Canadian manufacturing sector falling behind in digital production revolution, says BDC
A BDC study says that 42 per cent of Canadian manufacturing businesses have not yet initiated a digital shift, and those companies will soon be at a disadvantage against competitors
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MONTREAL—A new Business Development Bank of Canada (BDC) study released today finds that 39 per cent of Canadian manufacturing businesses have started to implement digital projects.
The study also found that, while only three per cent of manufacturing SMEs have fully digitized their production, 17 per cent of manufacturing SMEs are preparing to do so.
The impact of this revolution promises to be remarkable and Canadian manufacturers have a lot of work to do to catch up. The BDC study draws its conclusions from a recent Canada-wide survey of 960 Canadian SME entrepreneurs.
“Our study clearly demonstrates that it pays to embrace the digital shift. The Canadian businesses that have been early adopters of digital technologies have increased their productivity, reduced their costs and improved the quality of their products,” says Pierre Cléroux, chief economist and vice-president of research at BDC.
“However, 42 per cent of Canadian manufacturing businesses have not yet initiated their digital shift. These businesses will be at a disadvantage against their competitors.”
Cléroux says the world is already witnessing the impact digital transformation is having in Europe and the U.S., where highly automated and flexible factories now compete against low-cost factories in Asia.
“In order to survive, Canadian businesses must innovate, because the international competition is on the cutting edge of the Fourth Industrial Revolution,” he says.
- Businesses in Canada that have adopted the digitization of their production forecast higher growth and enjoy increased productivity and lower operating costs.
- Quebec (45 per cent), Manitoba and Saskatchewan (44 per cent) top the list of provinces that have initiated the digital shift. British Columbia (39 per cent) and Ontario (39 per cent) come in mid-pack, Alberta follows with 35 per cent and the Atlantic provinces trail behind at 32 per cent.
- The overall level of investment in these technologies remains low. The majority of Canadian SMEs have invested less than $100,000 compared with an international average of $261,000.
- The main obstacles to implementation of digital technologies are the lack of a qualified workforce, excessive costs and the difficulty in understanding the benefits.
Indeed, digital production is no longer a technology of the future. Ontario’s AGS Automotive Systems is using digital technology to gain a competitive edge.
AGS employs highly connected sensors and monitors that fuel data mining. The company is also looking into using 3D printers, also known as additive manufacturing technology. AGS’s head office is in Toronto, and it has six manufacturing facilities in Canada and U.S.
Joe Loparco, co-president at AGS, says the cost savings and productivity gains can be enormous.
“The auto industry is one of the most competitive sectors in the world, and AGS has long used sophisticated technologies such as robotics to boost productivity and improve quality,” says Loparco. “The use of digital manufacturing technology is the next leg on that journey.”
BDC is a crown corporation bank tasked with supporting Canadian entrepreneurship, with a focus on small and medium-sized businesses. Its investment arm, BDC Capital, offers equity, venture capital and flexible growth and transition capital solutions.