Assembly Lines: Life Short for Manufacturing Facilities
OTTAWA-More than half of all new manufacturing plants go out of business within 6 years, according to a recently published study of Canada's manufacturing sector.
The study, titled "Death in the Industrial World: Plant Closures and Capital Retirement," is based on data from Canada's "Annual Survey of Manufacturers" from 1960 to 1999. The study found that 14 percent of new plants go out of business within their first year of production, with less than 20 percent of new plants still in operation after 15 years. The average new plant in Canada operates for about 9 years, with rates varying by industry.
Study author John R. Baldwin, director of microeconomic studies and analysis at Statistics Canada, notes that plant closures occur for a number of reasons, including the need to modernize. However, he warns that high plant death rates still have implications for policy-makers.
"At the local level, economic development experts must be constantly working toward the replacement of the plants that they succeed in attracting," Baldwin writes. "While examples can be given in the auto industry or in the steel industry of plants that have not exited for very long periods, these are the exceptions to the norm."
For more on the study, which is available through Statistics Canada, call 800-263-1136 or e-mail email@example.com.