In Part 1 of this series we briefly talked about the exchange rate and the impact it is having on Canadian manufactures who's main clients are in the Unites States. Productivity improvements can neutralize the swing in the rising dollar. How can you neutralize the swing in the Canadian dollar through productivity improvement? At the bare minimum we need to be able to produce our "widget's" at the same price as manufactures in the United States with the profit margins required to stay in business - assuming value to the customer is the same.

Ideally, if the United States widget costs S1.00US to produce including profit; then the Canadian price including profit with the dollar exchange rate at pare; the Canadian company should be producing the same widget for  $1.00 CDN just to compete. Ideally we should be at less then $1.00US to gain market share  - providing "value" is the same. In this scenario the dollar swing will basically be neutralized and working for you, not against you.  So if the exchange rate is  $0.90 then the Canadian company will have approximately 10% addition profit.  What do you do with this addition money - Pocket it?  Well you may want to pocket 10-20% of it. The other 80% can - and should - be used be put back into the company to improve productivity, Research & Development, Ect.. Unfortunately we can no longer rely on the exchange rate spread as our competitive edge!

So were do you start to improve your productivity without or, minimal capital spending? No matter what manufacturing philosophy you choose to follow - Lean, Flexible, etc. - requires management to have a strong trust that the systems they have in place will work when called upon. One area that seems to be a major problem no matter were you are in the world is the Reliability of your equipment.  Are you controlling the equipment or, is the equipment controlling you?

Note: The information contained in this blogg is the opinion of the author and is intended for discussion purposes only.