Fabricated Metal Product Manufacturing: Ontario 2016-2018

Sectoral Profiles provide an overview of recent labour market developments and outlooks for key industries, for various regions of the country.

FABRICATED METAL PRODUCT MANUFACTURING FORGES AHEAD IN ONTARIO

  • Improved economic growth will support the production of fabricated metal goods
  • Steady construction and stronger manufacturing output will boost demand in the industry
  • Companies will seek greater skill sets as the industry relies on more technology
  • Labour market conditions should be rather stable for the fabricated metal product manufacturing industry over the 2016 to 2018 period

Ontario is the top producer of fabricated metal goods in Canada. It is home to more than 40.0% of all fabricated metal manufacturers in the country, which includes most of the large industry players. The province employs close to 43.0% of Canada's labour force in fabricated metal product (FMP) manufacturing.1 This industry is broken down into nine groups based on the type of goods made. Architectural and structural metals manufacturing, and machine shops, turned product, and screw, nut and bolt fabrication employ over one-half of the industry's workforce in Ontario.2 Meanwhile, spring and wire product manufacturing, and cutlery and hand tool production have the fewest number of employees.

FMP manufacturing is a core part of Ontario's industrial base. It is the third biggest employer across the manufacturing industry after motor vehicle and parts, and food processing. Fabricated metal producers supply a wide range of industries as well as households. The vast majority of companies in the FMP manufacturing industry have fewer than 100 employees in the province. Except for the larger producers, most businesses focus on a limited range of goods. This allows smaller manufacturers to compete in the landscape to serve specialized needs. Some of the key end users for the FMP manufacturing industry include construction, automotive, machinery and metal manufacturing, and oil and gas extraction.

Outlook: Employment will likely remain positive in fabricated metal product manufacturing

The FMP manufacturing industry should see steady labour market conditions in Ontario over the 2016 to 2018 period. Although total employment has fallen in this industry over the past decade, it has been rather stable since 2009. Job growth took place in all of the larger sub-industries such as architectural and structural metals, and machine shops, turned product, and screw, nut and bolt fabrication during this time. This helped balance declines in some of the smaller areas such as boiler, tank and shipping container manufacturing, hardware production, and forging and stamping.

While exports are important, most of the demand for fabricated metal products comes from the domestic market. Greater need for these goods from major end users will continue to support employment prospects especially in the bigger sub-industries. Lower metal prices may also keep input costs down, which will give companies an edge and allow them to re-invest. Total revenue in the FMP manufacturing industry rose by 4.0% in 2015 and should stay healthy in the near term.3

Factors that will influence employment in the FMP manufacturing industry

Some of the main aspects behind future growth in the industry include:

  • Economic growth and demand from local industries
  • Success in the global trade environment and foreign competition
  • Labour supply and the shift towards a higher-skilled workforce
  • Future opportunities in new fields as well as material substitution

Increased economic activity in Ontario will keep the demand for fabricated metal products steady

Improved economic activity and industrial output in Ontario will spur demand in FMP manufacturing. Even though industry sales dipped in 2016, conditions should remain positive in the next few years.4 The need for fabricated metal goods mainly stems from the construction and manufacturing industries. The construction industry is one of the largest buyers of these products. Some of the staple items include structural and sheet metal, framed windows and doors, fasteners, hand tools, and industrial vales and pipes. Non-residential and engineering construction is the main driver compared to the residential side. Healthy levels of non-residential construction in the province will encourage production in the FMP manufacturing industry over the forecast period. Significant investments in public infrastructure will increase the construction of roads and bridges, transit lines, water and sewer systems, and healthcare and educational institutions. The start of large-scale nuclear refurbishment projects will also raise orders for items such as boilers, valves and structural metal parts. While residential construction may grow at a slightly slower pace, the ongoing development of high-rise buildings in urban centres like the Greater Toronto Area will further provide work in FMP manufacturing.

Greater activity in the provincial manufacturing base will lift fabricated metal production

An uptick in the provincial manufacturing base will increase the need for fabricated metal goods to maintain production across multiple industries. The greatest demand for these items across the manufacturing industry is from motor vehicle and parts production. Higher automotive sales have led to greater output and investments in the motor vehicle industry in Ontario. This trend will create work for companies such as machine shops, stamping plants, and makers of automotive fasteners. Machinery and equipment manufacturing is another large user of fabricated metal goods. The FMP manufacturing industry should benefit from higher orders for machinery as businesses add production capacity and upgrade equipment. Manufacturers intend to raise capital expenditures by 8.3% in Ontario in 2017, with most of the investment towards machinery and equipment.5 FMP manufacturers also heavily supply the primary metal, aerospace, and electronic and electrical components industries. The backlog of orders in aerospace along with growth for specialized electrical devices may help sustain work for FMP manufacturers. Meanwhile, though the price of steel may be on an upswing lower oil prices will continue to affect overall demand in primary metal manufacturing.

