Industrial production capacity falls again

OTTAWA — Production capacity of Canadian industries fell to the lowest level in more than three years, Stats Canada reports.

For the fourth consecutive quarter, overall production capacity was reduced between October and December in 2006.

At year-end, industries operated at 82.5 percent of their capacity, down from 83.4 percent in the third quarter.

The fourth-quarter rate was 4.6 percentage points below the recent high of 87.1 percent reached in the second half of 2000, when the high technology sector was booming.

Manufacturers experienced a difficult year in 2006 because of the strong Canadian dollar, growing competition by foreign industries and the significant job losses in their sector. This group reduced its production capacity utilization for a fourth straight quarter, with a rate of 81.4 percent, down from 82.2 percent in the previous quarter.

This was the lowest rate posted by this sector since the third quarter of 2003. Overall, 12 of the 21 groups in the manufacturing sector, representing close to 63 percent of total production, used less of their production capacity in the fourth quarter.

Four industries — primary metals (down from 93.6% to 89.3%); wood products (78.5% from 82.6%); transportation equipment (84.4% to 83.1%), and rubber and plastic (76.4% to 73.45) — were strong contributors to the decline in this sector. The computer and electronics products industry, helped to mitigate the decline in the sector.

All sectors which comprise the industrial group posted lower rates in the fourth quarter. For most, this reduction was slight, less than 1 percentage point. The electric power sector, where demand was lower because of the milder than usual weather in 2006, and the mining, oil and gas extraction sector, where two exceptions.

In the mining sector, the rate dropped from 84.5 percent to 81.5 percent during the final three months of the year. The upswing in production for metal and non-metal mines was clearly insufficient to offset the 18.8 percent drop in oil drilling and extraction activities.

Production fell 1.4 percent in the forestry and logging sector.