Canada needs to strengthen chemicals industry: trade group

Canada must take steps to improve the competitiveness of its chemicals industry, according to a new strategy paper by trade group the Chemistry Industry Association of Canada (CIAC).

The study cited a number of “serious concerns” over regulatory framework, feedstock availability, infrastructure and logistics, electricity prices, and finance issues that have stunted the growth of domestic chemical production, all at a time when manufacturing in central Canada and large parts of the U.S. has been eroding.  

“North America and central Canada in particular has been experiencing serious erosion of its manufacturing base for some time,” the study said. “This represents the key customer base for the chemical sector and is a competitiveness concern.”

CIAC suggested a number of steps and initiatives for government and industry to meet those challenges.

First, a two-year accelerated capital cost allowance (ACCA) for machinery and equipment used to upgrade material resources and add value; second, Canada needs to align federal and provincial approaches and strategies in the key area of environmental policy; and third, Canada must “actively encourage” value-added resource upgrading within the country, moving along energy and other value chains.

The study also expressed concern over electricity and electricity pricing, especially in Ontario. “Ontario needs a plan that includes less costly options for supply and delivery [of electricity]” the study said.

Another issue is logistics. Canada’s rail system, especially in western Canada, was congested, with chemical firms facing “arbitrary changes in the timing and frequency of delivery and pick-up of railcars that do not match production schedules.”

Founded in 1962, the Ottawa-based CIAC lobbies government and other groups, and represents over 50 chemical companies.