Manufacturing AUTOMATION

News Studies & Reports
There is a new sense of optimism for early 2010: CME survey


Despite numerous looming challenges to their bottom line, Canadian manufacturers and exporters are optimistic about the first quarter of 2010, according to Canadian Manufacturers & ExportersNovember Business Conditions Survey.

Three-quarters of the 727 respondents expect business to improve with new orders increasing over the next three months, while 79 per cent expect they won’t shed jobs in the first two months of 2010.

“We are slowly moving into the recovery phase.”
— CME president Jayson Myers

“We are slowly moving into the recovery phase,” said CME president and CEO Jayson Myers. “It appears as if we will start 2010 on a positive note and that’s encouraging, but manufacturers and exporters across Canada are facing a number of significant challenges that are constraining their ability to take advantage of the fledgling recovery.”

Business is beginning to pick up – Thirty-one per cent of companies have seen customer orders increase since August, 32 percent have seen orders remain at the same level, while 37 percent have seen orders decline over the past three months. Eight percent of companies saw orders fall off by 30 percent since August. This result is a significant improvement since June when two-thirds of companies were reporting that orders were in decline.

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Markets are stabilizing but the outlook is for a slow and faltering recovery – Thirty-one percent of companies expect orders to increase over the next three months, while 38 percent say orders will remain the same and 31 percent expect orders to decline further. Only two per cent report that orders will fall over the next three months.

Manufacturers are working inventories down – Although 29 percent of companies say that inventories are still too high, 68 percent report that inventory levels are just about right.

Job recovery will be slow – Twenty-one percent of companies report that they will be reducing employment levels, 63 percent say that job levels will remain stable, while 16 percent say that they will increase employment over the next three months.

Forty-two percent of companies have reduced capital investments in machinery and equipment

Overall, the recession has taken its toll on manufacturing and exporting. These results underestimate the impact of recession on the Canadian economy as a whole because they do not take into account those firms that have gone out of business or have closed operations in Canada as a result of consolidation. According to November’s survey and over the past 12 months:

• Sixty-eight percent of small and medium-sized manufacturers and exporters have cut employment levels over the past year – 16 percent of companies have cut employment by more than 30 percent. Only 10 percent of companies have increased the size of their workforce while 22 percent are employing around the same number of people today than at the beginning of the recession.

•  Forty-two percent of companies have reduced capital investments in machinery and equipment, and 20 percent have cut investment by 30 percent or more, over the past year. On the other hand, 22 percent have increased investments in new technology while 36 percent have held their capital spending budgets at about the same level as last year.

• Twenty-seven percent of companies have reduced spending on new product research and development, but 23 percent of firms have increased R&D spending and 50 percent have held product innovation budgets steady.

“As the recovery does take hold, the challenge of change will be the new norm. We need to be thinking about the future, now. In the long term, we need a debate followed by a strategy for the future of Canadian industry – we need to define our strengths; our weaknesses and what we need to do in order to take on the globe and win,” Myers added.

“We are not alone – economies around the western industrialized world are facing the same challenges, but the barometer of success is how we transform these challenges into opportunities and create conditions that will enable Canadian companies to compete and win on not just in Canada or North America, but on the global stage.”

The survey was conducted the first three weeks of November.
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