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Storms a’ brewin this October – open your doors for #MFGMONTH

There’s an old saying in the Maritimes, “If you don’t like the weather, wait five minutes,” in reference to the Mother Nature’s unpredictable and seemingly ever-changing influence on Canada’s east coast

Today, there’s a new saying emerging around the world in reference to stormy economic conditions, “If you don’t like the global economy, wait 5 months and hope you don’t get poured on.”

Since the ‘great meltdown’ in 2008, the global economy has been in a constant state of flux, volatile with many peaks and valleys — in two words, unstable and unpredictable.

Welcome to the new economic normal.

Case in point, one year ago, the loonie was trading at around 90 cents and Texas Crude was selling around $94 per barrel. Today, oil is hovering around $40 per barrel and the loonie is in the low 70-cent range.

For Canadian manufacturers, the lower loonie is good news and means that the Great White North is a more attractive locale for business and will ultimately reduce the cost of manufacturing and innovation.

This begs the question though, what does the future have in store?

Manufacturing, not just in Canada, but around the world is undergoing a ‘seismic shift’. The very nature or face of the industry as we know it is changing due to a number of factors including technological evolution, increasing global competition and changing customer demands.

It’s not the same industry as it was a mere five years ago and it will continue to evolve.

And as a result of this change, some are concluding that manufacturing in Canada will never see a repeat of it’s glory days, that it doesn’t have a future at all.

In August, The Economist published an article describing Canada’s industrial heartland, southern Ontario, as a “rust belt.”

“If you visit south-western Ontario and the Niagara peninsula you will see scenes of industrial decay. Steel mills, vehicle-parts factories and food processors sit abandoned, their car parks studded with tufts of grass. The region has the look of a rustbelt, and that has Canadians worried,” the piece stated.

Are Canadians worried??? Truth be told, no. And you know why? Many don’t really understand or even know the role manufacturing plays in the overall economy and how it contributes to the standard of living. That’s a fact.

What they do understand is one word — jobs.

And truth be told, it’s not companies that create jobs, nor governments. It’s customers who create jobs.

I’m not an economist, but the law of supply and demand seems pretty simple — companies need customers to buy the widgets they are making or the services they are providing. And customers want the best quality product/service at the best price.

This means that manufacturers have to be more than competitive, they have to be the best. In the new economy, that doesn’t mean competing on low costs and high volume — just the opposite.

The future of the Canadian manufacturing hinges on customization, specialization and focusing on the industry as an entire business system – not just assembly. That means embracing and maximizing new technologies and driving efficiency throughout the entire business and through their supply chains.

Most importantly, manufacturers have to be solutions providers for their customers — this is the seismic shift that we’re talking about.

Yes it involves both new ways of thinking and doing business, but what’s the alternative?

Already, the perception of the industry, like what The Economist is referring to, is out of touch with the 21st reality. There are many great best-practice examples of Canadian companies taking on the world and winning in the emerging arena of advanced manufacturing.

Manufacturing is not just about widgets and sprockets, axels and heavy metal anymore. Nor is it solely about chips, microprocessors and robots.

Manufacturing is everywhere and touches everything. And with the emergence of 3D printing, it is putting the power to create and make in the hands of everyone.

But we tend to hold onto this perception that manufacturing is about heavy industry, assembly lines and mass production — an antiquated perception.

That needs to change.

And industry, the very companies that are employing 1.7 million Canadians, need to tell their own stories. More importantly, they need to show that jobs in manufacturing are not dirty, depressing, declining or dangerous. They need to show that a career in manufacturing is high tech, high value, highly skilled and high paying.

Together, Canadian manufacturers need to take the lead and show the world all they have to be proud of; how their innovation and creativity combine to make the global standard of quality Made by Canada has earned.

Telling those stories and demystifying the image of manufacturing is the focus of Canadian MFG MONTH. This is an opportunity for industry to band together to educate Canada on the true nature of manufacturing.

Get involved. Jump on the factory wagon and open your doors, share your story.

CME has developed all the tools required to successfully engage in the October campaign. And they are no further than the click of a mouse away. Visit www.mfgmonth.ca and join us — we want and need you to be part of the solution.

Rain or shine, this October will be a storm of activity and unlike the weather, we can’t afford to wait for it to change — in Canadian manufacturing, the future is now.

Join us — visit www.mfgmonth.ca and be a part of the change

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Next Issue: November–December 2015

Global business

Close deadline: October 2, 2015
Material due: October 19, 2015

To advertise, contact: Ronda Landygo — ronda.landygo@cme-mec.ca or call 1-877-880-3392

Special feature: North American hot spots


  • Ports

  • Supply chain and logistics

Deliver your message to Canada's leading decision makers

The November–December issue of 20/20 examines the Global Business and how Canadian manufacturers and exporters can take advantage of growing opportunities for Canada in foreign markets.

Have an opinion or a story to tell? Join us and add to the debate.

That's why it's critical you participate in this insightful and undoubtedly, provocative issue.

The publication date for this issue is early November.

Canadian Manufacturers & Exporters' magazine — 20/20 is the only publication that Canada's manufacturing and exporting leaders rely on for intelligence and solutions to the issues they face day to day. We are not afraid to ask the tough questions nor provide the answers you don't necessarily want to hear — we deliver the intelligence you need.

Distributed via Canadian Manufacturers & Exporters (CME) to 16,000 manufacturers across the country in hard copy along with 17,000 digital copies. Readership of 20/20 magazine is 82,500 per issue.

Our value proposition is simple — we can make a difference in your business. Becoming a CME advertiser gives you access to the biggest business network in the nation and more importantly, helps you translate your message into language understood by manufacturers and exporters across Canada.

And it works. More than 98 per cent of our advertisers in 20/20 magazine are repeat customers. Join us.

We have two available options to support this important initiative including placing an advertisement within the feature of your choice or, participate in creating a feature article with partnered content. For more information about our partnered content that can be formatted into single or double-page article options or for discounted ad rates in this issue, contact:

Ronda Landygo
Executive Director, Partnership & National Business Development
Associate Publisher, 20/20 magazine
Tel: 1-877-880-3392
Email: Ronda.Landygo@cme-mec.ca

Tailor your message, gain new business opportunities, expand your market reach. Share your solutions with leading industry decision makers from coast to coast. Leverage the only magazine the represents Canada's manufacturing and exporting sectors.

