Shop View: China and India: Friend or foe for Canadian manufacturing?
- October 22, 2011
Much has been written about how North American manufacturing has flowed to the Far East, followed closely behind by service sectors, such as IT and graphic design.
It's an interesting dichotomy we face here in North America. While government officials such as Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty talk about strengthening the manufacturing sector in Canada, businesses continue to outsource their manufacturing because it's seems to be the only way they can compete against inexpensive offshore products that flood our market.
There appears to be little support for the small and medium sized manufacturers struggling to remain in business in Canada. Just talk to any SME in the manufacturing sector and they'll likely tell you accessing credit from banks and other financial institutions for machinery purchases or plant upgrades is next to impossible. And when such financial institutions come through, interest rates are often so high businesses can't afford to take out the loans they need to invest in the right technologies to remain competitive.
The dilemma governments must grapple with is to balance the need to provide an environment for growth in manufacturing in North America while at the same time maintaining healthy free trade arrangements that open doors for these same manufacturers to expand into offshore markets.
China and India are prime examples. These countries' fast-growing economies with bulging middle class (and increasingly affluent) populations with a hunger for Western style products represent immense export opportunities for North American manufacturers. Yet at the same time, North American manufacturers are threatened by the flow of inexpensive, and increasingly higher quality, products from China and India coming into our market.
The question is can North American manufacturers take advantage of the opportunities these growing economies offer while still remain competitive against manufacturers from these same offshore growing economies?
In other words, can China and India be a friend and a foe? It's a question that remains to be answered, but my hope is that North American manufacturers will find the elusive balance to grow here and there.
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