National HR Sector Study for the Advanced Wood Processing Industry

National HR Sector Study

for the Advanced Wood Processing Industry in Canada

Prepared for the Wood Manufacturing Council

Ottawa, ON

UNIT 5Labour Market Outlook, Skills

Needs and Skills Training Gaps

UNIT 5Labour Market Outlook, Skills

Needs and Skills Training Gaps

November 2005

Wood Manufacturing CouncilNational HR Sector Study for the Advanced Wood Processing Industry in Canada – UNIT 5

Page 2

Table of Contents

Introduction 3

Acknowledgements 4

Layout of the Report 5

1. How Much Labour, and What Skills, Will be Needed? 6

2. Labour Force Supply: Workplace Skills Available 22

3. Apparent Deficiencies & Implications for Skills Training Needs 27

4. Training 32

5. Small Shops 41

Glossary 44

Bibliography See Unit 7

Page


Page 3

Introduction

This report (Unit 5) is the fifth in a series of six commissioned by the Wood Manufacturing Council www.wmc-cfb.ca as part of the development of a national human resources sector strategy for Canada’s advanced wood products processing sectors. The five manufacturing sub-sectors analysed in the study are:

FurnitureCabinetsWindows and DoorsOther MillworkBuilding Components and Factory-Built Housing

The first three reports in this series (Units1 to 3) provided a perspective on the global competitiveness of the industry; a technology roadmap for the sector; a review of supply-chain (notably distribution) developments, and a review of how Canadian value-added firms are positioning themselves through globally competitive business models. The reports identified the impacts of new, low cost supply sources and rapid growth of final product imports. Sector manufacturing investment flows within North America, and into Asia, were also discussed. Unit 4 identified key employment and labour market issues being faced today by the sector. Many are urgent and will require prompt action.

Currently, there are deficiencies in the size and composition of the sector’s labour force in relation to the emerging needs of manufacturers. A shift is taking place in the types of skills needed, and how these are delivered. This report (Unit 5) presents quantified forecasts of future labour needs for the sector as a whole, and for individual sub-sectors. These are based on various assumptions regarding the market and competitive outlook, and shifting skill set needs.

Important considerations include the evolving role of post secondary education institutions (P2Es) and the apprenticeship system. Canada’s advanced wood products processing sectors need new initiatives in the attraction, recruitment and retention of labour—discussed in Unit 6. Finally, Unit 7 presents the overall findings and coordinates the analyses outlined in Units 1-6 in the form of a national human resources strategy and recommendations.


Page 4

AcknowledgementsThe Wood Manufacturing Council wishes to express its appreciation to all the individuals across Canada whose participation in this study has contributed to its success. Particularly, we wish to thank a wide range of firms in the industry for information provided, comments and for allowing process and equipment photographs to be taken. In some cases, these sources have been identified. In other cases, they are not identified for confidentiality reasons.

This study was prepared by Woodbridge Associates Inc. under the direction of our Steering Committee made up of volunteers from industry, education, government and other groups. The members are representative of several geographical regions in Canada. Members comprise the following:

Mitch Toews is Project Manager for this study.

For inquiries:

Wood Manufacturing Council Tel. (613) 567-5511514 - 130 Albert Street Fax. (613) 567-5411Ottawa, ON K1P 5G4 www.wmc-cfb.caCanada

This report is funded by the Government of Canada’s Sector Council Program.

• John English, Dean, School of Construction and the Environment, BCIT, Steering Committee Co-Chair• John Leurdyke, Director, Building Products, Alberta Economic Development, Steering Committee Co-Chair• Ken Montgomery, Senior Analyst, Industry Canada• Michelle Gagnon, Industry Liaison, CFS, Natural Resources Canada• Dave Hanna, President, Ontario Furniture Manufacturers Association• Tim Hunter, President, Hunter Lake Tamarack Flooring• Fred Nott, President, Wood Products Group• Douglas Hess, Manager, Human Resources, Durham Furniture• Pierre Fournier, Vice President, Triangle Kitchen• Sandy Steward, Managing Director, WoodLINKS• Al Sparling, Conestoga College / AWMAC• Roxanne Burelle, Senior Analyst, Human Resources and Skills Development Canada• Ken Dregger, Human Resource Manager, Superior Millwork• Deb Purdy, Vice President, Superior Millwork• Catherine Hunter, Secretary, Hunter Lake Tamarack Flooring


Page 5

Section 1How Much Labour &

What Skillswill be Needed? Section 2

Labour ForceSupply

Workforce Skills Available

Section 3Apparent

Deficiencies & Implications for Skills Training

Needs

Section 4

Training

Section 5

Challenges Facing Small Shops

Layout of the Report

Key Assumptions

Sector LabourForce Projections2006-2010

EvolvingTrends in Skills Needs

Sector Planning Model: Inflows

Linkages to WorkforceProductivity

Losses and Gainsfrom Other Sectors

2E: Secondary Education & Training

P2E: Post Secondary Education & Training

Apprenticeship Training

Immigration


Page 6

Section 1

How Much Labour and

What Skills Will be Needed?


Page 7

How Much Labour Will be Needed?

Section 1 presents our projections of Canada’s value-added wood product manufacturing sector’s workforce labour needs. Baseline data for this analysis were provided earlier in the Unit 4 report.

In Section 1 (‘How Much Labour & What Skills will be Needed?’), forecast data are presented for two periods (a) 1993 to 2010 and (b) 2010 to 2015. Some key macro-economic and related assumptions underlying these projections are shown on the next page.

Based on evaluations of a combination of past labour supply rates, and projected demand, we are able to conclude the most likely demand-supply scenarios for aggregate labour in Canada for each value-added manufacturing sub-sector.

The analysis presented in Section 1 is carried out for aggregate labour without reference to any skills deficiencies that may exist. Based on the supply data and analyses provided in Section 2 (‘How Much Labour & What Skills will be Needed?’), we identify in Section 3 (‘Apparent Deficiencies & Implications for Skills Training Needs’) where the main occupational skills shortages and deficiencies are most likely to develop, and how these will need to be addressed.

Throughout the report, we comment on typical mis-matches between labour demand and workforce supply , such as the immobility of labour. Impacts of migration trends between rural and urban areas are assessed. This provides a base for the analysis of training needs presented in Section 4 (‘Training’).

Later, in Unit 6, we examine essential skills needed in the high school to P2E transition (S2S) and present a detailed analysis of the school-to-business (S2B) transition, and on-the-job training.

A key part of this is the evaluation of Canada’s trades training and apprenticeship system, and discussion of P2E delivery mechanisms to meet the needs of the sector.

Section 5 (‘Challenges Facing Small Shops‘) of this report examines the challenges faced by small shops and identifies apparent deficiencies in the labour force. Solutions for small businesses are discussed in Unit 6.


Page 8

How Much Labour Will be Needed?

We assume the following macro-economic drivers in the projections shown in Tables 1and 2, and in related graphics.

Real GDP/y % averageCanada 3.5%United States 3.5%

Housing Starts # Conventional UnitsCanada 180,000United States 1,750,000

Factory-Built Housing # Units ShippedNorth America 205,000

Consumer Spending (Durables) Avg. Annual Expenditures /Consumer Unit (CU)

Canada +2.5% realUnited States +3.0% real

CPICanada +3.5% realUnited States +3.5% real

Foreign ExchangeC$0.85 in US Funds

Imports (See Table 1)

Trade Actions (Wood Furniture) It is assumed that Canada will not take trade actionagainst low cost imports of furniture from China and elsewhere.

Productivity Gains No aggregate measures of manufacturing productivity are available, but it is assumed that competitive levels of labour productivity growth are achieved

in each sub-sector through a combination of capital investments in new plants and equipment, lean manufacturing techniques and improved levels of plant utilization.

Key Macro-Economic Assumptions (Averages, Period 2003-2015)


Page 9

Sector Labour Force Projections

Modest Rise Initially Becoming More Rapid

Sub-Sector Will Continue to be Split into Two Separate Industries. Engineered Wood and Building Components Increasingly Larger Scale and Automated. Independent & National Factory Builders More CAD/CAM

Linked Strongly to North American New Housing Start Levels, House Size/Amenities and Growth in Renovation MarketsFlat Trend in Housing Demand Growth in Components Demand

Building Components & Factory-Built Housing

RisingSub-Sector Will Continue to be Dominated by Small and Medium Scale Enterprises. Increased Use of CNC and Growth in Demand for High End Skills

Demand Linked to Several Sectors. Increased Emphasis on Customization will Create Growth OpportunitiesGrowth Trend in Demand

Other Millwork

Flat to Modest RiseN.Am. Commodity Sub-Sector Already Dominated by Several Large Firms. Some Small Independents will Exit the Business. Technology & Quality Focus in Place. More Custom, Auto-Design.

