Good morning,
It's an honour to be here at this conference with representatives from all over the world. I'm pleased that the University of Windsor is hosting this forum, which is being held in Canada for the very first time.
For those of you who may not have been to Canada before, I am sure you are more than aware, especially after the 2014 Olympics, that Canadians love hockey! Given this national pastime or obsession (seriously, what else do you do in a climate like ours), I hope you will indulge me in using this sport to illustrate innovation in manufacturing.
Hockey sticks used to be made of wood and while they were strong and fairly durable, they didn't provide the flexibility to wire one past goalies the likes of Carey Price or Roberto Luongo. So manufacturers started producing composite sticks using different materials, such as fibreglass. As a result of these advancements — both in the composites and design — hockey sticks are lighter, puck speed and control have improved and, above all, the velocity at which a puck can be drilled into a net is astonishing.
Unfortunately, all too often and much to our disappointment, the sticks snap right at the wrong time. So, much like our quest for Gold or the Cup, manufacturers are constantly searching for new materials and processes to improve products, provide variety to consumers or meet changing needs.
Manufacturers have to adapt and evolve to meet demand, but also to compete in today's global, knowledge-based economy.
And to compete and win, just like the Canadian Olympic men's and women's hockey teams did in Sochi this year, it takes the right equipment and the right players.
Conferences like this one today, which bring together the right players from various countries, communities and sectors, are important because they stimulate dialogue about not only why, but how manufacturing can evolve to remain a driver of economic prosperity.
This is of particular importance to Canada and specifically to Ontario as this great province — the one we're currently in — accounts for nearly half of national manufacturing sales in this country. Of course those of us who live here, know that Ontario's strength in manufacturing is related to the automotive, food and beverage, petroleum and coal products industries, as well as chemical manufacturing, including pharmaceuticals.
What we also know, is that the recession of 2009 hit the manufacturing sector particularly hard. At its peak in 2004, the manufacturing sector employed more than two million Canadians, with nearly half of those located in Ontario. Today, it employs a little more than 1.7 million people nationally, accounts for 11 percent of our GDP and conducts half of all of Canada's business R&D.
Our fortunes are improving as noted a few weeks ago, in Statistics Canada monthly report. National manufacturing sales rose 1.4 percent to $51.2 billion in February. This sales level is the highest we've seen since July 2008, just before the last recession began.
And while seven provinces posted higher sales in February, the bulk of the gain was concentrated in Ontario. In Ontario, sales rose 2.9 percent to $23.3 billion in February, nearly half of all manufacturing sales in Canada.
While employment levels are not at pre-recession levels, the manufacturing sector is still a great creator of wealth and opportunity. To expect that we can recover all the jobs lost in the manufacturing sector would be unrealistic. But we can expect that the jobs that will be created will be of higher pay and quality. This is simply an indication of the change within the sector towards more innovative and efficient ways of doing things. This sometimes requires fewer workers on the factory floor, but more brain power and skills behind the equipment and technology being adopted.
Challenges remain, as was highlighted in the Boston Consulting Group's recent study, released last Friday, noting concerns with Canada's cost competitiveness.
Ladies and gentlemen, the Government of Canada is committed to helping this sector adapt and grow in what is rapidly becoming a knowledge-based and globally competitive economy. And we are committed to fostering the necessary collaboration between the government, the research community and business, to bridge the gap between new ideas and the marketplace.
We have all of the right players in the region, it's simply a matter of bringing them all together.
Ontario has more than 30,000 manufacturing establishments.
In addition to the main manufacturing strengths in Ontario such as automotive and food and beverage, Ontario also has a well-established Information and Communications Technology industry. It is concentrated in the Waterloo area, which we call Canada's Technology Triangle.
We have world-class higher learning institutions, such as the University of Windsor where we are gathered today.
In fact, Dr. Hoda ElMaraghy, your Conference Chair, is a Canada Research Chair in Manufacturing Systems and is doing some excellent world-leading work on intelligent manufacturing systems. I would like to take a moment to congratulate her for winning the Research Engineering Ambassador Award 2014 presented by Partners in Research, for her outstanding research and outreach activities over the years.
With these attributes, our region has the potential to continually strengthen innovation in manufacturing, but only if we work together to translate innovative knowledge and ideas from various areas of expertise into commercial products. As well, it will lead us to development and adaption of cutting-edge manufacturing technologies and techniques.
All around the world, governments are taking action to support the manufacturing sector and guide it into the 21st century. This is in response to a long-term trend of slow growth in manufacturing, as compared to other economic sectors, which can be seen across Germany, Japan, the United States and Canada over the past couple of decades.
