying costs of their investments in Canada.

SKILLS AND RESEARCHCanada has a world-class higher education system, with 20 Canadian universities ranking among the top 500 universities in the world.7 Canadian universities and institutions offer a number of engineering programs at the undergraduate, graduate and PhD levels, in addition to graduating skilled tradespeople with relevant skill sets in areas such as machining, metalwork, welding, robotics, manufacturing systems, repairs and maintenance, and tool and die making. Canadian manufacturing-sector workers are reliable, staying with their employers for an average of 10 years.8

6 IMF, World Economic Outlook: April 2017.

7 Times Higher Education, World University Rankings, 2016.

8 Statistics Canada, CANSIM 282-0150, 2017.

Canada offers generous programs to support the machinery manufacturing sector:

Many foreign firms are taking advantage of Canada’s expertise through R&D programs and collaboration with research organizations.

» The Scientific Research and Experimental Development (SR&ED) provides income tax credits and refunds for expenditures on eligible R&D activity in Canada on wages, materials, some overhead, and SR&ED contracts.

» The Accelerated Capital Cost Allowance (ACCA) is a program that allows companies to rapidly write off of eligible machinery input investments acquired after 2015 and before 2026 with a 50 percent straight line depreciation rate. The program supports businesses in the manufacturing and processing sectors by helping them retool and provides planning certainty for long-term investment projects.

» The Industrial Research Assistance Program (IRAP) supports innovative R&D and commercialization of new products and services by small and medium-sized firms.

» Export Development Canada (EDC) and Business Development Bank of Canada (BDC) provide flexible financing programs and solutions tailored to support foreign direct investment in Canada.

For more information about these and other programs, please visit: investincanada.com

Canada is also home to world-leading research institutions in industrial manufacturing equipment technologies.

» Natural Sciences and Engineering Research Council of Canada’s (NSERC) Canadian Network for Research and Innovation in Machining Technology – Phase 2 has highly advanced virtual machining technology (VMT), enabling the manufacture of innovative products without resorting to costly physical trials.

» National Research Council Canada performs R&D on advanced materials and manufacturing technologies. Its areas of activity include greener materials and manufacturing processes, lightweight materials, and advanced technologies and composites.

» The Prairie Agricultural Machinery Institute (PAMI) conducts R&D, international standard testing and quality assurance on agricultural equipment. Its engineering expertise also benefits the transportation, military, aeronautics, forestry and mining industries.

» CanmetMATERIALS is Natural Resources Canada’s national laboratory dedicated to metals and materials research, focusing on fabrication, processing and evaluation. Its facilities in Hamilton, Ontario and Calgary, Alberta focus on research in the transportation, energy and metal manufacturing sectors.

» The Integrated Manufacturing Centre (IMC) is a unique Canadian educational resource co-located at Durham College and the University of Ontario Institute of Technology (UOIT), both in Oshawa, Ontario. The fully automated, industrial-grade, flexible manufacturing facility is capable of fabricating and assembling a wide range of products from raw materials, with limited need for human intervention. The IMC serves as a model of the new standards in education in the fields of advanced manufacturing, mechatronics and engineering.

SUPPPORT PROGRAMS AND INNOVATIONSUPPPORT PROGRAMS AND INNOVATION

Global Affairs Canada 111 Sussex Drive, Ottawa, Ontario, K1N 1J1, CANADA

Catalogue number: FR5-38/20-2016E-PDF

ISBN 978-0-660-05225-0

Summer 2017

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AN ENABLING BUSINESS ENVIRONMENT

A WELCOMING BUSINESS ENVIRONMENTCanada is the second best place for business in the G20.

Source: Forbes

A HIGHLY EDUCATED AND TALENTED WORKFORCECanada has the most educated talent pool in the OECD with more than half of its population aged 25-64 having a tertiary level education.

Source: OECD

LOW BUSINESS TAX RATESCanada is the most tax competitive country in the G7.

Source: KPMG

WORLD-CLASS CLUSTERS OF INNOVATION, WITH GOVERNMENT AS PARTNERCanada has strong geographic and sectoral clusters, as well as R&D-intensive sectors with the lowest business costs in the G7.

Source: KPMG

FINANCIAL STABILITYCanada’s banking system, ranked 3rd by the World Economic Forum (WEF), remains one of the soundest in the world following eight consecutive first place standings.

Source: World Economic Forum

A GREAT PLACE TO INVEST, WORK AND LIVECanada ranked first among 60 countries for quality of life. Canada is ranked first in the G7 and G20 for overall prosperity of citizens.

Sources: U.S. News and the Legatum Prosperity Index

CANADA HAS A STRONG AND STABLE business climate

that is open for business, investment, and trade. Canada

benefits from a sound, efficient financial system supported by low taxes and business costs

and a government investing in the innovative, clean, inclusive

economy of tomorrow.

Unless otherwise noted, all values in this publication are in Canadian dollars. The content is based on the latest available information at time of publication. Images: Shutterstock. All rights reserved.