Restructuring in the Canadian Economy: A Survey of Firms

The regional offices of the Bank conducted a survey of 140 Canadian companies (representing all non-government sectors of the economy) to study the effects of restructuring (defined as a major change in the way firms do business). Results of the survey confirmed the perception that the extent of firm-level restructuring was greater in the 1990s than in the 1980s. The most common type of restructuring was the adoption of new technology. This investment was typically driven more by the availability of the technology than by its affordability. Intense competitive pressure was another important motivation. Other forms of restructuring included the move to "bigger business" through larger-format retail outlets, mergers, or consolidation.

For the firms surveyed, restructuring reduced employment more often in the 1990s than in the 1980s. The most common reason for a decrease in employment was that competition squeezed profit margins and made it necessary to reduce the cost of labour. Restructuring also had other effects on the labour force: a shift in the skill mix in favour of more highly skilled workers and increasing use of contract workers to maintain flexibility. Companies were optimistic, however, regarding their future performance.