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How we can climb out of the pandemic hole

Two manufacturing groups offer recommendations for action.

September 3, 2020   Joe Terrett

Canada’s manufacturers demonstrated why they’re essential to our economy. They were agile and adapted quickly to COVID-19 safety measures under rapidly shifting business and regulatory conditions, but also seized opportunities to provide needed medical supplies and protective gear to their communities. Some developed creative new product lines that will continue beyond the pandemic’s run.

But there have been losses. Companies closed, others have struggled to stay in play and many jobs were lost. The pandemic has changed the way business will be conducted and how trade flows. Recovery won’t be a short affair. Manufacturers would like the current federal regime to show some agility and help them “kick start” the economy, currently experiencing shrinkage of about 6.8%.

Two industry groups – Canadian Manufacturers & Exporters (CME) and the Coalition of Concerned Manufacturers and Businesses of Canada (CCMBC) – are on the job, each with a report (download at https://bit.ly/3dzd7lA and www.ccmbc.ca) offering recommendations for action.

There is much common ground between the two associations when it comes to cutting red tape, lowering the cost of doing business and the importance of leveraging natural resources (not just harvesting, digging, pumping and shipping, but adding value in Canada). The CCMBC places particular emphasis on energy – getting out of its way by declaring orderly development to be in the national interest. And CME is keen on a Made in Canada strategy, but not in a Trumpy way. The idea is to boost sales at home and abroad, increase infrastructure spending and leverage government procurement by basing purchasing decisions on total economic value to Canada (not just price).

Procurement should also be used to encourage development and production of new health care technologies to avoid another supply panic.

Of particular note is CME’s forward thinking: develop policies that support SME exporting and scaling up; conduct a full mapping of Canada’s domestic manufacturing capabilities; and leverage CUSMA to drive North American activity.

RBC also has some advice for small businesses, which account for most of Canada’s manufacturers. The bank surveyed companies and got 22,000 responses that led to a report offering a five-point plan. Three points adapt nicely to CME’s and CCMBC’s recommendations (download at https://bit.ly/2ZxpCdP).

Create new networks for a massive digital push. The pandemic has led to a significant increase in cross-border data flows. A greater concentration of power among global platforms is helping customers search, share and shop from a distance. Act on this growing reality.

Implement new economic strategies to scale small business. Form alliances to compete in a more fragmented, localized global marketplace. Governments and large enterprises creating Canadian alliances for procurement and supply chains would strengthen the economy and communities.

Adopt a more strategic approach to globalization. The pandemic disrupted supply chains and exposed some of the unintended consequences of globalization. Small manufacturers that retooled to produce critical products such as masks and ventilators demonstrated the sector’s ability to quickly adapt and innovate. More of that is needed and not just for the domestic market.

Manufacturing’s share of GDP has been shrinking over the years but accounts for 10% and 1.7 million jobs (pre-COVID), making our plants significant contributors to the economy. Quickly reversing shrinkage with a national plan is just what the doctor ordered. Re-imagining supply chains to be less dependent on global sources and making more things here for world markets will hasten long-term growth as we climb out of the deep hole created by the pandemic.

This article first appeared in the July-August 2020 print edition.

 


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