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Canadian manufacturers respond to mounting challenges
To paraphrase Mark Twain, reports of the imminent death of the Canadian manufacturing sector have been greatly exaggerated.
At
least that is the view that Jason Meyers, president of the Canadian
Manufacturers & Exporters recently shared during a speech to
members of the Empire Club.
“I
believe that we are witnessing not the demise of manufacturing in
Canada, but the emergence of a new, more innovative, more high-tech,
more service-intensive, and globally networked industry, bringing with
it new opportunities for future growth,” he says.
However,
Meyers says that it’s not hard to understand why many Canadians might
think that manufacturing is disappearing. “We hear the bad news
daily-the plant closures, the 400,000 job losses across Canada, half of
which have occurred here in Ontario. It’s a very serious situation.
“Manufacturers
face severe competitive pressures and financial strain. For six years,
Canada’s manufacturers have been buffeted by a perfect storm that has
now gained hurricane strength. A rapidly appreciating Canadian dollar
has cut into export sales. At the same time, soaring costs for energy
and materials have eroded profit margins and cash flow even further.
More recently, manufacturers have suffered from the downturn in US
housing, consumer, automotive, and industrial equipment markets-all key
export markets for significant portions of Canadian industry. All this
has exerted tremendous pressure on the bottom line. Now, credit is
becoming scarce thanks to the turmoil playing out in financial markets
around the world,” says Meyers.
According
to Meyers, Canadian manufacturers are responding to today’s challenges
by changing business strategies and by investing in new product
development, new technologies, and new markets. “I’m optimistic about
the new investments being made in innovative businesses and product
lines, about the business opportunities that Canadian manufacturers are
exploiting in new markets both at home and abroad. I’m optimistic when
I see manufacturers continuing to grow their business in these
challenging times.”
Continues
Meyers, “Canada’s manufacturers will succeed as long as they continue
to create value for both customers and investors in this fast-paced,
high-risk, global economy. No company can base its competitive future
today on low labour costs, nor should they try. Nor can Canadian
industry compete on high volume production that the advantages of
market scale and high rates of capitalization offer. Our manufacturing
companies are relatively small.”
Make
no mistake. Canadian manufacturers do have competitive advantages, he
adds. “Where Canadian manufacturers do have a competitive edge is in
their flexibility-their ability to respond rapidly to changing customer
demands, to specialize and customize production for niche markets, and
to add value through the quality and services they bring to solving
their customer’s problems.”
The
competitive strengths that Canadian manufacturers possess will become
even more important in light of future market trends, he says. “In a
world of intense global competition where products and services
literally become commodities overnight, companies have to differentiate
themselves and their products in order to compete for business and to
grow.
“Rapid
advances in technology are changing production capabilities and at the
same time opening new business opportunities. Customer expectations are
changing. Environmental and social sustainability are becoming standard
operating practices for business. And, as more and more constraints are
placed on energy and carbon consumption, even large-scale producers
will have to become more specialized in terms of their products and
production processes,” says Meyers.
Adds
Meyers, “The reality is that production itself is becoming a smaller
and smaller component of the value being added in the business of
manufacturing. Today, value is generated by the knowledge and the
services that go into solving customers’ problems. Value is created-and
money is made-in product development, engineering, and design, in
quality control, process and materials management, logistics,
distribution, and supply chain management, and in customer service and
financing.”
In
order for Canadian manufacturers to succeed in the new global markets,
Meyers singled out four critical areas that must be addressed including
continuous improvements that drive efficiencies and deliver cash
savings; innovation in products, processes, and supply chains; the
realization of new business opportunities; and, the skills and
capabilities of the Canadian workforce.
Looking ahead, it won’t be business as usual for Canadian manufacturers. They can’t afford it to be.
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