From the editor: Investment is necessary for business survival
Jan. 26, 2016 – My favourite part of my job is investigating and sharing the many manufacturing successes Canada offers.
Mellow Walk, a light industrial safety shoe manufacturer based in Toronto, Ont., is one of those stories. Established 22 years ago, the family-run business says it operates the last shoe factory in the province.
Earlier this year, I spent a morning chatting with Andrew Violi, Mellow Walk president, about his operation. (CLICK HERE to watch the video from my tour.) At a time when many competitors have offshored their manufacturing, Mellow Walk insists that it maintains its made-in-Canada commitment. What is a key ingredient in the secret sauce? Regular investment in new and upgraded equipment, he says, which results in machines that offer “better programming and control.”
“For us to be competitive against someone who’s making shoes in Vietnam or China or anywhere else in the world, we have to not just make a better product but we have to be lower our costs by making them here as well,” says Violi. “Anytime you’re buying industrial machinery, it comes with a high price tag, but if we don’t make these kinds of capital investments in our business, we’re not going to be able to maintain our position, and I think that is [a main reason why] I saw a lot of my competition close their doors here in Canada over the last 20 years. They closed because they stopped investing.”
That insight falls right in line with the findings of KPMG’s Canadian Manufacturing Outlook 2015, an annual survey of more than 200 manufacturing executives from an array of industries, such as: industrial products, technology and electronics; automotive; food and beverage; aerospace and defence; and chemicals. Released last fall, the report notes, “The time to invest in growth initiatives, such as expanding to new markets and developing new products, is now. If Canadian manufacturers don’t act quickly, there is a very real risk of losing ground to global competitors.”
The report reveals a gap between what manufacturers want (65 per cent list sales growth as their top strategic priority), and what they may risk to succeed (only 17 per cent list increasing R&D and new product development as a top strategic priority, compared to 32 per cent globally). “The current incremental approach to growth and innovation is no longer the safety net it was for Canada in past years,” states the report, adding that the risk-averse attitude of storing up cash and putting innovation and investment on the back burner is no longer enough — manufacturers have a “real opportunity” to embrace disruptive changes in this global economy.
With challenges come opportunities, and with opportunities come risk and reward. This year, make investing in innovation, skilled people, and technology one of your New Year’s resolutions. Only with continuous upkeep can we drive efficiencies in our processes. And with that, we wish you all the best for a safe, happy and prosperous 2016.
This column was originally published in the January/February 2016 issue of Manufacturing AUTOMATION.