To put into scale how big of an issue succession planning is in Canada right now, consider that in the next five to 10 years, 70 per cent of today’s businesses will change hands. Or, as Grant Robinson, director of the BDO SuccessCare Program likes to phrase it, “Three out of four businesses will have reached retirement age in the next one to two car leases.”
Let’s face it—for the past several years, manufacturers in this country have been in survival mode. This has created a reactive environment of short-term management focus and seat-of-the-pants decision-making. But with the rising optimism we’re seeing in the manufacturing industry, now is the time to raise the level of your game and take a more comprehensive and sophisticated view of your business to seize opportunities for growth. And Canadian manufacturing is in growth mode these days. We are seeing expectations of higher revenue and profits, and anticipating the re-emergence of the U.S. market. Merger and acquisition activity is also expected to pick up, especially in emerging markets, where companies can potentially capitalize on rising demand generated by population growth, increasing wages and real economic expansion. Manufacturers are quite used to the need for sophistication in innovation and product development. However, sophistication is just as essential when preparing your growth strategies. Having well-thought-out strategies for acquisitions, developing trusted and proactive relationships with lenders, seriously exploring emerging market opportunities and their critical success factors, and implementing comprehensive domestic and international tax planning processes are just a few examples of things you should be thinking about. Create proactive and thoughtful strategiesWhen it comes to mergers and acquisitions, smart manufacturers will make sure to have a proactive and thoughtful strategy in place so they can filter potential acquisition candidates. This includes comprehensive criteria and thresholds for things like geography, operating results, tax and litigation risk, IT systems and controls, operating capabilities and synergies—all a necessity for successful M&A activities in the industry today. The more that you can tie these elements to your overall strategy, the more successful the transaction will be. These considerations are especially important when looking to acquire companies in emerging markets—especially since Canadian manufacturers don’t actually have a long history of successful ventures into emerging markets. Financing is a key element of any M&A strategy, and operations that are well managed and have a strong financial position can typically secure conventional financing. However, even these companies need to be aware that all funding needs are not created equal. For example, the kind of funding required to provide liquidity for shareholders because an owner is planning to retire will be evaluated differently from funding needed to make an acquisition in an emerging market. Many manufacturers ultimately find themselves looking beyond senior debt lenders to alternative providers. Inevitably, though, these alternative sources of financing come at a higher price. While bank financing and senior term debt generally come with an interest cost from 3 to 8 per cent, interest on subordinated and mezzanine debt can reach anywhere from 8 to 15 per cent, depending on the financial strength of the company and structure of the financing required. While stable companies with solid finances can find lenders, manufacturing executives shouldn’t be complacent and wait until capital is required before arranging the necessary financing. Having a good relationship with your financial partners is more important today than ever before. Looking closer to home, there are also a number of federal and provincial government financing vehicles and tax credits available to help manufacturers support growth right here in Canada. Make sure you are not only aware of these programs, but that you take advantage of them. Similarly, there are countless foreign investment incentives available to finance growth in the United States and emerging markets. In some instances, these incentives will be the deciding factor when Canadian manufacturers are choosing a market in which to invest. Remember—growth opportunities happen quickly. Be prepared to identify them, and be ready to take advantage of them. Don’t get left at the starting gate. Jim Menzies, CA, has more than 20 years of experience in public practice and is currently the national leader of the Manufacturing and Distribution practice for the audit, tax and advisory firm of Grant Thornton LLP. This article originally appeared in the May 2013 issue of Manufacturing AUTOMATION.
I recently had a chance to chat with Ministry of Labour (MOL) engineer, Don Caskie, about machine safeguarding. Caskie has been with the ministry for 25 years. He assists inspectors on field visits, inspections and investigations. Take a look at what he had to say about the challenges he faces as an MOL engineer, and the most common machine safety error he sees.
