NAFTA OR NOT
QUEBEC INDUSTRIES ARE PUSHING FORWARD WHILE AWAITING ANY CHANGES TO TRADE PACT,
The future of Canada’s trade relationship with the U. S. is in limbo but that didn’t stop Robert Bélanger from investing $3.6 million to upgrade his Quebec fabrics plant.
New weaving machines and a state- of- the- art dying system are helping his Granby, Que.- based company, Belt-Tech Inc., produce enough of the webbing used in seat belts and pull straps to meet a 30 per cent surge in orders from the North American auto industry. Part of the financing came from Quebec’s government, which is pushing manufacturers to modernize their factories despite uncertainties surrounding renegotiation of the North American Free Trade Agreement.
“I can’t tell my client ‘ Apologies, but I’m waiting for NAFTA talks to conclude before investing to give you the product you need today,’ ” Bélanger, Belt-Tech’s chief executive officer, said in a phone interview. “I need to forge ahead.”
With Ottawa just beginning to focus on making businesses more competitive, provincially owned Investissement Québec is more than a year into a push to spur investment in robotics and technology. After 18 months — half the expected time — it spent almost all of the $825 million earmarked for loans and loan guarantees for innovation in manufacturing, according to the agency’s president, Pierre Gabriel Côté.
The province, however, has its work cut out for it. Less than 20 per cent of Quebec’s manufacturers have automated at least half of their operations, compared with about 50 per cent in the U. S., Côté said. Nationally, Canada’s level of automation tops that of France and the U.K., but trails Germany and South Korea. And with the Bank of Canada warning that trade uncertainties are curbing investment, it’s not clear how fast the nation can catch up.
Quebec’s hands-on approach — which includes seminars, videos and tours of best- in- class companies for entrepreneurs — also aims to break manufacturers of their habit of letting a weak loonie take care of competitiveness challenges. The Canadian dollar has been one of the worst performers among major currencies in the past six months, giving exporters an artificial edge.
“The exchange- rate effect has always been negative on the adoption of technology because people used to say ‘ I am making money no matter what,” Côté said in an interview. “This is a mould we’re breaking.”
The weak currency, vigorous demand south of the border and a rebound in oil prices have been a boon for Canada’s industrial output, which is concentrated in Ontario and Quebec. And there are signs automation has intensified in Quebec. A 2017 survey by the Business Development Bank of Canada showed 45 per cent of manufacturers in Quebec had implemented digital technologies, compared to 39 per cent in Ontario and 35 per cent in Alberta.
Quebec’s current labour market makes it easier to follow the global trend toward automation, according to the Institut du Québec, an economic think- tank. Its population is aging, unemployment is hovering near a record low, and businesses can’t find workers. Vacant positions in manufacturing were up 53 per cent in the third quarter from a year earlier, said Mia Homsy, the institute’s director.
On the ground, Quebec Citybased tech entrepreneur Alexandre Leclerc has seen the manufacturing industry evolve over the three years since he created Poka, an online platform for workers to log issues or consult video tutorials on machines across factories.
“When we started there were no iPads in factories, no tablets, no Wi- Fi. Yes, there was automated equipment, but no infrastructure to support other technology platforms,” said Leclerc, whose firm services 200 factories in Quebec — nearly half its total of 450. “Now when we contact clients, they’re open to tablets, to the cloud, they already have installed Wi- Fi. It’s much easier for us.”
Still, Louis Duhamel, a strategic adviser with Deloitte LLP who has given dozens of presentations to manufacturers across Quebec, cautions the province is only taking the first steps toward the next industrial revolution, which will be based on advanced digitization and connectivity. Companies are starting to install sensors in their factories to compile data on temperatures or humidity, for example, but few are adjusting to it automatically yet or using data from clients to optimize their products.
“Lots of companies are moving, but not enough. The Chinese are completely transforming their manufacturing sector, they will soon jump on the ice,” he said.
“What will we do if we haven’t made the required investments?”
Bélanger also takes a global view in pondering the future of Belt-Tech, which employs about 200 people about 80 kilometres east of Montreal. For now, he provides nearly a third of the webbing used in cars and trucks in North American.
His next priority is to expand the firm’s reach through a tie- up with a competitor in Europe or Asia to better meet demands of the globally integrated automotive market.
“I don’t have a choice, I have to follow the clients,” he said. “If I don’t do it, I’ ll put my company at risk.”
I CAN’T TELL MY CLIENT ‘APOLOGIES, BUT I’M WAITING FOR NAFTA TALKS TO CONCLUDE BEFORE INVESTING TO GIVE YOU THE PRODUCT YOU NEED TODAY.’ I NEED TO FORGE AHEAD. — ROBERT BÉLANGER, CEO OF QUEBEC FABRIC MANUFACTURER BELT-TECH