2019 Business Outlook
- October 23, 2018
Canada’s manufacturing industry is poised to take business to the next level and step up on the global playing field
Industry in Canada has always followed the most rational route, according to Paul Preston, director of science technology and innovation policy for the Conference Board of Canada. In the 1990s, the exchange rate allowed us to export a lot of goods to the biggest economy in the world, our neighbours to the south, and we made a lot of money exporting. In the 2000s it was a commodity super cycle—oil and gas, minerals, metals—and Canada could simply dig commodities out of the ground or cut down trees, sell its resources on the world market and get paid well for it.
Having such an advantage for a few decades was profitable, but likely not the most sustainable approach. But throughout those years, industry has slipped in innovation, which just happens to be the next rational step for Canadian companies to remain relevant in the global supply chain.
“Canada continues to slip in innovation rankings relative to other nations around the world. And there are a couple of areas where we see a lack of performance in general,” says Preston. “It’s in businesses not spending money on research and development and our lack of investment in information and communication technology (ICT). Quite frankly, our peer countries are outpacing us in the adoption of technology.”
That’s not to say Canadian companies aren’t improving or investing in technology. “Venture capitol in Canada has improved and the entrepreneurial ambition is strong,” says Preston. “The challenge we see is that we’ve improved on a couple of indicators, but other countries are improving faster. Companies know the adoption of ICT is going to make them more productive and more money, but they’re going to do what’s rational.”
Don Matthew, national sector leader of industrial manufacturing for KPMG Canada agrees, “It’s really quite interesting because right now industry, generally speaking, is doing well. But there is a lot of haziness looking forward. There are definitely trade issues to deal with, but there’s a second high level issue, in my opinion. We can’t get anything done here in Canada. I’ll use the pipeline projects as a prime example. As a result of that we’re seeing significant decline in foreign investment in Canada.
“We have to make sure we maintain our relevance in the global marketplace. Whether or not we want to do business globally, we are faced with global competition,” continues Matthew. “I’m a firm believer in the wealth that this country can generate. And if we can get a few of these projects done, it would put us in a position to be a leader in the adoption of new technologies, renewable technologies and green technologies.”
Despite the slippage in the rapid innovation race, the future is unquestionably bright for Canadian industry. While many have adopted automation and new technology to keep pace with customer demands, it’s become much more than that. Opportunities for growth and expansion abound, but in today’s technology driven world there’s a real focus on that looming idea of Industry 4.0 and the Internet of Things (IOT). For Canada’s robust capabilities and industry expertise, the new reality for growth will be in embracing the interconnectivity of automation technology and collaborating with other companies to get there.
Super charging capabilities
The Federal government recently challenged the country’s small to large companies, academic institutions and not-for-profits to unite and collaborate on new bold ideas. Called the Supercluster Initiative, the government has invested $950 million—to be matched by
private sector—and held a competitive bidding process for different industry sector groups that came together to bid.
“One of the winning bids was the advanced manufacturing Supercluster, which consists of all the industry organizations, private sector, academic and government departments,” says Preston. “The research and innovation work that we’re going to do is meant to be projects that can advance that sector in Canada.”
“It’s a very exciting time for Canada and a big step forward with the Superclusters,” says Paul Smith, vice president and director of innovation for Xerox Research Centre of Canada (XRCC). “Most countries already have centers of expertise that have been driving innovation. It’s hard to do without something like a supercluster.”
This new injection of funding is meant to increase job opportunities and the country’s GDP.
Next Generation Manufacturing Canada (NGen), a not-for-profit organization that’s leading the advanced manufacturing supercluster, is headed up by Jayson Myers, a well-known name in Canadian industry and manufacturing sector.
Regarding the future of industry in Canada, Myers says, “the big thing that I see is going to be the application of digital technologies in manufacturing. That means the development of smart materials, products and processes, and interconnecting processes. It’s also going to be about the ability to use the data that’s generated as a result of those applications from digital technology. I think that’s going to be key and going to create an awful lot of opportunities to develop more customized types of products and processes.”
NGen is focused on accelerating the development of technology, the adoption of new technology and fast tracking the scale up of those technologies for manufacturing. “First of all, we have great manufacturers and technology companies across the country, but often we don’t actually know [what’s out there],” says Myers. “What we’re trying to do is connect those companies and raise awareness of the potential partnerships.”
In addition to developing an asset map or capabilities database to easily connect companies across the country and funding projects to help position Canada as a world leader in advanced manufacturing, NGen is investing in capacity building programs to help small to medium sized companies
de-risk the adoption of technology.
