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 25% and 27% of production in 2018. 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 accounts for 76% 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 80% of production sold on the domestic market. The industry employed 102,800 workers in 2018 (5.9% of total manufacturing employment), with 44% in pharmaceutical and medicine products, 16% in soap, cleaning compound and toilet preparation products, and 12% in basic chemicals. Employment is mostly concentrated in Ontario (51%) and Quebec (27%), and the workforce is largely composed of men (63%). Key occupations (4-digit NOC) include:[3]

  • 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)

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 global recession of 2008-2009. After peaking in 2003, production declined by 25% in the following six years. Stimulated by the economic recovery in Canada and the United States that followed the recession and by the lower value of the Canadian dollar since 2014-2015, output increased back from 2010 to 2018 and has now fully recovered from its pre-recession levels. The resulting pace of growth in real GDP averaged 1.4% annually over the period 2009-2018. After declining markedly from 2003 to 2009, employment in the industry fluctuated significantly from 2010 to 2018, but remained well below the levels observed in the early 2000s. This resulted in a net employment decline averaging 0.4% annually for the entire period 2009-2018. Increased competition from U.S. producers and from emerging producers in Asia and Latin America forced the industry to restructure operations and increase productivity to remain competitive on the domestic and foreign markets.

Over the projection period, faster growth in the chemical industry is expected to be primarily driven by the stronger pace of growth anticipated in manufacturing activity in Canada and robust demand for chemical products, particularly from the United States. Exports are expected to benefit from the relatively low value of the Canadian dollar, while the signing of the Canada-U.S.-Mexico Agreement (CUSMA) to replace the North American Free Trade Agreement (NAFTA) has removed a significant layer of uncertainty. 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. Moreover, demand for chemical products in India and China is expected to accelerate as the middle class in these countries continues to expand. The global chemical industry is gradually shifting to the use of natural gas liquids as feedstocks for the production of petrochemicals, and Canada is in an excellent position to take advantage of this trend due to its abundant supplies of liquefied natural gas. Population aging is also expected to continue to boost demand for pharmaceutical and medicine products, one of the largest segment in the industry. Canadian exports of those products increased markedly in recent years as the industry took advantage of strong demand from the United States, Japan and Europe. The CUSMA will strengthen intellectual property protection by increasing copyright durations and extending patent lifetimes on certain types of drugs. This is expected to make production and research and development (R&D) more lucrative in the pharmaceutical segment of the industry and stimulate investment in intellectual property. The price gap between brand-name and generic drugs has also been widening, providing opportunities for Canada’s generics producers.

On the negative side, the quickly growing chemical industry in emerging markets represents a competitive challenge for Canadian producers. The United States is another important competitor as the surge in shale oil and gas production is providing U.S. chemical producers with an abundant and relatively inexpensive source of feedstocks. New policies to fight climate change have also created multiple layers of regulation with frequent overlaps between federal and provincial rules, increasing operating costs and reducing the competitiveness of Canada’s chemical industry. Neverheless, real GDP in chemical products is projected to grow at an average rate of 1.8% annually over the period 2019-2028, a notable acceleration relative to the previous ten years. Faster growth in production is expected to result in renewed employment growth, with job creation averaging 0.7% annually. However, about two-thirds of production growth is expected to be met by additional gains in productivity. Low interest rates in the past decade have enabled many 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 average growth rates of real GDP and employment over the periods 2009-2018 and 2019-2028 for the industry of chemical products. The data is shown on the table following this figure

Sources: Statistics Canada (historical) and ESDC 2019 COPS industrial projections.

Text Version of Figure Real GDP and Employment Growth Rates in Chemical Products (%, annual average)
  Real GDP Employment
2009-2018 1.4 -0.4
2019-2028 1.8 0.7

Sources: Statistics Canada (historical) and ESDC 2019 COPS industrial projections.

[3]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). Back to text.

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