Canadian manufacturers are increasingly turning to Cheap Labour factories in Asia or Latin America to be more competitive.
Photo: Joe Terrett
Hugh Thompson knows he’s part of a dying breed, a Canadian manufacturer who still makes products that come with the red Maple Leaf emblazoned “Made in Canada” label.
He’s the president of Cambridge Towel Corp., specializing in bathroom towels, rugs, shower curtains and other accessories, which sells Canadian-made products across the country through retailers such as Wal-Mart, The Bay, Zellers and Sears.
It’s not because he’s especially patriotic nor because its cheaper to make his products in Cambridge, Ont.—it’s not, in fact, and about 30% of the company’s line comes from China and India. But for fast turnover on his popular solid-coloured towels, shortening the distance between the production line and his customers is essential.
“It’s a business decision,” he says. “If you move production offshore for the lowest price, you find out later that the goods don’t arrive, or they arrive late or they cost you more because you’ve got to carry inventory.”
Fewer and fewer Canadian manufacturers are finding that Thompson’s logic makes sense for their operations.
From iconic companies with a global reach such as Research in Motion Ltd. and Bombardier Inc., to small family owned operations with only regional appeal, Canadian manufacturers are increasingly turning to cheap-labour factories in Asia or Latin America in order to be competitive.
Even Roots Canada Ltd., a company that literally wears its red Maple Leaf on its sleeve, makes only about half its products in Toronto.
Meanwhile, almost every week sees new announcements of layoffs or factory closing, such as General Motors’ recent decision to close its Oshawa, Ont. truck plant next year.
According to Statistics Canada, about 100,000 Canadians lost their factory jobs last year, about 300,000 in the past five years.
The villains for the latest shakedown are reduced demand in the US, where 75% of Canadian exported goods head, and the appreciation of the loonie, but manufacturers in the industrialized world have been fighting an uphill battle against cheaper production costs in emerging economies for decades.