Linked Strongly to North American New Housing Start Levels, House Size/Window Sizes/Styles and Growth in Renovation MarketsFlat to Rising Trend in Demand

Windows & Doors

RisingSlow Pace of Consolidation.Reduced # of Firms by 2010Increasingly Automated & Efficient.Focus on Customization, QualityStrong Renovation Demand

Linked Strongly to North American New Housing Start Levels, House Size/Amenities and Growth in Renovation MarketsRising Demand, Fewer Low Grade

Cabinets

Sharp Initial Decline,Later Partial Recovery

Numerous Closures of Small Shops & ‘Commodity’ Furniture Manufacturers. Limited Consolidation. Substantially Reduced # of Firms by 2010. Medium/Large Firms Increasingly Automated & Efficient. Focus on Customization, Quality & ServiceSignificant Changes in Distribution

Excess Global Capacity, with Continued Strong Growth in Imports. Overall Spending Linked to Consumer Disposable Income Growth. Growth in Renovation Market will Create Steady Demand for High/Medium End HH Furniture. Office Furniture Growth.Downsizing, Imports Dominant

Furniture

Labour Force DemandTrend

(Sub-Sector Overall)

(a) Manufacturing Capacity & (b) Automation and Technology Trend

Market Outlook2006-2010

Sub-Sector

Macro Assumptions Underlying Sector’s ‘Production Labour Workforce’ Projections 2006-2010 Table 1


Page 10


Table 2

Building Components

& Factory-Built Housing

OtherMillwork

Windows & Doors

Cabinets

Furniture

Sub-Sector

+5,000+5.6%

23,000+3,428+3.4%

18,000+5.5%14,572

+5,000+2.6%

43,000+7,793+3.7%

38,000+6.0%30,207

+1000+1.4%

15,500+2670+3.2%

14,500+0.1%11,830

+6,500+4.4%

36,000+6,238+3.8%

29,500+5.4%23,262

+5,000+2.5%

45,000(11,270)-3.1%

40,000+2.6%51,270

Projected Workforce

2015# Persons

Projected Workforce

2010# Persons

Growth Rate(Annual Average)

1991-2003%/y

EstimatedWorkforce

2003# Persons

Canada: Value-Added Wood Product Manufacturing Sector—Workforce Needs

Change 2010 v. 2003

# Persons

Growth Rate %/ y

Change 2015 v. 2010

# Persons

Growth Rate %/ y


Page 11

Value Added Wood Product ManufacturingProjected Sector Workforce in Canada

(Denotes Supply-Demand of Workers, Not Skill Sets)

162,500

140,000131,141

67,134

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1990 1995 2000 2005 2010 2015

Tota

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#2933-379

3.6% Growth Rate 1.0% Growth Rate 3.2% Growth Rate

Sector Workforce slowed to 0.3%

growth in 2002-2003

Period of Rapid Growthin Demand and Supply

Slower Growth.

Supply Exceeds Demand

Faster Growth.

Demand Exceeds Supply

In 2003, the workforce for the value-added wood products manufacturing sector in Canada was 131,141 persons. Unit 4 provides the details. Over the period 1990 to 2003, the sector’s workforce within Canada grew at an average rate of 3.6% annually (Chart 1). Details for each of the five sub-sectors are provided in the next pages.

For the period 2003 to 2010, we predict that the rate of workforce growth will slow sharply, to around 1.0% annually on average.

Much of this slowdown is attributable to job losses projected for Canada’s furniture sub-sector (Chart 2).

Despite this projected slower growth, the sector’s workforce will increase, on a net basis, by nearly 9 thousand jobs— to around 140,000 persons by 2010.

In the period 2010 to 2015, we project significantly faster rates of growth in the sector’s workforce—adding a further net 22,500 jobs over this period.

Thus, by 2015, we project that the sector’s workforce will be around 162,500 persons.

The years 2003 to 2010 will be a period when slower rates of workforce growth will lead to a situation in which, for the sector overall, aggregate supply will begin to exceed aggregate demand.

Over the five years to 2003, the sector matched demand with supply at the average pace of 6.2% growth annually. Sector workforce growth slowed to a 0.3% rate annually, during 2002-03. With the proven ability to supply labour at the much higher annual rate of 6.2% recently, we conclude that available supply is likely to exceed demand over the period to 2010.

A reverse situation occurs during the period 2010 to 2015 as a result of rapid workforce demand growth.


Chart 1


Page 12

3.21.06.2Average for Sector

5.63.47.1Building Components & Factory Built Housing

2.63.78.3Other Millwork

1.43.23.4Windows & Doors

4.43.89.8Cabinets

2.5-3.14.4Furniture

2010-2015 Av. Growth Rate

2003-2010 Av. Growth Rate

1999-2003 Av. Growth RateSub-Sector

Projections of Sector Workforce Demand Growth Rates, by Sub-Sector We make the simplifying assumption that each sub-sector has the ability to continue supplying labour, over the near term, at the rate which it has provided it in the recent past (Table 3).

This is unlikely to be true over the longer term, but it reflects the realities and conditions of current labour market dynamics.

Correspondingly, for each of the five value-added wood products manufacturing sub-sectors, we project (over the next several pages) a broad assessment of the likely demand-supply balance for aggregate labour in each sector.

Later in this report, we examine potential deficiencies in skill sets in each sub-sector.

Table 3

Table 3 summarizes these various growth rates in the sector’s workforce. In all sub-sectors, the most recent overall growth rate in supply comfortably exceeds the rate of demand that we have predicted for the two projection periods.

In the case of Canada’s furniture sub-sector, declining demand (minus 3.1% per year ) for labour in aggregate, to the year 2010, contrasts sharply with the sub-sector’s 2.6% average annual rate of growth in workforce supply (1990 to 2003) and the more robust 4.4% growth in supply over the past five years (1999-03) (Table 3 and Chart 1). Thus, we predict a surplus of potential labour supply over demand for Canada’s furniture industry for the period to 2010. But sharp demand recovery in the period 2010 to 2015 will require more workers than the labour pool serving the sector will have been used to accommodating. Thus, demand likely will start to exceed supply.

Canada’s kitchen cabinets and countertops manufacturing sub-sector has experienced some of the fastest rates of workforce growth in the overall sector. The long term average growth rate in supply was 5.4% annually (Chart 3) and the most recent five year rate was 9.8% (Table 3). This suggests a comfortable margin of labour supply in aggregate in view of the projected 3.8% average annual rate of growth in demand to 2010. However, tightening supply is likely between 2010 and 2015.

The window and door sub-sector experienced only a 0.1% average rate of growth annually over the period 1990 to 2003 (Chart 4), but over the most recent five year period, this rose rapidly to a 3.4% average supply rate annually (Table 3). We predict that this implies a balanced, but fairly tight, aggregate labour supply situation for this sub-sector in the near future, easing by 2010.

On a similar basis, the outlook for other millwork manufacturing (Chart 5 and Table 3) is for a balanced workforce supply-demand situation until 2010, leading to a growing labour supply shortage through the year 2015. For the building components sub-sector (Chart 6 and Table 3), a well balanced supply-demand labour situation will prevail.

Source: Woodbridge Associates Inc.



Page 13

CanadaProjected Workforce for Furniture Subsector

(Denotes Supply-Demand, Not Skill Sets)

45,000

40,000

28,170

52,415

0

10,000

20,000

30,000

40,000

50,000

60,000

1990 1995 2000 2005 2010 2015

Wor

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#2933-374

2.6% Average Growth -3.1% Average Growth 2.5% Average Growth

Over Supply

Labour Supply

Shortage

In Past 5 Years, Workforce Supply Has Increased By

4.4% / Year

Chart 2 Chart 2 provides the details of the workforce growth outlook predicted for Canada’s furniture sub-sector.

From its recent peak of 52,415 persons reached in 2002, the workforce nationally is expected to decline sharply over the next several years in response to market and pricing conditions discussed elsewhere in this report.

