Canadian factories are increasing production as the economy faces labour shortages, increased international competition and a dollar that has soared to a nearly 30-year high, said Bank of Canada Governor David Dodge.
"Canadian manufacturers have been getting more efficient," Dodge told the House of Commons Standing Committee on Industry, Science and Technology. "Indeed, we have seen a tremendous rebound in manufacturing productivity — output has increased even while the number of jobs has been reduced."
Firms have taken advantage of the strong Canadian dollar to buy new machinery and equipment to boost productivity. The increased productivity and efficiency will improve Canada's international competitiveness in a global economy, said Dodge.
But many factories are having a hard time making those adjustments in light of the mercurial rise of the Canadian dollar, Dodge acknowledged after his speech. About half of firms have said they have been hurt by the strong dollar, he said.
However, in light of these challenges, about 80 per cent of manufacturers are repositioning their operations, something that would have been impossible 20 years ago, said Dodge.
Unlike previous economic downturns in the 1970s and 1980s, today Canadian factories are more flexible and able to make adjustments, he said.