You’d be hard-pressed to find anyone who would disagree that 2025 was a year of uncertainty for Canadian manufacturing.
For companies serving the deep foundation and heavy construction industries, on-again/off-again tariffs have slackened demand, while economic uncertainty has paused investment in new projects. On the bright side, Dennis Darby, president and CEO of Canadian Manufacturers and Exporters (CME) since 2017, believes that Canadian manufacturing will see a better 2026, predicting modest growth and more certainty towards the end of the year.
Here, Piling Canada sits down with Darby to get his take on the state of domestic manufacturing and how companies are navigating global competition, supply chain disruption and sustainability-related goals.
How would you describe the overall state of Canadian manufacturing heading into 2026?
Dennis Darby (DD): [Last year] was a terrible year for many reasons, mostly due to uncertainty for the sectors affected by tariffs – steel, aluminum, autos, wood products [and] medium-sized heavy-duty trucks. All of them did poorly. But the energy sector did fairly well. In an environment where both our economy and the U.S. economy are uncertain, there has been a pullback in investments. When there is uncertainty, businesses tend to sit on their money.
Where are you seeing the strongest growth or innovation among Canadian manufacturers?
DD: Areas that have seen the most resilience in 2025 include the energy sector – so anything related to oil and gas or nuclear. Mining is also beginning to improve. Electric vehicle (EV) plants announced a couple of years ago are continuing, although at a slower pace.
“We need to exercise our muscles over the next while with these national projects and government initiatives, which are a double-edged sword. We are using tax dollars to build infrastructure; but if we do that, it will ultimately become something we can sell to the world. Investing to build capacity is very positive for the infrastructure industry.”
Dennis Darby, Canadian Manufacturers and Exporters
What are the main headwinds facing manufacturing right now?
DD: Tariffs introduce cost pressures and make it hard to compete. In Canada, the policy side is difficult because we have a complicated regulatory environment. Bill C-5 hopes to get around that by fast-tracking some projects. To our sector, [which] has highlighted that if you’re not on that fast track, we have uncertain regulatory outcomes – and that’s a real damper on industry. No one is building new things. It’s hard to get companies to commit without certainty. The other hurdle is our trade infrastructure. Our roads, rail lines and ports are unable to take additional volume. We have no capacity to move more manufactured goods.
How are Canadian manufacturers who serve the deep foundation and construction industries staying competitive on the global stage?
DD: Right now, a lot of companies are relying on the new government’s idea to be our own best customer. There is a lot riding on the federal government’s commitment to build our military, transportation infrastructure and housing. That’s one way we can stay competitive. But to pivot, we need to adjust our products. For example, we need to build various grades of steel for all of these projects. So, we’ll have to adjust our product mix in many categories. Auto parts companies may need to look at making parts for the defence industry. We must provide the right incentives to help these companies make those shifts. The table has been set with the government’s commitments, and the provinces have also been providing tax incentives.
What lessons have manufacturers learned since the pandemic when it comes to supply chain resilience?
DD: First, we all grew up in an environment of just-in-time delivery, single suppliers and limited inventory. Now, companies are looking for backup and multiple suppliers, and many are looking for them in Canada. Second, we need to look at the length of the supply chain. We underutilize trade with a market like Mexico. For example, we rely on electronics from China; instead, Canada must look to Mexico, already a free-trade partner, as a region with competitive operating costs and strategic readiness for component production. The last point is that companies are considering how to become more self-sufficient, ensuring they have enough warehousing and capacity to weather economic storms.
Where do you think Canada has the best potential to strengthen its domestic supply – steel, fabrication, components, something else?
DD: If you think about it, the ability to build big infrastructure requires steel, concrete, fabricated components and even mass timber. I think there is a big push to have a broader supply chain in Canada.
Historically, we’re great at building things, although we haven’t focused on using those muscles over the last decade. We used to source much of our supply from the U.S., but we have to be competitive. We have to increase our capacity, and there is an opportunity to do that. We need to exercise our muscles over the next while with these national projects and government initiatives, which are a double-edged sword. We are using tax dollars to build infrastructure, but if we do that, it will ultimately become something we can sell to the world. Investing [in building] capacity is very positive for the infrastructure industry.
Sustainability goals are shaping both construction and manufacturing. Has government policy been keeping pace with industry’s needs?
DD: In many cases, government policy has been ahead of industry for things like net zero and supply chain traceability. Things do seem to be on hold now, but I think this focus will return. In Canada, we will change how we use energy, upgrade how we make cement [and] even how we produce oil and gas. EV policy is a great example – the government got way ahead of the consumer and technology, and had to back off. You have to match the market.
How does CME help manufacturers adapt to the green transition?
DD: In various provinces, we offer lean training and technology assessments. We provide seed funding – to be competitive and efficient, you need to understand your process. You need to know how to reduce waste and streamline operations. In many provinces, we also do technology assessments. We bring in experts who can help companies understand how to grab the low-hanging fruit, how to reduce waste, etc. CME is not-for-profit – the idea is we help manufacturers adjust. I encourage companies to contact us to find out more about our programs and resources. We represent 2,500 manufacturers and exporters in every province and in every sector.
How can manufacturers and contractors collaborate more effectively to drive innovation and sustainability?
DD: If you think about the whole supply chain, manufacturing needs to do more to work together. A good percentage of Ontario manufacturers supply the construction industry in general. Collaboration has probably been an untapped concept and it’s certainly something worth looking at, especially now that we have a direction. For years, we’ve asked government for an industrial policy, so we commend the government and provinces for the work that has been done. Now, we have some direction and we want to build. Over the past years, we became complacent as an economy because we relied so much on the U.S. We were running our capital as hard as we could to meet their demand. Meanwhile, other parts of the world were making investments to build a better global product. It’s time to catch up.
Looking ahead, what would a thriving Canadian manufacturing landscape look like?
DD: It will be about two things: the U.S. and the rest of the world. It’s about increasing the size of the overall pie. Success doesn’t mean trading less with the U.S., but it does mean adding more trade elsewhere. In five years, success will mean that we are more competitive around the world.