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The transportation equipment manufacturing industry in Canada exports the most of any manufacturing subsector, $74.8 billion to the U.S. alone in 2013.  Two of the main reasons why this sector is extremely successful in exporting goods are the research and development (R &D) the industry undergoes and its ability to benefit from trade agreements.

By a great margin motor vehicle manufacturing is the largest exporter in the transportation equipment manufacturing industry. In order to remain on top of their export game, the industry that saw falling exports for the last ten years has invested in more energy efficient technologies such as electric vehicles and hybrid vehicles to remain innovative in their field. In the Government of Canada’s article Automotive: Canada’s Competitive advantages, electric vehicles and hybrid vehicles are projected to account for 50% of new vehicles sold globally by 2025. The initial rapid recovery of this industry can largely be credited to growth in U.S. consumers’ purchases when disposable income per capita started increasing in 2010 and 2011, while innovation in the transportation manufacturing industry will likely be what sustains this growth in exports into the future.

Why is this important for Edmonton businesses?

Emphasize innovation – By investing in the development of forward-thinking ideas, such as electric and hybrid vehicles, the transportation equipment manufacturing industry will be able to address the growing demand for vehicles as they shift away from the old and towards the new. This mentality to embrace innovation can be translated to any firm in any industry, and can help businesses stay ahead of the curve on market trends. An added bonus of investing in R & D and advancing new and innovative ideas are the tax credits offered by the Government of Canada for eligible R & D work done in Canada.

Understand the NAFTA advantage Through the North American Free Trade Agreement (NAFTA), Canada has duty-free access to the U.S. and Mexico in the transportation equipment manufacturing industry.  Businesses in other industries need to take full advantage of this free trade agreement as Canada exports the majority of its goods to America. As well, all nine free trade agreements Canada has in force should be considered when looking to expand exportations and grow.

The U.S. exporting relationship continues to be important –  As 90% of exports of the transportation equipment manufacturing industry go to the United States, this industry is undeniable linked to the U.S. economy. While the economic downturn affected exports profoundly causing a drastic decrease in exports, the transportation equipment manufacturing sector benefitted from the corresponding up-swing of the United States’ post-recession consumption.  It is essential to acknowledge the importance of the U.S. trading relationship, nonetheless businesses must continue to broaden horizons and diversify to other export markets.

Is your business pursuing innovative practices?  Enterprise Edmonton wants to hear about how your organization is adopting innovative practises and leading growth in your industry. Contact to tell us your story.

(photo credit: Ampersand Grey)

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