Optimism is Canada’s missing economic ingredient

As published in The Financial Post

It’s impossible to ignore the drumbeat of negativity surrounding Canada’s economy. Every headline seems to point to a nation falling behind. And we’re tired of it.

A culture of complaint has taken hold that is demoralizing as well as economically damaging. The more we talk ourselves down, the harder it becomes for Canada to attract investment, innovate and keep good workers. The words we say don’t fall to the ground at our border. As any coach knows, you don’t motivate your team by telling them what bad players they are.

As business leaders, we see a different story, one of resilience and opportunity. Canada’s economy is strong, adaptable and full of untapped potential. It’s time to change the story and fight the gloom with facts and optimism.

A good place to start is productivity — the favourite metric of pessimists. We’ve all heard that Canada’s productivity lags that of the United States. What few realize is that business productivity has steadily grown for 25 years, up roughly 50 per cent in that time. The weaker national average is weighed down by a distinct lack of any productivity in the public and non-profit sectors, where output per worker has been flat for two decades.

This doesn’t mean those sectors don’t matter. Health care, education and social services are essential to our quality of life. But like business, they too can pursue greater productivity by using taxpayer and donor funds more efficiently and adopting innovations that deliver better outcomes for Canadians, just as business is so effectively doing.

Reducing non-business-sector workers and shifting them into revenue-generating businesses would meaningfully move the dial on national average productivity.

Even with these headwinds, Canada’s overall productivity has risen over time. Since 2014, productivity has grown by about 0.4 per cent annually. Output per hour worked in the past five years is more than four per cent higher than in the five years before the pandemic.

Yes, we could do better. But the current panic is overblown. The slowdown in productivity growth is a challenge across advanced economies. And Canada’s record is solidly in line when compared with our G7 peers. The U.S. stands out from the rest of the world not because Canada is failing, but because its extraordinary technology sector has driven global-leading gains. Rather than lamenting the gap, we should learn from what drives their success.

Productivity also varies by sector. Technology, financial services and advanced manufacturing have all had strong gains. In auto parts manufacturing, productivity is 8.2 per cent above 2019 levels and nearly 12 per cent higher than a decade ago.

Canadian manufacturing overall has outperformed the U.S. in productivity growth over the past 15 years. It is growing at double the rate of the U.S., thanks to the powerful intersection of our technology sector and our deep manufacturing roots. Canada’s thriving artificial intelligence ecosystem, one of the world’s most dynamic, has supercharged innovation on factory floors.

At Linamar Corp., despite the annual price reductions to customers that are mandatory in the automotive industry, productivity in our Canadian operations has risen 54 per cent over the past decade. Our 29 Canadian plants are the most productive among our 75 worldwide. We are investing more in Canada in 2025 than in any other country globally by a factor of at least four times — a testament to the capability and competitiveness of Canadian teams.

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The lesson is simple: Canada’s fundamentals are strong. We have a skilled and diverse workforce, key to driving that strong productivity, abundant clean energy and water, vast natural resources vital to the global transition, strong institutions and free trade agreements with partners representing 65 per cent of the world’s economy. These are the building blocks of growth.

Some sectors do face barriers — mining, utilities and construction among them — where regulation too often slows investment and innovation. Smarter, more agile regulation would help unlock their potential without compromising safety or sustainability.

Canada has the ingredients to succeed. Many of our companies are already proving it, scaling globally and competing with the best. We should celebrate their success and use their example to inspire others.

Pessimism is contagious. So is optimism. Let’s focus less on what’s wrong and more on what’s working, and tell the world a story of Canadian ingenuity, resilience and confidence.