PLANT

Editorial: Innovate your way through the recovery


September 20, 2009
by Joe Terrett

There are hopeful signs the recession is winding down, so it’s time for western manufacturers and suppliers to prepare for action.

The Bank of Canada is optimistically projecting 3% growth next year, and a PricewaterhouseCoopers survey shows Alberta businesses are confident about the next 12 months. Globally, the International Monetary Fund and the Organization for Economic Co-operation and Development have noted the economic downturn is slowing in most economies, with France and Germany already reporting growth.

But the recovering world economy will be a much tougher place to do business and Canadian firms must be a lot more innovative to compete in the inevitable, hyper-competitive free-for-all that will follow the recession.

That means we have some work to do. A report by the federal Science, Technology and Innovation Council says businesses simply aren’t doing enough research and development. It ranks Canada sixth among the G7 industrialized countries. Compared with countries ranked by the Organization for Economic Co-operation and Development (OECD), Canada is 14th out of 19: this in spite of what the report describes as “substantial federal tax breaks and funding.” And businesses aren’t collaborating enough with other businesses, universities or governments, ranking Canada near the bottom of 26 OECD-ranked countries.

Jayson Myers, president of Canadian Manufacturers & Exporters, suggests at least part of the problem comes from five years of eroding profit margins that made it tough for companies to invest in technologies, product development and new markets.

Richard Hawkins, a professor at the University of Calgary, suggests in his paper, Is Canada really all that bad at Innovation?, the problem has less to do with capabilities or opportunities; rather it’s a tendency not to follow through when initiatives could be transformed into new national “engines of growth.” It’s not as if Canada is lacking in innovative energy. He notes we managed to figure out a way to extract oil from sand and turn it into a business; and to turn a toxic seed into oil that is edible and burnable.

Manufacturers of all sizes have to step up.

Don’t presume you have the same market access (even in Alberta) that you enjoyed pre-recession, Myers warns. Look at innovation as a “differentiator.” And there must be more collaboration: connecting the dots from business need to research to development and commercialization. Finally, senior management must drive an innovative company culture.