While 15 of 21 Canadian manufacturing industries reported decreases in manufacturing shipments in August, none were as hard hit as motor vehicle manufacturers.
Shipments for motor vehicle manufacturers plummeted 23.1% to $4.4 billion, following a healthy gain in July (+10.5%), Statistics Canada reported this morning. Meanwhile, year-to-date shipments are down 4.7% from the same period of 2002.
August marked the largest monthly shipment decline in motor vehicles, in terms of percent change, since October 1996’s 29.7% decrease, the result of a three-week strike at General Motors. In June and July of 1998, another GM strike in the United States contributed to a two-month decline in shipments of 31%.
In 2003, production activity in the motor vehicle industry has been volatile. The August 14 blackout, which encompassed much of the manufacturing belt of southern Ontario, resulted in numerous plant closures and production slowdowns. Additionally, some assembly plants were already operating at a reduced capacity for inventory-control measures and for re-tooling purposes, as new models will be launched shortly.
Excluding the motor vehicle and parts industries, shipments fell a sizable 1.6% in August. The chemical products industry reported shipments of $3.1 billion, down 5.3% from July. The electricity blackout reduced shipment levels at many Ontario-based plants. In addition, some manufacturers had already curtailed production as a result of high input costs of recent months.
The primary metals and aerospace products and parts industries also reported sharp declines in August. Shipments of primary metals fell 4.8% to $2.6 billion, a 19-month low. Meanwhile, production in the beleaguered aerospace industry decreased 9.6% to $924 million, the lowest level since March.
Higher shipments of wood products and petroleum and coal products partly offset the overall decrease in August. The increases were less related to production volumes, and more to rising industrial prices for these industries. Shipments of wood products rose 3.6% to $2.4 billion, the highest level in 2003. A sharp upturn in prices since June, the result of continuing strong demand in the North American housing market, and supply concerns due to the forest fire situation in British Columbia have contributed to a significant rise in the value of shipments in recent months.
Shipments of petroleum and coal products rose 2.5% to $2.9 billion in August, entirely the result of a 5.2% jump in petroleum prices. Shipments are at the highest level since April.
In August, manufacturers sliced another 1.4% from inventories, the fourth consecutive decline.
Inventories were $61.5 billion, the lowest level in more than three years, Statistics Canada reports.
August’s decrease, which was concentrated in finished-products, was largely attributable to manufacturers drawing down their finished-product inventories to meet product demand. As a result of the blackout, many manufacturers curtailed production activity during the month.
Manufacturers reduced finished-product inventories by 2.4% to $19.1 billion in August, the lowest level in one year, and the fourth decrease in a row. Meanwhile, raw material (-0.6%) and goods-in-process (-1.6%) inventories were also scaled down during the month.
The primary contributors to the lower inventories in August were the aerospace products and parts (-2.8%), wood products (-3.3%) and motor vehicles (-7.0%) industries.