Putting the manufacturing pedal to the metal

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This article was published 16/03/2022 (1321 days ago), so information in it may no longer be current.

It’s time to expand Manitoba’s industrial reach, according to the local manufacturers association.

The province’s Canadian Manufacturers and Exporters branch launched its Manufacturing Accelerator Program Tuesday. The project has received nearly $1.4 million in federal government funding.

“Supply chain issues… are huge (right now),” said Ron Koslowsky, the CME’s divisional vice-president. “We can now maybe consider doing business more locally, or more within our own economic region of North America.”

Over 95 per cent of Manitoban manufacturers are facing supply chain disruptions, according to a CME-produced survey that circulated in February. Two-thirds of the respondents said the disturbances were “major” or “severe.”

“In some cases, companies are looking at saying, ‘Well, maybe we can’t count on a supplier from China anymore… Maybe we need to look around and find a supplier around the corner,’” Koslowsky said.

The association will work with businesses on growth strategies and action plans through its accelerator program. Experts will offer improvements in various areas, from productivity to technology to human resources practices, Koslowsky said.

The goal is to increase global competitiveness.

“We’re trying to take a really holistic look,” Koslowsky said. “We want to build the best group of manufacturers in the world, located here in Manitoba.”

It’s tough to stay competitive internationally when the cost of labour and goods are cheaper elsewhere, according to Claude Saelens, the operations manager of Hillary Production Machining.

“If they’re finding materials less expensive in their own country, then that’s something you’re competing with,” Saelens said.

Hillary Production has had to raise its prices as supply and transportation costs skyrocket. Usually their steel comes from overseas, Saelens said. But, between the pandemic and Russia’s invasion of Ukraine, foreign steel is harder to come by. Russia is a major producer of iron ore, one of the material’s key ingredients.

Hillary Production has turned to Canadian-made steel — for a higher price.

“Using domestic material just makes it a lot more expensive,” Saelens said.

He and other manufacturers also face increased shipping costs. A shipping container is triple the price of one 10 years ago, Saelens said.

“Even pre-COVID, staffing was an issue,” he added. “You’ve got to find other means to run your manufacturing, whether that’s computerized machines or robots. Again, that’s more money out of manufacturing’s pockets.”

So, as prices rise, it’s hard to compare to countries like Mexico, India and China, Saelens said.

Restructuring supply chains so they’re closer to home is, in some situations, happening, according to Barry Prentice, a University of Manitoba supply chain management professor.

However, a lot of United States companies are looking to Mexico, he said.

“Consumers don’t want to pay any more than they have to,” Prentice said.

Canada has established itself as a high-quality parts producer, specializing in fields like aerospace, Prentice said. Most everyday goods still come from overseas.

“All you have to do is think about a hardware store,” Prentice said. “You look closely, you’ll probably find a whole bunch of it that’s from China.”

Still, now could be a good time for Manitoba to enlarge its manufacturing footprint, Prentice said.

“We have a relatively cheap dollar, which makes us more competitive,” he said. “There’s (also) maybe a trade-off between paying a little bit more for parts but making sure you get them (versus) having delays in production.”

Eighty per cent of Manitoban respondents to the CME’s survey said delays and costs from shipping via boat have been “major” or “severe.” Sixty-three per cent said the same of transport by truck.

Over 80 per cent reported they’ve been forced to increase prices and delay fulfilling orders because of supply chain challenges.

Just 18 per cent of the 890 countrywide respondents said they’d source more from Canada. Many added there’s no domestic supplier for their goods.

CME Manitoba’s new program might level up companies, Prentice said.

“It gives more impetus to change, and sometimes that’s all you need,” he said.

CME Manitoba plans to work with between 100 and 150 companies over three years, according to Koslowsky. The program is open to any Manitoban manufacturing business, for a fee.

The industry drives nearly two-thirds of the province’s exports and accounts for almost 10 per cent of the provincial GDP. It had sales of $18.7 billion in 2020 — $611.2 billion across Canada — and employs over 60,000 Manitobans.

Approximately 13,000 manufacturing jobs will open in the province over the next four years, according to CME Manitoba.

The association will build checklists and other resources while meeting its accelerator program clients, Koslowsky said. Then, the knowledge can be transferred to the association’s Alberta and Saskatchewan locations.

Prairies Economic Development Canada is the federal government arm providing the funding.

gabrielle.piche@winnipegfreepress.com