Lack of access to capital and skills shortages make it hard for small manufacturers to compete. Here’s how CME is helping.
Manufacturing is vital to Canada’s economy and one of the backbones of OECD (Organization for Economic Co-operation & Development) economies. But when it comes to digital transformation needed to remain globally competitive, not all Canadian manufacturers are on a level playing field.
Compared to their large counterparts, small Canadian manufacturing companies face significant challenges accessing capital, skilled labour, and information about how to incorporate advanced technologies into their daily operations. According to the Canadian Manufacturers & Exporters (CME) 2023 Technology Adoption Survey, companies with fewer than 100 employees reported lower confidence in their knowledge of the advanced technology solutions available to them today and greater difficulty in obtaining financing for digital transformation.
The barriers to tech adoption
While manufacturers of all sizes spoke of technology integration challenges, funding access and skills gaps as key barriers to digital transformation, smaller companies reported having a more difficult time. For example, 18 per cent of small businesses said that financing for digital transformation projects had been very difficult, compared to four per cent of medium and large manufacturers. Since about 93 per cent of Canadian manufacturers are small businesses, many of which play a key role in the supply chains of larger companies, this is an issue that affects the competitiveness of the entire industry.
While the survey reveals that digital transformation is well underway for many manufacturers, additional work needs to be done to get more companies on board. In fact, 40 per cent of manufacturers have yet to start or are just beginning their digital transformation process, and 24 per cent of manufacturers are not currently using any of the nine digital transformation software solutions being used in manufacturing today, like enterprise resource planning (ERP) systems. Additionally, the survey reports that 10 per cent have yet to adopt any of the nine advanced manufacturing technologies frequently associated with Industry 4.0, including cloud computing, robotics, and cybersecurity.
The voice for Canadian manufacturers
As an industry organization that represents thousands of Canadian manufacturers from coast to coast, CME is dedicated to helping these companies scale up their operations in Canada and abroad by removing barriers to growth and lowering the cost and risk of investing in new machinery, equipment, and technology. CME offers training and development services, specialized programs, conferences, and events, as well as research and advocacy, calling on governments to provide more targeted support to accelerate tech adoption. One key advocacy area is support for more vocation-focused education streams at the secondary level and positioning the industry to students as a leading-edge, innovative, and attractive career option.
Support Information and Testing Opportunities
- Provide financial support to facilitate technology demonstration tours and site visits for Canadian manufacturers that showcase cutting-edge machinery, equipment and technologies.
- Fund technology demonstration and testing hubs across Canada to give manufacturers the opportunity to learn about and test new and emerging technologies.
- Develop an online technology adoption roadmap that allows businesses to learn about the various stages of technology adoption, assess their own progress in moving towards Industry 4.0, and get information on the steps needed to advance to the next level.
Reduce Purchase Costs and De-Risk Investments
- Introduce a nationwide federal 10 per cent refundable manufacturing investment tax credit (ITC) for investments in new buildings and new machinery, equipment, and software. This could be accomplished by extending the Atlantic Investment Tax Credit—currently only eligible for capital projects in the Gaspe Peninsula and the Atlantic provinces—across the whole country.
- Introduce a matching 10 per cent ITC in all provinces, using the same base as the federal program.
- Extend the Accelerated Investment Incentive’s current rate for three more years.
- Expand the Canada Digital Adoption Plan (CDAP) by creating a dedicated manufacturing stream including a non-repayable component to offset the high cost associated with software critical to process automation.
- Support the creation and delivery of a nationwide technology assessment and investment program that would offset the cost of technology assessment and diagnostic services and provide support for advanced manufacturing technology adoption initiatives at SMEs.
Reduce Skills Shortages and Skills Gaps
- Develop more vocation-focused education streams at the secondary level and provide more information to secondary students about career options in manufacturing.
- Fund Regional Industry Councils (RICs) that bring together employers, government, and educators to coordinate skills training and education programs based on regional needs.
- Support employer-led training through a 50 per cent tax credit that offsets half the costs of employee training.
- Increase funding of the Canada Job Grant to $1 billion annually, make it permanent, and expand it to include on-the-job training.
Learn more about how CME helps Canadian manufacturers grow by visiting cme-mec.ca.