High quality, low cost furniture imports into the North American market , along with dramatic ongoing changes in the supply-chain, notably in retail distribution, are key factors in this scenario.

We predict a decline in the aggregate workforce within Canada of 11,270 persons by 2010 compared with 2003 levels (Table 3). This would be the equivalent of, on average, a 3.1% annual drop in the size of Canada’s furniture sub-sector’s workforce.

By 2010, along with substantial industry re-structuring, we forecast that the workforce will have shrunk to around 40,000 persons. As noted earlier in the macro-economic assumptions, this assumes that the Government of Canada does not take trade action against low-cost imports of furniture.

Recovery in the downsized Canadian furniture industry will lead to increased workforce demand exceeding supply growth after 2010. We foresee a period of critical supply shortages at that time.

Sector Labour Force Projections: Furniture Industry


Page 14

CanadaProjected Workforce for Cabinet Subsector


23,262

29,500

36,000

9,846

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1990 1995 2000 2005 2010 2015

Wor

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#2933-376

5.4% Average Growth 3.8% Average Growth

Supply-Demand Well Balanced

LabourSupply

Shortage


9.8% / Year

4.4% Average Growth

Chart 3 The workforce growth outlook predicted for Canada’s kitchen cabinets and countertops sub-sector is summarized in Chart 3.

Workforce growth has been very robust and compares closely with similar levels of growth experienced in other millwork and structural building components.

From a low point in 1992, when 9,846 persons were employed in cabinet and countertop manufacturing in Canada, the total workforce grew to 23,262 persons by 2003.

The longer term (1990-2003) average rate of workforce growth is 5.4% annually. More recently, over the past five years to 2003, the rate of growth rose to 9.8% annually (Table 3).

Concurrent with a slowing pace of activity in new residential construction, but with robust spending on new cabinets in the home improvement market, we predict a slowing pace of workforce growth in the cabinet sub-sector to the Year to 2010.

This suggests that workforce supply and demand will be well balanced for this sub-sector—at least in terms of aggregate workforce numbers. With faster rates of workforce demand growth after 2010, we predict a growing labour supply shortage.

By 2015, the sub-sector’s workforce will approach 36,000 persons.

Sector Labour Force Projections: Kitchen Cabinets & Countertops Industry


Page 15

CanadaProjected Workforce for Window & Door Subsector


15,50014,500

13,354

9,028

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1990 1995 2000 2005 2010 2015

Wor

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#2933-375

0.1% Average Growth 3.2% Average Growth 1.4% Average Growth

Supply-Demand Balanced

Supply-Demand Balanced


3.4% / Year

Chart 4 provides a summary of the workforce growth outlook predicted for Canada’s window and door sub-sector.

Over the past decade and a half, there has been virtually no net growth in the size of the workforce in this sub-sector.

A sharp decline in employment occurred that lasted through to 1996—when the Canadian window and door manufacturing workforce stood at 9,023 persons. Between 1990 and 1996, the sub-sector lost over three thousand jobs.

Workforce growth after 1996 increased quickly, rising to a peak of 13,354 in 2002.

The most recent five year average growth rate was 3.4%.

We project that, by 2010, the sub-sector’s workforce will recover from its 2003 level (11,830) to reach 14,000 persons.

This would be an average annual workforce growth rate of 3.2%—very close to the most recent five year average rate. On this basis, we believe that the aggregate workforce will be in supply-demand balance.

By 2015, further workforce growth (at a 1.4% annual growth rate) is expected to create the need for an additional 1,000 persons.

Sector Labour Force Projections: Window and Door Industry

Chart 4


Page 16

CanadaProjected Workforce for Other Millwork Subsector


43,000

38,000

30,207

11,500

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1990 1995 2000 2005 2010 2015

Wor

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#2933-377



8.3% / Year


Supply-Demand Well

Balanced

Chart 5 Rapid growth in ‘Other Millwork’ manufacturing activities has resulted in this sub-sector’s workforce growing at the fastest pace among all five sub-sectors.

From a low point of 11,500 persons in 1991 (Chart 5), the size of the workforce grew to 30,207 persons by 2003.

Over this period, the average annual growth rate was in excess of 6% per annum.

In the most recent five year period to 2003, the workforce grew at an average rate of 8.3% annually.

We project workforce growth slowing to a more modest 3.7% annual average rate over the period 2003 to 2010. This would add close to eight thousand new jobs.

With this slowed rate of increase, the demand-supply situation to 2010 would be well balanced.

Further slowing (2.6% average annual rate) of demand for labour in the ‘Other Millwork’ sub-sector over the period 2010 to 2015, will generate the need for a further 5,000 new workers over this period.

By 2015, we predict an aggregate workforce of around 43,000 in this sub-sector.

Sector Labour Force Projections: Other Millwork Industry


Page 17

CanadaProjected Workforce for Building Components & Factory Built Housing


23,000

18,00014,572

6,176

0

5,000

10,000

15,000

20,000

25,000

1990 1995 2000 2005 2010 2015

Wor

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Labour Supply

Shortage

In Past 5 Years, Workforce Supply Has Increased By 7.1% / Year

As noted elsewhere in this series of reports, people seeking jobs in the building components, trusses, wall panels, structural engineered wood and factory-built draw most of their workers from the construction labour pool.

The trend in workforce growth (Chart 6) mirrors the trend in new residential construction in North America. In addition, recent strong growth in home renovations and in non-residential construction activities in Canada have boosted workforce growth to record levels.

The sub-sector’s long-term growth rate (1990 to 2003) averaged 5.5% annually. Over the most recent five-year period, it averaged 7.1% annually.

We expect further growth in this workforce as a result of many currently site-based construction activities being re-assigned to off-site locations and factories. There is an acute shortage of key skills on construction sites. Many can be performed, at lower costs, off-site.

However, site-based workers will be available at lower wage rates during construction slowdowns, and this supply will modify the growth rate for factory-based activities. We expect this sector to add close to 3,500 new jobs between 2003 and 2010.

But, beyond 2010, we predict a rapidly rising labour shortage.

Sector Labour Force Projections: Building Components/FB Housing

Chart 6


Page 18

Labour Force Needs: Skill SetsIn the previous pages, we presented our projections of labour force demand and supply in terms of aggregate numbers of people for each of the five sub-sectors being evaluated in this report. As a result of these analyses, we have predicted a range of outcomes. The synopsis of the projections presented on the next page provides a summary of our conclusions.

It should be emphasized, however, that the situation facing most manufacturers is not a shortage of potential employees as such, but a shortage of suitably qualified and experienced persons with the desired supporting attributes, such as a good attitude and self motivation. Moreover, employers have noted overwhelmingly that they experience severe problems in trying to identify and/or successfully recruit these types of candidates in the areas where their plant is located, at the right time and at the right price (see Unit 4).

Only one of the reasons frequently cited for the apparent lack of employable people (Chart 7) depends directly on inflows from schools, P2Es and from the immigration pool. Two factors involve logistical considerations (such as being in the right place, at the right time) and the final factor (wages) is a function of labour market pricing. These distinctions are important because some are not sector-specific “problems”, as such. Rather, they are normal market factors faced by business owners and operators globally.

Classification of Skills Deficiencies Reported by Sector Firms

Chart 7

Lack of Employable

People At the Right Price

With the Right Skills

Sets

In the Right Place

At theRight Time

Logistical Labour Market PricingLabour Force& Workforce

Characteristics

The labour market is an incredibly powerful mechanism for resolving logistical problems (ensuring that labour is available in the right place at the right time). It does so by bidding up wages and benefits, and by communicating the ‘soft issues’ that motivate employees (see Unit 4 report). Current evidence for this is provided by the rapid growth in the Alberta labour force, notably construction. By paying significantly higher wages than elsewhere, many (but not all) of the unskilled, semi-skilled and skilled workers required by employers are being attracted from other sectors and from other regions via migration.


Page 19

Section 1 has presented the ‘most likely scenarios’ of demand and supply of labour in the value-added wood products manufacturing workforce in Canada. The numbers shown for each value-added wood products manufacturing sub-sector are aggregates. They include production workers as well as a wide variety of people involved directly or indirectly in support of manufacturing. They include occupations such as management, marketing and sales, engineering, design and business administration.

