Regional Manufacturing Profile Montreal Region

REGIONAL MANUFACTURING PROFILE MONTREAL REGION

Montreal 2014 Economic and Demographic Profile Population 4,188,345 Employment* 2,084,333 Manufacturing Share of Employment 11% Unemployment Rate 7% Real GDP ($2007 Millions) 174,289 Manufacturing Share of GDP 12% Manufacturing Hiring Requirement (2014-2023) 57,003 Recruitment Gap (2014-2023) 19,791

*place of residence (POR)

HIGHLIGHTS

The Montreal Region is expected to experience recruitment challenges in the manufacturing industry if retirements occur at the expected rate, creating a recruitment gap of around 20,000 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 professional services. 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 (e.g., utilities).

3) Dependence on net migration: Montreal’s recruitment challenges may be mitigated by the high levels of in-migration the region historically enjoys. The region’s manufacturing industry will 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 Montreal Region will be particularly challenged to find industrial instrument technicians and mechanics, sheet metal workers, machinists and machining and tooling inspectors, and electricians.

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.

MONTREAL

THE MONTREAL REGION Greater Montreal is the largest city in the province of Quebec, and the second most populous metropolitan area in Cana- da after Toronto. The Region receives high levels of international immigration, ranking 6th in North America. It is known for a low cost of living and business operations, which makes it attractive to both individuals and investors. The Region’s rising industries include aerospace, electronic goods, pharmaceuticals, printed goods, and software engineering. The Greater Montreal Region’s economy grew by 1.2% in 2013. The manufacturing segment Real GDP shrank by 1.5% the same year. Manufacturing makes up 12% of the regional GDP as well as 11% of regional employment. The manufacturing industry went through a serious recession in 2008 and 2009, and did not fully recover from that since. The average annual growth of the manufacturing industry is projected to be around the 2-3% level during the next few years. As a result, the industry is expected to expand its workforce in the absence of large technological shifts. In Greater Montreal, the finance and insurance industry made up 20% of total GDP in 2014. Manufacturing, health and social services, and wholesale trade followed with 12%, 7%, and Source: Prism Economics, Strategic Projections Inc. 7% respectively. Other notable industries of the Region include professional services, education, construction, and retail trade. As such, Industry Share of GDP, 2014 manufacturing still makes a significant portion of the Region’s total output, albeit a declining one. The output share of manufacturing was as high as 16% in 2006.This share will remain stable during the next few years due to the projected expansion. Employment in the Greater Montreal Region is spread out to a variety of industries. The big- gest employers are health and social services, retail trade, and manufacturing. Within the manufacturing industry, the top employers are transportation equipment, food, chemical, and machinery sectors. Manufacturing employment has been in decline compared to other industries in the Region. The share of manufacturing employment in total employment declined from Source: Prism Economics, Strategic Projections Inc. 15% to 11% between the years 2006 and 2013. This trend is projected to continue through 2016 to reach 10% of the total workforce in the Greater Montreal Region.

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THE MANUFACTURING OUTLOOK

A longitudinal look at the manufacturing output Annual Change (%) in Manufacturing Output reveals that the industry has already been in decline before the financial crisis of 2009. The reces- Annual Change (%) in Manufacturing Output sion exacerbated this by almost quadrupling the 6 rate of decline in one year. The industry contract- 4 2 ed by 9.2% that year, 4% less than overall Cana- 0 dian manufacturing. The industry barely grew dur- -2 ing the following years, only to revert to a decline -4 in output in 2012. Manufacturing in the Region is -6 -8 forecasted to grow, albeit moderately, during the -10 next three years. -12 -14 The opportunities facing the industry include: -16

 Favourable Canadian vs. U.S. dollar ex- Greater Montreal Canada change rate

 Optimistic U.S. economic growth and demand Source: Prism Economics, Strategic Projections Inc.  Decrease in fuel and transportation costs

 Rising manufacturing machinery and equipment investment

Although manufacturing will maintain its role as an important economic force of the region, its rate of expansion will be surpassed by other industries such as construction, professional services, information and culture, wholesale and retail trade, which are expected to grow by 4% by 2018.

