REGIONAL MANUFACTURING PROFILE

Transcription

1 REGIONAL MANUFACTURING PROFILE EDMONTON REGION *place of residence (POR) Edmonton 2014 Economic and Demographic Profile Population 1,356,339 Employment* 732,065 Manufacturing Share of Employment 6% Unemployment Rate 4% Real GDP ($2007 Millions) 89,246 Manufacturing Share of GDP 8% Manufacturing Hiring Requirement ( ) 14,207 Recruitment Gap ( ) 6,890 HIGHLIGHTS The Edmonton Region will experience notable recruitment challenges in the manufacturing industry, facing a recruitment gap of around 7,000 workers over the next 10 years. The reasons behind recruitment challenges are fourfold: 1) A large demographic challenge: the manufacturing workforce is older than the overall labour force of the region. As these workers retire in the next 10 years, the manufacturing industry is projected to have difficulty filling skilled trades and technical positions. 2) Competition from other industries: occupations such as sheet metal workers, electrical and electronics engineers, and industrial mechanics are also highly demanded in other industries such as construction, utilities, and the oil and gas industry. It will be especially difficult to attract those workers due to faster growth rates experienced by competing industries and higher wages offered in some cases. 3) Dependence on net migration: Edmonton s recruitment challenges may be exacerbated by low levels of in-migration. The region will critically depend on its propensity to receive migrants from other provinces and from outside the country to fill many manufacturing positions during the next few years. 4) Occupational characteristics: some occupations are harder to fill across the manufacturing industry and the country due to low supply. The Edmonton Region will be particularly challenged to find construction millwrights, industrial electricians, machinists and machining and tooling inspectors, and sheet metal workers. Potential solutions to these recruitment challenges include increasing training and apprenticeship in the workplace, advocating for increases in government support for training, promoting manufacturing as a career option, and establishing training consortia.

2 THE EDMONTON REGION Edmonton is the capital, and the second largest city in the province of Alberta, located on the North Saaskatchewan River. It is the north most metropolitan area in North America. Its proximity to the oil sands and diamond mines makes it a hub for resource extraction and management. The raw material industry supports a sizeable manufacturing industry, making the region Alberta s largest manufacturing center. The region s metal and machinery manufacturing carry the whole manufacturing segment forward supplying the oil extraction sector with the necessary equipment. The Edmonton Region s economy grew by Real GDP Real GDP 4.8% in The manufacturing segment only grew by 1.1% the same year. Manufacturing makes up 8% of the regional GDP and 6% of 120, , , regional employment. The industry is dominated by machinery and metal products manufacturing, making up almost 40% of the total manufacturing GDP of the region. The output of these businesses will slow down as a result of the economic slowdown in the oil industry. 60,000 40,000 20, In Edmonton, the finance and insurance industry generated the highest GDP with 17% of total regional output in Construction and mining, oil, and gas industries followed with 12% each. Manufacturing came after these industries with 8%, after a 1.1% growth during the same year. Although the manufacturing sector in Edmonton is expanding in terms of output, and will continue to do so during the forecast period, it is declining in terms of its share of the total GDP. This is due to the faster growth of other industries in the region. Manufacturing employment in the Edmonton Region is concentrated in 5 main industries. The top manufacturing employers are fabricated metal, machinery, and manufactured food producers with 7,756, 5,491, and 4,114 employees respectively. Other notable employers include chemical, petroleum and coal, and plastic and rubber product manufacturers. The difference between manufacturing employment share and GDP share (6% vs. 8%) indicate high labour productivity. Transportation, warehousing, 4% Retail trade, 5% Professional, scientific, technical services, 5% Health, social services, 6% Wholesale trade, 6% Total GDP ($2007 Millions) Annual Growth Rate (%) Source: Prism Economics, Strategic Projections Inc. Industry Share of GDP, 2013 Industry Share of GDP, 2013 Other, 18% Government, 6% Finance, insurance, 17% Construction, 12% Mining, oil and gas, 12% Manufacturing, 8% Source: Prism Economics, Strategic Projections Inc. 2 REGIONAL MANUFACTURING PROFILE EDMONTON

