Productivity and cost competitiveness of Canadian food and beverage manufacturing industries

• Main Author: Feeley, David John
• Language: English
• Published: 2008
• Online Access: http://hdl.handle.net/2429/2912

This thesis reports an analysis of the competitive position of the Canadian food and beverage industry with respect to the U.S. industry for the year 1986. The main contribution is in providing measures of Canada/U.S. variable factor productivity for 38 food processing and beverage industries. It is an improvement over previous work for two reasons. First, the analysis is conducted at a more disaggregated level than previous studies, that is, below the Canadian SIC level. Secondly, in using 1986 data for analysis it is the most up to date productivity study of the industry available. The study uses the index number approach to productivity measurement. For each industry, relative Tornqvist price indexes for commodity outputs and materials, labour, and energy inputs were constructed. These indexes, along with data for industry shipments and expenditures on materials, labour, and energy, were then used to develop input and output relative Tornqvist quantity indexes, and hence, measures of relative physical productivity. Sources of Canadian data were Statistics Canada publications containing data for 1986 while data for U.S. industries were obtained from the 1987 Census of Manufactures and 1986 Annual Survey of Manufactures. The results indicate that in 1986 the Canadian industry was not well placed with respect to its U.S. counterpart. On average, relative variable factor productivity for each Canadian industry was estimated to be 7.6 percent lower. Relatively lower Canadian physical productivity was exacerbated by relatively higher input prices, so that average output cost competitiveness was 15.5 percent lower in Canada. Average input cost competitiveness was found to be 4.8 percent lower in Canada. Correlation analysis found no strong evidence of a link between these two measures of cost competitiveness.