Manufacturing innovation may mean thinking outside plants
Mass production has changed to customer- oriented niche solutions
OTTAWA October is when Canadian manufacturers promote themselves. These days that can be a tough sell.
“Manufacturing ( firms) suffered greatly during the economic recession of 2008- 09. And not only did they suffer an economy setback, but we also lost a lot of capacity during that recession,” says Craig Alexander, a vice- president at the C. D. Howe Institute, responsible for economic analysis.
“In other words, plants that were shut down were — effectively — dismantled, and so the capacity has been lost.”
Six years on, there is still rust on the spreadsheets of many Canadian factories.
The global recession gutted much of the manufacturer sector — in Central Canada for sure, and the auto sector in particular — resulting in tens of thousands of workers losing their jobs.
The most recent economic downturn in the first two quarters of this year, though short- lived by most accounts, certainly hasn’t helped quicken the rebuilding process.
It’s a waiting game for many companies still expecting the weak loonie and the U. S. recovery to help jump- start the sector. They have also held back from investing more of their cash on hand, or what former Bank of Canada governor Mark Carney once labelled “dead money” — a characterization that, not surprisingly, raised the hackles of CEOs across the country.
Even so, investments have been slow to come.
Why? Largely because businesses around the globe — and their target markets — have changed or are moving on.
“Manufacturing isn’t dead. It’s just not what it was once,” says Jeff Brownlee, vice- president of Public Affairs and Business Development at Canadian Manufacturers & Exporters, the industry body.
“You’re not going to have a job in St. Thomas, Ont., putting bolts on a rim and being paid $ 60 an hour. Sorry, those days are gone, guys. But people are still making things and they’re doing it differently, and people are designing it differently,” he argues.
“We’re either in the game or we’re not. And, unfortunately, in Canada, for the most part, we’re not in the game. It’s not about mass production. It’s about mass customization. It’s about niche manufacturing. It’s about providing a solution to problems ... thinking in terms of being more customer- oriented.”
Take Ontario craft brewer Beau’s, for example.
Despite the so- called hollowing out of the country’s manufacturing hubs — some 230,000 fewer workers now than in August 2008 when the global downturn hit — “there are some wonderful examples of great success,” says Steve Beauchesne, CEO of nine- year- old Beau’s, a family- run startup based in Vankleek Hill, Ont.
“Sometimes the stories don’t get told as well in Canada. But I don’t think that means we’re not just as successful. There are just 10 times more people in the United States and there tends to be 10 time the volume on the success stories there.”
But he adds: “I’ve always been very optimistic about the Canadian market place.”
Beauchesne acknowledges that “a lot of people don’t think of breweries, especially craft breweries, as being manufacturing facilities.”
Most likely, says Brownlee, that’s because “brewers are sort of the example of the new age of manufacturing that we preach about all the time.”
Another example is Christies, a company with a long history of adapting and finding ways to grow.
The Kitchener, Ont., company began in 1929 making lamp consoles and film projectors, pretty typical of that economic era. But by 1999, it had purchased Electrohome Ltd.’ s digital projection business and today has 43,000 of its cinema screens and projectors operating worldwide, along with other visual display technology.
“Our philosophy is to really focus on innovation. It’s a rapidly changing industry,” says Dave Paolini, public relations manager at Christies, which is now owned by Ushio Inc., based in Japan.
“Knowing what is going on worldwide in your industries — both from a business and technological point of view — are important and helped us weather the recession,” Paolini says.
“We’ve been in constant growth mode — sometimes slow growth, sometimes rapid growth. We certainly kept our workforce. In fact, we’ve never had a layoff and have, over the last 19 years, increased our workforce,” which now numbers 1,500 globally.
That can’t be said for many companies in Central Canada during the recession — nor for those in Alberta with the reversal of its energy fortunes.
“I think manufacturers should be looking for opportunities under every stone. It means you need to think about the potential customer base in a very broad sense,” Howe’s Alexander said.
“I would have hoped this was something manufacturers were already doing, thinking broadly about what business opportunities are out there.”