Canadian Occupational Projection System (COPS)

Industrial Summary

Chemical Products

NAICS 3251-3259

This industry comprises establishments primarily engaged in manufacturing chemical products from organic and inorganic raw materials (such as petrochemicals and industrial gas, fertilizers and pesticides, pharmaceutical and medicine products, paint, ink, soap and cleaning products). Pharmaceutical and medicine products and basic chemicals are the largest two segments of the industry, accounting respectively for 39% and 20% of production in 2016. Overall, the industry is highly export intensive as more than 70% of its production is shipped to foreign markets, essentially to the United States which account for 77% of exports. Pharmaceutical and medicine products have the highest export intensity, with close to 100% of production delivered abroad. In contrast, pesticides and fertilizers have the lowest export intensity, with two-thirds of production sold on the domestic market. The industry employed 94,900 workers in 2016 (5.6% of total manufacturing employment), with 39% in pharmaceutical and medicine products, 17% in basic chemicals, and 14% in soap, cleaning compound and toilet preparation products. Employment is mostly concentrated in Ontario (47%) and Quebec (31%), and the workforce is largely composed of men (64%). Key occupations (4-digit NOC) include:

  • Chemical plant machine operators (9421)
  • Supervisors, petroleum, gas and chemical processing and utilities (9212)
  • Chemical technologists and technicians (2211)
  • Chemists (2112)
  • Labourers in chemical products processing and utilities (9613)
  • Central control and process operators, petroleum, gas and chemical processing (9232)
  • Chemical engineers (2134)

* Key occupations for manufacturing industries in general also include: Manufacturing managers (0911); Construction millwrights and industrial mechanics (7311); Material handlers (7452); Shippers and receivers (1521); Transport truck drivers (7511); Industrial engineering and manufacturing technologists and technicians (2233); Industrial electricians (7242); and Industrial and manufacturing engineers (2141).

Some segments of the industry, such as basic chemicals, synthetic resins and artificial and synthetic fibres and filaments, are strongly tied to the North American manufacturing supply chain. Other segments rely on demand for pharmaceutical and medicine products from the health sector, demand for fertilizers and pesticides from the agriculture sector, or demand for paint, coating and adhesive materials from the construction sector. The industry was already struggling before being hit further by the effects of the global recession of 2008-2009. After reaching a peak in 2003, production declined by 25% in the following six years. Stimulated by the recovery in economic activity in Canada and the United States ensuing the recession and by the decline in the value of the Canadian dollar in recent years, output increased back from 2010 to 2016, but it never fully recovered from its pre-recession level. This resulted into negative growth over the whole period 2007-2016, with real GDP contracting at an average rate of 0.5% annually. Employment has been on a declining trend since the early 2000s, even when output straightened between 2010 and 2016, with the exception of temporary jumps in 2010 and 2013 that were fully reversed in subsequent years. On average, employment in the industry declined by 0.8% per year from 2007 to 2016.

Over the projection period, renewed growth in the industry is expected to be primarily driven by the straightening anticipated in manufacturing activity and stronger demand for chemical products, particularly from the United States. The decline in the value of the Canadian dollar boosted exports of many chemical products from 2014 to 2016, with the most notable increases in pharmaceutical and medicine products, and this situation is expected to persist for some time. Tariff reductions included in the Comprehensive Economic and Trade Agreement (CETA) are also expected to provide incentives for domestic firms to increase their penetration into the European Union market. The recent merger of Potash Coproration of Saskatchewan and Agrium Inc., valued at $36 billion, makes Canada the world’s largest producer of potash and second-largest producer of nitrogen fertilizer. Since manufacturing firms often deal with large amounts of toxic materials, alliances with research facilities to develop more environmentally conscious products is also expected to increase demand for domestic chemicals. For example, Canada is well-positioned for the development of new technologies to produce chemicals from biomass, given the high volume and diversity of its available biomass. Furthemore, population aging is expected to result in growing demand for pharmaceutical and medicine products, boosting production in the largest segment of the industry. On the negative side, constantly evolving regulations can increase operating costs and curtail the market for certain products. For example, Health Canada is working toward banning the use of imidacloprid due to its harmful levels in waterways, a chemical commonly used by farmers to manage insects on several crops. Increased competition from foreign chemical producers based in the Middle East and Asia could also restrain growth in the industry, while the renegotiations of the North American Free Trade Agreement (NAFTA) represent a downside risk to the export outlook. Nevertheless, real GDP growth in the industry is projected to return to positive territory over the period 2017-2026, averaging 2.1% annually. Renewed growth in production is expected to result in a full recovery in employment, with job creation averaging 0.8 per year. However, two-thirds of production growth is expected to be met by solid gains in productivity. Low interest rates over the past several years have enabled many Canadian chemical producers to finance new plants and equipment in order to increase efficiency and stay competitive. Emphasis on R&D activities for the production of advanced specialty chemicals is also expected to increase the value added in some segments of the industry.

Real GDP and Employment Growth Rates in Chemical Products

Figure showing the annual growth of real GDP and employment over the periods 2007-2016 and 2017-2026 for the industry of Chemical Products. The data is shown on the table following this figure

Source: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

Text Version of Figure Real GDP and Employment Growth Rates in Chemical Products, 2007-2016 and 2017-2026, in Percent
  Real GDP Employment
2007-2016 -0.5 -0.8
2017-2026 2.1 0.7

Source: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

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