Thinking outside the plant on manufacturing
• 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 vicepresident 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 that are 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 CE Os 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, Ontario 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 solutions to problems ... thinking in terms of being more customer-oriented.”
One 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.
“We ensured we were both invested and heavily into research and development. 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, adding Christies has been able to avoid layoffs.
That can’t be said for many companies in Central Canada during the recession — nor for those going through a similar trauma 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.