The slowdown in resource-based industries will affect some metal fabricators

Several FMP manufacturers in Ontario make goods for resource-based industries such as oil and gas extraction and mining. Lower oil prices may reduce the need for fabricated metal goods related to drilling and pipeline work in the oil sector. Weaker prices for certain base metals may hinder exploration activities and mining operations particularly in northern Ontario as well. This could affect those that produce mining-related parts and those that supply manufacturers of mining equipment.

Fabricated metal producers see higher global demand

Though the FMP manufacturing industry mainly supplies the domestic market, the industry will benefit from global conditions. In 2016, the provincial FMP manufacturing industry exported about 32.1% of all goods made.6 This figure has risen steadily since 2011, which may indicate that exports are slowly becoming a bigger part of growth. The bulk of shipments went to the United States. Fabricated metal producers will likely benefit from a stronger economic climate south of the border along with the lower Canadian dollar. This should increase the demand for these metal goods and possibly open new doors for some companies in the near term. One area that has seen a large rise in the value of exports over the past few years is architectural and structural metals manufacturing. This could be because of greater activity in the United States construction industry. Ontario's FMP manufacturers are also expanding into other emerging regions such as Mexico and the Asia Pacific. The value of shipments to Mexico has more than doubled between 2014 and 2016. This growth may continue as Mexico builds its manufacturing base and relies more on components from the FMP manufacturing industry.

Similar to many other areas of manufacturing, foreign competition is a growing challenge for companies. The value of FMP imports to Ontario has trended upwards since 2009. Part of this may be because of an overall shift in lower-valued manufacturing away from Canada to lower cost regions such as China. To help offset an increase in imports local producers will have to focus on high-valued goods and niche fields.

Fabricated metal product manufacturing moves to higher skilled labour

Companies in FMP manufacturing require higher-skilled labour to meet the shift towards advanced manufacturing practices. Manufacturers now use more computer-controlled machinery to produce goods and custom products. As a result, workers often require knowledge of numerical tools, robotics, and manufacturing software such as computer-aided design (CAD) and computer-aided manufacturing (CAM). There is also a need for micro-welding techniques in some occupations. To keep up with this change employers will have to invest in skills training to learn the latest techniques to stay competitive.

Fabricated metal producers rely on several manufacturing-related trades in metalworking. Candidates with apprenticeship or college training in related fields as well as those with programming knowledge will likely see better career opportunities. Access to highly skilled labour is crucial for the future success of the FMP manufacturing industry especially as it focuses on specialized goods for a wider range of applications. To promote growth in these skilled trades, there have been a few funding announcements to upgrade apprenticeship-training facilities at local colleges across the province.

Key occupations in the FMP manufacturing industry

The FMP manufacturing industry supports thousands of jobs across Ontario. Some of the larger manufacturing-related trades in the industry are:

  • Machinist and machining and tooling inspectors (NOC 7231)
  • Tool and die makers (NOC 7232)
  • Sheet metal workers (NOC 7233)
  • Structural metal and platework fabricators and fitters (NOC 7235)
  • Welders and related machine operators (NOC 7237)
  • Construction millwrights and industrial mechanics (NOC 7311)

Outside of the trades, some of the main occupations in the industry include:

  • Metalworking and forging machine operators (NOC 9416)
  • Machining tool operators (NOC 9417)
  • Labourers in metal fabrication (NOC 9612)

New areas of growth and potential hurdles for fabricated metal producers

Fabricated metal producers will find opportunities for high performance goods with the move to more advanced manufacturing in Ontario. This will include growth for machine shops to design miniature fasteners and parts as companies produce smaller but more sophisticated devices. Increased regulations and cost saving measures have also led manufacturers, particularly in the automotive and aerospace industries, to seek out lightweight materials such as aluminium. The industry may further find avenues in developing industries such as optomechanics, biomedicine, and fields of information technology.