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Getting ahead of currency exchange risk

In today’s interconnected world, business is no longer limited to one’s domestic market but is increasingly dependent upon international trade as customers and suppliers are sourced from overseas. This inevitably leads to increased exposure to the foreign exchange market as imported goods need to be paid for and payment for exported goods repatriated.
Many businesses are still unsure about how to best protect themselves from adverse
currency movements


The foreign exchange market is the largest in the world - with daily volume in excess of $5.5 trillion a day, no other market or exchange comes close. There is no central marketplace for foreign exchange with transactions being conducted ‘over the counter’ and trading taking place 24 hours a day. Importers, exporters, speculators, fund managers, corporations and day traders all have an effect on the currency market. And how a company’s home currency fluctuates can seriously impact the company’s business. A strengthening home currency will make importing goods cheaper but will have a negative impact for exporters as their products become more expensive for international customers.

For corporations, the key is to manage their currency risk in a way that accounts for future foreign purchases and sales to protect their profit margins. For example, agreeing to pay USD 1mm in six months’ time for an imported product and hoping the exchange rate doesn’t move against you is a dangerous game. A rising USD could very quickly turn a profitable transaction into a loss maker.

How can you protect yourself?

If you know you have a currency requirement sometime in the future, a forward price is one way reduce risk. Forwards allow you to take the risk out of future market movements by agreeing on the rate you will transact at in the future, today. For example, you may be an importer of goods from the US but are not be required to pay for them for six months. Rather than accept the Spot rate in six months, which could easily have moved and taken your profit with it, you can lock in a forward price and know exactly what your costs will be in future. The forward price is easily calculated and is just a function of the interest rates of the two currencies concerned.

Options are another albeit less precise way to manage your future currency risk. Buying an option gives you the right to exchange currency at a fixed rate on a future date. You are not obligated to transact at this rate so if the actual rate in the market on the future date is better than your option rate (known as the strike price), you can ignore the option and transact at the then current spot rate. Options can be a good way to manage downside risk by defining what your worst-case scenario is while allowing you to benefit from a currency move in your favour. The upfront price of the option is known as the Premium, and this is a function of strike price, time remaining and underling volatility.

A simple stop loss order can also be effective and is designed to protect your downside. You may have a currency exchange requirement but are waiting for a better rate, in this case a stop loss order will give you piece of mind that you are protected from a sudden large move against you.

Whichever strategy you choose, the key is to be proactive about managing current and future currency exposure so that an adverse market move doesn’t turn your profits into losses.

At Agility Forex we help businesses manage their currency exchange risk and make international payments quickly and securely whilst taking advantage of the best rates around. No matter what your business is, our business is saving you time and money.

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ELECTION 2015: CME outlines priorities for all parties and next government

Now, more than ever, Canada’s prospects for economic growth depend on the competitiveness of our manufacturing and exporting sector — on our ability to produce the high‑value, high-quality and competitively priced goods, along with supporting services and technologies that customers want to buy across Canada and around the world

It is up to manufacturers themselves to implement the business strategies and make the investments in the new markets, new products, process improvements, advanced technologies and workforce skills they require to succeed. But, governments can and should play a critical role in their success — by maintaining a best-in-class business environment in which manufacturers can operate, by offsetting the risks of investment, innovation and technology adoption and by expanding access to markets in Canada and around the world.

CME is calling on the next federal government to articulate and deliver on a long-term growth strategy for manufacturing. The goal should be to double manufacturing production over the next 15 years. That would create more than two million jobs in manufacturing and supporting businesses.

A number of important issues then need to be addressed:

  • Investment. We need to encourage manufacturers looking to expand production to do so in Canada. Our ability to retain and attract investment and product mandates will depend on a competitive tax structure for manufacturing investments. Low corporate tax rates and accelerated depreciation allowances for investments in machinery and equipment are critically important and should be maintained. Initiatives to reduce unnecessary regulatory compliance costs should be strengthened within federal departments, in the context of interprovincial trade and on our borders with our main trading partner, the United States. A single-window, investment attraction agency able to promote Canada as a destination for business investment, clear obstacles and coordinate federal and provincial support would be very welcome.

  • Innovation. Innovation depends not only on great research but also on the ability of companies to bring new products and technologies to market and to introduce new and improved processes in their business. The federal government has an important role to play in helping to defray some of the risks involved.

    • It should re-institute a tax credit for investments in capital equipment used for research and development;

    • It should partner with industry, academic and research institutions and other levels of government to create an advanced manufacturing hub that could connect small and mid-sized manufacturers to the technological, advisory and financial resources that would assist them in adopting advanced technologies;

    • It should share some of the financial risk of technology commercialization by introducing a technology demonstration fund available to all manufacturers;

    • It should create a self-sustaining national manufacturing investment and innovation fund to provide consistent support for investments in new technologies, production scale-up and process improvements by manufacturers across the country;

    • It should simplify and streamline application and approval processes for direct funding programs and ensure that long-term loans are not taxed back; and

    • It should leverage public procurement to encourage the development, demonstration and commercialization of new technologies manufactured in Canada.

  • Skills. People are the only true guarantee of manufacturing success – people with the practical leadership, technical, business and problem-solving skills required by modern manufacturing. The federal government should continue to support joint post-secondary education programs with industry. It should increase financial support for apprenticeships and employer training. It should support initiatives to develop skills and promote career opportunities in manufacturing, technology and trades to Canada’s youth, including our aboriginal communities. And, it should ensure expedited entry for immigrants whose technical and practical skills cannot be found in Canada.