3 Industry EDMONTON THE MANUFACTURING OUTLOOK A longitudinal look at the manufacturing output reveals that the industry has already been in decline before the financial crisis of The recession exacerbated this by increasing the rate of decline in one year. The industry contracted by 15% that year, 2% more than overall Canadian manufacturing. The industry rapidly recovered during the following years and remained in the positive growth zone even in 2013 when manufacturing in the rest of the country was contracting. Manufacturing in the Region is forecasted to grow moderately during the next three years. The opportunities facing the industry include: Favourable Canadian vs. U.S. dollar exchange rate Optimistic U.S. economic growth and therefore demand Decrease in fuel and therefore transportation costs Annual Change (%) in Manufacturing Output Annual Change (%) in Manufacturing Output Edmonton Canada Source: Prism Economics, Strategic Projections Inc. Although manufacturing will maintain its role as an important economic force in Alberta, its rate of expansion will be surpassed by some other industries such as utilities, information and culture, and transportation and warehousing, which are expected to grow at a rate of above 3.5% per year. Annual Average GDP Growth by Industry, Alberta, Professional, scientific, technical services Construction Information, culture Retail trade Wholesale trade Other business services Finance, insurance Government Transportation, warehousing Manufacturing -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Average Annual Growth Rate (%) Source: Prism Economics, Strategic Projections Inc. REGIONAL MANUFACTURING PROFILE EDMONTON 3

4 The growth of competing industries are expected to translate into higher labour demand. This will create significant recruitment challenges for manufacturing, especially for the occupations that are also needed by other growing industries such as professional services (i.e. electrical engineers) and transportation and warehousing (i.e. transport truck drivers). RISING INVESTMENT IN MANUFACTURING AND RISING PRODUCTIVITY OF THE MANUFACTURING WORKFORCE Since the recession hit its lowest point in 2009, manufacturing in Alberta has been investing heavily in machinery and equipment. The chart below displays provincial data and shows an increase of 44% in investment between the years However, the rise in investment did not effect into a similar increase in employment. In fact, the rise in manufacturing output can largely be explained by increasing productivity of the manufacturing workforce. Manufacturing Output and Employment, Alberta, 1991 to 2014 Source: Prism Economics, Statistics Canada POPULATION, DEMOGRAPHICS AND LABOUR FORCE Population Region years Growth Rate ( ) Edmonton 1,116,742 1,331,893 1,466, % Source: Prism Economics, Strategic Projections Inc. 4 REGIONAL MANUFACTURING PROFILE EDMONTON

5 The population in the Edmonton Region has increased soundly over the last decade, growing from about 1.1 million in 2006, to over 1.3 million in The region will continue to grow in population through 2018 to reach 1.4 million individuals. Population growth will largely be fuelled by net migration from Canada and abroad, as well as births which will outweigh deaths in numbers. In terms of age distribution, the region will experience some ageing by 2024, when persons over 65 years of age are expected to make up 15% of the total population. Fortunately the region is not expected to suffer from labour shortages due to expansion in the and age brackets as well. Age Distribution of Edmonton Region Population, Source: Prism Economics, Strategic Projections Inc. THE DEMOGRAPHICS OF THE MANUFACTURING WORKFORCE The aging manufacturing demographics are more pronounced than the overall aging population of the Region. The following chart illustrates the age differential between the manufacturing workforce and the total working age population in Edmonton. The manufacturing workforce is slightly stacked on the right hand side of the graph, with a larger portion of workers over the age of 45 than the total working age population. Edmonton, Manufacturing Demographic Distribution Source: Prism Economics REGIONAL MANUFACTURING PROFILE EDMONTON 5

6 The Manufacturing workforce is slightly older compared to other industries in the region and will face higher replacement demands in the coming years. Still, only 44% of the manufacturing workforce is over the age of 45, a lower rate than many other regions experiencing an older manufacturing workforce. Employers can expect to replace 10 to 15 percent of their experienced workers over the next 10 years. It should be emphasized that the age bracket of years consists of only 10% of the manufacturing industry employment, as compared to 16% for all other industries. This wedge is a result of two patterns dominating the labour market: lack of new and younger hires and lack of interest on behalf of younger generations in working in manufacturing. Age Distribution of the Edmonton Region Labour Force, Manufacturing and Total (Excluding Manufacturing) Source: Prism Economics, Statistics Canada, National Household Survey 2011 THE MANUFACTURING LABOUR FORCE IN EDMONTON IS SLIGHTLY OLDER THAN THE OVERALL WORK- ING AGE POPULATION. THE INDUS- TRY WILL FACE RECRUITMENT CHALLENGES AS A NOTABLE NUM- BER OF WORKERS RETIRES DURING THE NEXT DECADE. The challenges faced by Edmonton manufacturing businesses differ from other regions due to the region s resource-rich economy. Increasing competition emerges from the construction and pipeline industries in hiring similar type of workers as these competing industries go through booms and busts. Recent developments in the price of oil slowed down the competition from the oil industry, which freed up skilled labour and technical workers for the manufacturing sector. In the near future, manufacturing employers will not face significant recruitment challenges. However, in the longer run, retiring workers will compel them to develop additional strategies to attract employees to manufacturing. 6 REGIONAL MANUFACTURING PROFILE EDMONTON