Although the FMP manufacturing industry should see steady customer demand over the next few years, some trends could affect the industry in the longer term. The move to plastics, ceramics, and carbon fibre components could reduce the need for metal parts. Growth in 3D printing may compete with traditional metal fabrication in certain instances as well. One factor that will help manufacturers deal with these changes and industry-specific slowdowns is to diversify its client base. Many fabricators have grown from serving one core industry to several with unique products to be able to withstand market pressures and turns with greater ease.

A snapshot of Ontario's fabricated metal product manufacturing centres

The FMP manufacturing industry plays a major role in the manufacturing heartland in southern Ontario. Many plants are in close distance to transportation, machinery, and primary metal manufacturing hubs. Labour market activity created by FMP manufacturers helps drive local economies through direct and indirect linkages across the supply chain.

Muskoka-Kawarthas Economic Region

  • This industry is a significant employer in the regional manufacturing base
  • Muskoka-Kawarthas has several small and medium-sized producers of fabricated metal
  • Many of the companies are in large urban centres such as Peterborough and Cobourg

Recent Labour Market Highlights:

  • Kawartha Metals Corp. will move into a larger facility in Peterborough in the spring of 2018. The expansion will lead to about 10 jobs.
  • Havelock Metal Co. will invest more than $1.1M to expand operations at its manufacturing and distribution centre east of Peterborough, which will create 12 jobs

Toronto Economic Region

  • Toronto is home to several of the biggest fabricated metal producers in Ontario
  • FMP manufacturing is the fifth largest employer across the manufacturing industry in this region
  • Toronto employs just under 40.0% of the FMP manufacturing workforce in the province 7
  • Many of the companies in the smaller sub-industries in FMP manufacturing are in Toronto. For instance, more than one-half of all hardware, metal can, stamping, and cutlery and hand tool producers are in the region. This may be because of Toronto's diverse industrial base.

Recent Labour Market Highlights:

  • Elias Custom Metal Fabrication Ltd. will invest about $2M towards new equipment at its Concord plant, which will lead to 10 jobs

Kitchener-Waterloo-Barrie Economic Region

  • Kitchener-Waterloo-Barrie is a hub for FMP manufacturing and has many of the biggest producers in Ontario
  • FMP manufacturing is the third largest employer across the manufacturing industry in this region
  • Kitchener-Waterloo-Barrie employs about 20.0% of the fabricated metal manufacturing workforce in the province
  • The region has a higher share of machine shops, which is likely tied to its firm automotive base
  • A fair number of the big producers are in Cambridge, Guelph, Penetanguishene, and Kitchener

Recent Labour Market Highlights:

  • MTM Automation & Aerospace MFG. Inc. will invest $1.75M in equipment and personnel at its Guelph plant, which will create 6 jobs
  • Colt Canada Corporation received a $32.8M contract to supply rifles to the Government of Canada in September 2016. This will support work at the company's Kitchener facility and lead to 30 jobs.
  • Integrated Metal Products opened a new plant in Guelph in September 2016 that can accommodate 15 additional staff
  • Brotech Precision CNC Inc. will spend $2.5M to expand operations at its Barrie facility. This will lead to 15 jobs.
  • Kromet International Inc. will invest more than $5.3M to upgrade equipment at its Cambridge plant, which will create at least 50 jobs

Hamilton-Niagara Peninsula Economic Region

  • The Hamilton-Niagara Peninsula has several major fabricators given its deep steelmaking industry
  • FMP manufacturing is the fourth largest employer across the manufacturing industry in this region
  • The Hamilton-Niagara Peninsula employs almost 15.0% of the FMP manufacturing workforce in the province
  • The region has a higher share of companies in metal valve manufacturing
  • A number of the big producers are in Hamilton and Welland

Recent Labour Market Highlights:

  • Allied Marine & Industrial will invest more than $4.6M in a new facility in Port Colborne, which will create 16 jobs
  • Cambridge Pro Fab Inc. will spend $9.3M to expand operations at its Brantford plant. The project will lead to 30 jobs.
  • In 2015, Patriot Forge Co. announced that it would invest about $63M to add a new facility to its Brantford site. The project will take five years to complete and will create 75 jobs during this period.