  • Business Opportunities. Canada’s trade and investment agreements have opened new markets for Canadian goods, services, procurement and investment. The next federal government needs to see through the ratification of our Comprehensive Economic and Trade Agreement with the European Union. It needs to be part of a Trans-Pacific Partnership Agreement. It should continue to promote and support the growth of Canadian exports. It should work to remove unnecessary regulatory obstacles to the movement of goods and people across provincial boundaries and across our border with the United States. It should insist on open and reciprocal access to federally funded procurement projects in Canada. And, it should support critical transportation, energy and information infrastructure, including the infrastructure required to transport our energy, resources and manufactured goods to market.

Canadian Manufacturers & Exporters and the 60,000 manufacturing companies we represent across the country look forward to working with the next federal government to ensure that Canada is a preferred location for businesses to invest, manufacture, export from, employ and grow. Our manufacturing and economic future depend on it.

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Manufacturing Month stats


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Manufacturing changes lives Join CME in celebrating Manufacturing Month this October

Terry Fox is a Canadian folk hero whose Marathon of Hope to raise money and awareness for cancer research ended tragically 35 years ago

Fox and his famous prosthetic leg ran a marathon (42km) every day from St. John’s, NL to just outside of Thunder Bay, ON in the spring of 1980. It was far from a marvel of modern technology. The leg that now sits as part of a display honouring Fox at the Canadian Museum of History is adorned with parts from a 1978 Chevy Malibu suspension, from a repair done in Newmarket, ON.

Fox could very likely have completed his pan-Canadian run with today’s advances in manufacturing technology.

Even 1980s-standard research and development provided a more capable and advanced leg. The patented Terry Fox Prosthesis was developed in 1980 by McMaster University researchers, but Fox passed away before it could be tested and used.

“The technology now that allows patients to do a whole range of things wasn’t even dreamt of when Terry was around,” Hamilton, ON-based Chedoke-McMaster Hospital Prosthetist Patrick Reilly told the Hamilton Spectator recently.

Advanced manufacturing technology has revolutionized medical devices with advances leading to the development of prosthetics that include electronic skin to allow the wearer to sense touch and exoskeletons that allow the paralyzed to regain bi-ped mobility.

Despite the recurrence of cancer that had made its way into Terry Fox’s lungs, those advances in mechanical and electrical engineering and design, lightweight material development and robotics integration would likely have given Fox the performance to preserve energy and improve his staggering marathon-per-day pace.

Canadian Manufacturers & Exporters’ Manufacturing Month, this October, is about showcasing the current state of manufacturing and the opportunities manufacturing careers provide to impact our day-to-day lives in a substantial way.

The Future is Now theme is about dispelling the myths surrounding people’s perception of manufacturing.

Throughout the month, CME and its partners BDO, Edge Factor, Acklands-Grainger and Intertek will organize events and raise awareness to spark the interest of budding industrial designers of tomorrow.

Through the donation of 200 subscriptions of the manufacturing education resource platform eduFACTOR.org, CME hopes to reach future innovators at the high school level and introduce the rewards of various manufacturing career options.

By inviting manufacturers coast‑to‑coast to host plant tours, we hope to help dispel the misconception that today’s manufacturing careers resemble those of years ago.

Our student video contest aims to engage youth, providing a $2000 prize to the most creative entrant depicting the current manufacturing industry. And, with a campaign to make manufacturing an election issue CME will raise the collective voice to showcase the potential manufacturing holds.

Technological advances through research and development and the ingenuity of manufacturing employees has led to life-altering advances in all facets of all our lives. Just take a look at the evolution of 3D printing.

Not only would this technology have redefined Terry Fox’s run, but is changing the way we approach manufacturing as well as the manner in which we look at health care. Doctors have successfully “printed” human organs.

However, as it stands, the manufacturing sector that fuels those advances is facing a skills shortage. Areas of advanced manufacturing see highly skilled, highly paid positions going unfilled because there aren’t people entering the industry.

Vancouver, BC-based Williams & White Co. are a third generation manufacturing company for whom innovative products, ideas and the adoption of advanced manufacturing techniques have seen the company grow into a global leader.

Despite a flat culture allowing for the types of innovation and collaboration necessary for the steady stream of innovative products the company has been known for, skilled workers are still hard to find.

“We maintain a good relationship with local colleges and universities to ensure we’re able to attract the best and brightest engineers and industrial designers,” says Justin Williams, CEO of TK, one of the three companies under the Williams & White Co. banner. “Sometimes, we end up posting jobs through Kijiji, or local job boards and then train the workers on the job in order to attract the technologists we need to keep our operations running,” says Williams of a wider problem seen across the country.

Manufacturing is not commonly presented to students as a viable career option while they are in secondary school. This is particularly baffling in BC where a recent report showed that industrial production jobs are among the highest paying jobs in the province at between $48 and $52 per hour.

More concerning is that there are an estimated 400,000 positions coming available in the next five years that will go unfilled by qualified workers.

“If manufacturing is not seen as a primary career option for students when they are making decisions heading into secondary education, they’re unprepared for the opportunities that exist,” says CME President and CEO Jayson Myers. “And if parents remain unaware of the state of industry and the potential a career in manufacturing can provide, Canada’s opportunity to lead in the global economy falters.”

Film camera

Phoenix Vaithilingam had only two weeks to create his award-winning video for the Made by Canada contest last fall. The grade 12 student at Erin, ON-based Erin District High School found Canadian Manufacturers & Exporters’ contest on a Skills Ontario social media page and sprang to action, creating From One’s Mind to Another’s Hands, the video that won him CME’s $2,000 prize.

Launched during the inaugural Manufacturing Month in 2014, the Why is manufacturing cool themed student video contest sought to help creative students discover what Canadian industry was about. By pairing his creativity with the manufacturing technologies available to him at Erin District, Phoenix was able to capture the spirit of what Manufacturing Month is becoming.

So, too, did the students of Madame O’Brien’s eighth grade class at Kemptville, ON‑based St. Michael’s Catholic capture what Canadian industry means to us all. Taylor Gerus, Madeline Hubbard and Ashley Snippe collaborated to show what manufacturing has provided to them in a video that walked through the everyday items that manufacturing has created.

This year, the Made by Canada video contest is themed What is manufacturing today? Combined with CME’s The Future is Now theme for Manufacturing Month, students will tackle some of the more exciting advancements in manufacturing showcasing the robotics and automation that help drive innovation in Canadian manufacturing.