In many industrial sectors of the Canadian economy, there has been a marked shift in the mix of workers away from production-related functions. In Unit 1 through 3, we discussed the effect of high levels of automation in many sectors, and the vital importance of robotics in overcoming labour and skills shortages—notably in achieving substantial gains in productivity. There is very little evidence that this is a widespread development in the value-added wood products manufacturing sector in Canada. There are many excellent examples of leading-edge firms that are succeeding by adopting higher levels of automation. But, for the most part, the sector appears not only to be dependent on intensive use of labour, but also still appears to be culturally committed to continuing to employ large numbers of comparatively unskilled workers. Much of the reason for this situation is economics. With high levels of market risks, operating risks and financial risks, many firms are unwilling and unable to substitute capital for labour. The resulting production equation locks many of these firms into continued dependence on low cost, mostly semi-skilled workers.

Labour Force Needs: Skill Sets

Canada's Value-Added Wood Product Manufacturing SectorProportion of Production and Other Workers in Total Workforce

0

20

40

60

80

100

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Perc

ent o

f Tot

al E

mpl

oyee

s (%

)

Production Workers

Other Workers

#2933-382

86%

80%

86%

14%20%

14%

82%

18%

Chart 8 shows that of Canada’s total workforce in the value-added wood products manufacturing sector of over 131 thousand persons in 2004, 82% were classified as production workers. Furthermore, over the past decade and a half, there has been no obvious trend away from this heavy weighting towards production occupations.

Correspondingly, ‘other workers’ have not risen sustainably as a proportion of the sector’s overall workforce. It should be noted that the actual number of workers in production occupations and ‘other workers’ has increased significantly in both cases.

Specifically, the number of production workers employed within the sector increased by nearly 34,000 persons over the period 1990 to 2003.

The number of ‘other workers’ increased by over 11,000 persons over the same period.

It is also significant that the skill sets required within many of the production worker occupations, and among ‘other workers’ have shifted substantially over time. Data are not available for the sector, but Chart 9 on the next page shows the situation for all manufacturing in aggregate within Canada.

Chart 8


Page 20

Labour Force Needs: Skill Sets

Manufacturing in Canada:Growth in Production Occupations 940

864

625

753

Machine Operators & Assemblers in Manufacturing

204213196192

Labourers in Processing,

Manufacturing & Utilities

0

200

400

600

800

1,000

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Empl

oym

ent i

n Th

ousa

nds

#2933-318 Data Source: Statistics Canada

Caution: These data are not specific to the value-added wood products manufacturing sector

Chart 9 Chart 9 shows (for all manufacturing in Canada) that there has been substantially greater workforce growth in occupations such as machine operators and assemblers than in labourersemployed in processing and manufacturing.

The number of machine operators and assemblers employed has fluctuated over the period 1990 to 2003. In contrast, the number of labourers employed in processing and manufacturing has remained fairly constant.

Since the cycle low point experienced in 1993, there has been substantial overall growth in the number of machine operators and assemblers employed.

Based on general trends towards greater levels of equipment use, and substantial anecdotal evidence, it seems likely that many of the machine operators and assemblers increasingly will be classified as semi-skilled occupations.

The trend in growth of machine operators and assemblers appears to be comparatively strong in Ontario.

Further discussion of skill set needs is provided later in this report.


Page 21

Summary of Labour Force ProjectionsIn 2003, the workforce for the value-added wood products manufacturing sector in Canada was 131,141 persons. Over the period 1990 to 2003, the sector’s workforce within Canada grew at an average rate of 3.6% annually.

The fastest rates of workforce growth were experienced in ‘other millwork’ (6% average annual growth); building components and factory-built housing (5.5% average annual growth) and in the cabinet and kitchen countertops sub-sector (5.4% average annual growth).

The lowest rates of workforce growth over the 1990-2003 period were experienced by Canada’s window and door sub-sector (0.1% average annual growth) and in the furniture sub-sector (2.6% average annual growth).

In the most recent five year period (1999 to 2003), the workforce grew at a substantially faster rate than historically. The cabinets sub-sector’s workforce grew by 9.8% annually over this period. Other millwork grew by 8.3% annually; building components grew by 7.1% annually; furniture grew by 4.45% annually and windows and doors grew by 3.4% annually.

In the face of competitive operating conditions, discussed in Unit 1, we do not believe that these recent rates are sustainable. In fact, more recent data show slowing rates of workforce growth in almost all sectors. Based on our prediction of an average 1% rate of growth annually over the period 2003 to 2010, we forecast that the sector’s total workforce will rise by nearly 9 thousand jobs by the year 2010.

Importantly, we predict a decline in the aggregate workforce within Canada’s furniture sector—by 11,270 persons by 2010, compared with 2003 workforce levels. This will leave the aggregate workforce serving the sector in an over-supply position. However, labour migration within the furniture sub-sector is very low. Many of the persons losing their jobs in furniture plants that shut will seek similar work elsewhere. But few will be willing to travel long distances for this purpose, and few will migrate to the same sector in other parts of Canada where plants require more labour.

With substantial attrition from Canada’s furniture workforce over the period to 2010, the rate at which furniture plants are able to attract labour will slow markedly. On the basis of a more sustained recovery in the furniture business, as obsolete and uneconomic plants are replaced by larger, more efficient new plants, we forecast the need for about five thousand additional employees (most, but not all, with higher knowledge-based skill sets) over the period 2010 to 2015. The overall supply-demand situation will create a labour shortage in this period in Canada’s furniture sub-sector.

For the period 2010 to 2015, we predict sharply higher overall rates of workforce growth in most other sub-sectors. The sector’s total workforce is expected to rise to around 162,500 persons. We predict that labour force supply-demand conditions in Canada’s cabinets and kitchen countertops manufacturing sub-sector will remain well balanced until 2010. But faster rates of business expansion will lead to a labour supply shortage by 2015. The same is predicted for the building components and factory-built housing sub-sector.

Workforce demand and supply conditions in other millwork and windows and doors will remain well balanced over both periods. All the above comments refer to the aggregate workforce. As noted later in this report, we anticipate a severe skills shortage in certain occupational groups—notably in trades such as cabinet maker and in carpentry and in several other occupational groups.


Page 22

Section 2

Labour Force Supply

Workforce Skills Available


Page 23

Sources of Labour Inflows into the Sector’s Workforce are ShiftingModel of Flows

Value-Added Wood Products Manufacturing Sector

Workforce

Traditionally, Workforce Growth

Relied on a Strong Influx of High School Students

High School

Students

Carpentry

WoodProducts

Manufacturing

Some TradesTraining

Secondary Education & Training

Post-SecondaryEducation & Training

for the Sector

Mostly,Declining

Inflowsand/or

ApprenticeshipCompletions

Today, the Sector has to Rely Increasingly on Immigration, In-Migration

and Retraining the Existing Workforce

Fewer People = Need for Higher Productivity

University &U. Forestry

Schools

Constant Training

andRe-Training

In-Migration

Immigration

IncreasedParticipation

Rates

Initiatives Needed to

Reverse theDeclining

Inflow Trend

Net Gains from

Other Sectors

SomeRisingInflows

Building Engineering

Millwork

Labour Force Supply: Shifts in Inflows

2E P2E

Graphic courtesy of BCIT School of Constructionand the Environment: Strategic Plan 2004

Workforce inflows directly into the value-added wood products manufacturing sector from secondary education sources (high schools/2E) is experiencing an overall decline within Canada (Chart 10).

In some occupational categories, such as building engineering, enrollments and completions through the P2E system appear to be reasonably high.

But, in training for other occupational groups, such as wood products manufacturing in many parts of Canada, aggregate enrollments and completions are believed to be declining. The same phenomenon is found in forestry schools, not just in Canada but globally.

The image of the industry or occupation is reported to be part of the problem. But there are likely to be other reasons, including length of training (the student’s investment) compared with expected earnings after completion.

In the trades, apprenticeship registrations are declining, and conventional apprenticeship completions are reaching dangerously low levels (see separate analysis later in this section).

As a result of these trends, the sector regionally has to rely increasingly on in-migration and immigration (see discussion of temporary foreign workers program) for its supply of unskilled and semi-skilled workers. Plus, it relies on attracting workers from other sectors.

With the need for greater technical competencies, constant training and re-training of the existing workforce through the P2E system is vital.

Chart 10


Page 24

Labour Force Headcount: Where Will the People Come From?