London Economic Region

  • FMP manufacturing employs a sizeable number of residents in London with some of the province's largest fabricators
  • The region employs about 5.0% of the FMP manufacturing workforce in Ontario
  • London has a higher share of machine shops most likely because of the local automotive manufacturing industry

Recent Labour Market Highlights:

  • Marwood Metal Fabrication Limited will receive an investment of up to $4.27M from the Government of Canada towards hot stamping and press technologies at its Tillsonburg plant. This will lead to 70 jobs.
  • Artisan Metal Finishing received a loan of almost $1M from the Government of Canada to double operations at its London facility in the summer of 2015

Windsor-Sarnia Economic Region

  • FMP manufacturing employs a significant share of the region's total manufacturing industry
  • Windsor-Sarnia is home to a few of the province's biggest producers
  • The region employs just under 10.0% of the FMP manufacturing workforce in Ontario
  • More than 40.0% of all local FMP manufacturers are machine shops. This is likely because of the region's strong footing in motor vehicle and machinery manufacturing.
  • Many of the companies are in the larger urban centres such as Windsor, Sarnia, St. Thomas and Chatham

Recent Labour Market Highlights:

  • Peterson Spring Canada Ltd. announced that it would add a new production line at its Kingsville plant in April 2015, which would create 12 jobs
  • Crown Metal Packaging Canada closed its Chatham facility in late 2015. The plant employed 36 staff.

Stratford-Bruce Peninsula Economic Region

  • FMP manufacturing is one of the main areas of manufacturing in the Stratford-Bruce Peninsula
  • The region has several of the larger producers in Ontario
  • The Stratford-Bruce Peninsula employs 3.6% of the FMP manufacturing workforce in the province
  • The region has a higher share of producers involved in miscellaneous fabricated metal product manufacturing
  • Most of the companies are in the Stratford Census Metropolitan Area

Recent Labour Market Highlights:

  • Schaeffler Canada Inc. will invest $13.1M to add two assembly lines and purchase equipment at its Stratford plant. The project will create 44 jobs.
  • Perth Precision Machining & Manufacturing recently expanded operations at its Stratford facility to keep up with product demand

Other Economic Regions in Ontario

  • The FMP manufacturing industry is smaller in other parts of the province such as eastern and northern Ontario
  • Many of the larger companies in eastern Ontario are in Ottawa, Trenton or Belleville, while most of the companies in the North were in the northeast region

Recent Labour Market Highlights:

  • G.H. Metals closed its Smith Falls plant in October 2015, which led to 23 job losses

Prospects in the fabricated metal product manufacturing industry remain positive in Ontario

The FMP manufacturing industry has a vital role in our economy. The industry produces goods that feed into several markets such as construction, manufacturing, and natural resources. Higher demand from the construction industry and increased manufacturing output will boost the need for fabricated metal products in the near term. Opportunities may exist for companies to expand into the global environment, build expertise in advanced manufacturing, and create innovative products for emerging industries. To meet this potential, fabricated metal producers will require access to a skilled workforce that can adapt to more technology in the workplace. The industry will also have to contend with greater foreign competition, and shifts to other materials and concepts such as 3D printing. As FMP manufacturing moves forward, the industry will continue to be a key building block of the province's overall success.

Note

In preparing this document, the authors have taken care to provide clients with labour market information that is timely and accurate at the time of publication. Since labour market conditions are dynamic, some of the information presented here may have changed since this document was published. Users are encouraged to also refer to other sources for additional information on the local economy and labour market. Information contained in this document does not necessarily reflect official policies of Employment and Social Development Canada.

Prepared by: Labour Market Information (LMI) Division, Ontario
For further information, please contact the LMI team.
For information on the Labour Force Survey, please visit the Statistics Canada website.

Footnotes

Footnote 1

Statistics Canada. Table 281-0024 - Survey of Employment, Payrolls and Hours (SEPH), employment by type of employee and detailed North American Industry Classification System (NAICS), annual (persons), CANSIM (database).

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Footnote 2

Ibid.

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Footnote 3

Statistics Canada. Table 301-0008 - Principal statistics for manufacturing industries, by North American Industry Classification System (NAICS), Canada, provinces and territories, annual (dollars), CANSIM (database).

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Footnote 4

Statistics Canada. Table 304-0015 - Manufacturing sales, by North American Industry Classification System (NAICS) and province, monthly (dollars), CANSIM (database).

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Footnote 5

Statistics Canada. Table 029-0045 - Capital and repair expenditures, non-residential tangible assets, by North American Industry Classification System (NAICS), Canada, provinces and territories, annual (dollars), CANSIM (database).

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Footnote 6

Innovation, Science and Economic Development Canada. Trade Data Online.

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Footnote 7

Where provided, this figure is based on 2016 Labour Force Survey estimates from Statistics Canada

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