Not your father’s industry

Posted on 6 Feb 2014 by The Manufacturer

Aaron Rosland, senior economic counselor for the Government of Ontario, shares how the Canadian province has rejuvenated its manufacturing sector and how governments can support a brave, new manufacturing sector.

Aaron Rosland
Aaron Rosland, senior economic counselor, Government of Ontario

The past 15 years have been a challenging time in the world of global manufacturing.  More regions competing for the same investments and a sluggish recovery from the economic slowdown have led many analysts to predict that even mighty manufacturing nations will struggle to rebuild.  Ontario, Canada’s largest province and its economic powerhouse, is no exception.  The high dollar and increased competition have taken their toll.

Thankfully, this is not a doom and gloom story.  The future today is brighter than three years ago and the effects of the economic meltdown are melting away.  In boardrooms and at business conventions, industry and government leaders are daring to talk about a manufacturing renaissance in the province.

Something to learn?

What can other jurisdictions learn from the Ontario example? Is it possible for the province, or any place for that matter, to restore its manufacturing sector to its full glory? I believe it is- though this response comes with caveats. First, we must understand that the future of manufacturing, in this province and abroad,   will likely look and feel different than the past. Second, a true renaissance will require bolder strategic thinking from governments, and investment from the private sector. The stakes are high and we – governments and private enterprises – can’t afford to be complacent.

Ontario benefits from a rich history of manufacturing. Making things is part of our DNA. The roughly 800,000 Ontarians who work in manufacturing account for almost half of Canada’s manufacturing sales and employment.

Being bold

Perhaps where we stand out is our willingness to make bold changes. We are a powerhouse; a powerhouse that has learned valuable lessons from the past five years of economic recovery.  We recognize that we need to foster a business climate that attracts investment, creates manufacturing jobs and grows the economy. Manufacturing is critical both to whom we are now, and to the direction this province is headed.

At a recent panel discussion at the Economic Forum of the Americas, industry and banking leaders met to discuss issues and share specific strategies for ensuring the long-term competitiveness of Ontario’s manufacturers.   The discussion was an encouraging indicator that the public and private sectors are of a similar mindset.

Collaboration is key

Collaboration between these sectors is an important aspect of fostering a manufacturing renaissance. The private sector needs to train a 21st century workforce with the right skills, commit to research and development and invest in machinery to increase productivity. Government needs to ensure Ontario’s taxes for small and medium sized businesses that invest in productivity-enhancing technology are attractive and competitive. Government also needs to provide new programs designed to offer training, mentorship, experiential learning and hiring incentives to young Ontarians, specifically aimed at matching skills to the needs of the job market.

Once you have the best and brightest, the world is not necessarily your oyster.  Finding and nurturing new markets abroad is also paramount to the province’s manufacturing success. While the United States and the European Union still account for more than 90 per cent of the market for Canadian exports, that shouldn’t obscure growing opportunities elsewhere. Ontario has great potential in the shifting global markets thanks both to its geographic location in the heart of North America, and to demographics that show Ontarians have social, familial, cultural and business ties to every region of the world.

Diversity in markets

Finding diverse markets is a challenge to any jurisdiction and it is fundamental to put into place resources that help connect manufacturers with the best possible global opportunities.  As a province, we have put into place International Marketing Centres in strategic locations around the world to help us make these connections, such as the London International Marketing Centre that offers British companies localised investment support.  We also collaborate with Ontario business organizations to leverage our province’s ethnic diversity, and broaden our global reach.

Few regions of the world have so many specialized industries– automotive, aerospace, food processing, Information and Communications Technology, Cleantech, Chemicals and steel just to name a few. This mix provides opportunities for cross pollination and collaboration across sectors.

Investing to succeed

In Ontario, we are creating an ecosystem that makes it easy and desirable for companies to invest in manufacturing facilities. From critical infrastructure, like roads and bridges, to freeing businesses from unnecessary regulations and tax burdens, Ontario is investing in a bright manufacturing future.

We have even created an ‘Open for Business’ office with an express mandate to reduce regulatory and other burdens. We have already reduced regulations significantly,  allowing businesses to thrive and do business more effectively.

Competitive taxes and reducing regulations aren’t meant to create a race to the bottom, nor do we consider them problem solvers.

As Ray Tanguay, Chairman of Toyota Canada, wisely stated at the forum: “Government sets the environment, the context, but after that it’s up to the private sector. It’s a combination of what government can do, and also what the business community can do.”

We are working closely with the private sector to build such an environment.