7 SHRINKING NET MIGRATION, REASONABLE BIRTH-TO-DEATH RATIO The population of the Edmonton Region experienced a record growth of 3.6% in This was largely due to the influx of migrants, reaching 37,493 that year. This was an exceptional year. Net migration is forecasted to slow down significantly to drop below 20,000 individuals per year due to the economic slowdown. Still, over individuals will relocate to Edmonton in In addition, the region has a fairly stable birth rate fluctuating around 1.2 to 1.3% a year. This rate outweighs the death rate, contributing to the increase in population year after year. The forecast period is on a declining path in terms of net migration, but net births will remain stable. In total, net migration and net births will provide an annual 26,328 persons on average during 2015 and Components of Annual Change in Edmonton Labour Force, ,000 50,000 40,000 30,000 20,000 10, ,000-20,000 Deaths Births Net Migration Total Change Source: Prism Economics, Strategic Projections Inc. REGIONAL MANUFACTURING PROFILE EDMONTON 7

8 COMMUTING WORKFORCE PATTERNS More than 82% of the workforce in Edmonton and in Fort Saskatchewan reside in greater Edmonton. In Parkland County, St. Albert, and Strathcona County, between 1% to 6% of residents commute to Edmonton. Lac Ste. Anne County, Sturgeon County, Stony Plain, and Leduc County residents do not prefer commuting to Edmonton as less than 1% of their residents work in the city. Heavy commuters around Edmonton are concentrated in the eastern and western sides of the city. Commuters are an important factor contributing to the labour force of the region in addition to migrants and residents. Places of Residence - Edmonton Workforce Source: Prism Economics NEED TO ATTRACT PEOPLE WITH THE RIGHT SKILLS The Edmonton Region does not differ significantly from overall Alberta in terms of educational attainment. It has slightly more college graduates with a bachelor degree or above, and 3% less individuals with no degree. The region faces fierce competition from Calgary in attracting college students and graduates, and therefore is home to almost 10% fewer college graduates than the latter. A comparison between the years 2006 and 2011 shows that Edmonton s youth are getting more educated. The number of bachelor or higher level diploma holders has increased by 5% over 5 years. Conversely, only high school diploma holders declined by 1%. Individuals with no degree are catching up with the rest of the region, dropping from 12% to 9% between 2006 and There is a trend towards staying in school for more years among the inhabitants of the region, which will have an effect on the kinds of occupations they will look for once they enter the job market. 8 REGIONAL MANUFACTURING PROFILE EDMONTON

9 Edmonton, Highest Level of Educational Attainment, 25 to 44 years GROWING LABOUR FORCE, RISING UNEMPLOYMENT Source: Prism Economics, Statistics Canada The latest bust in the oil industry had a big impact on the labour force in the Edmonton Region. Traditionally maintaining low unemployment rates and high level of job openings, the Region was one of the main destinations of migration. The decline in oil prices changed this into rising unemployment rates and fewer job opportunities. The regional unemployment rate is expected to reach its highest level in a decade at 6.2% in Lower oil prices affected the labour force in Edmonton Region negatively. Several workers employed at the oil patches had to relocate and find other jobs, sometimes in other provinces. However, Edmonton s diverse economic base partly compensates for the shifting economic conditions. The labour force and employment in the Region are expected to continue their rise during the next few years. Labour Force, Employment and Unemployment Rate (All Industries), Edmonton, , , , , , , , , , , , Unemployment Ratee (%) Labour Force Employment Unemployment Rate (%) Source: Prism Economics, Strategic Projections Inc. REGIONAL MANUFACTURING PROFILE EDMONTON 9

