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Manufacturing jobs grow in London region – and that’s before VW plant

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London is among the hottest regions in Ontario for manufacturing jobs as industrial employers in the area are hiring, states a report Thursday from the Canadian Manufacturers and Exporters.

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London is among the hottest regions in Ontario for manufacturing jobs as industrial employers in the area are hiring, a new report says

Employment in manufacturing here has grown 17.7 per cent since 2020 and industrial work accounts for 16.5 per cent of all jobs in Southwestern Ontario, higher than the provincial average of 12.5 per cent, said the report by Canadian Manufacturers and Exporters (CME) released Thursday.

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London and area posted the third highest job growth across Ontario in the manufacturing sector, and that is before the impact of Volkswagen’s $7-billion electric vehicle battery assembly investment set to open in 2027 in St. Thomas.

“There is definitely strong growth across all sectors. We are seeing it,” said Vijay Lakshmikanthan, chief executive of Starlim North America on Tartan Drive in London. The company makes silicone products for a broad range of industries from automotive to health care.

“We also have a lot of projects in development that will hit production in one to two years.”

As for the job totals:

London had 55,100 people working in the manufacturing sector in 2023, up from 52,800 in 2022, 52,400 in 2021 and 46,800 during the pandemic in 2020. The recent high was 63,300 working in the sector in 2006.

As solid as growth has been, it may pale in comparison to what is coming, said Kapil Lakhotia, chief executive of the London Economic Development Corp.

“We have had a lot of growth, but with EVs coming there will be even more opportunities in the supply chain,” he said. “Manufacturing growth is not a one-trick pony. It is automotive, life sciences, agri-food, logistics and it will include EVs.”

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The Volkswagen plant will employ up to 3,000, and Lakhotia said he anticipates “thousands” of additional jobs in the supply chain. 

Volkswagon battery gigafactory site
Huge trucks carry material on the construction site of the massive Volkswagen battery gigafactory in northeast St. Thomas on Thursday, March 28, 2024. (Mike Hensen/The London Free Press)

“This speaks to exactly the success of strategic investments to attract manufacturing,” said Lakhotia, referring to industrial land development, skills, training, infrastructure around water and waste water and the electricity grid.

“It is not luck. It takes years of planning.”

Ontario has landed $30 billion in automotive investment in the EV battery market between Stellantis in Windsor, Volkswagen and Honda that recently announced investments here. 

“The effect of all of this is that there will be huge change” in the manufacturing sector, said Dennis Darby, chief executive of Canadian Manufacturers and Exporters that represents 2,500 companies.

About 18,000 workers are expected to retire from the sector annually for the next four years, and Ontario needs a workforce to staff these investments, he said.

“That is why there is urgency around this. Companies are retooling and reinvesting and we have to make sure we are ready,” Darby said.

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The manufacturing growth in 2023 was a result of the auto sector experiencing strong sales and food processing production grew as well, he said

The report confirms more manufacturing will flow to regions such as Southwestern Ontario and credited electric vehicle production.

“Regions like London have benefited from the decentralization of manufacturing work, as evidenced by recent investments in Southwestern Ontario from firms like Volkswagen and Maple Leaf Foods,” it stated.

Lou Cappa of Maple Leaf Foods
Lou Cappa of Maple Leaf Foods stands in the blue light area where chickens are calmed before processing in the company’s new plant in south London on July 21, 2022. (Mike Hensen/The London Free Press)

Maple Leaf last year opened the country’s largest poultry processing plant in London, employing more than 1,000.

The top sectors for jobs in London and area are:

  • Transportation (14,000 workers)
  • Food and beverage (8,000)
  • Fabricated metal products (3,800)
  • Machinery (3,600)
  • Plastic and rubber products (2,200)

The transportation sector includes auto manufacturing and logistics.

“We have seen a lot of growth. London is expanding as a city, there are more people here and we are still seeing just-in-time delivery for manufacturing as part of the supply chain,” said Jason Salmon, president of Drexel Industries.

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The company warehouses goods and arranges delivery through a third-party carrier.

Salmon said his business has grown about 20 per cent a year in recent years and he now employs about 100.

He said he is also bracing for the impact of EV manufacturing, which will see more goods shipped in and out of Southwestern Ontario. Drexel has four warehouses across the city with combined space of 79,000 square metres (850,000 square feet).

“We are not sure what it means yet. There may be more materials in the manufacturing process” to store and ship, he said. “It is hard to quantify now.”

Kitchener-Waterloo and Barrie regions have 19.1 per cent of total employment in manufacturing with Windsor-Sarnia at 18.2 per cent and London region at 16.5.

Since 2020, manufacturing employment in Ontario has increased by 10.3 per cent, reaching a 15-year high of 808,000 in 2023, up 2.6 per cent since 2021. Employment in the sector was more than one million in the early 2000s.

More than 70 per cent of businesses in the CME study report labour shortages, especially in the area of skilled labour, and 60 per cent say they are struggling to fill general labour jobs.

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The report also recommends actions for employers to address the shortage including:

  • Investing in training workers in technology
  • Investing in low-carbon manufacturing and green collar work
  • Engaging students and young professionals through robotics competitions and apprenticeship programs
  • Working with schools and government agencies to better train workers on where the demand is

“The future of Ontario’s manufacturing sector depends on our ability to adapt to new technologies, attract top talent, and foster innovation,” Darby said.

As for CME, more than 85 per cent of its members account for about 82 per cent of total manufacturing production and 90 per cent of Canada’s exports.    

ndebono@postmedia.com

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