Annual Average GDP Growth by Industry, Montreal, 2009-2018

Professional, scientific, technical services

Construction

Information, culture

Retail trade

Wholesale trade

Other business services Industry 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% 7.0%

Average Annual Growth Rate (%) 2009-13 2014-18

Source: Prism Economics, Strategic Projections Inc.

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The growth of competing industries are expected to translate into higher labour demand. This may create recruitment challenges for manufacturing, especially for those occupations that are also needed by other growing industries such as professional services (i.e. electrical engineers), construction (i.e. construction millwrights and industrial mechanics), 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 Quebec has been investing heavily in machinery and equipment. The chart below displays provincial data and shows an large increase in investment between the years 2009-2014. However, the rise in investment did not produce 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, Quebec, 1991 to 2014

Manufacturing Output and Employment, 1991 - 2014 180 $1.2

160 $1.0 140

120 $0.8

100 $0.6 80

Index Index 100=1991 60 $0.4

40 RateExchange $CAD/$US $0.2 20

0 $0.0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Manufacturing Real GDP Manufacturing Employment Manufacturing Investment Exchange Rate ($US)

Source: Prism Economics, Statistics Canada

POPULATION, DEMOGRAPHICS AND LABOUR FORCE

Population

5 years Growth Rate (2014-18) Region 2006 2013 2018

Montreal 3,819,484 4,132,710 4,425,937 1.4%

Source: Prism Economics, Strategic Projections Inc.

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The population in the Montreal Region has increased moderately over the last decade, increasing from about 3.8 million in 2006 to an estimated 4.1 million in 2013. The Region will continue to grow in population through 2018 to reach over 4.4 million individuals. The growth rate will slightly increase from 1.2% in 2013 to 1.4% in 2018.

In terms of age distribution, the Region will experience severe aging by 2024, when persons over 65 years of age are expected to make up 19% of the total population. The 35-44 age brackets will also increase its share, but the 20-24 age bracket’s share will be shrink. The Region may face labour shortages if it does not keep receiving working-age immigration.

Age distribution of Montreal Population, 2006-2024

1,200,000 2014 2024 1,000,000 65+ 800,000 0-19 65+ 0-19 15% 22% 19% 22% 600,000

400,000 55-64 12% 20-24 55-64 20-24 200,000 7% 12% 5%

- 45-54 25-34 25-34 45-54 0-19 20-24 25-34 35-44 45-54 55-64 65+ 15% 14% 14% 13% 35-44 35-44 2006 2014 2018 2024 14% 15%

Source: Prism Economics, Strategic Projections Inc. THE DEMOGRAPHICS OF THE MANUFACTURING WORKFORCE

The aging manufacturing demographics are even 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 Montreal. The manufacturing workforce is 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.

Montreal, Manufacturing Demographic Distribution

Source: Prism Economics

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The Manufacturing workforce is older compared to other industries in the Region and will face higher replacement demands in the coming years. With 48% the manufacturing workforce over the age of 45, employers can expect to replace 10 to 20 percent of their experienced workers over the next 10 years. 46% of employees in manufacturing are within the 45-64 age bracket, facing retirement in the short-run whereas 2% of the workforce is above 64 years of age, expected to retire during the next 5 years. In contrast, the 25-44 age bracket makes up only 44% of the workforce, not sufficient to replace near-future retirees by itself. Manufacturing needs to reposition itself as an attractive industry for young workers and create training opportunities for the skills needed in the short run.

Age distribution of the Montreal Region Labour Force, Manufacturing and Total (Excluding Manufacturing)

Source: Prism Economics, Statistics Canada, National Household Survey 2011

Despite the positive growth outlook in the Re- gion’s manufacturing sector, employers face two looming supply-side labour market concerns. The THE MANUFACTURING LABOUR first is the local manufacturing workforce is some- FORCE IN MONTREAL IS OLDER what older than other industries in the Region, THAN THE OVERALL WORKING AGE meaning more retiring workers will need to be replaced. POPULATION. THE INDUSTRY MAY FACE RECRUITMENT CHALLENGES The other challenge is the growing competition AS A LARGE NUMBER OF WORKERS for key trades and technical occupations employed by local manufacturers from sectors such RETIRES DURING THE as construction, professional/scientific, utilities NEXT DECADE. and government, which are poised to experience faster growth.

