Ontario 2015-2016 - Chemistry Industry Association of Canada

Competitiveness Scorecard – Chemical Sector
Ontario 2015-2016
Ontario accounts for 43% of Canada’s industrial chemical manufacturing. After shrinking for almost 20 years, an
opportunity exists for growth and renewal. Ontario has improved its corporate tax structure and the emergence of
shale gas-derived feedstock opportunities is a game changer. The commercialization of technologies for producing
chemicals from biomass is also a growth area. We recommend the following priorities for policy development so that
Ontario can compete to attract new investment and revitalize its chemical sector:
 Aggressively pursue investment opportunities to augment the already-substantial chemistry cluster in Ontario
 Take action to restore competitive prices for industrial electricity
 Strive for federal-provincial harmonization of regulations to improve industry competitiveness.
CATEGORY
COMPETITIVENESS
COMPARISON
COMMENTS
TREND
Corporate Taxation
and Fiscal Policy
The manufacturing tax rate of 10% is beneficial, and critical,
to achieving competitive advantage. Extension of ACCA for
10 years will help attract new investments to Ontario. Large
deficit and debt require sustained action to bolster investor
confidence. When combined with local-tax based incentives,
new investments are still mainly going to the USGC.
Environment,
Health & Safety
Joint fed/prov effort on Air Quality Management System is a
model that has worked well. A similar approach on climate
change is preferred, but Ontario is planning to move alone.
Retaining competitiveness will be critical to support jobs and
growth objectives. Companies still facing long turnaround
times for Environmental Compliance Approvals.
Manufacturing
Base/Critical Mass
Manufacturing showed good growth in 2014. Continuation
of this trend is important for the health of the chemical
sector given our role as supplier of inputs to almost all other
sectors. The weaker Canadian dollar and lower oil prices may
stimulate export growth and support further expansion.
Energy
(Supply-Pricing)
Ontario’s electricity strategy must include lower-cost supply
options for industry and must address grid inadequacies.
Industrial electricity costs are rising at unsustainable rate.
Low price natural gas offers an opportunity for industrial
renewal across entire Ontario economy.
Raw Materials/
Feedstocks
Early efforts to diversify into industrial biochemicals are
promising. Revitalization of the petrochemical industry is
starting to occur using feedstock from nearby natural gas
resources.
Logistics
Rail freight level of service continues to decline and investors
are concerned. Proximity to U.S. markets is an advantage,
but need to improve two-way market access at the border.
Road infrastructure, cross-border congestion and security
concerns are being addressed.
Workforce Supply/
Construction Costs
Workforce is skilled and productive; demographics indicate
rate of retirement will accelerate, increasing need for new
hires. Project agreements have been positive for new
construction. Labour costs are higher than on U.S. Gulf Coast.
Lower apprenticeship ratios would facilitate greater entry of
youth into workforce; modest gains have been made.
COMPETITIVENESS OVER COMPETING JURISDICTIONS
Advantage
Neutral
Disadvantage
1
Based on indices used by the
World Economic Forum
TREND IN COMPETITIVENESS 2014/2015
Improving
Unchanged
Declining
Who we are – Where we are
Economic Performance




Second among manufacturing industries on basis of exports - $18.8 B
Second in terms of average salary – $67,900; higher still for industrial
chemicals - $81,500
Third largest by value of shipments - $23.3 B, over half due to industrial
chemicals
Sixth largest by level of employment – 40,600
Ontario’s Chemical Sector
Keystone to Value-Added
2