Managing a manufacturing business in Canada has its challenges,
and perhaps the largest of them is learning how to cope in turbulent economic times. And we are indeed undergoing a period of uncertainty amid trade wars, tariffs and other global diplomatic disagreements.
This uncertainty is not likely to change much in 2019 and yet, despite this, recent economic outlooks for Canada point to a positive, albeit muted, growth period for the foreseeable future.
Forecasts from the Business Development Bank of Canada, the Conference Board of Canada and Deloitte predict the Canadian economy will grow about 1.7 to 2 per cent in 2019 and 1.5 to 1.7 per cent in 2020.
And there are other indicators that may bode well for Canada according to economic assessments.
The economies of two of Canada’s largest trading partners, the U.S. and China, are expected to continue to see growth in 2019: the U.S. economy will grow 2.5 per cent and China’s economy will grow 6.2 per cent.
In the U.S., despite rising import tariffs, tax cuts in that country have spurred business investment and consumer spending, and spillover effects may be expected in Canada.
A stronger U.S. economy will put pressure on the Canadian dollar and analysts predict the dollar will trade between 75 and 80 cents against the U.S. dollar in 2019, making Canadian exports less expensive.
Canada’s Federal government has introduced tax write-offs on machinery and equipment and an accelerated capital cost allowance to encourage business investment.
While the January and February IHS Markit Canada Manufacturing Purchasing Managers Index (PMI) eased back to 53.0 in January from last December’s 53.6 and eased to 52.6 in February, manufacturing companies noted a robust pace of job creation and slower input cost inflation in January, and strong US demand that spurred export order volumes in February.
The current business climate offers little comfort for those searching for economic certainty before making purchasing or investment decisions.
But many manufacturing executives know how to manage their businesses during tough economic times. A Manufacturing Outlook 2019 report by Plant, which surveyed 501 senior Canadian executives, outlined the
top five growth strategies executives
- 51% are investing in new machinery, equipment and technology
- 47% are focused on innovation in products, processes and technology management
- 47% are introducing more products
- 42% are selling more to current customers
- 35% are scaling up operations
The economic pendulum has swung towards uncertainty, but it will swing back, and the economy will see an upturn. And manufacturers who have implemented the right strategies during this time will reap the benefits. SMT