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HIGH NET MIGRATION, REASONABLE BIRTH-TO-DEATH RATIO The population of the Montreal Region experienced a growth of 1.2% in 2013. This was largely due to the influx of migrants, reaching almost 29,000 that year. Migrants made up 61% of population growth whereas new births added 37% in 2013. The share of net births in population growth are expected to decline over the next decade. This will make the manufacturing industry in Montreal even more dependent on net migration for its labour requirements.

Montreal historically receives large numbers of migrants every year, both from other provinces and from other coun- tries. Net migration is expected to increase over the forecast period each year to reach over 40,000 migrants in 2016.

Montreal’s birth rate is above 1% each year, a higher rate compared to some other aging regions such as Halifax. As a result, the Region is expected to have a steady stream of new entrants to the economy, younger generations who will replace the existing workforce. However, trying to replace experienced and skilled employees with inexperienced and in-training youth will pose challenges for the manufacturing industry. The Region is a popular destination for international immigrants, which could provide a solution to the intergenerational skills gap.

Components of Annual Change in Montreal Labour Force, 2007-2019

120,000 100,000 80,000 60,000 40,000 20,000 - -20,000 -40,000 -60,000

Deaths Births Net Migration Total Change

Source: Prism Economics, Strategic Projections Inc.

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COMMUTING WORKFORCE PATTERNS

Montreal is a city receiving a large number of commuters from surrounding areas on a daily basis. Commuters are an important factor con- Only 55% of the city’s workforce reside in the city of Montreal. A significant portion of Laval residents tributing to the labour force of the region commute to Montreal for work. Terrebonne, Blain- in addition to migrants and residents. ville, Bois-des-Filion, and Repentigny on the north, Longueil and Brossard on the southeast, and Dol- lard-Des-Ormeaux on the southeast of the city have 1% to 5% of their residents working in Montreal. The larger Montreal region’s residents do not commute to the city in large numbers (less than 1%).

Places of Residence - Montreal Workforce

Source: Prism Economics

GREATER MONTREAL IS A HUB FOR HIGHER EDUCATION

The Greater Montreal Region has a much higher level of individuals who have a bachelor degree or above, when compared to overall Quebec. This is consistent with the North American pattern of urban centers attracting and re- taining higher educated individuals. Montreal is home to McGill University, Concordia University, and the The Univer- sité de Montréal which are first rate educational institutions attracting students from the rest of the country as well as from around the world. As such, 36% of the Region’s 25-44 year old population holds a bachelor or a higher degree, 7 percentage points higher than overall Quebec. It also has fewer people with no degrees or only a high school diploma than the overall province.

A comparison between the years 2006 and 2011 shows that Greater Montreal’s youth are staying in school for more years. The number of bachelor or higher level diploma holders has increased by 5% in 5 years. Conversely, high school diploma holders declined by 2%. Apprenticeship and trade certificate holders are in slight decline as well as

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Montreal, Highest Level of Educational Attainment, 25 to 44 years

Source: Prism Economics, Statistics Canada RISING EMPLOYMENT, FALLING UNEMPLOYMENT RATES

Employment in the Greater Montreal Region declined by 0.9% in 2009 during the recession, but recovered quickly the next year by growing 2.6%. It has been on a positive growth trend ever since, contributing to a declining unemployment rate. This latter reached its peak in 2009 at 8.5% but dropped to 7.5% by 2013. By 2016, it is projected to decline to 6.2%.

Similarly, the Region’s labour force is expected to keep growing, both due to growing working-age population and higher demand for employment. The participation rate of the Region reached 63.8% in 2013, above the overall Canadian participation rate.

Labour Force, Employment and Unemployment Rate (All Industries), Montreal, 2006-2016

Source: Prism Economics, Strategic Projections Inc.

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MANUFACTURING EMPLOYMENT

Manufacturing accounts for 11 percent of the employment in the Greater Montreal Region. The largest employer is by far the transportation equipment industry with a 17% share. This is largely due to Bombardier’s dominant presence in the Region. Transportation equipment is followed by food, chemical, fabricated metal, and machinery manufacturing. Food manufacturers such as Gate Gourmet or Les Plats du Chef Inc. have large establishments in the Region, contributing significantly to manufacturing employment.

Manufacturing Sub-sectors - Percentage of Total Manufacturing Employment

Source: Prism Economics, Strategic Projections Inc.