10 MANUFACTURING EMPLOYMENT Manufacturing accounts for 6 percent of the employment in the Edmonton Region. The fabricated metal products sector employs 19% of the total manufacturing workforce. Machinery and food product industries follow with 14% and 10% respectively. Other prominent manufacturing activities in the region include chemical, plastic and rubber, petroleum and coal, and printing products. The top employer in manufacturing is Lilydale Inc., a poultry processing company with approximately 2,100 employees. The other companies employing more than 500 workers tend to be machinery, metal, and construction manufacturing businesses. Manufacturing Sub-sectors - Percentage of Total Manufacturing Employment Source: Prism Economics, Strategic Projections Inc. Employment levels in the region s manufacturing industry have been in steady decline over the past decade. This decline reached a trough around 2011 when the industry started to recover from the recession. However, the recovery has been gradual, with little employment gains in the total manufacturing employment. Forecasts of manufacturing output for the region project expansion during the next decade, which will translate into a slight increase in employment in the next few years. The upward trend will stabilize around 2018 and employment will remain flat after that. The following graphs illustrate the employment forecast for the top three manufacturing sectors in the region as well as the total manufacturing industry. Employment is expected to recover modestly during the next 8 years with minor increases in select industries. Total manufacturing employment in the region is expected to stay within the 40,000-45,000 band by Food manufacturing and machinery manufacturing will exhibit modest increases in employment in the medium run. Fabricated metal product manufacturing employment will experience a decline due to low demand from the oil industry during the next few years and recover after REGIONAL MANUFACTURING PROFILE EDMONTON

11 EDMONTON Total Manufacturing Employment, Edmonton, ,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Source: Prism Economics, Statistics Canada. Machinery Manufacturing Employment, Edmonton, ,000 5,800 5,600 5,400 5,200 5,000 Source: Prism Economics, Statistics Canada Food Manufacturing Employment, Edmonton, ,500 4,400 4,300 4,200 4,100 4,000 3,900 Source: Prism Economics, Statistics Canada. REGIONAL MANUFACTURING PROFILE EDMONTON 11

12 EDMONTON Fabricated Metal Manufacturing Employment, Edmonton, ,000 8,000 6,000 4,000 Source: Prism Economics, Statistics Canada PROFILE OF MANUFACTURING EMPLOYERS The Edmonton Region has a variety of manufacturing sectors, predominantly composed of businesses with less than 100 employees. The major sectors include fabricated metal products, machinery, printing, furniture, food, and computer and electronic products. These businesses also employ the most workers within the manufacturing industry. The sectors that have more than one establishment with 500 or more employees are machinery and chemical manufacturing. The Edmonton Region is the only area in the country that has experienced an increase in the number of manufacturing establishments since This increase was largely a function of the developments in the fabricated metal and machinery segment which cater to the booming oil industry. In fact, when those two industries are set aside, the remaining segments exhibit the exact same pattern experienced in other parts of North America: a sharp decline in the number of establishments. This trend documents the two-tiered nature of Edmonton s manufacturing industry. Change in Number of Manufacturing Establishments Manufacturing Establishments by Employment Size Source: Prism Economics, Statistics Canada Source: Prism Economics, Statistics Canada 12 REGIONAL MANUFACTURING PROFILE EDMONTON

13 Number of Manufacturing Establishments, by Segment Source: Prism Economics, Statistics Canada Largest Manufacturing Employers Company Employees Industry Lilydale Inc Poultry Processing Stream-Flo Industries Ltd Metal Valve Manufacturing All Weather Windows Ltd Plastic Window and Door Manufacturing Edmonton Exchanger & Refinery 1000 Plate Work and Fabricated Structural Product Manufacturing All Weather Windows Ltd. 800 Wood Window and Door Manufacturing Power Ignition & Controls Ltd. 800 Dreco Energy Services ULC 700 OEM Remanufacturing Company 700 Motor Vehicle Electrical and Electronic Equipment Manufacturing Mining and Oil and Gas Field Machinery Manufacturing Motor Vehicle Gasoline Engine and Engine Parts Manufacturing Source: Prism Economics, Statistics Canada REGIONAL MANUFACTURING PROFILE EDMONTON 13

