By Brian Kreissl
I’ve never understood the idea we in the Western world seem to have bought into — especially here in Canada — that somehow manufacturing is beneath us. For the longest time, boosting employment in the service sector was touted as the way forward. Lately, however, it has been all about the resource sector, especially given the rise in commodity prices over the past few years.
I’m not knocking employment in either of those two sectors. Other than a brief period spent working at a food processing plant as a summer student in university, all of my experience has been in the service industry. I also know there are a lot of well-paid, highly skilled jobs in the mining and resource sector.
But I still think we would lose a great deal as a society if we ever reach the point where we no longer actually manufacture anything. When we have so many natural resources and an educated workforce, why wouldn’t we at least try to refine those resources in our own country before shipping them abroad? Why should we be content with being the “hewers of wood and drawers of water” for other supposedly more industrialized nations?
I understand many of the reasons why manufacturing is declining in Canada. Our dollar is very high (largely due to high oil prices), productivity is relatively low and our labour costs are much higher than countries such as China (and even the United States in some instances). I also understand the impact of globalization, the prevalence of discount retailers and the ever-increasing consumer demand for cheaper goods.
The German paradox
Because of these factors, there is no way Canadian manufacturers can compete head-to-head against cheap imports from overseas based solely on price. So why then is Germany doing so well relative to most other countries?
The answer is because German industry concentrates on innovation, improving productivity and competing based on quality rather than price (although increased automation can also help keep prices reasonable). “Made in Germany” still stands for a certain level of quality, dependability and technological sophistication.
I hate to get political, but it’s also interesting how the Germans haven’t generally bought into the idea they need to be engaged in a “race to the bottom” by continuously cutting workers’ wages, pensions and employment benefits. German workers are well-paid even by Canadian standards, work shorter hours and have longer vacations than we do.
The way forward for Canada
Clearly, we would do well to emulate Germany in many respects. However, we are living right next to the United States, where workers in manufacturing are often lower paid than they are in Canada. In many cases, we have to compete with companies and workers south of the border (as well as Mexico, now that we’re all part of the North American Free Trade Agreement (NAFTA)).
It’s clear some Canadian manufacturing operations aren’t sustainable in the face of international competition, especially in cases where wages for largely unskilled work exceed those paid to managers and professionals in other sectors and where defined benefit pension plans are extremely expensive and underfunded.
But rather than engaging in a mean-spirited and jealous cost-cutting exercise to inflict austerity on blue collar workers, we’d be far better to focus on up-skilling those individuals and making them more productive so we can continue to enjoy the standard of living we’ve all grown accustomed to. There’s no reason why today’s manufacturing jobs have to be low skilled.
However, Canadian employers have to be willing to invest in training and development. They also need to focus on quality and invest in high technology equipment that makes manufacturing more efficient.
Universities and colleges need to do a better job preparing highly skilled workers for manufacturing jobs of the future. And we need to stop turning up our noses at manufacturing and convincing ourselves it isn’t part of our future.
It’s also worth reminding ourselves it isn’t all doom and gloom. After all, a Royal Bank of Canada report recently found Canada is one of the few countries where manufacturing is actually expanding.
Building on that success will be challenging but well worth it. There’s a role in this for all business leaders — especially those in human resources.
Brian Kreissl is the managing editor of Consult Carswell. He can be reached at firstname.lastname@example.org. For more information, visit www.consultcarswell.com.