Retooling for a Rebound
- April 29, 2020
It’s a front-end investment, and when done right it unlocks profitability and goes a long way in defining a manufacturer’s margins.
But these days, retooling is going to take on a whole new level of importance.
Maybe you are reading this column at home, after having closed down your shop to deal with the global coronavirus pandemic. Maybe you are reading this in your office, sorting out a wildly disjointed supply chain because of the outbreak’s impact. Either way, you are likely stressed and unsure about what the future holds for your job, your business and your family. And no matter what market your job shop serves, you can bet there is going to be significant change before things finally return to normal.
When we finally return to our jobs and restaurants and movie theatres, the manufacturing world will likely be a much different place.
There’s a no more telling sign of that than the reaction of Ontario Premier Doug Ford after learning the U.S. had been intercepting shipments of N95 facemasks destined for hospitals in his province.
“Never again in the history of Canada should we ever be beholden to countries around the world for the safety and well-being of the people of Canada,” exclaimed Ford. “We can’t be going over to other sources because we’re going to save a nickel. As long as I am Premier, I will never, ever let this happen again to the people of our province or our country.”
That sure sounds like Ford is willing to listen to options on a significant reshoring and manufacturing support policy, the same approach organizations such as CAMM, the CTMA and EMC have spent years pursuing.
And the Ontario premier isn’t alone in this thinking. Dave McKay, president and CEO of RBC, says the investment world is also expecting a shake-up in manufacturing policy.
“Global trade migration is not likely to go back to the old model. International movement won’t press a ‘resume’ button any time soon,” said MacKay, addressing shareholders during the bank’s virtual annual meeting.
“These are significant challenges to grasp for a world that has largely benefited from globalization,” MacKay continued. “We shouldn’t give up on it, but, for a country like Canada, we need to think about how to be more self-reliant in the areas that matter most to our competitiveness and prosperity. This includes creating more resilient Canadian supply chains, using technology to work and connect differently with stakeholders, and transforming the way we learn and train, so our companies and communities are better equipped for a new paradigm of disruption.”
If the banking sector is openly anticipating a shift in the supply chain to make Canada more independent, you should too. What this means, no one knows for certain. But there’s an excellent chance this shift would mean more products made close to home and more mandates for the job shops in those value chains. It could also mean more financing options for retooling to ramp up production, which could be a silver lining once the misery of a global pandemic lockdown is behind us. SMT