14 MANUFACTURING LABOUR MARKET HIRING REQUIREMENTS The forecasts presented above are based on the projected needs of the manufacturing industry in the region. However, they only calculate the total manufacturing workforce, not the hiring requirement. Workers exiting the labour force also need to be taken into account in order to estimate the hiring requirements and the recruitment gap facing the industry. To solve this issue, the labour forecast model developed for this project examines demographics and estimates the number of workers who will retire or die over time, hence exiting the labour force and making up the replacement demand. Hiring requirement is then the summation of the replacement demand and the expansion demand. It is also the summation of the new entrants and the recruitment gap. The chart below summarizes the results of the labour forecast model for each of these categories. By 2023, the projected 7,627 individuals who enter the workforce will cover only 54% of the hiring requirements. Therefore, the manufacturing industry in Edmonton will need to find additional 6,890 workers (recruitment gap) from other industries and other jurisdictions to fulfill its labour needs. DEFINITIONS Hiring Requirement: The number of workers needed to fill all the positions necessary for full-capacity production Recruitment Gap: The number of workers needed after new entrants to the workforce are taken into account New Entrants: Younger generations entering the labour force for the first time Replacement Demand: The number of workers needed to replace the retiring and others exiting the workforce Expansion Demand: The number of workers needed to add to the current workforce as the sector grows Hiring requirement = New Entrants + Recruitment Gap + Labour Force Change = Replacement Demand + Expansion Demand Labour Demand and Supply in Manufacturing, Edmonton, ,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Replacement Demand Expansion Demand Recruitment Gap New Entrants Source: Prism Economics 14 REGIONAL MANUFACTURING PROFILE EDMONTON

15 Within the hiring requirement, some occupations are poised to be in more demand than others. These professions tend to concentrate on skilled trades and technical occupations. As the manufacturing industry is going through a transformation of technological advancement, the kind of workers it needs in the future is quickly shifting towards more skilled labour. The next table illustrates some of the occupations that will be most in demand within the next 8 years in Edmonton s manufacturing industry. Occupations Total Hiring Requirement Share of 2014 Employment 7237 Welders and related machine operators % 0911 Manufacturing managers % 7231 Machinists and machining and tooling inspectors % 7311 Construction millwrights and industrial mechanics % 1521 Shippers and receivers % 0016 Senior managers - construction, transportation, production and utilities % 7511 Transport truck drivers % 7452 Material handlers % 7242 Industrial electricians % 7201 Contractors and supervisors, machining, metal forming, shaping and erecting trades % 9422 Plastics processing machine operators 99 34% 9446 Industrial sewing machine operators 98 40% 7233 Sheet metal workers 71 40% 2241 Electrical and electronics engineering technologists and technicians 60 28% 9614 Labourers in wood, pulp and paper processing 60 36% All Occupations in Manufacturing 14,207 35% REGIONAL MANUFACTURING PROFILE EDMONTON 15

16 COMPETING DEMAND FROM OTHER INDUSTRIES In 2014, approximately 6 percent of the local workforce is employed in manufacturing. As employment in other industries grows, this share is likely to decline. Overtime, competing employment demands from outside the manufacturing industry will make the attraction and retention of certain key trades and occupations increasingly more difficult for local manufacturers. The degree of difficulty will vary across occupational groups. Distribution of Employment by Occupational Category across Industries, 2014 Source: Prism Economics, Statistics Canada The above chart illustrates the competition from construction, professional services, and other industries in hiring certain occupations that could present hiring challenges for manufacturing. These include: Sheet metal workers Industrial sewing machine operators Welders and related machine operators Construction millwrights and industrial mechanics Some industries in the region are better positioned than manufacturing to recruit the workers they need due to their projected faster growth and higher wages (e.g., transportation, utilities). Competing demand for same occupations will be one of the major complications that manufacturing hiring managers will face during the next decade. 16 REGIONAL MANUFACTURING PROFILE EDMONTON

17 The manufacturing industry in the Edmonton Region may find itself at a disadvantage in hiring these workers compared to the utilities and professional services sectors because these are both projected to grow faster than manufacturing and may be paying higher wages to attract skilled workers. A quick look at wage differentials across industries in Alberta suggests that utilities and oil and gas industries tend to pay higher wages than other industries, and therefore can exacerbate manufacturing companies recruitment challenges. $80.0 $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 Wage Differentials across Industries, Alberta, Total Compensation Per Hour by Industry, Alberta $ Mining and oil and gas extraction Utilities Construction Manufacturing Source: Prism Economics, Statistics Canada REGIONAL MANUFACTURING PROFILE EDMONTON 17

