Manufacturing 20/20
Prospects for a Competitive
North American Economy
Jayson Myers
Senior Vice-President
& Chief Economist, CME
Manufacturing 20/20
 Launched January 2004
 Cross-country discussion on the Future
of Manufacturing in Canada
 Discussion about the future of
communities and the prosperity of all
Canadians
 Led by Canadian Manufacturers &
Exporters – Canada’s largest industry
association
What We Have Accomplished
 65 meetings with over 900 senior
manufacturing executives
 33 community meetings involving more than
2,500 manufacturers and stakeholders
 Input from 15 industry associations
 Cross-country survey of
834 manufacturers
 Manufacturing Summit
Issues Discussed
 What are the challenges facing the industry?
 How is manufacturing changing?
 What will manufacturing look like in Canada in
five to ten years time?
 What will be Canada’s competitive advantage for
manufacturers in the future?
 What do we have to do to ensure future business
success?
Importance of
Manufacturing in Canada

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

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

Single largest business sector in Canada
Directly accounts for 18% of Canada’s GDP
Every $1 of manufacturing output generates $3.05 in total
economic activity – largest economic multiplier
Over $580 billion in annual shipments (2004)
2.3 million Canadians employed in manufacturing
Wage levels 22% above national average
Accounts for 2/3 of Canada’s goods & services exports = $400
billion (2003)
Accounts for 2/3 of private sector R&D in Canada
Canada: Manufacturing Profile
OTHER
TRANSPORTATION
EQUIPMENT
4.5%
FURNITURE
2.9%
OTHER
3.0%
FOOD PRODUCTS
9.4%
BEVERAGE & TOBACCO
PRODUCTS
2.7%
TEXTILES & CLOTHING
3.0%
AUTOMOTIVE
PRODUCTS
11.0%
WOOD PRODUCTS
7.2%
ELECTRICAL
EQUIPMENT
2.2%
PAPER
6.6%
COMPUTER &
ELECTRONIC
PRODUCTS
5.8%
PRINTING
2.7%
MACHINERY
6.1%
FABRICATED METAL
PRODUCTS
7.6%
CHEMICAL PRODUCTS
9.5%
PRIMARY METALS
6.8%
NON-METALLIC
MINERAL PRODUCTS
3.1%
PLASTIC & RUBBER
PRODUCTS
6.0%
20
20
20
20
20
20
19
19
19
19
19
19
19
19
05
04
03
02
01
00
99
98
97
96
95
94
93
92
BILLIONS OF DOLLARS
Canada: Manufacturing Shipments
650
600
550
500
450
400
350
300
250
The Cost Squeeze
1st Qtr 2000 – 4th Qtr 2004

Selling Prices

Wage Rates
+17.5%

Raw Materials
+45.4%

Payroll Taxes & Benefits
+26.4%

Electricity
+54.2%

Industrial Fuel
-2.5%
+138.5%
Breakeven Time
8:00
7:53
7:46
7:39
7:32
7:24
7:17
20
04
20
02
20
00
19
98
19
96
19
94
19
92
19
90
19
88
19
86
7:10
What We Have Heard: Top Ten Challenges

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
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Increasing competition from China – and new opportunities!
Impact of dollar appreciation
More exacting customer & stakeholder expectations
Problems & delays at the border
Skills shortages & aging workforce
Rising business costs – materials, energy, insurance
Global sourcing/investment



Accelerating pace of technological change
Costly, slow, non-competitive tax & regulatory structure
Infrastructure & reliable supply of cost-competitive energy
Competing in World Markets

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Global markets – Global competition
Competitors, partners, & customers from around the world
Global sourcing – Global presence
Global value chains – Increasing complexity & competition
Global access to knowledge & new technologies
New and more exacting customer expectations
Accelerating pace of technological change
Rapid pace of product commoditization
Innovation & mastery of global value chains are preconditions for
business success
The China Factor
PERCENTAGE OF MANUFACTURERS
50
45
40
35
30
25
20
15
10
5
0
LOSING
LOSING
LOSING
MARKET SHARE MARKET SHARE MARKET SHARE
IN CANADA
IN THE USA
IN OTHER
CONTRIES
CONCERNS
OVER UNFAIR
TRADE
CONCERNS
OVER
INTELLECTUAL
PROPERTY
PROTECTION
CUSTOMERS
ARE
RELOCATING
TO CHINA
PART OF A
SUPPLY CHAIN
THAT INCLUDES
CHINA
Manufacturing in the 21st Century
 The business of creating & delivering customer value in tangible
goods – Global product and market management.
 Manufacturing is not just about producing things – It is about
capturing the value in the knowledge inherent in customer solutions.
 It includes:
 Product Research and Development.
 Marketing, Design, Engineering.
 Value Chain Management.
 Production Systems & Maintenance.
 Innovation, Continuous Improvement & Quality Control.
 Market Development, Distribution, Sales, & Service.
 Business & Customer Financing.
 A System of Global Business Networks.
Future Competitive Advantage?
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Customer Success
Mastering global supply chains
Knowledge management
Specialized products & services
Innovation – Continuous commercialization of new and improved
products & processes
 New technologies & automation systems
 New business models and global value networks
 New market opportunities
Agility & Customization
Customer Value – Design, Engineering, Service, Financing
Time – Product Development to Customer Delivery
Lean – Products, Processes, & Enterprise
Critical Success Factors

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Leadership
Workforce Capabilities
Innovation
International Business
Business Services & Financing
Infrastructure
Competitive Business Environment
Manufacturing 20/20:
www.cme-mec.ca/mfg2020/index.asp