Example: BC Elementary and Secondary School Enrolment is Declining

Public School Only (Old Series)

607,437

554,590

615,980610,851

689,540691,749

671,234

Public & Private School (New Series)

400,000

500,000

600,000

700,000

1992 / 93 1994 / 95 1996 / 97 1998 / 99 2000 / 01 2002 / 03 2004 / 05

# of

Stu

dent

s (H

eadc

ount

)

Public School Only (Old Series) Public & Private School (New Series)#2900-129

Data Source: BC Ministry of Education

Peak in Enrolmentin 1997

TREND

With Fewer High School Graduates from within BC, Labour Force

Growth Will Rely Increasingly on Immigration and In-Migration

Demographics are defining an emerging shortage of inflows of working age persons into the Canadian workforce in relation to historical levels.

Chart 11 shows the example of British Columbia.

In BC, the public school system is experiencing declining enrolment. A peak in enrolment was reached in 1997.

The overall trend is projected to decline.

With fewer high school graduates from within BC, future labour force growth within the province will depend increasingly on immigration, and in-migration from other provinces.

Chart 11


Page 25

CurrentLabour Force

Needs

Apparent Deficiencies Today

Responding to Apparent Skills Shortages Requires Insights into the Future

Apparent SkillsShortage

Future (Reduced)

Labour ForceNeeds

Actual DeficienciesAre Greater, and Different

Skills Available Skills

Available

TODAY FUTUREFuture Labour Force Needs Anticipate a Changed Mix of Skills

Chart 12

Labour Force Supply: Responding to Deficiencies

It is misleading to predict labour force shortages simply on the basis of past patterns. The manufacturing industry, in general, is able to respond to unskilled and semi-skilled labour shortages by substituting capital for labour. However, this process places increased strains on the skilled workforce. Chart 12 shows this in concept. Today, the industry can point to an apparent deficiency in the amount of labour available, and in certain skill sets. However, with greater use of existing and new machinery and/or by shifting to automated equipment, industry can reduce (but not eliminate) its level of labour intensity in unskilled and semi-skilled occupations. This can help reduce its overall workforce needs but, as Chart 12 suggests, the actual skill set deficiencies that emerge will be different, and could well be much greater.

Workforce size reduction

In labour markets, supply typically responds to increased demand by attracting workers from a larger pool of labour. But this assumes that the labour-deficient sector is able to pay the higher wage rates (along with other ‘hard and ‘soft’ motivating factors) that can successfully attract the required number of workers with the right skill sets. The example of this cited earlier is Alberta’s currently very hot construction sector (See wage analyses presented in Unit 4).

For manufacturing sub-sectors that cannot afford to increase wages (and there are many firms in this position), the choices are ultimately to (a) change their business model (where the capital investment-labour productivity model generates more added value (wealth), and thus improves the ability to pay higher compensation levels), or (b) exit the business. The former response is discussed earlier in this report. This process has significant implications for (i) the aggregate labour supply-demand balance for the sector, and (ii) the types of skill sets required .


Page 26

Labour Market Dynamics: Capital Spending (CAPEX)

WorkforceSkill Sets

Needs

CapitalInvestment+

Labour Productivity: Direct Linkage

= Productivity Gains

But, this is also affected by factors such as……….

The Manufacturing Firm’s

Business Model

Management’s Competence & Knowledge

of the Business

Operating Levels& Business Conditions

Motivation and Compensation

With fewer unskilled, semi-skilled and suitably qualified persons available to meet the sector’s workforce needs over the next decade and beyond, the available workforce will have to be leveraged to obtain significant gains in productivity (Chart 13).

Capital equipment (and other factors) can have a profound impact on labour productivity.

Old and outdated equipment can severely restrict the productivity gains possible in all plants, but particularly in smaller shops which often may be substantially under-capitalized.

This situation forces many small shop furniture components and assembling plants to seek low cost, immigrant labour. However, adding more labour frequently does not improve overall earnings. Nor, in all instances, does working longer hours or driving down the costs of labour through elimination of benefits packages.

At some point, substantial gains in labour productivity have to be achieved through investments in high productivity equipment.

But, correspondingly, this requires training, or sometimes complete re-training of the workforce.

In the analysis of the sector’s labour force needs, and identification of skills deficiencies, presented in this report, we note that there are areas where chronic labour shortage (e.g. in low cost immigrant labour) probably can only be resolved if sector manufacturing firms are willing to adopt a new business model focussed on the development of a more highly skilled workforce.

The skill sets that accompany this process are discussed in this report and in Units 6 and 7.

Labour Force Supply: Obtaining Productivity GainsChart 13


Page 27

Section 3

Apparent Deficiencies and

Implications for Skills Training Needs


Page 28

Occupational Skills Shortages—Sector AnalysisPrevious sections of this report predict ‘most likely scenarios’ of demand and supply of aggregate labour in the value-added wood products manufacturing workforce in Canada. The numbers presented for each sub-sector are aggregates. They include production workers as well as a wide variety of people involved in occupations such as management, marketing and sales, design, production engineering and administration.

Analysis of workforce data for these two groups shows a general trend of faster growth in non-production workers (See Unit 4). Moreover, these employees tend not to be laid off when production declines. They are part of the fixed workforce. Hourly paid workers, especially unskilled and semi-skilled labourers, experience much greater variability and far less consistency in terms of time on the job.

Furniture & Kitchen Cabinet Industry Workforce in Canada1990-2003 Average Growth Rate

4.8

3.1

1.7

6.0 5.8 5.7

5.1% Growth Rate

7.8% Growth Rate

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Wood KitchenCabinet &

Counter Top

Office Furniture Furniture &Related

Household &InstitutionalFurniture

Wood KitchenCabinet &

Counter Top

Office Furniture Furniture &Related

Household &InstitutionalFurniture

Perc

ent

Production Workers Mgmt, Professionals, Admin #2933-340

Chart 14 illustrates the faster rate of workforce growth for management, professionals and administrative workers compared with production workers in Canada’s furniture and kitchen cabinets industrial sectors.

Some segments of the industry have been adding management, professional and administrative jobs at a much faster rate than others.

For example, in the kitchen cabinets sub-sector, there has been a 7.8% growth rate in the number of these jobs added each year.

In contrast, the household furniture industry (as a long term trend) has been adding only slowly to its production worker labour force (1.7% workforce growth per year on average).

Across Canada, these numbers vary quite widely, even between manufacturing industries that are quite similar. Jobs created/lost reflect local circumstances.

At the national level, this suggests that over the short term at least, workforce demand growth by major occupational categories can be estimated only in broad terms, but can be predicted more accurately at the local and regional level.

Longer term, the process for estimating national rates can overlook short term local influences and can be linked more closely to sector drivers that, for each sub-sector, are common to all areas.

Chart 14


Page 29

Scheduling, Purchasing

Preparation of Documentation, Report Writing, Presentations

Interpretation (e.g. Ability to Read Blueprints, Computer Interface Data Analysis)

Management of Intelligent Systems / Robotics

Computer Skills (Enterprise-Wide)

CNC Operating

CNC Programming

Logistics & Transportation (e.g. Forklift Operating through Shipping)

Product Assembly

Packaging

Materials Handling

New Product Development

Engineering

Processing Skills (e.g. Sawing, Edgeband Operating, Painting, Sanding, Finishing)

Specific Processing Skills Most Frequently Identified By Firms as Being in Short Supply

Table 4

Table 5

General Occupational Skills Most Frequently Identified by Firms as Being in Immediate Short Supply

Source: Woodbridge Associates Industry Interviews

Occupational Skills Shortages—Sector Analysis

During our industry interviews, firms identified a large number of skill sets as being in short supply and for which (in most cases) they said that they had existing vacancies.

Specific processing skills most frequently identified were sawing, edge-banding operations, painting, sanding and various aspects of finishing operations (Table 4).

In many of the latter cases, firms reported that existing skilled plant operators and tradespeople were being stretched beyond practical capacity. Many highly skilled workers are aging, and replacements are not always being trained in these skills.

In terms of general occupational skills, a long list of needs was identified. These are summarised in Table 5. Some of these are existing trades or professions. Others are becoming defined as trades or professions—and should be considered as a basis for expanded formal training by post-secondary education and skills training service providers (ESTTTs -see Unit 4, and Section 4).