Manufacturing industry employment in the Greater Montreal has been declining between 2006 and 2011 at an average annual rate of 3.8%. This decline has continued but for a positive uptick in 2012 with employment growth in many sub- segments, ranging from food to machinery. This was a result of a delayed recovery from the 2009 recession. Manu- facturing employment declined again the next year and will continue to do so during the forecast period, albeit at a slower rate. This trend will widen the employment gap between manufacturing and other industries in the Greater Montreal Region.

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 3 years with minor increases in select industries. Total manufacturing employment in the region is expected to stay within the 220,000- 230,000 band by 2023. Food manufacturing and transportation manufacturing will exhibit modest increases in employment in the medium run and then slightly decline after 2018.

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Total Manufacturing Employment, Montreal, 2006-2023

270,000

260,000

250,000

240,000

230,000

220,000

210,000

200,000

Source: Prism Economics, Statistics Canada.

Food Manufacturing Employment, Montreal, 2006-2023

35,000

30,000

25,000

20,000

15,000

10,000

5,000

Source: Prism Economics, Statistics Canada

Transportation Equipment Manufacturing Employment, Montreal, 2006-2023

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

Source: Prism Economics, Statistics Canada.

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Chemical Products Manufacturing Employment, Montreal, 2006-2023

20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

Source: Prism Economics, Statistics Canada

PROFILE OF MANUFACTURING EMPLOYERS

The Greater Montreal Region has a variety of manufacturing sectors, predominantly composed of businesses with less than 100 employees. The variety of manufacturing in the Region can be documented by the number of “miscellaneous” manufacturing businesses being one of the highest segments among all manufacturing. The most common businesses in Greater Montreal’s manufacturing industry include clothing, printing, fabricated metal, and food. Since 2008, there has been a significant decline in the number of manufacturing establishments in the Region. A total of 822 businesses closed their doors in 5 years. Major declines happened in the 5-9, 10-19, and 20-49 employee brackets. The 1-4 employee establishments largely survived the recession, as well as the 500+ companies.

Change in Number of Manufacturing Establishments by Employment Size Manufacturing Establishments

Source: Prism Economics, Statistics Canada Source: Prism Economics, Statistics Canada

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Number of Manufacturing Establishments, by Segment

Source: Prism Economics, Statistics Canada

Largest Manufacturing Employers

Company Employees Industry

Bombardier Aerospace 16000 Aerospace Product and Parts Manufacturing

TC Média 14000 Printing

CST Canada Co. 3770 Petroleum and Coal Product Manufacturing

CAE Inc. 3500 General-Purpose Machinery Manufacturing

Air Liquide Canada Inc. 2200 Industrial Gas Manufacturing Motor Vehicle Electrical and Electronic Equipment Manufac- Alstom Power & Transport Cda 2000 turing Bombardier Aéronautique 2000 Aerospace Product and Parts Manufacturing

Peerless Clothing Inc. 1800 Men's and Boys' Cut and Sew Clothing Manufacturing

Source: Prism Economics, Statistics Canada

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MANUFACTURING LABOUR MARKET HIRING REQUIREMENTS

The forecasts presented above are based on the projected needs of the manufacturing industry in the DEFINITIONS

region. However, they only calculate the total manufac- Hiring Requirement: The number of workers needed turing workforce, not the hiring requirement. Workers to fill all the positions necessary for full-capacity exiting the labour force also need to be taken into production account in order to estimate the hiring requirements and the recruitment gap facing the industry. Recruitment Gap: The number of workers needed after new entrants to the workforce are taken into account To solve this issue, the labour forecast model devel- New Entrants: Younger generations entering the labour oped for this project examines demographics and force for the first time estimates the number of workers who will retire or die over time, hence exiting the labour force and making Replacement Demand: The number of workers needed up the replacement demand. The hiring requirement is to replace the retiring and others exiting the workforce then the summation of the replacement demand and the expansion demand. It is also the summation of the Expansion Demand: The number of workers needed to new entrants and the recruitment gap. add to the current workforce as the sector grows

The chart below summarizes the results of the labour forecast model for each of these categories. By 2020, Hiring requirement = the projected 18,308 individuals who enter the work- New Entrants + Recruitment Gap force will cover only 58% of the hiring requirements. + Labour Force Change = Therefore, the manufacturing industry in Montreal will need to find additional 14,126 workers (recruitment Replacement Demand + gap) from other industries and other jurisdictions to Expansion Demand fulfill its labour needs.