So, if you know a student who has the creative magic to produce a short video under two minutes that can help show other youth what a career in manufacturing might offer, introduce them to Manufacturing Month and the Made by Canada video contest.

They’ll have a chance to win $2000 for their efforts, plus, winners will be featured in an upcoming issue of CME’s award‑winning industry publication 20/20 magazine.

Help us spark the imaginations of tomorrow’s manufacturing leaders and help a Canadian student win our $2,000 Made by Canada video contest prize.

For more information visit www.mfgmonth.ca for contest rules
and entry forms, and to see last year’s winning entries.

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A turn-key resource with the click of a mouse: MFG MONTH virtual toolkit ready for download

By: Larissa Hofman

Intense. Epic. Cinematic. These are three words often used to describe the high-impact
media company, Edge Factor. So it’s no surprise that when the Edge Factor team agreed to be one of the official partners for Canadian MFG MONTH, the video resource it produced was big and bold

Edge Factor produces inspiring, cinematic media that tell stories of innovative teams who design and build incredible products that affect lives and, ultimately the future of our economy.

The resource kit was originally developed for the US-based MFG Day that is taking place October 2. Organizers in both Canada and the US are partnering this year to make the annual celebration of manufacturing, bigger and bolder — a true North American initiative.

“For us, every day is MFG Month,” says Edge Factor Producer and Host Jeremy Bout. “We live and breathe this stuff. At the end of watching any of our productions, I want to hear students say ‘this is rad’ and view manufacturing for what it is — an industry that’s filled with rock star teams of people, working together with technology to change lives and build the future.”

This MFG Month, Edge Factor and CME invite YOU to inspire young people to pursue careers in the amazing world of manufacturing. Edge Factor is equipping educators and business leaders with the FREE Rock MFG MONTH Kit: a time-saving and turn-key package of cinematic media and interactive resources to host a MFG MONTH event that will change perceptions of manufacturing, inspire students, spark conversations, reach parents and provide meaningful feedback on the success of the event.

It’s free, it’s big, it’s bold and it’s available in both English and French.

The Canadian Rock MFG Day/MONTH Kit has become available through the generous contributions of CME, Acklands-Grainger and Athabasca University.

The virtual toolkit is completely free to use until November 1, when it will only be available for eduFACTOR members. Edge Factor uses its compelling media as the basis for eduFACTOR: a membership-based, Netflix-style platform that features a library of high-impact stories and tools to inspire the next generation of makers, available online at www.eduFACTOR.org.

As Canada’s largest trade and industry association, the Canadian Manufacturers & Exporters (CME) is a voice for manufacturing and focuses on many facets impacting the industry and workforce development. Together with In-House Solutions, the Canadian Mastercam reseller, CME identified 200 Canadian schools from coast to coast to receive a one-year eduFACTOR membership.

“Manufacturing has an image problem. What eduFACTOR brings to the table is what no one has been able to do — not just a way to connect and portray the true image of manufacturing, but an opportunity to get hands‑on experience,” says Jeff Brownlee, VP of public affairs at CME. “It’s a great tool for educators and business leaders to engage the next generation.”

“Manufacturing is filled with compelling stories, and Edge Factor tells these kinds of stories in a manner that has you on the edge of your seat,” said Ed Youdell, president and CEO of the Fabricators & Manufacturers Association, one of the four co-producers of MFG Day in the US. “We are delighted that Edge Factor producer, Jeremy Bout, and his production team have agreed to join us and share their storytelling talents with the MFG Day movement.”

“The response to the Rock MFG Day Kit has been outstanding,” Bout says. “It’s our hope that this kit will change perceptions of manufacturing and inspire our next workforce. With an eduFACTOR membership, the learning experience can continue after Manufacturing Month, as students begin to pursue manufacturing careers.”

Sign up for the free Rock MFG Day/MONTH kit today at www.eduFACTOR.org and register to host a MFG MONTH event at www.mfgmonth.ca

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Calling all Canadian manufacturers — We need you to tell your story

Imagine you’re a contestant on Jeopardy! with Sudbury, Ontario’s Alex Trebek giving you this answer for the final question: “British vacuum inventor James Dyson did ‘make this up.’ He describes this as more than just putting parts together. It’s coming up with ideas, testing principles and perfecting engineering. A complete business system.”

If you bet the farm and responded with, “What is manufacturing, Alex?” you would be a Jeopardy! champion.

Unfortunately, not many North Americans would get the question correct.

“Canadian manufacturing suffers from an image problem,” says Jeff Brownlee, vice president of public affairs and business development at Canadian Manufacturers & Exporters (CME). “Many view it as an industry in decline, when in reality, it’s driving both the economic and innovation engines of the country.”

Educating Canadians about the reality of the business of manufacturing is the premise behind the industry association’s MFG MONTH celebration this October. From St. John’s to Victoria, manufacturers will open their doors to the public during the month to showcase the true innovative nature of Canadian manufacturing.

Consider these facts:

  • 3rd largest source of employment in Canada boasting a workforce of 1.7 million Canadians accounting for $93 billion in wages and salaries

  • Accounts for 46 per cent of all R&D in Canada

  • Directly responsible for 11 per cent of all economic activity in Canada

  • Every dollar generated in manufacturing adds $2.77 to the Canadian economy

  • Every manufacturing job adds 2.7 more jobs to the Canadian workforce

“We need companies to tell the story of Canadian manufacturing in 2015, the wealth creation story. Most importantly, we need manufacturers to tell their own stories,” Brownlee adds. “We must show Canadians that manufacturing is not a 4D industry (dirty, depressing, declining or dangerous). That it is high value, high tech, highly skilled and high paying.”

And getting that message across is crucial. The industry, despite job losses in the last decade, is facing a shortage of workers that will only be exacerbated in the future. According to CME, there just aren’t enough young people choosing manufacturing as a career.

“When you were in high school, how often did you have a teacher come to you and say that you should consider a job in manufacturing?” asks Brownlee. “You don’t need to be a Jeopardy! champion to answer that one — never.”