Many common “basic skills”, such as the ability to read blueprints or drawings, were mentioned. Similar skills identified as being essential for entry level workers include the correct use of tape measures, and the ability to convert into metric measurement where firms serve offshore markets.

CNC skills and operation were widely mentioned among the skill sets that firms expected to be taught at P2E institutions, with the opportunity to enhance these skills through on-the-job training.

Our interviews also identified a shift to intensive knowledge-based skill sets, notably preparation of documents (electronic and print), report writing and presentations. Various business courses provided at high schools and P2E institutions were acknowledged as being of considerable assistance, and a very desirable attribute in all levels of employees.


Page 30

Drafting & Design

Technical

Communications

Marketing & Sales

Mechanical (i.e. manual dexterity)

Numerical

Leadership

Maintenance (e.g. Planned Maintenance / Unscheduled Repair Quick Response)

Trouble-Shooting (e.g. Lean Manufacturing)

Administration (e.g. Accounting, Financial Reporting)

Service (e.g. Customer Service and Follow-Up)

Delivery (e.g. Shipping & Receiving)

Increasingly, these Essential Skills are:(a) Common to Each Sub-Sector

and

(b) in Many Cases, Highly Mobile and Readily Transportable to Other Sectors

Table 6 Table 7


Skill Sets Most Frequently Identified As “Desired” in Management

(not ranked)Occupational Categories/Skills Most Frequently Identified

As Being in Short Supply by Larger Firms(note: In addition to Tables 4 and 5)

Source: Woodbridge Associates Industry InterviewsSource: Woodbridge Associates Industry Interviews

Previous WMC studies have identified the need for leadership as being among the most desirable skills in employees. This attribute is defined at the micro-level (e.g. small team leadership) as well as at various levels of management. Our interviews confirmed this attribute as being high on the list of desired skills in various small business and larger scale management situations.

Table 6 summarizes a range of desirable skill sets, including manual dexterity. Several interviewees in small to medium-sized shops (5 to 20 employees) indicated that managers who could not manage the practical side of the operation sometimes failed to hold the respect of hourly paid workers. This underscores a more general theme that the most effective managers of small to medium-sized firms are those who have “risen through the ranks” and who have sound technical training. This factor was less important among larger firms, where greater specialization in the workforce was expected (Table 7).

Several firms noted that knowledge-based skilled workers are potentially more mobile, and that this helps define their HR policies, notably with regard to attraction, recruitment and retention.


Page 31

700,000 Job Openings in the BC Workforce from 1998-2008Where Will the Jobs Be?

Post-Secondary Diploma or Degree

High School Diploma

Less than High School

60

80

100

120

140

160

180

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Inde

x (1

990

= 10

0)

#2900-131

Data Source*: BC Progress Board

* Data interpreted from graphics.

Index = 100

60% of Jobs Require Post-Secondary Education

Skills Shortages Predicted Shift in Types of Jobs & Training

Source: BCIT Skills Training Workshop


The general expectation in high schools is that an increasing proportion of jobs require, at minimum, high school graduation and most likely a post-secondary diploma or degree (Chart 15).

In fact, we found that firms within Canada’s value-added wood product manufacturing sector varied quite widely in their expectations and desires regarding the optimum education levels for their employees.

Many firms’ recruiting policies fit well with the high school view outlined above. But many did not want the attitudes and expectations that frequently come with many P2E university graduates.

A case can be made for both points of view. Certainly the popularity of vocational education, post-university, suggests that “hands on” training has empirical merit.

The important point, however, is that there appears to be a mis-match (in certain regions and some occupations) between what firms consider to be desired skills and the absence of practicaltraining among many recent P2E graduates.

In BC, for example, it is predicted that 60% of future jobs willrequire post-secondary education. Certainly this fuels expectations among P2E graduates for income levels and types of work that, at least in the case of the value-added wood products industry, cannot always be fulfilled.

Few employers interviewed wanted to employ entry level workers with less than high school graduation. In cases where Grade 10 or Grade 11 employees were hired, and who sustained more than 6-12 months of consistent work at a plant, employers generally expressed a strong desire to see them complete their formal education.

Chart 15


Page 32

Section 4

Training


Page 33

P2E Training & Delivery Mode Trend Assumptions

40%11%

49%

46%

39%15%

29 Years Old & Under30 - 44 Years Old45 Years & Older

Delivery Models are Changing:Options for Part-Time Students

Traditional Delivery Distance Education

#2900-127Data Source: BCIT

Over 60% of Distance Education Serviceis for Ages 30 and Above

Today’s education and skills training delivery vehicles extend 365/24/7, making best use of

available time.

They utilize varied communications resources ranging from DVDs, iNet and inter-active

remote learning tools supplied by colleges and universities

In the past several decades, but notably since the mid-1990s, the range and quality of post secondary education and training options available to people in Canada’s value-added wood products industry has risen dramatically. There are now many more service points in the P2E system across Canada, many of which serve or are available to serve the sector.

There have been significant advances in the number and variety of courses and programs being offered. More institutions are nowable to confer degrees at the college and university levels.

Collaboration between service providers is less likely to fail today because of the perceived need to ‘protect turf’ and many cooperative arrangements have been developed between industry and high schools and between industry and P2E institutions.

Working groups, often through Industry Advisory Committees, help P2E institutions assess industry demands more closely than they could in the past. More fee-for-service work is provided by P2Es that focus on serving the needs of firms to have skills training and technology transfer services provided where and when they want them.

BCIT is a best practice model of this philosophy (Chart 16). Over 60% of its distance education delivery to part time students is directed to existing employees aged 30 years and older.

Several other similarly successful delivery models are in operation across Canada.

Chart 16


Page 34

P2E Graduate Employment Rates are Very HighExample: BCIT Technology and Vocational Programs

76%

86% 87%

82%

85%

50%

60%

70%

80%

90%

100%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002Graduating Year

Perc

enta

ge o

f Gra

duat

e Em

ploy

ed

(Rel

ated

and

Oth

er E

mpl

oym

ent)

#2900-133

Data Source: BCIT

P2E Graduates Achieve Consistently HighJob Placement Rates…..

Yet, Many Other Manufacturers Never Seek to Hire a P2E Graduate

Chart 17

P2E Training & Delivery Mode Trend Assumptions

The growing popularity of further education and skills training action, combined with flexible and pro-active delivery models offered by P2E institutions, suggests that the vocationally focused P2E system will continue to be an essential part of skills upgrading for a large part of the employed workforce.

Analyses show that vocationally focused P2E graduates achieve consistently high rates of successful job placement (Chart 17).

These P2E graduates are considered by most hiring employers to be well educated and “job ready”. Yet, many manufacturers never seek to hire a P2E graduate.

In Unit 6 , we explore ways in which this apparent ‘mis-match’ can be bridged. In the meantime, it is worthwhile noting that those P2E institutions that reach out to the value-added wood products manufacturing industry are more likely than others to achieve a good match between their students and the needs of prospective employers.


Page 35


The apprenticeship system is an important part of the overall labour force supply for the value-added wood products sector, and is a vital conduit of trades training for a wide range of age groups. It issometimes thought that cabinet-making is the only significant trade of interest to the value-added wood products manufacturing sector. But, in fact, several other trades ranging from industrial engineers to machinists, mechanics and electricians are also significant to the sector. Carpenters are an integral part of the sector’s workforce.

For instance, factory-built housing requires skilled trades in wiring and in installation. Industrial engineers are vital in operating dry kilns at furniture plants and millwork shops. Skilled trades are essential in many maintenance functions throughout the industry.

Canada’s provincial apprenticeship systems, like those in several other countries, currently are going through some major changes.Detailed analysis of these changes is outside the scope of this report. Generally, the focus of the changes being made is to align the supply of qualified tradespeople more closely with industry’s needs**.

Several key observations are pertinent. Firstly, the total number of apprenticeship registrations in Canada is rising. The CSLS estimates that, in 1985, there were 139,200 apprenticeships registered. By 2002, this had grown by 69%. However, the pattern of growth was not consistent over this period. A negative growth trend was experienced, for example, between 1991 and 1996.