Labour Demand and Supply in Manufacturing, Montreal, 2016-2020

35000

30000 Expansion Demand 25000 New Entrants

20000 Replacement 15000 Demand

10000 Recruitment Gap 5000

Source: Prism Economics

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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 Montreal’s manufacturing industry. Total Hiring Share of 2014 Occupations Requirement Employment 2014 - 2023 0911 Manufacturing managers 2,136 31% 0016 Senior managers - construction, transportation, pro- 1,997 38% duction and utilities 9446 Industrial sewing machine operators 1,901 43%

7231 Machinists and machining and tooling inspectors 1,273 23% 7452 Material handlers 1,200 25% 1521 Shippers and receivers 1,145 29% 7237 Welders and related machine operators 916 24% 7311 Construction millwrights and industrial mechanics 818 32% 7511 Transport truck drivers 702 43% 9422 Plastics processing machine operators 683 32% 7233 Sheet metal workers 487 56% 2241 Electrical and electronics engineering technologists and 434 26% technicians 2133 Electrical and electronics engineers 432 24% 9522 Motor vehicle assemblers, inspectors and testers 240 17% 9614 Labourers in wood, pulp and paper processing 227 29% 7242 Industrial electricians 188 27% 7201 Contractors and supervisors, machining, metal forming, 173 24% shaping and erecting trades All Occupations in Manufacturing 57,003 26%

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COMPETING DEMAND FROM OTHER INDUSTRIES

In 2014, approximately 11 percent of the local workforce is employed in manufacturing. As employment in other industries grows, this share is likely to decline. Over time, 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

7252 Steamfitters, pipefitters and sprinkler 10% 77% 11% system installers

7233 Sheet metal workers 38% 57% 5%

2132 Mechanical engineers 42% 3% 34.8% 16% Manufacturing 7237 Welders and related machine 58% 10% 30% Construction operators Professional Services 7311 Construction millwrights and industrial 52% 6% 40% Other mechanics

7242 Industrial electricians 34% 14% 50%

7232 Tool and die makers 72% 28%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Source: Prism Economics, Statistics Canada

The above chart illustrates the competition from construction, professional services, and other industries Some industries in the region are better in hiring certain occupations that could present hiring positioned than manufacturing to recruit challenges for manufacturing. These include: the workers they need due to their project-  Sheet metal workers ed faster growth and higher wages (e.g.,  Industrial instrument technicians and mechanics professional services, utilities). Competing

 Welders and related machine operators demand for same occupations will be one

 Machinists and machining and tooling in- of the major complications that manufac- spectors turing hiring managers will face during the next decade.

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The manufacturing industry in the Montreal 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 Que- bec suggests that utilities and mining tend to pay higher wages than other industries, and therefore can exacerbate manufacturing companies’ recruitment challenges.

Wage Differentials across Industries, Quebec, 2007-2013

Total Compensation Per Hour by Industry, Quebec $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $0.0 2007 2008 2009 2010 2011 2012 2013

Mining and oil and gas extraction Utilities Construction Manufacturing Retail trade Transportation and warehousing

Source: Prism Economics, Statistics Canada

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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 Montreal Region for the 2014-2023 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 occasional or chronic recruitment challenges during the next few years. These include occupations such as manufacturing managers, electrical and electronics engineers, and industrial instrument technicians and mechanics. Other professions such as mechanical engineers will also remain difficult to fill partly due to the competition from other industries.

These occupational categories will be in higher demand than others for the manufacturing industry due to demographic challenges. More workers will be retiring from the occupations that are ranked “4” and “5”. 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.