That’s why CME has partnered with Edge Factor on its Netflix-like platform, eduFactor.org to educate students on how exciting a career in manufacturing can be.

“This is education 3.0,” Brownlee says. “What eduFactor does is tells the manufacturing story in a way that today’s millennials will understand — through video and interactivity. Simply put, it’s gnarly.”

The two organizations along with Mastercam and In-House Solutions have partnered to gift 200 secondary schools 12-month access to eduFactor curriculum.

“We want to give students the options many of us never had,” Brownlee adds. “That means the information to make a decision about their future.”

Virtual Toolkit

For those companies that have never hosted a tour or dealt with the public, CME has created a toolkit that will help each company from beginning to end. Realizing that hosting a factory tour at a specific facility may not be possible, Edge Factor and CME have partnered and developed a virtual toolkit for companies to take and/or give to schools.

“We can’t necessarily rely on students to come to manufacturing, so why not take manufacturing to the students?” says Brownlee. “We want to make this as easy as possible for manufacturers to stand up, be counted and take a role in manufacturing Canada’s future.”

For a full list of manufacturing month activities or to promote
a facility tour during MFG MONTH,
visit www.mfgmonth.ca.
Alternatively, you can email mfgmonth@cme-mec.ca

Thank you Banner

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Jump on the #MFGMONTH bandwagon… Open your doors, show the world

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A national celebration of manufacturing — both virtual and actual — entering it’s second year, during the month of October. It includes both public and government relations activities at the regional and national levels.

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What do I need to do?

Get engaged. Participate by opening your doors to a factory tour during the month of October. Invite local politicians, students, teachers and the general public. Show them what Canadian manufacturing is all about.

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How do I get engaged?

Simple. Visit www.mfgmonth.ca and register to host your tour. You can download a turn-key “how‑to host an event guide” that will walk you through hosting an event from A to Z.

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I can’t host a tour, what else can I do?

You can visit www.edufactor.org and register to access your virtual tour toolkit that includes everything you need to connect with attendees, students, parents and educators as well as measure the impact of your event. Open your students’ eyes to the art of manufacturing, inspire the workforce of tomorrow and begin a movement in your community.

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How can we get students into MFGMONTH activities?

  1. Work with local schools in your community to host a tour or download the virtual toolkit at www.edufactor.org

  2. Promote our student video contest — What is manufacturing today? Combined with CME’s The Future is Now theme for Manufacturing Month, students will tackle some of the more exciting advancements in manufacturing showcasing the robotics and automation that help drive innovation in Canadian manufacturing.

So, if you know a student who has the creative magic to produce a short video under two minutes that can help show other youth what a career in manufacturing might offer, introduce them to Manufacturing Month and the Made by Canada video contest.

They’ll have a chance to win $2,000 for their efforts, plus, winners will be featured in an upcoming issue of CME’s award winning industry publication 20/20 magazine.

Tell us your story. Better yet, tell the world

Use #mfgmonth on Twitter to tell your story and you will automatically be entered to win a full-page ad in 20/20 magazine in an upcoming issue.

Manufacture Change. Be a part of the solution. Just make it.

Register today at www.mfgmonth.ca and join us in the campaign manufacturing makes Canada strong. And receive your I #mfgchange logo


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Peering through the economic crystal ball: Market volatility, a low loonie and your business

With the recent global market turmoil sending shockwaves through economies all over the world, 20/20 sat down with Jay Myers to get his take on what the future has in store for Canadian manufacturers and exporters

What’s the impact on Canadian companies as a result of the recent market turmoil, spurred on by China? Should they be concerned in the long term?

All this volatility in the financial markets right now is all the more reason for companies to be very careful about hedging their bets and finding insurance products that will help them mitigate risk — it makes the job of EDC and other agencies like it very important.

My hope is that volatility is not going to affect the risk assessment that EDC has of major markets in places such as China, Asia, Brazil, Africa or Europe, because they are still very important markets for Canadian exporters and manufacturers.

The inconsistencies in the economy recently has really underlined the concern I have in terms of the response to the global recession of 2008 and 2009. The response of Central Banks and particularly the FED has always been to pump more money into the economy.

What we’ve seen is that money going into the economy but not showing up as consumer price inflation, price inflation of goods and services, but as is inflation of financial assets: stocks, bonds, property and commodities. Over the past several years asset bubbles have appeared in various markets, first of all in the US dollar market, in China in the stock market and property markets there, which has now blown off in major correction. There is a real dislocation that has taken place between asset values and the underlining economy that they should be reflecting, which creates totally mixed messages.

So the idea that the US economy is recovering, which should mean that not only that the FED has unwound its quantitative easing, but is now looking at increasing interest rates when that news comes into the market it drives stock markets down, but what it should be is a signal that earnings performance is expected to pick up so the way the stock market should work is that this should be positive news rather than negative news and the fact that it is negative news tells me the stock markets values are very highly overvalued and have really little to do with earnings performance in the economy today.

How does the volatility in the oil market play into this?

We’ve seen inflation in the oil market. The price of oil today is gyrating like wild, but when you really look behind the scenes it’s clear that the demand for oil hasn’t fundamentally changed.

The Chinese economy is still growing and of course we are still pumping oil out, but it’s the expectations that have changed and the ability of the price to gyrate that much purely based on speculation shows how dislocated the price of oil is from real fundamentals in the market.

The same could be said about currencies. The Canadian dollar may be performing weaker than the United States dollar, but there is nothing that has taken place, or can be projected that would justify a 25 per cent drop in the value of our currency in about a year and a half.

Having said that, there is a silver lining in here in that all this wild volatility in financial markets really doesn’t say much about the real strength of the economy.

However, the danger is that these swings overwhelm what businesses can do in the real economy; it may tighten credit lines, it may tighten availability of credit for businesses, it may mean consumers are less reluctant to spend, it may mean companies put their investments on hold again.

How should companies approach this new economic outlook?