** For a detailed analysis, see ‘The Apprenticeship Systems in Canada: Trends and Issues’ Centre for the Study of Living Standards (CSLS) [September 2005]

Provincial Shares of Total Apprenticeship Registration, 2002

0.4

0.2

4.3

1.9

2.4

3

2.6

22.2

9.3

21.5

32.2

0.3

0.4

1.7

2.4

2.9

3

3.6

10.5

13.1

23.4

38.7

0 5 10 15 20 25 30 35 40 45

TERRITORIES

PEI

NFLD

NB

NS

SK

MB

AB

BC

QC

ON

Provincial Share (%)

Apprenticeship Registration Share Share of Canada's Population Aged 14-49#2933-353

Low Per Capita in BC

Ontario Has Low Per Capita Level of Apprenticeship

Registration

Per Capita Apprenticeship Registrations Are Highest

In Alberta

High Per Capita in Newfoundland

Source: CSLS

Another important observation is that the number of apprenticeship registrations far exceeds the number of completions. CSLS estimates that in 2002 there were 234,500 registrations in Canada, but only 16,500 completions (Summary table 2, CSLS study). The ‘gap’ between registrations and completions is widespread throughout Canada, but varies widely by sub-sector and by region. The situation also varies from year to year—often depending on job market conditions and rates of economic growth.

For instance, in 2002, Ontario had a low per capita level of apprenticeship training (along with BC—Chart 18), while Alberta and Newfoundland had the highest per capita levels in Canada. Apprenticeship levels in Quebec were in line with its population.

Chart 18


Page 36

Apprenticeship TrainingOver the longer term, from 1991 to 2002, a similar pattern of comparatively high per capita levels of apprenticeship registration were experienced in the Canadian prairie provinces (Chart 19). Over the same period, average registration rates in Ontario were below the national average. Meanwhile, Quebec and New Brunswick experienced negative growth in overall registrations. It is important to note that the extent of compulsory trades certification varies widely by province and occupation.

By gender, the pattern of male registrations mirrors closely the aggregate picture. Ontario (despite its below national average overall levels of registration—Chart 18 ) registered some of the highest rates of female apprenticeship registrations (Chart 20).

Quebec, in keeping with its negative growth rate in total apprenticeships over the 1991-2002 period, had Canada’s lowest share of female apprenticeship registrations. It appears that, within the overall provincial labour force in Quebec and Ontario, the low level of apprenticeship registrations that are typical in the provinces indicates a failure of key sectors of the economy to attract adequate levels of initial interest in the apprenticeship system.

Total Apprenticeship Registration Annual Growth By Province, 1991-2002

-2.05

-1.45

0.73

1.02

1.13

1.72

1.79

2.05

3.62

5.02

5.45

12.28

-4 -2 0 2 4 6 8 10 12 14

NB

QC

TERRITORIES

NS

BC

ONTARIO

CANADA

PEI

MB

SK

AB

NFLD

Compound Average Annual Rate of Growth (%)#2933-354

Canadian Prairies Have High Rates of Growth in Apprenticeship

Registrations

Ontario is Below the National Average Rate of Growth

Quebec and New Brunswick Have Negative Growth in Apprenticeship

Registrations

Source: CSLS

Chart 19

Female Share of Total Apprenticeship Registration by Province, 2002

1.8

3.0

3.6

4.8

5.9

8.7

9.3

14.4

15.1

16.3

16.7

0 2 4 6 8 10 12 14 16 18

PEI

QC

NB

TERRITORIES

NS

BC

AB

CANADA

ON

MB

NFLD

SK

Female Share of Registration (%)

N/A

#2933-356

Ontario Has A Healthy Share of Female Apprentice

Registration

Quebec has Canada's Lowest Share of Female Apprentice Registration

Source: CSLS

Chart 20


Page 37

Apprenticeship TrainingIt is commonly thought that the apprenticeship system is a mode of entry into the skilled trades labour force that is almost exclusively used by high school students (Grade 10 through Grade 12) and by recent entrants to the workforce. Analyses suggest, however, that the age distribution of registrations for apprenticeships is quite widely spread through all age groups up to persons in their mid-forties.

Chart 21 shows that around 30% of all apprenticeship registrations nationally are for persons aged 24 and younger. But a large number (25%) also register between ages 25 and 29 years. Perhaps surprisingly, 45% of persons who register for apprenticeship are over 29 years of age. Around 15% of total registrants are older than 39 years of age.

Apprenticeship CompletionsAcross Canada, only 39% of apprentices completed their certification to become certified journeypersons (Chart 22). The prairie provinces, along with New Brunswick, Nova Scotia and the Territories, had the highest rates of completion. Ontario and Quebec (already low in rankings of registrations) have some of the country’s lowest completion rates for apprentices.

Cumulative Distribution of Canadian Apprentices Registrations By Age Group (1999)

100%

4.4%

30.4%

55.1%

71.9%

84.7%

92.5%

0

20

40

60

80

100

Under 20 20-24 25-29 30-34 35-39 40-44 45+

Cum

ulat

ive

Perc

enta

ge (%

)

#2933-357 Source: CSLS

30% Are Age 24 Years or

Younger

55% of Apprentices Are Age 29 Years or

Younger

But The Remaining 45%

Are Above Age 29

Apprentice Completion Rate by Province, 2002

10.9

30.7

32.5

33.0

38.8

45.3

46.2

47.0

51.0

55.1

56.7

61.6

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

NFLD

QC

ON

PEI

CANADA

BC

AB

NS

TERRITORIES

NB

SK

MB

Completion Rate (%)#2933-355

Prairie Provinces Have Canada's Highest

Completion Rates for Apprenticeship

Ontario and Quebec Have Canada's Lowest Completion

Rates for Apprenticeships

Source: CSLS

15% are Older than 39 Years

Chart 22 Chart 21


Page 38

Apprenticeship TrainingChart 23

0 10 20 30 40 50 60 70

Completion Rate

Ind Electrician

Construction Electrician

Ind Instrument Mechanic

ALL TRADES

Machinist

Roofer

Carpenter

Canada: Apprenticeship Completion Rates 2002

25.3% Completion

38.8% Completion

64.1% Completion

Data Source: CSLS, 'Apprenticeship System in Canada', Sept 2005. Date covers '25 Largest Trades'. Cabinet-makers w ere not amongst them.)#2933-12344

Completions by Trade or OccupationCarpenters and cabinet-makers are vital tradespersons within the value-added wood products manufacturing sector.

Nationally, however, carpenters have a completion rate of only around 25% (Chart 23).

Several other construction and building component skilled trades, such as roofing, also suffer from low levels of completion.

For these types of trades, shorter training periods (i.e. less than 4 years indenture) are now being provided through changes in the apprenticeship systems in several provinces.

Anecdotally, it is reported that this approach is helping to shorten the supply cycle and is producing qualified, work-ready trades people who are closely aligned to employers’requirements.

For Canada, the average completion rate for ‘all trades’ was 38.8% in 2002. Several trades, such as electricians, consistently experience high rates of completion (e.g. 60+%). Part of the reason may be safety.

Occupational health and safety regulations, and legal issues related to code compliance, may keep pressure on employers to insist on certification as a means of maintaining professional standards within the industry.


Page 39


Traditional (3 to 4 Year) apprenticeships in many industries of interest to value-added wood product manufacturers, such as the building construction trades, have experienced sharply declining completion rates over the past several decades (Chart 24). Yet, this is happening at a time when the overall workforce in these occupations is expanding rapidly.

The development of new forms of apprenticeship, with a parallel focus on the employer’s needs as well as the employee’s compensation and mobility indicates a potential means of closing the gap in this deficiency.

Some manufacturers indicated, during the industry interviews that, because the content of trades training frequently does not meet their needs, at present, they prefer to train new entrants on-the-job. This may result in the employee becoming better trained, but he/she may not have the opportunity for any subsequent formal trades training.

Others indicated that they want to see national standards through apprenticeships and Red Seal mobility or Nu Seal programs, without necessarily maintaining the rigours, limitations and hierarchies often linked to traditional apprenticeships, such as promotion throughseniority. In other words, they seek a competency-based system.

Apprenticeship Potential in New Occupations and Skills

Canada: Registered Apprenticeship Training Completions - Male, in Selected Industries

0

5000

10000

15000

20000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Num

ber

Building Construction, Industrial Mechanical and Other Trades18,495

14,155

16,510

14,930

#2933-500-Graph 4

Traditional (4 Year) apprenticeships in many industries, such as construction, have sharply declining completion

rates—at a time when the overall workforce in these occupations is expanding rapidly.