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Technical and Managerial Occupational Rankings, Montreal, 2014-2023

Occupations 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0016 Senior managers (e.g., CEO, CFO) 5 3 4 4 4 4 4 3 3 3 3 3 0911 Manufacturing managers (e.g., plant managers) 5 3 4 4 4 4 4 3 4 4 3 3 2132 Mechanical engineers 5 3 4 4 4 4 4 4 3 3 3 3 2133 Electrical and electronics engineers 4 2 4 3 3 4 4 3 3 3 3 3 2141 Industrial and manufacturing engineers 4 2 3 2 2 3 3 2 2 2 2 2 2211 Chemical technologists and technicians 3 4 4 3 3 3 4 3 3 3 3 3 2232 Mechanical engineering technologists and technicians 4 3 3 3 3 3 3 3 2 2 2 2 2233 Industrial engineering and manufacturing technologists and 5 2 3 3 3 3 3 3 2 2 2 2 technicians 2241 Electrical and electronics engineering technologists and 5 2 4 3 3 4 4 3 3 3 3 3 technicians 2243 Industrial instrument technicians and mechanics 4 4 5 4 4 3 3 2 2 2 2 2 2253 Drafting technologists and technicians 5 2 4 3 3 3 3 3 3 2 2 2 2281 Computer network technicians 4 2 4 3 3 3 3 3 3 3 3 3

Source: Prism Economics

b) Skilled Trades Occupations Rankings

Several skilled trades occupations are projected to pose chronic recruitment challenges during the next few years. Profes- sions such as sheet metal workers, plumbers, transport truck drivers, process control and machine operators, and furniture and fixture assemblers and inspectors will remain difficult to fill partly due to the large retiring workforce. 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 industrial sewing machine operators during the next few years.

REGIONAL MANUFACTURING PROFILE MONTREAL 19 MONTREAL

Skilled Trades Occupational Rankings, Montreal, 2014-2023

Occupations 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 7201 Contractors and supervisors, machining, metal forming, 3 2 2 2 2 3 3 2 2 2 2 2 shaping and erecting trades 7202 Contractors and supervisors, electrical trades and 4 2 4 4 4 4 4 4 3 3 3 3 telecommunications occupations 7204 Contractors and supervisors, carpentry trades 5 2 4 4 4 4 3 3 2 2 2 2 7205 Contractors and supervisors, other construction trades, 5 3 4 4 4 4 3 3 3 2 2 2 installers, repairers and servicers 7231 Machinists and machining and tooling inspectors 4 3 3 3 3 4 4 3 3 3 3 3 7233 Sheet metal workers 4 3 4 4 4 4 4 4 4 4 4 4 7235 Structural metal and platework fabricators and fitters 4 3 3 3 3 2 2 2 2 2 2 2 7237 Welders and related machine operators 3 2 4 3 4 4 4 3 3 3 3 3 7241 Electricians (except industrial and power system) 4 3 4 4 5 4 3 3 3 2 2 2 7242 Industrial electricians 4 2 4 3 3 4 4 3 3 3 3 3 7251 Plumbers 5 4 5 4 4 3 3 3 3 3 2 2 7252 Steamfitters, pipefitters and sprinkler system installers 4 3 4 4 4 4 3 3 3 3 3 3 7271 Carpenters 3 2 4 3 3 3 3 3 3 3 3 3 7301 Contractors and supervisors, mechanic trades 5 3 4 4 4 4 4 4 3 3 3 3 7311 Construction millwrights and industrial mechanics 4 2 3 3 3 3 3 3 3 3 3 3 7452 Material handlers 3 2 3 2 3 3 3 3 2 2 2 2 7511 Transport truck drivers 4 3 4 4 4 4 5 4 4 3 3 3 9422 Plastics processing machine operators 3 2 3 3 3 4 4 3 3 3 3 3 9446 Industrial sewing machine operators 4 2 4 3 4 4 4 4 3 3 3 3 9461 Process control and machine operators, food, beverage 4 2 4 3 3 4 4 3 4 3 3 4 and associated products processing 9522 Motor vehicle assemblers, inspectors and testers 4 3 3 3 3 3 3 3 2 2 2 3 9532 Furniture and fixture assemblers and inspectors 4 3 4 4 4 4 4 3 3 3 3 3 9614 Labourers in wood, pulp and paper processing 4 2 4 4 4 4 3 3 2 2 2 2 9617 Labourers in food, beverage and associated products 4 2 3 3 3 4 4 4 3 4 3 3 processing 9619 Other labourers in processing, manufacturing and 3 2 4 3 3 4 4 3 3 3 3 3 utilities All Occupations in Manufacturing 4 2 4 3 3 4 4 3 3 3 3 3

Source: Prism Economics

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SURVEY RESULTS As part of the Montreal Region labour market forecast project, a survey among manufacturing employers based in the region was conducted to assess their labour needs and perceived challenges. The survey results are not statisti- cally 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 summa- rized in the following chart.