“We’re building collaborations and providing funding for companies to help them undertake technology assessments and audits. We will have a number of programs, demonstrations, and offer access to technology scale up centers that will help smaller companies de-risk the decision and learn how to use these technologies,” says Myers. “When you think about it, smaller companies may not be aware of how technology can help the business. They may not be aware of what the requirements are for successfully managing the technology, or how to chose the optimal mix of technologies for what they’re trying to do. Or they may not be aware of how to source the integrated solution they need. Those are some of the ways we think we can help smaller companies make more informed decisions.”
Myers points to the XRCC as a great example of an accessible scale up center. “They work with smaller companies to help them scale up the production of technology and integrate it into their processes,” he says.
Smith adds, “The aim of this supercluster is more than just networking. It’s the ability to have the knowledge of what’s available to you.”
XRCC, which focuses on material development and specializes in printable electronics, is sort of a mini cluster of its own. Smith explains that a few years ago, XRCC recognized that it could use its expertise to help small companies and startups to de-risk their technologies and help them become commercially viable. It ended up partnering with the National Research Council and building a national lab on its campus. “Now, Canadian companies can come to this campus and have a range of expertise. We can help you with fundamental problems of manufacturing. And we can help companies scale that material development up to a commercial project.”
For many Canadian manufacturers, 3D technology is becoming a quickly growing area that’s very relevant in the automotive and aerospace sectors. “Down the road in 3D printing, whether in polymers—where we play and have expertise—or metal, the aim would be the ability to print electronics onto those objects you just cut or made to make them more than an object that sits there, but an object that’s smart and has a function. That might be something interesting in the metalworking area,” says Smith. “With current electronics it’s a difficult thing to do and expensive. But now, with 3D, you can reduce cost and add that function. You’re producing more than just a commodity component, you’re producing a smart object that adds value in that value chain.”
Another player in this supercluster is the Barrett Centre for Technology Innovation (BCTI), which is Ontario-based Humber College’s attempt to increase the amount of cooperation with industry and community partners that engages both faculty and students in projects and innovation development to help industries grow.
“We understand there’s a skills gap and by working with our industry and community partners, we’re making sure our students and the people in the industry have the opportunity to develop the skills required for industry to grow and flourish,” says Darren Lawless, dean of applied research and innovation at BCTI. “I think we have to get away from that thought process that automation will kill jobs, because actually it will create more jobs, we just have to reskill and refocus people in the right areas.”
With a state-of-the-art facility and key industry partners, BCTI has positioned itself as a technology and process troubleshooting centre, with an open door policy for industry looking to improve or design manufacturing processes, and experimenting with prototyping and innovation development.
“We want industry and community partners to come and work with us. We want to create a space where industry will work side-by-side with our faculty and students to solve problems together,” says Lawless. “That way our students and faculty will better understand the needs of industry, which at the same time the students and those from the industry will be exposed to the creativity and emerging trends our students and faculty are well aware of. It’s kind of a win-win situation.”
What Lawless says needs to happen is simply just getting a dialogue going and building awareness. This centre is designed to address the timelines of industry, even outside of the regular school schedule, which is unique for a post secondary institution. “We understand confidentiality and we’ll keep conversations between us and the client,” says Lawless. “It’s difficult for companies to know all of the emerging trends. Humber has the kind of resources to help companies understand them. We want to help and we’re passionate about it because it’s a pathway for our students to understand the cool companies that are out there looking for skills they may or may not yet have.”
Where Canadian industry and manufacturing really shines is in the level of customized work it’s already producing. It’s this niche area that Myers says sets us apart and allows many Canadian manufacturers to get by any emerging political risks such as the recently imposed trade tariffs. “The real opportunities I see is that our manufacturers and tech companies are highly specialized and do a lot of customized work,” says Myers. “It’s now about how they will build on technology opportunities to grow their business around the world.”
KPMG’s Matthew agrees. “You can’t get scared at what’s coming at you, whether it’s political issues, trade issues or technology and the pace of change that you’re facing. From a Canadian perspective, we have to keep our eye on the rest of the world. Whether that means we’re servicing them, accessing their technology, or accessing their processes, we need to keep our eyes open to make sure we’re keeping pace. We can’t be too risk adverse or too timid. Yes there is uncertainty, but there is more risk and uncertainty if we do nothing.” SMT
Optimism prevails despite uncertainty: survey
Canadian manufacturers are optimistic about 2019 and many are looking at investing in machinery and people in anticipation of future growth according to participants in Shop Metalworking Technology’s annual readership survey. The survey was sent to more than 11,000 selected qualified readers with close to 200 responses.