The development of new forms of apprenticeship, with focus both on the employer’s needs and the employee’s

compensation and mobility indicatesa potential means of closing the gap in this deficiency.

With rising technical standards and more-intensive training required in new skill sets, the opportunity exists for the value-added wood products sector to develop apprenticeships in new occupational categories.

Based on industry comments, the preferred process for developing these skill sets in the wood products sector is that manufacturers must be closely involved.

A promising solution that is being advanced by BC’s Industry Training Authority is the formation of Industry Training Organizations (ITOs). The wood products industry sees tremendous potential for the concept of a well coordinated sector-based approach to skills shortages and workforce development. The creation of ITOs in key sectors and, where appropriate, the realignment of responsibility within provincial governments could help to break through the barriers that have, in the past, prevented the creation of an industry-led provincial training system**.

** Adapted from Paul Sourisseau. IFLRA Submission to BC Competition Council (October 2005)

Chart 24


Page 40

100%15.5 million

Total

14%2.1 million

Immigrant More Than 10 Years

6%1.0 million

Immigrant Landed within 10 Years

80%12.4 million

Non-Immigrants

% of Total

#PersonsGroup

100100TOTAL

424University degree

14University certificate or diploma(below bachelor’s degree)

1310College Certificate or Diploma

2715Trades Certificate or Diploma

1110Some Post Secondary Education

1514High School Graduate

2923Less Than High School Graduation

Non-Immigrant

s730,370 persons)

Immigrants

(13,405 persons)

Level of Education

Immigration

Education Profile of ImmigrantsExample: Canadian Construction Industry

Sou

rce:

200

1 C

ensu

s an

d C

SLS

Table 9

Immigrant Labour ForceExample: Canada All Industry

Table 8

Sou

rce:

200

1 C

ensu

s an

d C

SLS

The immigrant workforce provides an important share of Canada’s labour force growth. In some value-added wood products, and notably in some regions, immigrant labour represents a significant proportion of the overall labour force (e.g. furniture industry in Quebec and Ontario). Many of the immigrants who find work in the value-added wood products manufacturing sector provide mainly unskilled and semi-skilled labour. Usually, they are ‘upwardly mobile’ and seek to improve their job and pay. In small shops, this is not always possible. Many immigrants finding work in the sector are professionals in their country of origin. Table 9 shows this for the Canadian construction sector.

One of the problems faced by all countries is how to evaluate foreign credentials and qualifications for equivalency in Canada. The assessment and recognition of foreign-trained worker credentials and experience is a provincial responsibility. National Occupation Standards (NOS) exist and Prior Learning Assessment and Recognition (PLAR) officers can overview practices for equivalency. However, consistency is a problem. There is a substantial number of immigrant workers, notably recent immigrants (Table 8) in the Canadian industry. Actual job offers made to apparently qualified immigrants during hiring suggest that equivalency is hard to determine and may not always carry full weight with employers. Recent changes to the foreign credential recognition (FCR) program and other programs focused on employer evaluation and direct-hire-on-probation, could improve this process. (See Unit 6)


Page 41

Section 5

Small Shops


Page 42

Small ShopsMost small scale manufacturers in our interviews rate attitude and work ethic far above any skill sets learned in school/college or in previous jobs. This reinforces similar findings by the WMC in its Survey of the Educational Needs of the Advanced Wood Products Processing Sector.

In numerous interviews we were told, particularly by operators of small and medium shops (1 to 25 employees), that they would rather have new entrants with a good attitude and strong work ethic than hire college-trained new entrants. Several small shops said that they avoided recruiting college graduates. The implications of this were discussed in Section 4.

Technical Skill Set Shortages Most Commonly Reported by Small Shops

Processing Skills (e.g. Sawing, Edgeband Operating, Painting, Sanding, Finishing)

Attitudinal Skill Set Shortages Most Commonly Reported by Small Shops

Most manufacturers rate attitude and work ethic farabove any skill sets learned in school/college or in previous jobs.

Depending on the sector and location, collaboration (including sharing of employees) occurs quite extensively between small and medium scale shops

The conclusion reached during the industry interviews with operators of small shops was that the service points for skills training clearly exist, and are numerous across most parts of Canada where larger clusters of industrial activities in value-added manufacturing are located. Specialized providers such as the Wood Products Group in New Brunswick are best practice examples of organizations that provide a wide range of related types of services to small-scale manufacturing firms.

The challenge appears to be one of achieving a better connection between the services that are available and the specific needs of (often highly specialized) firms in the advanced wood processing industries. This is one of the themes that will be explored in some depth in Unit 6 of this series.

One of the major strategic challenges facing small shops in the furniture sub-sector during the next five years or so will be how to adjust their businesses in the face of increasing global competition.

Among the major HR issues they face will be how to retain core staff during times of difficult business conditions and perhaps while operating at reduced capacity.

In many small shops, business owners know that if they want to stay in business, they cannot afford to lay off their skilled craftspeople, and these people typically are the last to be released when layoffs occur.

Among the potential solutions, on a local basis, could be (a) job flexibility (short-term, temporary re-assignment to other tasks), (b) work-sharing with similar firms and operators (i.e. collaboration), (c) shorter work week or shorter shifts, if agreed between employer and employee, (d) long term re-allocation of experienced skilled craftsmen to new tasks, such as product development, or special tasks (e.g. lean management analysis) and skills enhancement (e.g. leadership training).

Operators of small shops reported that they find it difficult to release employees for outside training away from the plant. At one time, BC Wood operated a series of skills training workshops and provided a financial break for out-of-town attendees.


Page 43

Disclaimers

The contents of this report (Unit 5) and subsequent reports produced in this series, along with any conclusions reached and recommendations made, are entirely the work and responsibility of the consultants, Woodbridge Associates Inc., and may not necessarily reflect the views or position of the Wood Manufacturing Council, or HRSDC, or the individual or collective views of the Steering Committee.

Woodbridge Associates has prepared these reports on the basis of research into the sector and from its knowledge and expertise in the field of study. Facts and data presented have been checked and are believed to be accurate. Secondary and tertiary sources of data and information have been identified throughout the study. Information, views and opinions provided by industry participants are reported as such. Woodbridge Associates does not accept any liability for human resource or investment decisions made by individual manufacturing firms as a result of the analyses or recommendations presented in the reports. Firms interested in following up and acting on any of the product-market opportunities identified in the various reports should carry out independent analyses before proceeding, and consult with the WMC or local HRSDC offices.


Page 44

Glossary

ACST Advisory Council on Science & TechnologyB2B Business to BusinessB2C Business to ConsumerS2S School to SchoolS2B School to BusinessCAF Canadian Apprenticeship Forum CAPEX Capital ExpenditureCFIB Canadian Federation of Independent BusinessCIC Citizenship and Immigration CanadaCICIC Canadian Information Centre for International CredentialsCLBC Canadian Labour and Business CentreCSC Construction Sector CouncilCSLS Centre for the Study of Living Standards EDI Electronic Data InterfaceESTTT Education, Skills Training and Technology Transfer ESL English Second LanguageEWP Engineered Wood ProductsFITT Forum for International Trades TrainingGDP Gross Domestic ProductHH Household HR Human Resource(s)HRSDC Human Resources & Skills Development Canada

K-12 Kindergarten to Grade 12IFR International Federation of RoboticsISO International Organization for StandardizationICT Information and Communications TechnologyIPA Inter Provincial Alliance of Apprenticeship Board ChairsIT Information TechnologiesJIT Just in TimeLFS Labour Force SurveyLMDAs Labour Market Development AgreementsOEM Original Equipment ManufacturerOSB Oriented Strand BoardP2E Post Secondary Education Institution (or graduate)PNPs Provincial Nominee Programs PPI Producer Price IndexR&D Research and Development RFID Radio Frequency Identification (ID)SME Small and Medium Scale Enterprises UI Unemployment InsuranceWHMIS Workplace Hazardous Materials Information System


Page 45

This study was prepared for the Wood Manufacturing Council by :

Woodbridge Associates Inc.Suite 2120, Oceanic Plaza

1066 West Hastings St.Vancouver, BC V6E 3X1

Canada

Tel. (604) 699-0181Fax. (604) 699-0185

www.woodbridgeassociates.com

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National HR Sector Study for the Advanced Wood Processing Industry

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