18 MANUFACTURING LABOUR MARKET SHORTAGE RANKINGS BY OCCUPATION The supply and demand labour market forecast model developed for this project generated forecasts for 45 manufacturing-related occupations. These forecasts estimate the labour demand for each occupation in the Edmonton Region for the period. On the supply side, labour force exits (i.e. deaths and retirements) and new entrants (i.e. younger generations entering the labour force) were taken into account to create labour market shortage rankings for select occupations. The following legend describes the meaning of the ranks ranging between 1 and 5. a) Technical and Technologist Occupations and Managers Rankings Several technical and technologist occupations are projected to pose significant or occasional recruitment challenges during the next few years. These include occupations such as electrical and electronics engineers and mechanical engineering technologists and technicians. Other professions such as industrial instrument technicians and mechanics will also remain difficult to fill partly due to out-migration and competition from other industries. All occupations are expected to pose fewer challenges in the long run as the economy recovers and the Region receives more migration. Presently, human resources managers may need to widen their search beyond the region to find the skills they need during the next few years. The following chart ranks technical and technologist occupations and managerial positions in terms of their recruitment challenges through the forecast period. 18 REGIONAL MANUFACTURING PROFILE EDMONTON

19 Technical and Managerial Occupational Rankings, Edmonton, Occupations Shippers and receivers Mechanical engineers Electrical and electronics engineers Industrial and manufacturing engineers Chemical technologists and technicians Mechanical engineering technologists and technicians Industrial engineering and manufacturing technologists and technicians Electrical and electronics engineering technologists and technicians Industrial instrument technicians and mechanics Source: Prism Economics b) Skilled Trades Occupations Rankings Several skilled trades occupations are projected to pose chronic recruitment challenges during the next few years. Professions such as plumbers, industrial electricians, transport truck drivers, construction millwrights, and mechanic trades supervisors will remain difficult to fill, partly due to the lack of youth interest in skilled trades. These occupational categories will be harder to fill than others in the manufacturing industry due to competition from other industries, demographic challenges, and a limited labour supply. Human resources managers may need to widen their search beyond the region to find machinists, welders, and sheet metal workers. Several skilled trades persons left the region amid economic downturn to take positions in surrounding provinces such as British Columbia and Saskatchewan. As the regional economy recovers, construction and oil and gas industries will start hiring skilled trades in large numbers, which will make it harder for manufacturing businesses to find the right skills at their preferred wage level. REGIONAL MANUFACTURING PROFILE EDMONTON 19

20 Skilled Trades Occupational Rankings, Edmonton, Occupations Contractors and supervisors, electrical trades and telecommunications occupations Contractors and supervisors, pipefitting trades Contractors and supervisors, carpentry trades Contractors and supervisors, other construction trades, installers, repairers Machinists and machining and tooling inspectors Sheet metal workers Structural metal and platework fabricators and fitters Welders and related machine operators Electricians (except industrial and power system) Industrial electricians Plumbers Steamfitters, pipefitters and sprinkler system installers Carpenters Contractors and supervisors, mechanic trades Construction millwrights and industrial mechanics Material handlers Transport truck drivers Plastics processing machine operators Industrial sewing machine operators All Occupations in Manufacturing Source: Prism Economics 20 REGIONAL MANUFACTURING PROFILE EDMONTON

21 SURVEY RESULTS As part of the Edmonton Region labour market forecast project, a survey among employers based in the region was conducted to assess their labour needs and perceived challenges. The survey results are not statistically significant due to small sample size. Nonetheless, they are informative and confirm the findings of the model described above. The occupations that survey respondents identified as posing significant recruitment challenges are similar to the occupations identified by the labour demand forecast model. Survey respondents are facing recruitment challenges in hiring predominantly skilled trades and technical occupations. The occupations cited by respondents are: Machinists and machining and tooling inspectors Industrial electricians Construction millwrights and industrial mechanics Ironworkers Heavy-duty equipment mechanics Sheet metal workers Structural metal and platework fabricators and fitters Steamfitters, pipefitters, and sprinkler system installers Welders and related machine operators Mechanic trades supervisors Electrical trades supervisors Survey respondents also provided information on wages for specific occupations: Wages across Canada, Survey Results, 2014 Source: Prism Economics, CME Survey REGIONAL MANUFACTURING PROFILE EDMONTON 21

