Despite looming challenges Canadian manufacturers remain optimistic

Despite the recent economic downturn and the challenges on the horizon that are facing the sector, Canadian mid-sized manufacturing companies are optimistic about the future, according to a recent study.

"On the surface, the Canadian results seem surprisingly encouraging, but in the context of the overall report, the findings suggest that Canadian mid-sized manufacturers may have some challenges ahead," says Bruce Byford, national manufacturing and distribution sector leader with Grant Thornton LLP, a leading Canadian accounting and business consulting firm that conducted the survey.

Adds Byford, "In order to keep up the momentum of the past few years, Canadian manufacturers must be prepared for these challenges and the related opportunities that will no doubt arise."

The report entitled, Manufacturing Insights 2005: A Global Comparison, surveyed over 100 mid-sized Canadian manufacturers and 900 mid-sized manufacturers from nine other countries.

According to the survey, while 81% of Canadian mid-sized manufacturers reported being optimistic about the economic outlook, the data from other responding countries suggests that there are warning signs.

For example, Mexico (61%), United Kingdom (57%), and Russia (37%), reported lower levels of optimism. At the same time, only three in five (63%) United States respondents were found to be slightly optimistic and no U.S. respondents reported being very optimistic.

The lack of optimism expressed by U.S. mid-sized manufacturers is particularly worrisome, the report notes. "With Canadian manufacturers so dependent on the health of the U.S. economy, they can't afford to ignore the face that U.S. respondents are indicating that there may be tough times coming," says Byford.

Other mid-sized manufacturers the report found to be less optimistic about the future included Singapore (68%), Hong Kong (65%), and Taiwan (37%). "China and India seem to be having a significant impact on neighboring economies. Although many perceive China and India as threats, there is also an opportunity for Canadian manufacturers to take advantage of these booming economies. With a combined population of over two billion people in China and India, it is safe to say that this may be the most significant growth opportunity facing Canadian manufacturers in recent times," states Byford.

Jerry Cook
Editor, MPP
jcook@clbmedia.ca 

Flexibility critical for auto sector to succeed

Production flexibility will be even more critical for North American automotive OEMs if they hope to remain competitive and be successful in the future, warns an automotive consultant.

"Today, the market is demanding that we build more and more models and more and more different types of vehicles at lower volumes. Flexibility is key for the industry going forward," says Laurie Felax, vice president of Harbour Consulting, Troy, MI. Felax was speaking at the 2005 Automotive Parts Manufacturers' Association (APMA) annual conference and exhibition in Hamilton, ON.

Continues Felax, "Flexibility is not just important for the OEMs but it is also critically important for suppliers."

Felax says that the past year has likely been the most difficult year ever faced by the North American automotive sector. "This has probably been the most difficult time for the automotive industry. However, there are opportunities and there are things that auto parts suppliers can do to thrive in this environment."

Felax told the audience that currently there is approximately 80 million units of capacity in the global automotive market but only 60 million units of production. "That tells you that there is still a tremendous amount of open capacity and plants that will likely be consolidated, merged, or closed throughout the world." Projecting automotive production to 2012, Felax noted that North America won't experience that many changes. "Our situation is really very static. You will see some growth in production but it won't necessarily be the largest area of growth. Europe will see a little more growth, primarily coming out of Eastern Bloc countries. Of course, the big area of growth will be Southeast Asia and all the emerging markets including China, India, and Thailand."

At the same time, sales and market projections to 2010 indicate that North America is expected to grow overall sales during the period by over $20 billion. "However, that production is not going to come from this country. When we see this growth in sales, we will see a lot of that coming from other markets."

However, it's not just a matter of low wage countries attracting capital investment from automotive manufacturers. "Everyone thinks that we are going to China and India because it is about low wage countries. Instead, the big difference is the actual capital investment that is put in. For example, a traditional body shop, which is the highest-cost thing that an OEM would build in North America, the best manufacturers are building body shops for $150 million on average in this country. In China or India, you can put in a body shop for $60 million. There is a dramatic difference in cost for investment."

September 13-15, 2005-Midwest 2005 Exposition and Conference, Novi Expo Center, Novi, MI. For futher information contact the Society of Manufacturing Engineers at (313) 271-1500 or visit www.sme.org

September 20-22, 2005-All-Asia Wire & Cable Trade Fair, Tube Singapore 2005, Singapore Expo, Singapore. For further information contact Messe Düsseldorf North America at (312) 781-5180 or visit www.mdna.com

September 26-28, 2005-North American Hydroforming Conference and Exhibition, Sheraton Detroit Novi, Novi, MI. For futher information contact the Society of Manufacturing Engineers at (313) 271-1500 or visit www.sme.org

October 4-5, 2005-Rapid Prototyping and Manufacturing Certificate Program-Associate and Professional, Georgia Institute of Technology, Atlanta, GA. For futher information contact the Society of Manufacturing Engineers at (313) 271-1500 or visit www.sme.org

October 17-20, 2005-Canadian Manufacturing Technology Show, National Trade Centre, Toronto, ON. For further information contact Reed Exhibitions at (416) 491-7565 or visit www.reedexpo.ca

October 31-November 3, 2005-ICALEO 2005: International Congress on Applications of Lasers and Electro-Optics, Hyatt Regency Miami, Miami, FL. For futher information contact the Society of Manufacturing Engineers at (313) 271-1500 or visit www.sme.org

November 13-16, 2005-FABTECH International and The AWS Welding Show, McCormick Place, Chicago, IL. For further information telephone 1 (800) 432-2832 or visit www.fmafabtech.com

December 6-8, 2005-FabForm 2005, NürnbergMesse, Nuremberg, Germany. For information contact Mack Brooks Exhibitions at +44 (0) 1707 278 200 or visit www.fabform.de

March 27-30, 2006-WESTEC 2006 Exposition and Conference, Los Angeles Convention Center, Los Angeles, CA. For futher information contact the Society of Manufacturing Engineers at (313) 271-1500 or visit www.sme.org

Coming in the June issue of MP&P

• Cutting Tools

• Coolants/Lubricants

• CMM

• Quality Control

• Laser/Robotics/Automation

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