Canadian manufacturers optimistic about the future, KPMG report says
July 25, 2012 by Manufacturing AUTOMATION
Despite a sluggish economic recovery, 85 per cent of Canadian manufacturers are optimistic about the future of their business over the next two years, according to KPMG’s third annual survey of Canadian manufacturers.
KPMG’s “Canadian Manufacturing Outlook 2012: Push and Pull – Reducing Costs and Investing in Innovation” found Canadian manufacturers are more optimistic than last year (nine percentage points) and share a more positive outlook than that of their global counterparts.
“Our survey tells us that Canadian manufacturers are confident in their business strategies, but investing in innovation, increasing efficiencies and managing risk are top-of-mind moving forward,” Laurent Giguère, national industry leader, industrial markets, KPMG in Canada, said in a statement. “As smaller, niche players operating with a strong dollar, Canadian companies realize they need to innovate in order to compete with lower-cost global producers.”
The report found, however, that Canada has not seen disruptive, game-changing innovation, nor has it experienced process innovation that can revolutionize and drastically improve productivity in the manufacturing sector. But despite the lack of recent transformation, manufacturers do realize the impact innovation can have on their business and, more specifically, their bottom line – more than 60 per cent of Canadian respondents say the next wave of transformational innovation is underway or will be within the next 12 to 24 months.
Canadian manufacturers also say they are striving to increase productivity and manufacture products at the lowest cost to stay competitive. In today’s increasingly global market, labour costs continue to be a priority for Canadian companies – half of respondents say reducing labour costs is the cost control method they expect to be most important over the next 12 to 24 months. Coming in at number two is exiting unprofitable product lines and/or geographies (46 per cent).
As the number of Canadian manufacturing companies doing business in emerging markets rises, their investment in risk management strategies should increase as well – however, this is not the case. Canadian respondents plan to spend relatively less on risk management than their global counterparts in 2012. Currently, only five per cent of Canadian respondents use scenario/simulation planning to address aspects of risk management and 17 per cent of Canadian respondents “don’t know” how they’re going to identify risk in their supply chains over the next 12 to 24 months.