The Commerce Times

Breaking down our broken economy

With more than 300,000 manufacturing jobs lost in Canada since 2004, globalization continues to create difficult times for Canadian manufacturers today.  Look around, more and more vacancy space is available because Canadian manufacturers continue to close their doors.

Statistics Canada reports that manufacturing sales are down 22.4 per cent over the last year, while new orders for manufactured goods are down a whopping 28.3 per cent this year.  Many who lost their manufacturing employment have found new opportunities in either the retail or service sectors of the economy; however, wages in these areas are about 40 per cent lower.

Ontario’s economy, in particular, has suffered severely, with unemployment rates now teetering around the 10 per cent mark.

“Canadian manufacturers need to focus on the advancement and commercialization of new products.”

Statistics Canada, July 2009, shows that manufacturing accounts for less and less of the total value of the Canadian economy’s market output. Moreover, this value has been on the decline since 1961.  Some attempt to derail this statistic, claiming that the total quantity of manufactured items has in fact increased over this period. However; this is not an entirely accurate claim.

The soaring Canadian dollar has also contributed to a loss of manufacturing opportunities in Canada, but there are two greater pressures on manufacturing could better explain this loss: globalization and worker expectations.
The business of manufacturing has changed a great deal, with Canada facing a very different landscape, one which is integrated on a worldwide scale. However, globalization has created many disadvantages for Canadian manufacturers.   High-volume production, coupled with comparatively low wages, has made newly emerging industrial economies like China, India, Brazil, Mexico, Indonesia and Russia dominant players in the manufacturing business.  So how does Canada compete now and in the future? How does any business compete in this type of new world order?

Canadian manufacturers will be successful so long as they produce “real” value for the end consumer in this very fluid global economy.  Canada’s competitive advantage will not be realized by taking on the emerging volume-based production systems of market scale.

If there is an advantage to be found, it will stem from those Canadian manufacturers who have the ability to respond rapidly to changing customer needs and who can specialize and produce new innovative products for niche markets. Further advantage can be realized by adding value through consistently high quality production.

“The business of manufacturing has changed a great deal, with Canada facing a very different landscape.”

In order to compete and grow in these new global market realities, Canadian manufacturers need to focus on the advancement and commercialization of new products by adopting flexible manufacturing systems that utilize innovative reconfigurable technologies.  This may be considered a tall order; however it is not impossible especially given recent Federal Government initiative programs for innovation, flexibility and continuous improvement.

Much of this can be achieved by examining past and present worker expectations.  Clearly, there has been upward pressure on wages and downward pressure on productivity in many Canadian, union-based production facilities.  Studies show that automotive manufacturers from the developing world have been more efficient at producing vehicles compared to their North American counterparts.

Historically, it has taken often as much as twice as long to produce a North American car as opposed to those produced in the East.  These differences in productivity are as much a function of worker expectations as they are attributable to any other such variable.  Shaping and influencing workers’ attitudes towards employment, wages, productivity, benefits, and working conditions is a difficult mission to overcome for Canadian manufacturers.

Even with such changes on the part of workers’ attitudes, there still looms the question of “cheap” energy and its availability to the third world for production.  In the future, should these sources of energy prove unavailable, there could be a complete reversal of the globalization process. We could see resurgence in domestically manufactured goods, and the competitive disadvantage once facing Canadian manufacturers could turn into a competitive advantage.

The business of Canadian manufacturing is undergoing radical change that has affected workers’ lives, production methods, how and what goods are delivered to consumers, and our standard of living.  Change is inevitable, and success is achievable especially if consumers are mindful of the “buy Canadian” option.