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Manufacturing 20/20 Prospects for a Competitive North American Economy

Manufacturing 20/20 Prospects for a Competitive North American Economy. Jayson Myers Senior Vice-President & Chief Economist, CME. Manufacturing 20/20. Launched January 2004 Cross-country discussion on the Future of Manufacturing in Canada

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Manufacturing 20/20 Prospects for a Competitive North American Economy

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  1. Manufacturing 20/20Prospects for a Competitive North American Economy Jayson Myers Senior Vice-President & Chief Economist, CME

  2. Manufacturing 20/20 • Launched January 2004 • Cross-country discussion on the Future of Manufacturing in Canada • Discussion about the future of communities and the prosperity of all Canadians • Led by Canadian Manufacturers & Exporters – Canada’s largest industry association

  3. What We Have Accomplished • 65 meetings with over 900 senior manufacturing executives • 33 community meetings involving more than 2,500 manufacturers and stakeholders • Input from 15 industry associations • Cross-country survey of 834 manufacturers • Manufacturing Summit

  4. Issues Discussed • What are the challenges facing the industry? • How is manufacturing changing? • What will manufacturing look like in Canada in five to ten years time? • What will be Canada’s competitive advantage for manufacturers in the future? • What do we have to do to ensure future business success?

  5. Importance ofManufacturing in Canada • Single largest business sector in Canada • Directly accounts for 18% of Canada’s GDP • Every $1 of manufacturing output generates $3.05 in total economic activity – largest economic multiplier • Over $580 billion in annual shipments (2004) • 2.3 million Canadians employed in manufacturing • Wage levels 22% above national average • Accounts for 2/3 of Canada’s goods & services exports = $400 billion (2003) • Accounts for 2/3 of private sector R&D in Canada

  6. Canada: Manufacturing Profile

  7. Canada: Manufacturing Shipments

  8. The Cost Squeeze 1st Qtr 2000 – 4th Qtr 2004 • Selling Prices -2.5% • Wage Rates +17.5% • Raw Materials +45.4% • Payroll Taxes & Benefits +26.4% • Electricity +54.2% • Industrial Fuel +138.5%

  9. Breakeven Time

  10. What We Have Heard: Top Ten Challenges • Increasing competition from China – and new opportunities! • Impact of dollar appreciation • More exacting customer & stakeholder expectations • Problems & delays at the border • Skills shortages & aging workforce • Rising business costs – materials, energy, insurance • Global sourcing/investment • Accelerating pace of technological change • Costly, slow, non-competitive tax & regulatory structure • Infrastructure & reliable supply of cost-competitive energy

  11. Competing in World Markets • Global markets – Global competition • Competitors, partners, & customers from around the world • Global sourcing – Global presence • Global value chains – Increasing complexity & competition • Global access to knowledge & new technologies • New and more exacting customer expectations • Accelerating pace of technological change • Rapid pace of product commoditization • Innovation & mastery of global value chains are preconditions for business success

  12. The China Factor

  13. Manufacturing in the 21st Century • The business of creating & delivering customer value in tangible goods – Global product and market management. • Manufacturing is not just about producing things – It is about capturing the value in the knowledge inherent in customer solutions. • It includes: • Product Research and Development. • Marketing, Design, Engineering. • Value Chain Management. • Production Systems & Maintenance. • Innovation, Continuous Improvement & Quality Control. • Market Development, Distribution, Sales, & Service. • Business & Customer Financing. • A System of Global Business Networks.

  14. Future Competitive Advantage? • Customer Success • Mastering global supply chains • Knowledge management • Specialized products & services • Innovation – Continuous commercialization of new and improved products & processes • New technologies & automation systems • New business models and global value networks • New market opportunities • Agility & Customization • Customer Value – Design, Engineering, Service, Financing • Time – Product Development to Customer Delivery • Lean – Products, Processes, & Enterprise

  15. Critical Success Factors • Leadership • Workforce Capabilities • Innovation • International Business • Business Services & Financing • Infrastructure • Competitive Business Environment

  16. Manufacturing 20/20: www.cme-mec.ca/mfg2020/index.asp

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