Occupations Posing Recruitment Challenges , Survey Results, 2014

Occupation # Challenge 7231 Machinists and machining and tooling inspectors 8 7201 Contractors and supervisors, machining, metal forming, shaping and erecting trades6 and related occupations 7232 Tool and die makers 4 7272 Cabinetmakers 4 7311 Construction millwrights and industrial mechanics 4 7312 Heavy-duty equipment mechanics 4 2253 Drafting technologists and technicians 4 7301 Contractors and supervisors, mechanic trades 3 2233 Industrial engineering and manufacturing technologists and technicians 3 2241 Electrical and electronics engineering technologists and technicians 3 2281 Computer network technicians 3 7202 Contractors and supervisors, electrical trades and telecommunication occupations2 7204 Contractors and supervisors, carpentry trades 2 7205 Contractors and supervisors, other construction trades, installers, repairers and servicers2 7237 Welders and related machine operators 2 7241 Electricians (except industrial and power system) 2 7242 Industrial electricians 2 7271 Carpenters 2 7303 Supervisors, printing and related occupations 2 7521 Heavy equipment operators (except crane) 2 2232 Mechanical engineering technologists and technicians 2 2234 Construction estimators 2 224 Technical occupations in electronics and electrical engineering 2 2242 Electronic service technicians (household and business equipment) 2 2243 Industrial instrument technicians and mechanics 2 2244 Aircraft instrument, electrical and avionics mechanics, technicians and inspectors2 2251 Architectural technologists and technicians 2 2261 Non-destructive testers and inspection technicians 2 2263 Inspectors in public and environmental health and occupational health and safety2 2282 User support technicians 2

Source: Prism Economics, CME Survey

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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 150.000 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. Therefore, this provides an illustrating point of comparison to the survey.

Wages for Select Occupations across Regions, 2014

Millwrights Machinists $70,000 $60,000

$60,000 $50,000 $50,000 $40,000 $40,000 $30,000 $30,000 $20,000 $20,000 $10,000 $10,000 $- $- Manufacturing - Manufacturing - Manufacturing - Manufacturing - Manufacturing - Manufacturing - Manufacturing - Manufacturing - Manufacturing - Manufacturing - Canada (Survey) Canada Montreal Vancouver Toronto Canada (Survey) Canada Montreal Vancouver Toronto (Wanted (Wanted (Wanted (Wanted (Wanted (Wanted (Wanted (Wanted Analytics) Analytics) Analytics) Analytics) Analytics) Analytics) Analytics) Analytics)

Electrical Trades Tool and Die Makers $70,000 $60,000

Source: CME Survey, Prism Economics, Wanted Analytics

22 REGIONAL MANUFACTURING PROFILE MONTREAL MONTREAL

Finally, the Montreal Region can be compared to other manufacturing hubs across the country in terms of recruitment challenges reported by employers in the survey. 38% of the survey respondents in the Montreal Region report experiencing immediate or chronic recruitment challenges. An additional 38% 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 Montreal Region’s recruitment challenges are less immediate than other manufacturing regions in in Canada with the exception of London, Edmonton, and Halifax. Recruitment challenges are more severe in some other Ontario regions such as Windsor, where 60% of respondents report immediate or chronic challenges. Outside of Ontario, survey respondents from Greater Halifax report minor or no recruitment challenges. Calgary and Edmonton are also facing some recruitment challenges.

Recruitment Challenges across Manufacturing Regions, 2014

Source: CME Survey, Prism Economics

REGIONAL MANUFACTURING PROFILE MONTREAL 23 MONTREAL MONTREAL

CONCLUDING REMARKS AND RECOMMENDATIONS

The manufacturing industry in the Montreal 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, recruitment challenges may 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, construction, 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.

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 MONTREAL MONTREAL

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 Montreal

Prepared by Prism Economics & Analysis for: Canadian Manufacturers & Exporters & the Canadian Skills Training & Employment Coalition

other non-university certificate or diploma holders. This will have an effect on the kinds of professions graduates will look for once they enter the job market and could create shortages for some manufacturing industries.