By Jayson Myers
Where do Prairie manufacturers sell what they make? Well, mainly in the Prairies. Next, to other countries. And, then to the rest of Canada.
In a world facing major trade disruptions because of tariff threats south of the border, it’s a good time to take a closer look at where customers come from. Because manufactured products make up such a large share of our non-energy merchandise exports (demand for which is less likely to be affected by tariffs), who buys what should also tell us a lot about our trade vulnerabilities with respect to other jurisdictions across Canada, south of the border, or around the world.
The numbers are a bit out of date (the last year they are available is for 2023), but they do tell an interesting story, and patterns are unlikely to have shifted significantly over the past year.
Canadian manufacturers generated $936.9 billion in total revenue in 2023. That’s up by just over 25 per cent since 2019. Prairie manufacturers earned $164.8 billion, or 17.6 per cent of that total, a four-year increase of 39 per cent.
Domestic customers accounted for 65 per cent of all product sales by Canadian manufacturers and 74 per cent of sales by Prairie manufacturers in 2023. International exports made up the remaining 35 per cent of Canada’s manufacturing sales revenue, with 27 per cent of products sold to the U.S. and eight per cent shipped to other countries. As we will see, the export dependence of Canada’s manufacturing sector is considerably higher than for manufacturers on the Prairies.
Of course, export vulnerabilities vary across sectors and supply chains. Higher export dependencies on the part of final goods producers affect the domestic sales of their suppliers as well, but overall rates of export exposure are still good indicators of the vulnerability of manufacturing sectors and national and provincial economies to trade disruptions like the ones that have recently hit us from south of the border.
Manitoba most exposed
Of all Prairie manufacturing sectors, Manitoba’s is most dependent on international exports and counts the least on its own market for customers. Manitoba manufacturers earned close to $27.5 billion in 2023, a 39 per cent increase over 2019. Exports accounted for 45 per cent of that total, with 36 per cent going to the U.S. and customers in other countries buying nine per cent of the goods manufactured in the province.
In terms of domestic demand, 28 per cent of Manitoba manufacturers’ revenue is derived from sales within the province—a share that we will see is considerably lower than other Prairie provinces. Manitoba counts on the rest of Canada for another 27 per cent of its manufacturing sales revenue, with customers in Saskatchewan and Alberta buying five per cent and seven per cent, respectively, and the rest of the country buying just over 15 per cent of the manufactured goods produced.
Saskatchewan most dependent on Prairie customers
Manufacturing sales revenue in Saskatchewan slightly exceeded $29.9 billion in 2023. That was a very healthy
45 per cent increase since 2019. Customers outside Canada accounted for 26 per cent of the sector’s total sales—much lower than the national average—with the U.S. buying 14 per cent and other countries buying 12 per cent of all goods sold by manufacturers based in the province.
Saskatchewan manufacturers are highly dependent on the Prairie market. Customers across all Prairie provinces accounted for almost 64 per cent of their sales, with 46 per cent of that total derived from within the province itself. Customers in Manitoba bought another six per cent of Saskatchewan’s manufacturing output, while 12 per cent went to Alberta. Outside the Prairies, the rest of Canada accounted for slightly less than 11 per cent of all products sold by Saskatchewan-based manufacturers.
Alberta least export-oriented, most self-contained
Alberta manufacturers sold more than $107.5 billion in goods in 2023. Their sales revenue was up by 37 per cent since 2019. Although $22.1 billion was derived from international exports, Alberta is the least dependent on manufacturing sales outside Canada than any of the Prairie provinces and far less dependent than manufacturers across the rest of Canada as a whole.
Only 21 per cent of sales for Alberta manufacturers came from outside the country in 2023. Sales to the U.S. accounted for 14 per cent of total revenue while customers in other countries bought seven per cent of Alberta’s manufactured output.
Customers within the province are far more important, accounting for 55 per cent of the total sales for Alberta manufacturers. Another four per cent of sales were made in Saskatchewan and two per cent in Manitoba. The rest of Canada outside the Prairies bought 18 per cent of Alberta’s manufacturing output – more, it should be noted, than what was sold into the United States.
Alberta’s manufacturing sector is a good example of the vulnerabilities that can be transmitted through supply chains. The largest export from the province is, of course, oil and gas, which is highly dependent on international exports and especially on sales to the United States. So, although Alberta manufacturers sell predominantly to the domestic provincial market, many of their customers are in the oil and gas sector. Alberta manufacturers may be less export-oriented themselves, but they are still highly dependent on international market conditions.
What’s made in the Prairies…
Well, a whole lot of it stays there. Together the Prairie provinces were the sales destination for 58 per cent of all products manufactured and sold by Prairie manufacturers in 2023. The direct export dependence of Prairie manufacturers is significantly lower than for their counterparts across the rest of Canada. Prairie producers earned 26 per cent of their revenue from international exports, including 17 per cent from U.S. customers and nine per cent from buyers in other countries. They generated 16 per cent of their sales from customers in other parts of Canada.
The Prairies, then, are the most important market for Prairie manufacturers. And, in Saskatchewan and Alberta, manufacturers depend on their own provincial customers for most of their direct sales.
But how important are the Prairies to manufacturers across the rest of Canada? For a long time, the story goes, Prairie manufacturing has been underdeveloped in favour of creating a lucrative market for Canadian manufacturers in Ontario and Québec. Well, if that were ever the case, it certainly isn’t now. The Prairies account for less than four per cent of sales generated by Canadian manufacturers outside the region.
The Prairies are home to dynamic and rapidly growing economies that support their own manufacturing sectors which are growing much more rapidly than the Canadian average. Prairie manufacturers do depend on international exports to a significant degree but depend on sales to the rest of Canada just as much as on exports to the United States. The Prairies are not a significant market for Canadian manufacturers based outside the region. In other words, Prairie manufacturers run a very healthy trade surplus with the rest of the country.
These are important issues to keep in mind as we look to our future economic relationship with the United States and to new interprovincial trade opportunities in Canada.
Jayson Myers is CEO of Next Generation Manufacturing Canada – the country’s Global Innovation Cluster for advanced manufacturing. An award-winning business economist and leading authority on technological change, Myers has counselled Canadian prime ministers and premiers, as well as senior corporate executives and policymakers around the world.