Canadian manufacturing at risk of falling behind

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by Emily Atkins

A shortage of skilled workers is threatening Canadian manufacturers’ ability to adopt necessary technologies to scale and compete globally, according to a new national survey by Canadian Manufacturers & Exporters (CME).

As the business landscape becomes more complex and competitive, manufacturers are looking to technology to improve profits, but are thwarted by ongoing skills shortages, high purchase costs, and the ability to finance these new innovations.

One-third of manufacturers identified a shortage of skilled workers as one of their biggest barriers to technology adoption, as they cannot find enough workers with the appropriate skills to take advantage of the technologies.

Conducted between March 15 and April 17, 2023, the survey also shows that two out of five companies have not started or are in the early stages of digital transformation. If Canada’s manufacturing sector is to remain globally competitive, more manufacturers will need to embrace digital transformation at a faster pace.

At the same time, the survey reveals that one out of four companies are not currently using any of nine digital transformation software solutions available on the market, like enterprise resource planning (ERP) systems, and that 10 percent have yet to adopt any of the nine advanced manufacturing technologies frequently associated with Industry 4.0, including cloud computing, robotics, and cybersecurity.

It also found that small manufacturers face greater barriers to technology adoption than their larger counterparts. Compared to medium-sized and large enterprises, companies with fewer than 100 employees reported lower confidence in their knowledge of advanced technologies and greater difficulty in obtaining financing for digital transformation.

“More than 90 percent of Canadian manufacturers are small businesses and play a crucial role in the supply chain of larger companies,” said Dennis Darby, CME president and CEO.

“We need more targeted government support for these companies to help accelerate technology adoption in our manufacturing sector or risk our economic competitiveness and standard of living.”

CME is calling on governments to act on three specific fronts to speed up technology adoption:

  1. Introduce a national 10 percent investment tax credit that is matched by all provinces to help reduce costs and de-risk investments.
  2. Support employer-led training through a 50 percent tax credit to offset half of the costs of employee training.
  3. Fund technology demonstration tours and site visits to help companies understand the opportunities with the new technologies.

“There’s no question that technology adoption is critical to meeting the challenges of intensifying global competition and an aging population, but Canadian manufacturers face many barriers that prevent them from taking full advantage of these solutions. This needs to change or Canada risks falling further behind on the world stage,” Darby added.