Many organizations have not invested enough in training, technology: report
In the past few months, a reinvigorated Canadian dollar has put new pressures on Canarm Ltd., a Brockville, Ont.-based marketer and manufacturer of industrial and agricultural ventilation and lighting systems.
A strong dollar is a double-edged sword, says Steve Read, director of operations. The importing side of the business benefits from the increased buying power of the loonie. But for the manufacturing side, about one-third of the business, the strong dollar is bad news. As it goes up, Canarm’s products are less attractive in the huge U.S. market. “The advantage we have always had has now been eliminated,” says Read. Instead, the company has had to look for ways to create revenue without adding costs. The only option is to push harder, be leaner, run the business more efficiently, and reduce idle time, he says. “All those things are more important than ever before. There is no room for waste.”
Similar challenges are being faced by manufacturers across the country, according to a report from the Canadian Manufacturers and Exporters (CME). Manufacturers are feeling pressure to revisit how and what they are getting from their workforce, to be more productive and more efficient.
For the past few years, an anemic Canadian dollar meant higher sales for many organizations selling to the U.S., and therefore less need to boost productivity to improve the bottom line, states the report Striving for Excellence. “It also made Canadian labour costs relatively inexpensive in relation to the cost of new technologies.”
As a result Canadian manufacturers overspent on labour rather than investing in new technology and felt little impetus to improve practices and processes to be more productive or to be more innovative.
Between 1991 and 2001, manufacturing employment rose by 16 per cent in Canada while it dropped by four per cent in the U.S. On the face of it, employing more people seems like a positive development, but the CME says Canadian manufacturers had to hire more workers because they were less productive than competitors in the U.S.
“The record of Canadian manufacturers in boosting productivity performance has not been exactly stellar over the past decade,” states the report. Canadian production and export numbers have gone up, but the CME concluded that as of 2000, Canadian manufacturers were about 75 per cent as productive as manufacturers in the U.S.
And now that the dollar has strengthened considerably, and is expected to remain strong vis-à-vis the U.S. dollar for the foreseeable future, manufacturers have to find ways to be more efficient and productive.
Importantly, CME stresses being more productive does “not necessarily mean doing more with less. Doing a lot more with more is better — that is what leads to wealth creation and economic growth.”
More lean manufacturing
“Even where we have been improving our productivity in Canada, the issue is that others are doing more faster,” says Perrin Beatty, president and CEO of the CME.
For Canadian manufacturers to be more efficient and productive industry-wide changes are needed, he says. Productivity improvements come through innovation, and innovation requires a highly trained workforce.
“We need to invest more in terms of upgrading training in the workplace,” Beatty says. But employers also need more information about what training is available and the industry should work closely with education facilities to ensure people are graduating with the right skills. Training should also be more accessible for employers, he says. “We need programs that go into workplaces, rather than take people out of the workplace.”
The CME is also promoting lean manufacturing — the elimination of wasteful activities that do not add to customer value — through the creation of manufacturers’ consortia across the country. A group of 12 or more company leaders work together to share best practices to manage innovation, improve operations and develop joint training programs.
Global pressures
Some companies have made attempts to improve productivity, he says. “But are we sufficiently focused on it and have we done enough? The answer is no. We need to have a sense of urgency,” he says. Leaving aside the rising dollar, Canadian manufacturers are facing other emerging pressures. Most Chinese companies, for example, used to have major quality problems but improvements there make many Chinese organizations a serious threat to companies here. Canadian manufacturers have to make improvements or risk being left behind, he says.
Even before the dollar started its upward climb, Canarm was trying to be more efficient, says Read, revamping the performance planning and evaluation system in 2000 to improve alignment between employees and corporate goals, for example. “It was a recognition that we really need to count on everybody to understand the vision of the company and the objectives we are trying to accomplish,” he says.
Since Canarm was never a high-volume company, quality product had always been crucial for success, he says. The company had already adopted the Philip Crosby quality improvement system and most staff had taken training on how they could reduce costs year over year while maintaining quality levels. “And we have done it but those are diminishing returns,” he says. Costs can be driven down only so far before it becomes time to look for new ways to increase productivity and generate revenue.
New markets
The biggest change has happened in the last few months as the company looked for new ways to increase production. “We had a fair bit of idle capacity,” explains Read. The company had always run just one shift. Having its facilities and machines unproductive for so long made it tough for Canarm to compete against round-the-clock companies or even those running two shifts, says Read.
