Wages and Manufacturing- The Trend Towards Automation

Due to globalization, competition within manufacturing has increased. Wage growth in developed countries makes it difficult for companies to keep overhead low and as a result are forced to relocate to countries with low wages. The Canadian manufacturing industry used to be very strong however, many of these companies have gone to China and India. For example, the automotive manufacturing industry was large but has shrunk through the last decade.

If a company wishes to become competitive in an environment with high wages, it is necessary to invest in automation. Automation while initially it is capital intensive, in the long run it has the potential to pay off depending on the industry. In some sectors complete automation is impossible due to constant product changes. These industries include electronics and custom products.

2025 BMB is petitioning governments to remove minimum wage regulations so that jobs can be brought back to Europe and North America. We believe that the market price of labour should be determined by manufacturers rather than setting a wage floor (minimum wage). This study supports our viewpoint.