Machinery and Equipment Industry | The Canadian Encyclopedia


Machinery and Equipment Industry

Machinery and Equipment Industry includes establishments that produce pumps and compressors, rolling-mill and metalworking equipment, forestry equipment, mining equipment, farm machinery, construction equipment and service industries equipment.

Machinery and Equipment Industry

Machinery and Equipment Industry includes establishments that produce pumps and compressors, rolling-mill and metalworking equipment, forestry equipment, mining equipment, farm machinery, construction equipment and service industries equipment. The largest resource industry users of machinery in Canada are mining, forestry, petroleum and electric-power generation. Among Canadian manufacturing industries, the largest purchasers of machinery and equipment are the metalworking industries, including steelmaking, the automotive industry and the machinery industry itself. Other large user industries are food processing, packaging and air and water purification. Machinery and equipment are made in foundries, machine and welding shops and assembly plants.

It was not until the 1850s, when a reciprocity treaty opened the booming US market to Canadian manufacturing industries, that machinery and equipment production moved from small forges and metalworking shops to the early versions of today's large plants.

It is estimated that, at the time of Confederation (1867), about 30 to 40 firms were manufacturing machinery and equipment for other industries; by 1967 there were 15 Canadian machinery firms 100 years or older. Some, such as Dorr-Oliver Canada Ltd in Orillia, Black Clawson-Kennedy Ltd in Owen Sound and Babcock-Wilcox Canada Ltd in Cambridge, are now among the country's largest.

The earliest companies manufactured primarily steam engines, hydraulic turbines, pumps, woodworking machinery, machine tools and flour-mill, cement-making and sawmill machinery. The plants were initially powered by waterwheels, water turbines or steam engines. At the end of the 19th century, the advent of large thermal and hydroelectric power plants, with their far-flung distribution systems, started a new phase in machinery manufacturing. Factories were located near markets and transportation networks. The availability of large, efficient electric motors permitted the design of more powerful machinery.

As its customer industries proliferated and expanded, machinery manufacturing grew. WWI accelerated the demand for more and newer types of machinery, giving the industry maturity and a permanent place in Canada's economy. It expanded until the Great Depression of the 1930s, when all sectors encountered nearly a decade of minimal growth. With WWII, enormous demands were again imposed on the industry. The boom was followed in 1945 by a period of conversion and expansion for production of peacetime materials and goods for the domestic market and for the immense rebuilding requirements in Europe. These events called for new machinery on an unprecedented scale.

Annual plant shipments of Canadian machinery and equipment grew from $60 million in 1938 to $460 million in 1950. The industry enjoyed a continuous and above-average growth rate until 1981, after which it followed the rest of the Canadian economy into a severe recession. Industry sales dropped from $6.1 billion in 1981 to $4.86 billion in 1982. Production has since then risen steadily and reached $6.4 billion in 1985.

The Modern Industry

The modern Canadian machinery and equipment industry is heavily dependent on export markets: between 1975 and 1985, exports accounted for 62% of the industry's real growth. Increasing exports were necessary to sustain growth because the indigenous Canadian market is too small, even for manufacturers who concentrate on producing machinery for larger Canadian industries.

In 1985 the industry exported 51% of its production, with $2.8 billion or 75% of exports going to the US. Conversely, a country with Canada's small population cannot manufacture the entire range of machinery and equipment needed by all its industries. In fact, in recent years Canadian machinery and equipment manufacturers have never managed to capture more than about one-third of the domestic market.

A 1977 study of the 17 largest Western industrial nations by the OECD showed that Canada had the lowest machinery self-sufficiency in the group (32%). By comparison, figures for some of the other countries were Italy 60%, West Germany 70%, France 74%, the US 91% and Japan 95%. A 1985 study showed Canada's machinery self-sufficiency still to be only 31%.

Location of Plants

About 64% of the machinery and equipment industry (by dollar value of plant shipments) is found in Ontario; Québec has 20%; the Prairie provinces 9%; BC 6%; and the Maritimes 1%.


It is estimated that in the 1980s about 225 firms in the Canadian machinery sector, accounting for about 62% of its total output, were subsidiaries of American parent companies. Only about 25% came from Canadian-controlled companies. FOREIGN INVESTMENT has provided ready access to the technical, financial and marketing resources of parent corporations. It has also created an outflow of profit capital and, in some cases, has restricted company activity.

Work Force

Machinery and equipment manufacturing is a labour- and technology-intensive industry, employing large numbers of engineers and skilled tradesmen. The industry work force has grown, but in less than direct proportion to the value of its shipments because of productivity improvements. Employment increased from 13 500 in 1949 to 112 000 by 1967, to 132 000 by 1981. By 1983 the work force was down to 102 000. While the industry's output increased by 33% from 1983 to 1985, its work force increased by only 8%. The low employment increase primarily resulted from large productivity gains provided by the implementation of new computer-assisted design and manufacturing technologies during this period. The 3 major unions are the International Association of Machinists and Aerospace Workers, the United Steelworkers of America and the Canadian Auto Workers.


The Machinery and Equipment Manufacturers Association of Canada was established in 1955 in Ottawa to provide a forum for technical, economic, educational and other deliberations, and for representation to the government, the public and the media.

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