In the last few months, additional contracts have been signed, extra shifts added and the company is now doing entirely different kinds of work. The new work opportunity arose after one client noticed Canarm did sheet metal fabrication in the production of the ventilation systems and asked for a quote on the production of metal caging. Though Canarm hadn’t produced caging before, this was a new opportunity Canarm’s skilled metal fabrication employees could transition to with relative ease.
Most lines are now running two shifts and two machines are running 24 hours. Between 25 and 40 people will be hired to handle the new work (nearly doubling the workforce on the shop floor). Most new staff have been offered four- or six-month contracts though the hope is to make them permanent employees once Canarm stabilizes relationships with new customers, says Read.
It’s taking a while for some staff to get accustomed to the change and become comfortable with the idea of working afternoon or night shifts, he says, but the management team has worked hard to explain why the change was necessary.
Cross-training
So far the rising dollar has not had a major impact on business at All Weather Windows, says Brian Hunt, director of human resources. Nonetheless, for the last two years, the company has been making a concerted effort to improve efficiency and increase production rates, he says.
The Edmonton-based manufacturer of window and door products employs about 700 employees in total, about 500 of whom work at the main 280,000-square-foot manufacturing facility in Edmonton.
Aside from spending on machinery to increase output, they have also tried to improve the skills sets of employees. “We are doing a lot more cross-training than we have done in the past which allows us to make better utilization of the skills,” Hunt says. “We have nine separate production lines and if you train people to unique positions in lines and you don’t see sufficient orders to maximize that line, you have people who are not as productive as they could be. So cross-training allows us to move people from one area to another as required.”
The cross-functional training has resulted in “significant increases” in the organization’s production rates, says Hunt. “We have seen a reduction in the number of employees it requires to produce an equal number of windows and doors,” he says.
Cross-training is also necessary if All Weather Windows hopes to achieve its larger goal of becoming a year-round operation. In the past, business for the company was very cyclical, subject as it was to seasonal demands, says Hunt. But now the organization is looking to move into new markets to reduce the number and severity of down periods. To do so, it needs to have the flexibility to respond to orders it has not been accustomed to handling, he says. The products themselves won’t change but the demand will, and as demand changes so will production rates. To meet those new production schedules the company needs workers who can move from one line to the other.
A new HR management system will give the HR team a better grasp of exactly who has what experience and training and where, making it easier to move people around, Hunt says.
Employees have for the most part embraced the new training opportunities, he says. “I think people understand that the more they know then the more valuable they are to the organization,” he says.
A strong dollar is a double-edged sword, says Steve Read, director of operations. The importing side of the business benefits from the increased buying power of the loonie. But for the manufacturing side, about one-third of the business, the strong dollar is bad news. As it goes up, Canarm’s products are less attractive in the huge U.S. market. “The advantage we have always had has now been eliminated,” says Read. Instead, the company has had to look for ways to create revenue without adding costs. The only option is to push harder, be leaner, run the business more efficiently, and reduce idle time, he says. “All those things are more important than ever before. There is no room for waste.”
Similar challenges are being faced by manufacturers across the country, according to a report from the Canadian Manufacturers and Exporters (CME). Manufacturers are feeling pressure to revisit how and what they are getting from their workforce, to be more productive and more efficient.
For the past few years, an anemic Canadian dollar meant higher sales for many organizations selling to the U.S., and therefore less need to boost productivity to improve the bottom line, states the report Striving for Excellence. “It also made Canadian labour costs relatively inexpensive in relation to the cost of new technologies.”
As a result Canadian manufacturers overspent on labour rather than investing in new technology and felt little impetus to improve practices and processes to be more productive or to be more innovative.
Between 1991 and 2001, manufacturing employment rose by 16 per cent in Canada while it dropped by four per cent in the U.S. On the face of it, employing more people seems like a positive development, but the CME says Canadian manufacturers had to hire more workers because they were less productive than competitors in the U.S.
“The record of Canadian manufacturers in boosting productivity performance has not been exactly stellar over the past decade,” states the report. Canadian production and export numbers have gone up, but the CME concluded that as of 2000, Canadian manufacturers were about 75 per cent as productive as manufacturers in the U.S.
And now that the dollar has strengthened considerably, and is expected to remain strong vis-à-vis the U.S. dollar for the foreseeable future, manufacturers have to find ways to be more efficient and productive.
Importantly, CME stresses being more productive does “not necessarily mean doing more with less. Doing a lot more with more is better — that is what leads to wealth creation and economic growth.”
More lean manufacturing
“Even where we have been improving our productivity in Canada, the issue is that others are doing more faster,” says Perrin Beatty, president and CEO of the CME.
