India has a problem and it’s looking at manufacturing to fix it. The country’s services sector, which has driven economic growth in that country for years, is shrinking and some are proposing India refocus its efforts on manufacturing
India’s solution may become a problem for North America if it succeeds. Despite the recent trend toward reshoring, spurred in part by rising manufacturing costs in countries like India and China, initiatives by these country and by other low-labour cost countries to strengthen manufacturing threatens the fragile movement we call reshoring in Canada and the US.
The potential lure to offshore again to other countries isn’t likely to be about low cost labour; increasingly it’s likely to be about simply having a more attractive business environment in which to invest. According to a recent Bloomberg ranking, Canada isn’t likely to attract a lot of new business investment in the future. And businesses aren’t going to head to China either.
Bloomberg’s ranking of the “30 Most Innovative Countries” ranked Canada 11th, which isn’t bad until you look deeper into the scores. The total ranking looked at 50 countries and in R&D intensity and patent activity Canada was 24th and 23rd respectively, which points to our country’s inability to commercialize on innovative R&D ideas. In manufacturing capability, it ranked 32. China ranked 25th overall. The big winners? South Korea and Sweden, which held the number 1 and 2 spots respectively in the ranking.
What this means for Canada is that we need to pull up our boot straps and figure out a way to make sure the reshoring trend continues to move in our direction and not move away to India, South Korea or even Sweden. Canada needs to work harder at moving up the rank [i.e. become more productive and more innovative] to reach for that metaphorical number one position and attract and maintain businesses in Canada to ensure future jobs and economic growth.
If South Korea and Sweden can do it, why can’t Canada?
For the record, the Federal government has outlined some initiatives about retaining and encouraging business investment in Canada in the recent Federal Budget released on February 11 (Read SMT’s comments about the Federal budget online at www.shopmetaltech.com/industryupdate), but we think our readers may have some better ideas about what
we can do.
If you have suggestions, please share your ideas with us. We’ll collect responses, publish them in the magazine and work with the industry’s key associations to get your voice heard by the Federal government. Canada’s manufacturing industry needs to speak up for itself and there is no better way to do this than with one loud collective voice to get the government’s attention.
Let’s work together to make some positive changes and maybe within the next five years, Canada may be able to secure its place as a permanent home for reshoring.SMT