As for Canadian manufacturers and exporters, it is important to focus on the medium to long term, not the short term and to be prepared for adjustments in customer demand. And again, if there is a reason why companies should be holding onto cash, this is it. Focusing on productivity enhancements and investing in new technology is still very important but no business can afford to get out ahead of its customers too much.

This really compounds, for manufacturers anyway, the continued weakness in those sectors that are focused on the commodity markets. For instance, we’ve seen a major postponement in future oil projects. This is not as big of a concern for today as it will be in 2018 or 2020 when current projects dry up and there’s nothing on the books. That’s where the supply sector feeding into oil sands and feeding into commodity markets, or commodity-based producers are really going to feel the pinch for probably four or five years before things begin to pick up again.

This really underlines the importance of maintaining global growth and the importance of our export sector. The key takeaway is that if you don’t have customers buying it is going to be really difficult to sell and to produce and to plan.

How should Canadian companies prepare for finding financing in a low Canadian dollar climate?

There are two key steps companies have to take before they find financing. The first is to manage the risk involved in the investment. Companies should understand their current processes and ensure that if they are investing in a new piece of equipment, process, technology or information system, that it’s actually going to deliver the benefits they expect. This requires using a LEAN perspective to take stock of the processes already in place and those that need to be improved.

The second step involves the company acknowledging that their cash flow is going to generate, or attract additional financing. Ultimately cash is king — not only for investors, but for manufacturers as well and it is critical for companies to ensure they are employing cash effectively using a strong flow strategy.

Plenty of options are available for financing. Not only commercial banks, but also BDC, which is set up explicitly to provide capital financing for both expansion and new technology. Other sources of financing are available directly through the government and can be found using a site like CME’s Funding Portal.

EDC and other government institutions provide bank guarantees, which are particularly important if investments are tied to international supply chain development or to export development. It’s crucial for companies to recognize that all of these resources are available to them.

How can Canadian manufacturers and exporters mitigate foreign exchange risk?

Hedging can be used — which is a form of insurance — as well as insurance against sudden foreign exchange rate fluctuations. Businesses can use hedging strategies supported by financial institutions, but there are also natural hedging strategies which can be very important for offsetting exchange rate risks. A natural hedging strategy may be to balance out imports and exports, or to balance out the content of foreign debt to ensure your business is not exposed to the wild swings in currency that we’ve seen over the past 10 or 15 years.

Companies should be considering these strategies, and should also be taking advantage of the financing and hedging services from EDC and other financing institutions.

What is one key to success all Canadian companies should focus on moving forward?

Things are changing on such a rapid basis. The Canadian dollar is falling because the US dollar looks relatively strong and it is possible that we will see things continue to improve in terms of consumer spending and industrial growth. Our businesses looking at growth potential need to consider economic growth beyond what’s happening in the US; they should be monitoring the performance of multinational supply chains, who they are competing against for a shrinking share of the global market. If their customers are US, European or Asian companies that are selling raw materials around the world, then these companies are going to be affected by what’s going on in China and Asia.

There certainly is not a lot of pricing leverage and competition is fierce. This is all the more reason for Canadian companies to be holding cash, lowering costs and making sure they are coming up with innovative, customized products. This is the only way to compete in an intensively competitive marketplace — by doing something different that nobody else can do. That’s where services come in and your ability to protect yourself against all of these risks is really important.

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Riding the foreign exchange roller coaster

By James Careless

As soon as a Canadian business breaks out of the domestic market and starts to sell internationally —even if only into the US — it finds itself riding the foreign exchange roller coaster. Suddenly some of its invoices are being paid in US dollars, UK pounds, Russian rubles and all kinds of other non‑Canadian currencies

The Canadian company does not know until those foreign payments get converted into Canadian dollars (through the foreign exchange process) how much it will be receiving for those foreign sales. Sometimes the converted amount received is over the Canadian price, sometimes it is on par and sometimes it is below, even way below! (Whatever happens, some money is lost by the exporter to whichever agency converts the foreign currency into Canadian dollars.)

This is the foreign exchange roller coaster; a place where the US dollar can pay as much as $1.50 CAD, or as low as $0.88 — or less. “The problem is that the value of currencies vary with relation to each other on an ongoing basis, due to the health of the national economies these currencies are supported by,” said Martin Lavoie, CME’s director of manufacturing policy. “As a result, you cannot assume that the exchange rates between the Canadian dollars and other currencies will remain predictable and stable — because they won’t.”

It is quite normal for the Canadian dollar’s value to vary by as much as 10 per cent a year, said François Villeneuve, team leader of Export Development Canada’s Treasury Centre of Expertise (EDC). “Such an annual shift or more is quite normal,” Villeneuve said. “For instance, the Canadian dollar has weakened more than 10 per cent relative to the US dollar since June 2014.”

For exporters, the key to riding the foreign exchange roller coaster is not to try and master it — because the global currency market’s ups and downs cannot be predicted, due to all the factors in constant play — but rather to learn how to ride the coaster carefully and comfortably. This means managing the revenues and costs associated with exporting in a rational manner — and doing so while allowing enough room for negative currency fluctuations.

Fortunately, there are many ways for Canadian exporters to minimize their exposure to foreign exchange-caused losses. The simplest is what François Villeneuve refers to as a natural hedge. This is what occurs when an exporter both sells product and buys supplies in the foreign market(s) they are serving. “Say that you are earning $1000 in USD sales, and spending $1000 USD to buy supplies for your overall manufacturing enterprise,” he explained. “If you use your USD revenues to buy your USD supplies without ever converting any of the funds to Canadian, you cancel out any fluctuations in the Canada/US exchange rate.”

In markets where a Canadian exporter is making substantial sales, it can make sound foreign exchange sense to establish a branch plant there. For instance, if you have a strong market in Poland and are being paid there in zlotys, then you could consider setting up a factory there where all of your costs are also being paid in zlotys. Until you actually transfer the net income back to Canada and convert it into dollars, you are neutralizing fluctuations in the foreign exchange rate — and not giving currency converters more commissions than you have to.

