We need to turn tech leadership into real value for manufacturers
By Jayson MyersIn-Depth Canadian businesses Canadian manufacturers clean technology cleantech adoption cleantech companies tech leadership
Canada is one of the world’s leaders in cleantech – the broad array of innovative technologies that provide solutions for pollution abatement, energy efficiency, climate change mitigation and adaptation, waste management and remediation, or anything that reduces the environmental footprint of economic activity.
Canada ranks number two in the world on the Global Cleantech Innovation Index. There’s a lot of research happening in the field by industry and academia. Twelve Canadian start-ups are listed among the Global Cleantech 100 list for 2023. There are over 1,100 cleantech companies operating in Canada. They contribute over three per cent of Canada’s GDP and employ close to 350,000 people in well-paying, highly-skilled jobs. The global cleantech market is currently estimated at over $2.5 trillion USD.
However, opportunities are huge, led by increasing demand for clean energy solutions in Canada and internationally. Heavy industry accounts for 11 per cent of Canada’s greenhouse gas emissions but about one-third of emissions around the world. Electric vehicles are expected to account for over 45 per cent of all new light-duty vehicle sales globally, up from four per cent in 2021. All things considered, the transition to a net-zero economy globally will require global investments averaging $3.5 trillion USD and in Canada between $125 billion and $150 billion every year to 2050.
The year 2050 is when Canada and 72 other countries have pledged to achieve net-zero GHG emissions. Window dressing? Don’t count on it. Governments and businesses are facing mounting pressures around the world from voters and customers, investors, and insurance companies, stakeholders, and the public at large – young people in particular – to take action to improve environmental sustainability, address climate change, and improve energy and materials efficiency. Roadblocks may be thrown up along the way, but the path to what lies ahead is clear.
For manufacturers, it means more stringent regulations, higher penalties, and new restrictions on production, such as the ban on non-reusable plastics. Producers are being required to track and trace their supply chain to reduce their carbon and overall environmental footprints. At the same time, they are having to take on more responsibility for the full life-cycle management of their products and the waste they generate, leading to greater recycling and new circular manufacturing processes.
You would think business at Canada’s cleantech companies would be booming. For some firms it is. However, overall sales are growing at about the same pace as the economy. What gives?
Some say it’s a commercialization issue, that cleantech companies need to do a better job “productizing” their solutions and developing applications for customers, or they need to find more money to scale up production of their technologies.
Others argue it’s an adoption problem, that Canadian businesses, and especially manufacturers, are too small or too risk adverse to be early adopters, and it’s difficult to scale up a cleantech company based on the Canadian market alone. Both arguments are true, to an extent. It’s a lot more complicated than that.
It’s not just about technology. Manufacturers are looking for solutions. Cleantech may be part of a solution, but it needs to be integrated with other technologies or existing manufacturing processes to be a useful one. Solution design requires manufacturers, cleantech, and possibly other tech companies, engineering firms, and researchers to work together to design and implement a solution that works for individual customers. In other words, cleantech needs to be integrated into a practical engineering solution that can be managed at competitive costs by manufacturers and contribute to their bottom line to have a feasible chance of being commercialized.
The solution also must be seen to work for manufacturers to buy in. Not just the technology, the whole solution. There’s a huge difference between prototype testing on the one hand and demonstrating that cleantech will work in a full-scale manufacturing operation on the other.
Manufacturers are, and should be, reticent to jump into a new technology, particularly when it involves changes to other existing processes, if they are unsure it will help them meet their business objectives. Seeing how solutions play out in other companies is a safe way to validate the effectiveness of a technology. While that doesn’t mean Canadian manufacturers are going to be early adopters, it does mean that the solutions they eventually adopt are likely going to work for them. If we want to speed up the adoption process, more of Canada’s funding support for innovation needs to go into industrial scale-up and demonstration projects.
Are solutions manageable? It depends on the skill sets of the customer and the way cleantech solutions are integrated into manufacturing operations. Environmental engineering and relevant technical support skills are becoming increasingly important assets for manufacturers who need to transform their processes. So too are the manufacturing management skills involved.
Lean principles lie at the heart of running a competitive manufacturing operation. They focus on value-adding activities and the elimination of waste – those non-value-adding activities that soak up a lot of time, attention, and money from an organization.
It’s time to add real waste into the equation. Process improvements coupled with better ways to optimize energy efficiency, water and materials use, and supply chain performance will naturally lead to improvements in environmental sustainability while at the same time improving productivity performance and possibly creating new sources of value for customers. Cleantech needs to be integrated into lean manufacturing. Where can cleantech help to drive value for customers? Where can it help to improve production processes?
Higher value, improved productivity – those are the two essential elements for making the case for cleantech adoption. Manufacturers are coming under tremendous pressure to improve environmental performance. The selection of proven productivity enhancing cleantech solutions will make all the difference in the world between sunk costs and investments that contribute to the bottom line.
Bridging the gap between technology and manufacturing is what it’s all about. It’s not an easy task. However, it’s essential if we are really committed to making Canada a leader in clean energy or clean manufacturing, and if we have any chance as a country of meeting our net-zero emission targets.
Jayson Myers, the CEO of Next Generation Manufacturing Canada, an award-winning business economist and advisor to private and public sector leaders. E-mail email@example.com. Visit www.ngen.ca.