For Canadian manufacturers to be more efficient and productive industry-wide changes are needed, he says. Productivity improvements come through innovation, and innovation requires a highly trained workforce.
“We need to invest more in terms of upgrading training in the workplace,” Beatty says. But employers also need more information about what training is available and the industry should work closely with education facilities to ensure people are graduating with the right skills. Training should also be more accessible for employers, he says. “We need programs that go into workplaces, rather than take people out of the workplace.”
The CME is also promoting lean manufacturing — the elimination of wasteful activities that do not add to customer value — through the creation of manufacturers’ consortia across the country. A group of 12 or more company leaders work together to share best practices to manage innovation, improve operations and develop joint training programs.
Global pressures
Some companies have made attempts to improve productivity, he says. “But are we sufficiently focused on it and have we done enough? The answer is no. We need to have a sense of urgency,” he says. Leaving aside the rising dollar, Canadian manufacturers are facing other emerging pressures. Most Chinese companies, for example, used to have major quality problems but improvements there make many Chinese organizations a serious threat to companies here. Canadian manufacturers have to make improvements or risk being left behind, he says.
Even before the dollar started its upward climb, Canarm was trying to be more efficient, says Read, revamping the performance planning and evaluation system in 2000 to improve alignment between employees and corporate goals, for example. “It was a recognition that we really need to count on everybody to understand the vision of the company and the objectives we are trying to accomplish,” he says.
Since Canarm was never a high-volume company, quality product had always been crucial for success, he says. The company had already adopted the Philip Crosby quality improvement system and most staff had taken training on how they could reduce costs year over year while maintaining quality levels. “And we have done it but those are diminishing returns,” he says. Costs can be driven down only so far before it becomes time to look for new ways to increase productivity and generate revenue.
New markets
The biggest change has happened in the last few months as the company looked for new ways to increase production. “We had a fair bit of idle capacity,” explains Read. The company had always run just one shift. Having its facilities and machines unproductive for so long made it tough for Canarm to compete against round-the-clock companies or even those running two shifts, says Read.
In the last few months, additional contracts have been signed, extra shifts added and the company is now doing entirely different kinds of work. The new work opportunity arose after one client noticed Canarm did sheet metal fabrication in the production of the ventilation systems and asked for a quote on the production of metal caging. Though Canarm hadn’t produced caging before, this was a new opportunity Canarm’s skilled metal fabrication employees could transition to with relative ease.
Most lines are now running two shifts and two machines are running 24 hours. Between 25 and 40 people will be hired to handle the new work (nearly doubling the workforce on the shop floor). Most new staff have been offered four- or six-month contracts though the hope is to make them permanent employees once Canarm stabilizes relationships with new customers, says Read.
It’s taking a while for some staff to get accustomed to the change and become comfortable with the idea of working afternoon or night shifts, he says, but the management team has worked hard to explain why the change was necessary.
Cross-training
So far the rising dollar has not had a major impact on business at All Weather Windows, says Brian Hunt, director of human resources. Nonetheless, for the last two years, the company has been making a concerted effort to improve efficiency and increase production rates, he says.
The Edmonton-based manufacturer of window and door products employs about 700 employees in total, about 500 of whom work at the main 280,000-square-foot manufacturing facility in Edmonton.
Aside from spending on machinery to increase output, they have also tried to improve the skills sets of employees. “We are doing a lot more cross-training than we have done in the past which allows us to make better utilization of the skills,” Hunt says. “We have nine separate production lines and if you train people to unique positions in lines and you don’t see sufficient orders to maximize that line, you have people who are not as productive as they could be. So cross-training allows us to move people from one area to another as required.”
The cross-functional training has resulted in “significant increases” in the organization’s production rates, says Hunt. “We have seen a reduction in the number of employees it requires to produce an equal number of windows and doors,” he says.
Cross-training is also necessary if All Weather Windows hopes to achieve its larger goal of becoming a year-round operation. In the past, business for the company was very cyclical, subject as it was to seasonal demands, says Hunt. But now the organization is looking to move into new markets to reduce the number and severity of down periods. To do so, it needs to have the flexibility to respond to orders it has not been accustomed to handling, he says. The products themselves won’t change but the demand will, and as demand changes so will production rates. To meet those new production schedules the company needs workers who can move from one line to the other.
A new HR management system will give the HR team a better grasp of exactly who has what experience and training and where, making it easier to move people around, Hunt says.
Employees have for the most part embraced the new training opportunities, he says. “I think people understand that the more they know then the more valuable they are to the organization,” he says.