A third currency management strategy is to lock in your predicted exchange rate by buying a Foreign Exchange Forward Contract (Forward Contract) from a chartered bank or other authorized provider. “With the Forward Contract, you sign a contract with the bank where they agree to pay a pre-agreed exchange rate for the foreign currency you are receiving, say, three months from now,” said Michael Burt, The Conference Board of Canada’s director of industrial forecast. “That rate is based on the provider’s own calculations, so it may not be as high as you would like the exchange to be. But it does provide your company with a guaranteed payment in Canadian dollars, which makes revenue management much easier,” he said.

The downside is that banks often require collateral or some other form of financial guarantee to back Forward Contracts with exporters. This is where EDC can help: “We can provide the necessary guarantee for the bank to agree to the Forward Contract, assuming that the exporter meets our qualifications,” said Villeneuve. (More details at http://www.edc.ca/EN/Our-Solutions/Bonding-and-Guarantees/Pages/foreign-exchange-facility-guarantee.aspx.)

One last strategy: “Draw up a policy on how your company will deal with foreign exchange issues, including your strategies, tactics and acceptable margins, and stick with it,” said François Villeneuve. “It is very easy in the heat of the moment and to act recklessly; including risking the company by speculating on foreign exchange returns. In one known neighbourhood abroad, a popular local grocer destroyed his otherwise healthy business by speculating in the financial markets — and losing everything.”

The bottom line: Although it is impossible for exporters to avoid riding the foreign exchange roller coaster, they can take steps to ensure that the ride isn’t hazardous to their businesses’ health — nor financially nauseating for themselves.

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Navigating the insurance maze

By James Careless

Insurance is a must for CME members — whether they are exporters, manufacturers or both. The challenge is to find the right insurance at the right price with preferably as much coverage as possible for as little expense as possible

Unfortunately, the kinds of insurance CME members need go beyond what the average Canadian requires to protect their car and home. “Imagine that you are a Canada-focussed company who sees an opportunity to export to the US,” said Rhonda Barnet, vice president of finance at Steelworks Design (www.steelworksdesign.com), an engineering design firm based in Peterborough, ON. “The US market is renowned for its tendency towards litigation, with lawsuits there being more common and costly than they are in Canada. You have to protect yourself against this threat, or risk your entire business being wiped out by a costly US action — even if you are proven innocent!”

Fortunately, CME stepped up years ago to help its members find the insurance policies they need. To this end, the association has forged a long-term relationship with Tripemco Burlington Insurance Group Limited (www.tripemco.com) of Stoney Creek, ON. “Our relationship with the CME commenced in 1999 when the insurance industry in Canada was in turmoil and less capitalized insurance companies were having difficulties,” explained Tripemco CEO Paul Vaccarello. That crisis led to the Canadian insurance industry either substantially increasing premiums for the policies CME members needed, or eliminating them entirely — particularly for exporters.

In response, “CME Ontario VP Ian Howcroft contacted us asking for assistance,” Vaccarello said. It was a good move for CME’s members: “We were able to work with CME members to place affordable comprehensive coverage with alternate insurance carriers,” he said. “At the same time we created an excellent group home and auto product exclusively for CME members and their employees.”

Not surprisingly, Paul Vaccarello is more than happy to provide similar assistance to today’s CME members. But he also encourages Canadian exporters and manufacturers to do their own homework to find the insurance they need — and to get it from the sources they judge to be best for them. The key is to find a knowledgeable insurance broker — one who has access to policies from a number of underwriters — to come up with the right balance of risk mitigation and premium costs.

“Insurance costs can be a big expense, so care needs to be taken when choosing the brokerage you want to work with,” said Vaccarello. “Businesses can decrease premiums by increasing deductibles and including self-insured retentions (setting aside money to cover a potential loss, so that this risk doesn’t have to be insured against). Transferring risk to others is a great way to minimize risk and decrease your insurance costs.”

This said, having a business-savvy broker isn’t enough. Getting the right insurance also relies on having the ­appropriate mindset to consider risks and policy options pragmatically and fully. This is why Tripemco’s CEO advises CME members to park their preconceptions about business insurance, particularly when it comes to ‘knowing’ what they need and don’t need.

“Some medium and smaller sized manufacturers are guilty of being minimalistic when designing an insurance program and tend to concentrate on the traditional lines of insurance: property, business interruption, equipment breakdown, crime and liability insurance,” Vaccarello explained. “Today’s businesses have exposure to privacy breaches (cyber liability), professional liability and terrorism. Key man, Critical Illness, and Directors/Officers liability insurance can round out and protect the business and key executives.”

That’s not all: “Exporters face additional issues with currency fluctuations, political unrest, accounts receivable challenges and different cultural values,” said Vaccarello. Each country has its unique set of laws, so it is wise for Canadian exporters to have local legal representation in every market they serve just in case. “Transporting goods via ship warrants ocean marine cargo coverage and if your staff is travelling to high-risk countries you’ll also want to consider a kidnap and ransom policy,” he added.

Export Development Canada (EDC) has a number of programs available to help exporters manage their risks internationally. “For instance, our Credit Insurance program protects Canadian exporters from non-payment,” said Joanne Palmer, EDC’s strategic advisor and manager of insurance products. “This is the biggest risk exporters face in global markets, and one that we can help them guard against.”

Clearly, getting the right business insurance ­requires a serious effort by exporters and manufacturers alike. Executed properly, such policies can protect CME members from a wide range of financial threats at a justifiable cost. This is where Tripemco can help: “Our insurers will provide CME members with enhanced extensions of coverage, including failing to manufacture to customer specifications, product recall and legal expense,” said Paul Vaccarello. “Simply put, we take the time to understand your business and develop a plan, so there are no nasty surprises at the time of claim.”

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Savvy financing tactics for CME members

By James Careless

Financing is an ongoing challenge for CME members, and indeed virtually every company in business today. Capital is needed to start an enterprise, to underwrite expenses and equipment costs when payables slow down, and to pay for expansion when the right opportunities arise

There is no magic recipe for getting all the financing you need — unless you happen to be close friends with Warren Buffet and Bill Gates. But there are many tactics that can make finding financing easier. Here are seven of the best:

1. Work the banks: In Canada, chartered banks are the first point of financing for manufacturers and exporters. Government agencies such as the Business Development Bank of Canada (BDC; www.bdc.ca) and Export Development Canada (EDC; www.edc.ca) are able to supplement bank financing, but are legally prevented from superseding the banks as a frontline source of funding.