22 EDMONTON Compensation is an important factor in recruitment. The chart below reports additional wage data by region. This data was provided by Wanted Analytics which maintains a large database of online job postings across Canada, allowing users to compare information by region, industry, and occupation. The first column reports the CME survey data whereas the remaining columns report Wanted Analytics wage data by region. Overall, survey respondents seem to report higher wages than Wanted Analytics online job postings database. The difference between the survey results and Wanted Analytics wage data stems from several factors: 1. Survey respondents were asked to report the wage they were paying their existing workers in these occupations while Wanted Analytics reports wage data from online job advertisements for new recruits. The differential may be a function of the experience level required in new recruits vs. the experience level of survey respondents employees. 2. Wanted Analytics data is generated using an algorithm that combines wage data from online job advertisements of the last 3 years and some other factors affecting wages. Online job advertisements include a range of positions from apprentices to Red Seal Certificate owners and with titles ranging from industrial mechanic millwright to field service technician. Survey respondents only report the wage they pay to their millwright. 3. The Wanted Analytics database includes over wage samples. Although this number is significantly reduced after selecting for region, job title, and industry, it is still much higher than the wage data reported by each survey respondent. Wages for Select Occupations across Regions, 2014 Source: CME Survey, Prism Economics, Wanted Analytics 22 REGIONAL MANUFACTURING PROFILE EDMONTON

23 Finally, the Edmonton Region can be compared to other manufacturing hubs across the country in terms of recruitment challenges reported by employers in the survey. 33% of the survey respondents in the Edmonton Region report experiencing immediate or chronic recruitment challenges. An additional 24% of respondents reported occasional recruitment challenges. Only 24% of the respondents said they are experiencing no recruitment challenges in the region. Survey results suggest that the Edmonton Region s recruitment challenges are less pronounced than most other manufacturing regions in Canada. Recruitment challenges are more severe in all Ontario regions including Sudbury, where 72% of respondents report immediate or chronic challenges, and London where 54% do. Outside of Ontario, survey respondents from Greater Halifax report minor or no recruitment challenges. Calgary also faces recruitment challenges similar to Edmonton s experience. Recruitment Challenges across Manufacturing Regions, 2014 Source: CME Survey, Prism Economics REGIONAL MANUFACTURING PROFILE EDMONTON 23

24 EDMONTON CONCLUDING REMARKS AND RECOMMENDATIONS The manufacturing industry in the Edmonton Region is positioned for modest growth during the next decade. Output growth will not translate into large gains in employment due to increasing investment levels and rapidly improving productivity of the manufacturing labour force. As a result, the industry will not face severe recruitment challenges to fill new positions added to the manufacturing workforce. Instead, significant recruitment challenges will present themselves as a result of the retiring workforce. The manufacturing industry s demographics demonstrate a larger segment over the age of 55 than the overall working population. This will result in high replacement demand during the next few years and even in the longer run. Recruitment challenges will not be ubiquitous across all occupations. As the manufacturing industry becomes more technologically advanced, the kinds of jobs needed to maintain full capacity output are shifting towards more skilled trades and technical occupations. Both model and survey results confirm this point, identifying these occupations as the main culprits of recruitment challenges now and in the projected future. Moreover, these recruitment challenges will be exacerbated by competition from other industries poised to grow faster. These industries include professional services and information and culture. Occupations needed by other industries which tend to pay higher wages (i.e. utilities, mining and oil extraction ) are especially prone to generating recruitment challenges for the manufacturing sector as they recover from the economic slowdown. Based on this state of the manufacturing labour force, the industry needs to respond as a whole before the recruitment challenges become unmanageable. Some potential solutions to the problem include: Increasing training and apprenticeship in your workplace Collaborating with other regional employers and stakeholders Advocating for increases in government support for training Working with educational institutions to ensure programs meet industry needs Promoting manufacturing as a career option Establishing training consortia 24 EGIONAL MANUFACTURING PROFILE EDMONTON

25 This Regional Manufacturing Profile was prepared for the project Regional Labour Market Information to Address Skills and Human Resources Issues in the Manufacturing Sector. This project is sponsored by the Canadian Manufacturers & Exporters and the Canadian Skills Training and Employment Coalition. This project is funded by the Government of Canada s Sector Initiatives Program. The opinions and interpretations in this publication are those of the author and do not necessarily reflect those of the Government of Canada. REGIONAL MANUFACTURING PROFILE Edmonton Prepared by Prism Economics & Analysis for: Canadian Manufacturers & Exporters & the Canadian Skills Training & Employment Coalition