Humera Malik, CEO, Canvass Analytics
Canada’s industrial heartland is familiar with heartbreak. In the past few months alone, General Motors of Canada Co. has announced it will shutter its Oshawa plant and an RV factory in Cambridge has closed, laying off 900 workers. Between 2005 and 2018, Ontario lost almost 28 per cent of its manufacturing jobs, according to Statistics Canada data.
The economic sands are shifting. The question is: How should we respond?
One fact is already clear: Canada can’t win a race to the bottom. We can’t compete at mass production against low-wage economies abroad. To corrupt a phrase, we can’t go low, so we have to go high – toward high technology, high skills and high value.
Fortunately, right now there is a window of opportunity. At the time Ontario needs to re-invigorate its manufacturing sector, the manufacturing industry is about to re-invent itself.
The coming five to 10 years will see a rapid transformation in the way factories operate. Technologies such as artificial intelligence are opening the door to new ways of working that make more use of big data to optimize processes, reduce downtime and boost efficiency. It’s almost certain that this will lead to a shift toward highly skilled work in which data scientists, engineers, designers and technicians collaborate. We see this already with the investment by GM Canada in its new Markham Technical Centre, which will employ up to 1,000 engineers, and Ford’s R&D centres in Ottawa, Waterloo and Oakville.
This move plays to Ontario’s strengths. The province’s competitive edge is that it has a deeply rooted manufacturing sector, together with a rapidly growing ecosystem of technology companies and a deep talent pool coming out of universities such as the University of Toronto, Ryerson, Waterloo, McMaster and others. That’s a combination that few other places can boast.
To leverage these advantages, we need to do three things.
The biggest priority is to double down on our major strength: talent. Southern Ontario in particular is a talent hot spot for tech-based industries, thanks to its concentration of leading universities and colleges. We need to press this advantage by expanding access to STEM (science, technology, engineering, mathematics) programs.
Manufacturing plants tend to be in suburbs and smaller towns where land is cheaper, so expanding access to STEM courses in these communities is vital. With nearly a quarter of manufacturing workers due to retire in the next few years, the focus must be on making it as easy as possible for young people and transitioning workers to gain the skills they need.
Collaborations between major universities and local colleges should be encouraged, which will make expert education more accessible. But that won’t always mean taking a four-year degree – shorter or part-time continuing education programs are likely to be more useful in many cases.
Second, we need to start teaming up. Silicon Valley startup culture spawned the notion that innovation is a zero-sum game: You’re either a disruptor or disrupted. The truth is that innovative new ventures and large incumbents often have much to gain by co-operating. Established players get access to new technologies and insights, while startups can plug into large customer bases and much-needed revenue sources.
But bringing incumbents and insurgents together requires a broker. The province already has a series of gateways to startups through its extensive network of innovation centres. The larger hubs are already active in brokering relationships between corporations and small businesses. For instance, Autodesk, an international tech firm, and the University of Toronto have built a prototyping lab at MaRS Discovery District that supports dozens of entrepreneurs who are designing new products.
The final step to stoke our manufacturing sector is to take aim squarely at the biggest challenge our economy faces: Canada’s culture of risk aversion. In parts of the economy from banking to health care, Canadian companies are often slower to invest in new technologies than their counterparts in the United States and Europe. If Ontario’s manufacturing sector is to ride on the coming wave of innovation in the industry, that has to change. If we don’t become fast-adopters, it’s likely that the factory closings and job losses will continue.
We need to provide more ways that allow companies to experiment with new technologies and follow the lead of larger players who create their own internal innovation centres. The government could also encourage companies to buy Ontario technologies through financial incentives. In some cases, the government could directly support innovative local manufacturers with changes to its procurement process.
Between 2006 and 2016, investment in Ontario’s manufacturing sector has declined by 26 per cent, according to the Fraser Institute. Reversing that trend is vital, not just for Ontario but for all of Canada. Ontario’s manufacturing sector is still a major economic driver and a source of 40 per cent of the country’s exports. Investments made now in transitioning our manufacturing companies and our workers toward a tech-driven industry will pay dividends.
Quite literally, they will be investments in our country’s future.