In the past many months we have seen manufacturers throughout the region (and indeed across Canada) publicly express concern about the challenges affecting manufacturing today, and their ability to remain a vibrant part of our business community. 

Some are struggling.  Several have departed. Many are succeeding.  ALL are facing challenges.

The record-setting levels of the Canadian dollar, along with rising energy and employment costs (resulting in cost increases in all other areas of business) and the low cost of manufacturing in China/ Asia/ Eastern Europe, have compounded to create a ‘perfect storm' which manufacturers must weather in order to survive.  

The key is finding the eye of the storm... a place where manufacturing people, processes and productivity all come together in a powerful network of industry peers, providing ready access to information and expertise, enabling manufacturers to be more competitive.  Fortunately in the raging battle between the loonie, the greenback, the energy meter and the bottom-line, there is such a network and the world-class strategies necessary to help manufacturers achieve a competitive advantage and remain in the ‘eye'.  Many however, are still not fully aware of the options (and opportunities) that small, medium and large size manufacturers have available to them and they are facing the storm without an ‘umbrella'. 

Excellence in Manufacturing Consortium (EMC) is helping industry to find the eye of manufacturing's ‘perfect storm' and to remain competitive in Canada.  Founded in the mid 1980's, EMC has grown to become Canada's largest manufacturing consortium, providing primary expertise and advanced peer-to-peer networking to over 800 member manufacturers, active in 52 consortium regions and encompassing 190 communities across Ontario and Atlantic Canada.  EMC's KW consortium brings together manufacturers in an ‘industry only' environment, which allows them to share best practices, and collaboratively draw upon knowledge & expertise without being swamped unnecessarily.  By providing ready access to solutions and resources, manufacturers have an ‘EMC umbrella' to turn to when a storm arises, no matter the issue or the sector involved.

As part of its continuous efforts to read and respond to these issues, EMC asked its group of manufacturing owners and senior managers, about the impacts a rising Canadian dollar (along with rising costs) have had on their businesses and about the strategies they have in place to become more competitive. 

Without exception, two key dollar-related challenges were identified.  The first involves ensuring essential cash flow for on-going operations, and the second is to remain price competitive with US-based companies.  Manufacturers with a large percentage of U.S. sales have to contend with a 50% increase in the Canadian dollar over five years (20%+ during this past year).  This has taken a huge bite out of their net sales revenue.

To remain highly competitive on a global basis, manufacturers must continue to lower margin expectations, to maintain competitive selling prices against US based competitors.  This means making more with less. 

"For several years now, we have been speaking to our members about ‘the light at the end of the tunnel' with respect to the dollar," said Al Diggins, President & General Manager of EMC.  "We have been vigilant in our promotion of ‘Lean Thinking' as the best way to build competitiveness and achieve cost savings, and many of our members have strategies in place to deal with parity.  As we suspected, the ‘light at the end of the tunnel' was in fact a TRAIN and unfortunately manufacturers who did not plan for parity have collided with that train head on." 

"There is a bright side, and a dark side to this," said Jim McCoubrey, Vice President and General Manager of Troy Sprinkler Limited and National Chairman of EMC.  "Costs are paid in Canadian dollars, expenses such as labour, taxes and utilities go up with the loonie, but on the positive side, materials and equipment brought in from abroad become cheaper," McCoubrey said.  "Companies that have high labour costs, and that assemble Canadian made parts or use Canadian natural resources, such as furniture builders, find themselves in "a very difficult situation," said McCoubrey.  "But companies that bring parts in from the United States or elsewhere for assembly should get more for their money.  The higher loonie is also making it more affordable for companies to update manufacturing equipment, much of which is made in the United States."

As many manufacturers have emphasized in the media recently, creating the right climate for local manufacturers to succeed has (and will continue to) require government investment.  Beyond "planes, trains and automobiles".  As one manufacturer pointed out, "We are well on our way to a capitalistic free market and we need to respond in a way that will ensure our survival."  Government investment alone will not be able to offset the impact of the changes in the value of the Canadian dollar.  

Higher costs of acquiring energy, employee benefits and rising wages have caused manufacturers to take an enterprise-wide approach to competitive improvements.  Regardless of the economic climate, manufacturers must engage Lean best practices, advanced manufacturing networks and other critical tools to succeed.  "Nobody knows the issues manufacturers are facing, better than manufacturers themselves," said Al Diggins, "EMC member manufacturers throughout the region are working together in unique and innovative ways, to help each other to get better at what they do!" 

EMC members and many local manufacturers - large and small - are working hard to weather this ‘perfect storm'.  Fortunately, there is a terrific local network of industry, businesses, community and government partners all working together through the Manufacturing Innovation Network... working hard to ensure the ‘eye' of manufacturing's perfect storm can grow to encompass all manufacturers across Waterloo region.