Canadian Packaging Machinery Market Research Report - PMMI

1.0 THE CANADIAN MARKET ENVIRONMENT
1.1 INTRODUCTION
Canada has an affluent economy that is closely integrated with that of the United
States, resembling not only U.S. per capita output, but also its market-oriented
economic system, pattern of production, and high standard of living. In the years
since the Second World War, impressive growth in the manufacturing and service
sectors has transformed the nation from a largely rural economy into one primarily
urban and industrial; although much of Canada’s manufacturing sector, including
many purchasers of packaging machinery, is owned by American companies. The
1989 U.S.-Canada Free Trade Agreement (FTA) and the 1994 North American Free
Trade Agreement (NAFTA), which includes Mexico, eliminated virtually all Canadian
tariffs on U.S. products and touched off a dramatic increase in trade and economic
integration with the U.S. Economically and technologically, Canada has developed in
parallel with the United States across an undefended border.
It is difficult to isolate the precise effects of any trade agreement on economic growth,
but NAFTA’s numbers are impressive. By the fifth anniversary of the agreement,
Canada’s merchandise trade with the U.S. and Mexico had risen 80 per cent and 100
per cent, respectively. By 1999, trade in goods and services between Canada and
the U.S. totaled $622.7 billion—an average of $1.7 billion of business crossing the
border every day. The dominance of the U.S. in the Country’s trade statistics is
striking: all told, in 2002 the U.S. bought about 85 per cent of Canada’s exports and
produced 72 per cent of its imports.
Although the Canadian market mirrors the U.S. market in many respects, there are
differences among Canada’s regions. Canada is made up of 10 provinces and three
territories in five main regions: the Atlantic region, Central Canada, the Prairies, the
West Coast and the North. The Atlantic region includes the provinces of Nova Scotia,
New Brunswick, Prince Edward Island, Newfoundland and Labrador. Central Canada
is comprised of the English speaking province of Ontario and the French speaking
province of Quebec. Central Canada is the most populated region of the country.
Together, Ontario and Quebec produce 77 per cent of all Canadian manufactured
goods. The Prairies encompass the provinces of Manitoba, Saskatchewan, and
Alberta, while the West Coast consists of the province of British Columbia. The North
includes Canada's three territories: Yukon, the Northwest Territories, and Nunavut,
which make up more than one-third of Canada's landmass but far less than 1 per
cent of the population.
The provinces of Ontario and Quebec are the economic heartland of Canada, as the
majority of the country’s manufacturers are concentrated in this region. The Province
of Ontario is the economic powerhouse of Canada. In 2002, Ontario accounted for 41
per cent of Canada's Gross Domestic Product (“GDP”), 53.5 per cent of Canada's
total manufacturing shipments, and 38 per cent of Canada's population. Ontario’s
economy is comparable in size to that of Sweden, Switzerland, Belgium, or Austria.
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