Leadership fuels ambition

What’s the difference between a Canadian and American business owner? One wag offered the following: Give each of them $1 million, and the American will aim to turn it into $10 million, while the Canadian will buy a cottage and retire. Ouch!

And there’s Ken Tencer, CEO of Spyder Works Inc., a branding and thought guru in Mississauga, Ont. who was asked about how his US and Canadian audiences differ. His answer: “Americans want to be Bill Gates, Canadians want to be careful.”

Too careful, perhaps? When senior executives of the mostly small and medium-sized businesses were asked about how they viewed this year’s prospects in PLANT Manufacturers’ Outlook survey (sponsored by Grant Thornton LLP), 60% were “cautiously” optimistic, despite the loonie’s decline, analysts’ anticipation of a resurging US economy and the plentiful opportunities that beckon beyond North America.

The survey responses did show incrementally greater interest in venturing beyond North American markets, but most of the respondents’ revenue comes from Canada and the US. What about new markets over the next three years? Their sights are mostly trained on … North America.

So what’s with the apparent lack of ambition? There’s a leadership deficit, and it needs to be turned around, said Robert Hattin, past chair of Canadian Manufacturers & Exporters (CME) and the president of ProVantage Automation, an integrator and service provider based in Ancaster, Ont.

He offered some straight talk as a guest speaker at a recent Grant Thornton “leadership” event for manufacturers. He noted, for example a typical small-medium, family-run, German manufacturer that is enjoying 18% growth over last year despite an unfriendly world climate. It invested almost $4.1 million in automation equipment last year and $5.4 million in plant expansion this year, adding jobs and capacity for the future.

By contrast, typical SMEs from the Outlook survey, if they are investing, are doing so conservatively in the thousands of dollars, most funding projects out of their own treasuries, and there is a very limited appetite for expansion.

Yet the time is ripe to think bigger and act. Canada has an educated workforce, tax rates and interest rates are low, countries such as India and China are quickly expanding their middle classes, Canada now has a trade deal with Europe, the US has tapped out its manufacturing capacity as pent up consumer demand comes into play, energy inputs are lower, and technology (hello Industry 4.0) is expanding capabilities and improving productivity.

But the opportunities aren’t here, he said. “You have to go there.”

Manufacturing has grown 5% annually since 2009. CME has set a goal for manufacturers: double production by 2025. That’s 6.5% a year.

Some up and comers are already making their mark. Take Aeryon Labs Inc., a Waterloo, Ont. company run by a young leadership that develops and manufactures drone technology (PLANT, March 2015 cover story). It anticipates 80% of its business will come from outside North America this year and next.

What drives that kind of ambition? Hattin stressed the need to create a culture of leadership, which is about knowing where the company is going, articulating the vision and sharing it with the people who will make it happen. Collaborate. Inspire and build confidence. Recruit great people. Allow them to develop. Build a workplace where everyone is engaged, and they look forward to what the day will bring. Bring along the next leaders, and let them put some skin in the game.

Owners need to see their companies differently, he said post event. It’s not about cutting costs but building value. “Any monkey can cut costs and make the balance sheet look good, but it’s not sustainable. Growth is the only way out, because stagnation is dying.”