Manufacturing focus shifts to on-shore.

• Author: Bissonette, Laurie
• Position: BUSINESS SENSE

For the past eight years, manufacturers in Canada have been fighting an uphill battle. From the downturn of the U.S. economy and the rising Canadian dollar to skilled labour challenges and off-shoring trends, manufacturing here has faced tough headwinds. However, according to KPMG's new Canadian Manufacturing Outlook 2014 Survey, times are finally moving in a direction that helps manufacturers.

The report reveals that Canadian companies are increasingly turning away from off-shoring as a cost-saving solution. In 2014, only 14 per cent of manufacturers planned to source from China, compared with 31 per cent in 2013. Likewise, plans to source from India were at 3 per cent this year compared to 12 per cent last year. Rising energy and transportation costs, along with added pressure on lead times and increased inflation in China have made Canada and the U.S. better able to provide these goods and services domestically. Reasonable energy costs and the quality and consistency of products offered here at home have also driven Canadian manufacturers to look on-shore.

This shift to North American sourcing, along with the strengthening U.S. economy and a dollar working to their advantage, allows Canadian companies to move past simply surviving and focus efforts on increasing revenue, which the survey identified as the top priority for 81 per cent of manufacturers. Earlier this year, the sector experienced its highest monthly growth in Canada since 2008, with revenue increasing 1.4 per cent across the sector. Given the current economic climate, the time is right for manufacturing companies to tap into current trends and seize industry opportunities to ensure continued growth and future success.

Another key insight from the survey is that although there is no shortage of workers in Canada, people must have the skills for the world of manufacturing. With an international shortage of skilled manufacturing workers, Canada has the potential for an enviable home-grown skilled workforce. Schools, governments and businesses need to continue investing in the right kind of training to generate much needed...