Manufacturing slips in the face of rail strike, fuel crunch

OTTAWA — Canadian manufacturing showed resilience in the face of a national rail strike, and a major oil refinery fire in February, but factory shipments still edged down.

The supply chain of manufacturers in transportation equipment, chemicals and non-metallic minerals, were most affected by the events in February, Stats Canada reports in its monthly survey of manufacturing.

Manufacturers shipped goods worth an estimated $48.5 billion in February, down 0.2 percent from the previous month but 0.1 percent more than in February last year. Overall, shipments fell in 14 of 21 manufacturing sectors, representing 56 percent of total output.

Petroleum products rebounded 4.6 percent in February,
following the 4.1 percent decline the month before.

Shipments of durable goods dropped 0.5 percent to $26.5 billion on declines in the wood, machinery, computer and electrical equipment industries. Though shipments of non-durable goods rose by 0.1 percent to $22.0 billion thanks to an increase in the petroleum and coal sector.

The transportation sector shipped $9.7 billion worth of goods in February, up 0.6 percent after falling from the recent peak of $10.2 billion in December.

Motor vehicle assembly, parts and accessories industries combined gained 2.5 percent to $7.6 billion, recovering some ground lost in January; while at the same time, aerospace shipments fell 2.4 percent to $1.2 billion.

One of the bright spots for manufacturing was in new orders, which increased 1.9 percent to $50.7 billion, the second highest level in 16 months.

The prices for petroleum and coal products has been up and down as of late, rebounded 4.6 percent in February, following the 4.1 percent decline in January and the 4.6 percent rise in December.

Consequently, shipments of chemicals fell 2.0 percent to $4.2 billion while smelters of primary metals shipped a mere 0.4 percent more — in spite of a 2.8 percent increase in prices of primary metals and a 5.8 percent jump in the price of non-ferrous metals such as copper, zinc and aluminum.

Gains and Losses Evenly Split:

Shipments in Ontario edged down 0.4 percent to $23.6 billion, where the largest decline was in the petroleum and coal industry, due to a refinery fire at Imperial Oil which hampered the province’s ability to supply fuel in the second half of the month.

The rail strike compelled manufacturers to draw
on inventories to maintain production levels.

In Quebec, shipments increased 0.7 percent to $11.6 billion.

Alberta saw an increase of 0.6 percent to $5.5 billion even though 12 of 21 industries reported declines. Petroleum and coal shipments increased 9.5 percent to $1.2 billion.

In B.C. however, the decline in shipments deepened, falling 1.4 percent to $3.4 billion. Overall, 12 of 21 British Columbia industries reported declines, the most significant being the wood industry.

In Manitoba shipments rose 2.3% to $1.3 billion, with the primary metals and transportation industries bouncing back, while in Saskatchewan, shipments fell 5.4 percent to $871 million on lower production of foodstuffs.

Shipments by manufacturers in the Atlantic provinces fell by 1.5 percent to $2.3 billion in February. New Brunswick reported the most significant decrease.

New Orders Hit Highs:

Aside from December’s peak of $50.8 billion, new orders hit the highest level in 16 months in February — an increase of 1.9 percent to $50.7 billion.

The largest gain was in the transportation equipment sector where they increased 11.1 percent. February was a strong month for new orders in the aerospace industry, rising by nearly a billion dollars (+51.0%) to $2.8 billion.
However, the two largest industries for new orders declined, with motor vehicles falling 0.4 percent to $5.2 billion while primary metals orders fell 2.1 percent to $4.3 billion.

Unfilled Orders Surge:

Unfilled orders increased 4.9 percvent to $46.8 billion, the highest level since November 2001.

The transportation equipment sector, in particular aerospace and motor vehicles, typically accounts for half of all unfilled orders in the manufacturing sector.

Inventories Down:

The rail strike compelled manufacturers to draw on inventories in an attempt to maintain production levels. Total inventories for manufacturers fell 0.4 percent to $62.8 billion in February, after hovering near record levels for several months.

While companies in 11 of 21 industries increased their inventories, rail dependent industries such as chemicals (-1.3%) and motor vehicles (-6.2%) used their inventories to tide them over during interruptions in the supply chain.