At Mohawk College, we’re proud to be part of an award-winning solution that makes good help easier to find for a major provincial employer. More than 30 per cent of Hydro One’s highly skilled and experienced workforce is set to retire within the next few years. It’s an all too familiar challenge across all sectors of our economy as growing numbers of workers retire and fewer young people enter the workforce. The Conference Board of Canada estimates Ontario alone could face a shortage of more than 360,000 skilled employees by 2025, and up to 560,000 unfilled positions by 2030. To replace retiring workers, Hydro One is counting on college graduates to get the job done. In the Fall of 2007, Hydro One initiated a strategic partnership with Mohawk, Algonquin, Georgian and Northern Colleges to train and recruit students for engineering technician, technologist and skilled trades positions in the electricity sector. The partnership marks the first time in Ontario that four colleges have joined forces to meet the workforce training and development needs of a provincial employer. Hydro One is investing $3 million in annual scholarships, new equipment and technology for the classroom and curriculum development in our colleges’ Engineering Technology programs. It also provides cooperative work terms and summer jobs so students gain real-world and hands-on experience. Students who graduate at the head of their class are invited to the front of the hiring line at Hydro One. The Hydro One – College Consortium delivers real benefits to students, to Hydro One and our four colleges. Students get an education that is custom-designed and gives them a definite competitive advantage in the job market. Hydro One gets job-ready graduates who hit the ground running. And our colleges get full enrolment and waiting lists for the Hydro One programs in our Schools and Faculties of Engineering Technology. In February 2009, the consortium won the Corporate Partnership Award from Colleges Ontario. The program can serve as a blueprint for other employers looking to replace retiring workers, close their skills gap and stay competitive on the world stage. The consortium also previews the future of industry and education collaboration. At Mohawk, the success of our students rests in large measure on the strength of our partnerships. We have more than 1,000 business and industry, education, community and government partners. We have partners throughout the Greater Toronto and Hamilton Area, across the province, from coast to coast and beyond Canada’s borders. It’s the power of partnerships that helps Mohawk transform students into highly skilled and future-ready graduates. Our industry and community partners provide hands-on learning opportunities and extend the classroom into the workplace. Our partners hire our graduates for great jobs and rewarding careers. And our partners help keep Mohawk responsive and adaptive to rapidly evolving needs and emerging trends. Mohawk quickly tacks to changing winds because of our partners. New winds were blowing in November 2005 when more than 150 business, government, community and education leaders took part in a Think Tank of Technology Education. Those leaders identified a pressing need for a new type of technology employee, who had both excellent technical capabilities and outstanding management and supervisory skills. In direct response to industry need, Mohawk and McMaster launched Canada’s first Bachelor of Technology Program. The program provides an accelerated path to both a university degree and college diploma in technology for working technologists, internationally educated professionals and graduating high school students. Like the Hydro One consortium, the Bachelor of Technology Program is an award winner. In 2006, we received the Innovative Manufacturing Technology Program Award: University Level from the Yves Landry Foundation. The success of our Bachelor of Technology program reflects an educational partnership that is unique in Ontario. In place of competition, Mohawk and McMaster have opted for collaboration to the benefit of our students and to the credit of our institutions. Mohawk and McMaster were the first in Canada to bring college and university health science education and research together under one roof. Today, the Mohawk-McMaster Institute for Applied Health Sciences is home to collaborative programs in Nursing and Medical Radiation Sciences that have achieved the highest possible levels of accreditation. This Fall, a team of recent graduates from our Medical Radiation Sciences won a North American research award, considered within the profession to be the pinnacle of career achievement. The team won the award for a research project they completed as undergraduate students using state-of-the-art equipment donated by Philips Medical Systems, a long-standing corporate partner. At Mohawk, we aim to be the prime job-creating engine in the communities we serve. Our job is to build the talent dividend and supply the human capital, the most valuable resource in our knowledge economy. Today’s college students are tomorrow’s inventors, innovators and entrepreneurs who will launch, lead and grow companies. Across all sectors of our economy, they’ll be creating new jobs, new wealth and new prosperity. And our college partners play a key role in making that happen. The economic, environmental and social challenges facing us at home and around the world are simply too great for any one sector of our economy to solve alone. We will always do better by working together, and even greater industry-education collaboration will turn those challenges into opportunities. Our partnerships with Hydro One and McMaster showcase what’s possible. And at Mohawk, we’re ready, willing and able to share what we’ve learned to close the skills gap and build an even stronger and more prosperous economy driven by highly skilled, future-ready college graduates. Cheryl Jensen is a member of the Manufacturing AUTOMATION editorial advisory board and vice-president Academic with Mohawk College.
If you’re buying equipment as a quick fix for a rapidly growing business then there may be a better way to make the most of your investment without draining the company’s cash. “That equipment purchase can be a costly decision. Entrepreneurs need to anticipate growth and do some long-range planning first,” says Mary Gagliardi, Business Development Bank of Canada (BDC) Vice President and District Manager, Southern Ontario. Gagliardi has seen many companies unexpectedly pick up new contracts and buy new equipment without carefully assessing their needs. “In capital-intensive sectors such as manufacturing, if you have an unusual blip in production, you need to know whether that’s just temporary and how new equipment will serve your business.”
Dick Caro led the charge for adopting Ethernet as a fieldbus and a means of achieving interoperability between hundreds of products. He held positions at Foxboro and ARC Advisory Group, and has authored books and papers. He has also served as chairman of the Fieldbus Standards Committee, and was elected to the Automation Hall of Fame. The following is an excerpt from Manufacturing AUTOMATION contributor Perry Marshall's interview with Caro:
Digital Industry USA
September 10-12, 2019
EMO Hannover 2019
September 16-21, 2019
Autonomous Mobile Robot Conference
September 17, 2019
International Metrology Congress
September 24-26, 2019
CMTS: Canadian Manufacturing Technology Show
September 30-3, 2019
MCMA Technical Conference
October 7-10, 2019