Going up: The 2014 Canadian Manufacturing Study reveals Increases in Demand, Production and Spending

GOOD NEWS from CANADIAN MANUFACTURING STUDY!!!

Manufacturing Automation, in conjunction with Excellence in Manufacturing, has released results of a survey conducted with 432 manufacturers covering a wide range of industries. Since more than 75% of those companies surveyed have been in business more than 20 years, 75% employ less than 200 and 62% generate sales less than $49 million, it suggests that the survey offers good insight to the majority of industries we serve in SW Ontario.

 While it appears that companies are still fighting foreign competition and applying Lean Manufacturing and Continuous Improvement techniques to drive costs down, more than half the respondents reported increased demand for their products and increased production, while 42.3% reported they were able to increase their prices. At the same time, respondents did report their businesses were troubled, were not winning the battles against rising costs and international competition and many hadn`t yet been able to get established in other markets. 

So, we should still expect instances of layoffs or plant closures but perhaps industry in general has turned a corner. Finally, some good news! Enjoy the article and be sure to use the link to deeper survey results.

-Jim Fairfax, President, Kitchener Executive Consultants

 

trending manufacturing

GOING UP: THE 2014 CANADIAN MANUFACTURING STUDY REVEALS INCREASES IN DEMAND, PRODUCTION AND SPENDING

Mary Del Ciancio, October 24.2014

The headline says it all. Things are looking up for the manufacturing industry. In fact, plenty of good news came out of this year’s Canadian Manufacturing Study. Conducted by Manufacturing AUTOMATION in conjunction with the Excellence in Manufacturing Consortium, the ninth annual study portrays an industry in growth mode.

For the fifth straight year, production has increased for more than half of respondents. Demand is also on the rise and, as a result, more than three-quarters of respondents are expecting to expand in some capacity over the next three years, whether it’s in engineering/R&D, production, sourcing or sales and service. And for those looking to expand, nearly three-quarters say this expansion will happen in Canada.

These are promising trends for an industry that over the last six years has made headlines for plant closures and layoffs. Are there still plants closing and workers losing jobs? Yes. But it appears the instances are decreasing. In fact, while the number of respondents expecting layoffs is still hovering around five per cent, those anticipating a plant closure has dropped to the lowest rate since we began asking this question in 2008.

In addition, more companies say they have experienced improvements and/or a turnaround in 2014 compared to last year.

But it’s not all good news. The respondents say there are still major barriers to their future competitiveness — namely the availability of skilled labour and high labour costs.

This year’s study looks at these trends and many more, including a year-to-year comparison of trends dating back to 2006. While the survey doesn’t drill down into month-to-month comparisons of productivity, demand and more, it does give a snapshot of some of the issues and opportunities awaiting manufacturers in the year ahead, based on the answers given by the more than 430 respondents.

Here are some of this year’s study highlights:

• More than 90 per cent of respondents have been in business for at least 10 years, and more than three-quarters have been in business for more than two decades.

• More than half of the respondents reported annual revenues below $49 million, about the same number as in 2013.

• Average hourly wages have slowly increased over the last two years, according to respondents. This year’s average is $22.24, which is almost a dollar more than last year, and two dollars more than 2012.

• The number of workers making between $8-14 an hour decreased from 8.7 per cent last year to 7.1 per cent this year. And while those making between $15-19 an hour and $20-24 an hour is also slightly higher than last year, there are slightly fewer workers in the $25-plus an hour category than there were in 2013.

• Companies are still planning to increase spending on capital equipment and technology in 2015, with more than half — 61 per cent — planning to boost it by at least five per cent. That’s up from the 55.1 per cent of respondents who last year said they planned to increase spending.

• While spending is on the horizon, it won’t be a significant amount for the majority of respondents — 66.7 per cent estimate their firm will spend less than $199,000 on manufacturing technology, software and related capital equipment and services over the next year.

• Like last year, design (i.e., CAD, CAM, CAE) topped the list of IT applications companies are using, receiving the most number of votes by almost double.

• As in years past, lean manufacturing is by far the most commonly deployed plant improvement strategy among respondents. More than half say they use lean manufacturing strategies.

• Continuous improvement is still the most commonly used strategic practice, according to respondents, with nearly three-quarters of the votes.

• Material handling continues to be the production activity most targeted for equipment purchases over the next year, followed closely by testing/inspection, production control and assembling.

•  Little has changed over the last year when it comes to the implementation of safety technologies. Like last year, two-thirds of respondents say they have implemented and are fully compliant, or have a plan and have begun implementation. And nearly a quarter say they don’t apply advanced safety technologies.

• The name of the game is expansion. 77.6 per cent of respondents are planning an expansion in the next three years, compared to 76.3 per cent last year — a clear sign the industry continues to improve. Once again, production was the top area cited for expansion. You should note, though, that individual areas — i.e., production, sourcing, sales, etc. — have higher numbers across the board because this year we allowed respondents to select more than one area of planned expansion.

• Where do respondents plan to expand their operations? Nearly three-quarters listed Canada as the number-one location for expansion. It’s also the top spot they are interested in acquiring customers from.

• More than half of respondents (58.5 per cent) have seen an increase in demand from their customers — up from last year’s 51.8 per cent and the 53.4 per cent who saw an increase in 2012.

• Production continues to increase for Canadian manufacturers, with 59.4 per cent of respondents saying production has increased over the last 12 months. That’s up from 58.2 per cent in 2013.

• 42.3 per cent of respondents say the price of their product has increased, compared to a slightly higher 43.1 per cent last year. Meanwhile, manufacturing costs continue to rise for the majority of respondents, though more respondents report a decrease in costs than last year — 13.6 in 2014 compared to 9.6 in 2013.

• More companies are planning to expand over the next year and a half than indicated last year — 43.5 per cent compared to 36.4 per cent. The number of respondents expecting layoffs is still hovering around five per cent, an improvement over the period from 2008-2010. More good news: The number of respondents anticipating plant closures has dropped to the lowest rate since we began asking this question in 2008 — 0.6 per cent.

This entry was posted in Employers Articles and tagged , , , , , , , , , . Bookmark the permalink.