“The good news is that there are five major banks in Canada, and other similar forms of institutional financing in the market,” said Martin Lavoie, CME’s director of policy. “After you have drafted up your detailed, well-organized pitch for financing, be sure to shop around for the best rate and the best service. If your proposal is solid, you may be able to get the banks competing amongst themselves to win your business.”

2. Improve your risk assessment: No matter who you approach for financing, you can count on them assessing your business to determine how risky the loan will be — and how much extra they should tack onto the financing to cover their exposure. “So when you approach potential financiers, start by asking them about their risk assessment criteria, and ask how your company can positively impact your risk rating,” said Rhonda Barnet. She is vice president of finance at Steelworks Design (www.steelworksdesign.com), an engineering design firm based in Peterborough, ON. “A lower risk assessment can result in lower financing costs for loans and mortgages for your company, while keeping your lenders happier and feeling more confident about you.”

3. Bring in BDC: Because they are committed to generating maximum returns for their shareholders, banks focus on financing projects that will directly generate revenue. “But if your business needs to buy a 3D printer for your R&D department to make prototypes, you may not be able to get bank financing,” Lavoie said. This is because R&D doesn’t directly generate sales; the kind the banks want to see when assessing loan requests.

This is where BDC can help. “We can provide the capital businesses need to finance long-term growth, such as R&D and expansion,” said Carl Gravel, BDC’s director of global expansion. “We can also help companies improve their risk situations, so that banks are more willing to extend additional credit.” As well, BDC offers consulting services for business in a range of areas, including sales growth, productivity and organizational capacities.

4. Call in EDC: Export Development Canada (EDC) is the government agency that helps Canada’s exporters with their financing needs. “Our programs can help exporters get additional credit from their banks or directly from EDC,” said Dan Mancuso, EDC’s vice president of international financing. EDC’s Export Guarantee Program (EGP) provides the exporter’s bank with a guarantee that can help them get access to increased credit facilities that will support their export business. EDC can also lend directly to exporters to help them grow their sales. “Say a small Canadian manufacturer makes a million dollar sale into the US market, but lacks the working capital to complete all the products for that sale: We can help them with financing so they can fulfill their order, and get paid for the sale,” said Mancuso. “We can also help exporters access more financing from their lenders, by providing financial guarantees related to working capital, support for their foreign operations, monetizing federal/provincial R&D tax credits, and more.”

5. Try the friends and family plan: The experts agree — friends and family can be a great source of additional financing, and their willing infusion of capital can persuade banks to take your company more seriously. “It is a matter of having skin in the game,” said Rhonda Barnet. “Lenders are impressed when they see family and friends putting their hard-earned cash into someone’s venture, because they know how difficult a decision this can be for these people. So don’t undervalue help from friends and family: Their contributions can convince others to pony up as well.”

6. A canny tip — diversify! When seeking financing, try to get it from a range of lenders, rather than relying primarily on a single source. “Having a diverse financing portfolio protects your company should someone decide to pull out,” Barnet said. “But if you only have one main funding source and they decide to cut your financial lifeline, your firm could be in real trouble, the kind that puts you out of business.”

7. Never give up: No matter how hard it may seem to get financing for your company, never give up. “If you need inspiration, talk to your suppliers, your customers and of course the experts here at CME,” said Martin Lavoie. “Chances are that they will have ideas that you haven’t thought of — and that may help get you the extra money you need to succeed.”

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Robots boost productivity and jobs for Canadian industry

There are robots among us. The use of robotics and artificial intelligence in nearly all aspects of our lives have led to their ubiquity going unnoticed by most. Some paranoia has taken place of the future AI might have if unrestrained, but, related to the impacts robots have on our lives, we could all use a more refined Siri or a more capable Roomba to help us in our day-to-day

"Everybody, certainly in the community I work in, has this vision of creating intelligent entities, beings that we can communicate with, who can help us do the kinds of things that would improve our quality of life," says Jonathan Schaeffer, dean of science at the University of Alberta in a recent interview.

Industrial robots, though, have greater potential to affect our lives. Estimates of 25 per cent cost savings from our current levels of labour productivity are driving the demand for industrial adoption at a growing pace.

Robotics automation implementation supports our industrial workers. In fact, the positions created to design, program, support and service industrial robotics applications will create more jobs and safer, more productive Canadian manufacturing as adoption grows with prices dropping.

“Robotics is a fundamental enabler of the next level of North American industrial growth in an increasingly competitive world,” says ASEA Brown Boveri (ABB) CEO Ulrich Spiesshofer.

Recent product launches such as ABB Inc.’s Yumi, a humanoid-like robot designed to be integrated with production lines, are designed to have assimilation on assembly lines with automated companions that pose no threat to their production worker counter parts.

The collaboration won’t end there. Drones and other unmanned robots have been used successfully in security and exploration situations extensively. Those areas of success will likely create more opportunities for robots in industrial spaces.

“I think we'll quickly see a time where workers are not exposed to dangerous situations, precision agriculture provides better yield per acre and driving on our roads and highways is significantly safer,” says Paul Rocco, president of Provectus Robotics Solutions Inc. an Ottawa, ON-based company that builds unmanned security vehicles used by the RCMP and security forces globally.

An automated highway project linking Manitoba to Mexico has been garnering some steam and the autonomous vehicles won’t only impact work being done on earth.

The legacy of our space robotics prowess aboard the International Space Station in the form of the Canadarm is now fueling opportunities in the privatization of space travel and other space exploration.

“What’s really cool now is that we’re transforming this niche in Canadian space robotics into new and practical uses,” says Natalie Panek, an aerospace engineer at MDA Space Missions in Richmond, BC. “An example would be taking Canadarm2 which was initially designed to assemble the International Space Station, and now it’s doing capturing operations for commercial cargo capsules like SpaceX’s Dragon capsule.”



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