Manufacturing

The manufacturing industry continued to experience growth last year. Manufacturing shipments from the Province rose for the fourth consecutive year to approximately $1.6 billion, up two percent from the previous year. Increased food product shipments were the main contributors to this growth, however, improvements were also recorded for wood and non-metallic mineral product shipments. Employment in the manufacturing industry rose by 10 percent over the previous year to 14,300.

Manufacturing is dominated by three main groups: fish products, pulp and paper and petroleum products. However, other sectors have grown in recent years providing employment for an increasing number of people. Products in this category vary considerably and range from advanced technology products -- satellite communications, medical technologies, environmental technologies -- to more traditional products such as footwear and furniture.

Government has introduced a number of initiatives to foster increased manufacturing activity in the Province. Various tax incentives, such as a research and development tax credit for manufacturers, are available and the Province boasts the lowest provincial manufacturing and processing tax rate (five percent) within Canada. The Province's Regulatory Reform Program, designed to eliminate unnecessary regulations that may impede business development, has broken new ground in terms of reducing government bureaucracy. The EDGE Program, which provides tax holidays and other incentives to companies wishing to locate or expand their business in the Province, has also assisted in diversifying the manufacturing base and creating employment.

The harmonization of the provincial RST and the federal GST on April 1, 1997 is another initiative which is being viewed as a positive development for the future of the manufacturing industry. Under the new harmonized sales tax (HST), businesses will be provided with full input tax credits which will result in a lower cost of doing business and lower prices for consumers. Goods and services produced in the Province will become more competitive with those produced elsewhere enabling businesses to better compete both internationally and domestically.

Outlook

The manufacturing sector is expected to post gains again this year. An improved performance is anticipated in both the fishing and mining industries and newsprint demand is expected to improve. The non-resource sector, which accounts for a substantial portion of manufacturing production in the Province, is expected to continue its growth in 1997. Increasingly, the Province is considered to be an attractive place for manufacturing businesses and interest is expected to continue growing as businesses recognize the comparative benefits of locating in the Province.

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