In 2020, the business of manufacturing will look very different in Canada than it does today. Changes taking place in the global market, new technological capabilities, and the re-organization of manufacturing enterprises will transform all aspects of the business in this country.
Across all sectors, manufacturers foresee a future for their industry in Canada that will be characterized by:
1. Product Specialization
Standard products that can be mass-produced and shipped long distances will be manufactured in newly industrialized countries, where production and delivery costs will be only a fraction of those in Canada, and manufacturers will be able to offer improved standards of quality, technical sophistication, and product and vendor reliability. Product lines that remain in Canada will be more specialized, because they will have to command a higher premium from customers. They will be products that require a high degree of innovation and customization, smaller production runs, and flexible production systems. Or, they will be products specially designed for local customers, or manufactured by companies where proximity to customers is a necessity.
2. Higher-End Production Processes and Business Activities
Product specialization will drive Canadian manufacturers further up the value-chain in terms of the nature of their enterprise as well. There will be fewer Tier 4 suppliers of standard materials, products, and parts, and more Tier 3 companies involved in specialized sub-assembly or integrated batch processing. More Tier 2 suppliers will be engaged in integrating materials, sub-assemblies, and components. And, there will be more Tier 1 companies – the original equipment manufacturers (OEMs) – whose business is in developing new products or customer solutions and bringing them to market. In short, value will be created more at the front end rather than in the basic fabrication and processing phase of product cycles.
The business of manufacturing will also change in Canada as companies graduate up the value chain. Market scope will expand from local and regional to a more global customer base. Supply chains will also become more global in reach. Companies will depend more on managing knowledge rather than physical assets, and the intellectual property that will define the value of their business will be attached not so much to production processes as to specific technologies and specialized products. As production evolves from fabrication to assembly and integration, so too will the primary functions of the enterprise – from a focus on materials management and production processes, to process validation and pre-production planning, to prototype development and design validation, and finally at the stage of the OEM to technology genesis, product development, and testing.