By Michael Bourque, Chemistry Industry Association of Canada

With a federal budget coming soon, expect to be bombarded with numbers. Here’s one to keep in mind: since 2002, Canada has lost 500,000 manufacturing jobs. While many of those jobs have gone to China and other developing countries, a significant number have been lost to the U.S. and other developed nations. The upshot? Low-cost labour isn’t the only way to lose a manufacturing plant.

In this globally competitive marketplace, many factors influence investment decisions. Evidence shows that companies typically choose to locate near key markets where there is an abundance of skilled labour, low corporate taxes, efficient regulatory systems and other incentives. Take Canada’s chemistry industry for example: recent investments in the sector were driven by a tax measure called the accelerated capital cost allowance (ACCA) for new machinery and equipment. The federal government introduced the ACCA in 2008 as a temporary measure, allowing businesses to defer taxes normally paid at the beginning of a project – when cash flow is most urgently needed – for a full two years. Since 2008, the government has extended the ACCA twice, securing many new investments that otherwise might not have landed in Canada.

The chemistry sector has long advocated for a permanent two-year ACCA to attract new investment to Canada. Our reasoning is simple: by making large investments here, manufacturers are then committed to operating and employing in Canada, often for a very long time. Those companies will pay taxes, likely for decades, and will create good-paying jobs, as well as jobs in related areas of the economy, such as the legal, financial, telecommunications, food services and technology sectors. In the case of the chemistry industry, the average salary is $70,000 a year, and each job in the sector creates five jobs elsewhere in the economy. How’s that for return on investment?

Canada needs to resurrect its manufacturing sector and new investments are essential to making that happen. But in order to secure those investments, we need to listen to what businesses are telling us, and learn from their decisions. As we approach the federal budget, let’s set our sights on creating competitive tax rates, efficient government processes and a permanent two-year accelerated capital cost allowance. Investments and jobs will only come – and stay – if Canada creates an attractive environment for them.