I know that for many years, Germany has benefited from the Fraunhofer institutes and research units that have developed many new products, which have driven the success of the manufacturing sector in that country. Also, President Obama has announced the creation of a network of Institutes for Manufacturing Innovation in an effort to bring together industry and academia in the United States.
Here in Canada, our Government is supporting the manufacturing sector through a number of public policies and targeted investments.
I would like to start by highlighting what our Government is doing as a whole across the country to help foster an environment of innovation and competitiveness, which in turn supports our manufacturing sector.
Since 2006, our government has lowered taxes, eliminated unnecessary regulatory burdens and improved conditions for business investment. We have eliminated all tariffs on machinery, equipment and manufacturing inputs, making Canada a tariff-free zone for industrial manufacturers — a first in the G-20.
In addition, Canada has the strongest job growth in the G7. Since January 2006, employment in Canada has increased by more than 1.1 million. We have the lowest debt to GDP ratio. And we are on track to return to a balanced budget this year. Other levels of government must also do their part with respect to their areas of jurisdiction.
We have also provided more than $11 billion in new resources to support basic and applied research, talent development, research infrastructure, and innovative activities in the private sector, including more effectively aligning federal support for research with business needs.
As a former Minister of State for Science and Technology, I commissioned an expert panel to examine federal government's R&D support for private sector innovation in order to increase our impact in this important area. Our Government responded in part by refocusing the National Research Council of Canada, or the NRC, into a research technology organization. The NRC now provides Canadian industry with access to the strategic research and development, technical services and specialized scientific infrastructure it needs to succeed.
Our Government also has a number of tax incentives to help manufacturers.
The first is a program that encourages Canadian businesses to conduct R&D in Canada by giving them tax credits. It's called the Scientific Research and Experimental Development Program.
The second is the Accelerated Capital Cost Allowance on Manufacturing and Processing Equipment. It helps reduce the real total cost of investing in productivity enhancing machinery and equipment by increasing the rate at which companies could write off depreciation in this equipment against their taxed income.
And the last one I want to mention is the Automotive Innovation Fund. The Fund promotes innovation and research in Canada's auto sector, which as I mentioned earlier is essential here in Ontario and especially here in Windsor. I know that you'll be hearing from Mr. Michael Bastian from Ford Motor Company later this morning. The Fund is contributing to Ford Motor Company Canada's Project Northern Star, which will help transform the company's Oakville Assembly plant into a state-of-the-art global manufacturing facility. This will make it one of Ford's most sophisticated plants in the world.
Ladies and gentlemen, given that this is an international audience and the fact that one in five jobs in Canada is linked to exports, I just want to point out our Government's efforts in developing trade relations with foreign markets that have the highest potential for Canadian exporters.
In less than seven years, Canada has concluded free trade agreements with nine countries and is negotiating with 30 more. A notable achievement in this effort was the historic agreement in principle with the 28-nation European Union, announced in October 2013 by Prime Minister Stephen Harper. For Canadian manufacturers, this opens up a key market with 500 million people and an annual economic activity of almost $17 trillion.
And now I'd like to tell you about a few investments in manufacturing in southern Ontario that I'm particularly proud of as Minister of State for the Federal Economic Development Agency for Southern Ontario, or FedDev Ontario.
I mentioned earlier that the manufacturing sector in Canada conducts more R&D than other sectors. By contrast though, Canadian businesses in general spend much less on R&D than counterparts in other countries. As a result, FedDev Ontario has invested in centres that allow industry and researchers to team up to innovate.
FedDev Ontario has provided $13.7 million to Western University for a $37-million project to create two centres that focus on the composite materials industry: the Fraunhofer Project Centre for Composites Research and the Western AMP (Advanced Manufacturing Park) Accelerator. FedDev Ontario's investment has contributed to creating a full-sized production environment for the development, testing, and validation of lightweight materials and advanced manufacturing processes.
The Fraunhofer Project Centre represents a partnership between three levels of government, a Canadian university, and Fraunhofer, Europe's largest research and development organization.
We are honoured to have a world-renowned organization to help establish a hub for companies involved in lightweight materials that can be used in a variety of industries, such as automotive, aerospace, or renewable energy, among others.
FedDev Ontario is also a partner in the McMaster Automotive Resource Centre, located in Hamilton. The Centre is making the auto sector more competitive by providing businesses access to state-of-the-art equipment and teams of international experts in areas such as powertrain technology, automotive software, materials development, and sustainable infrastructure, to name a few. The impacts of the project mean jobs and research opportunities locally, collaboration with numerous small- and medium-sized businesses and other organizations within the automotive cluster both nationally and internationally. It will also mean greener automotive technologies for Canadians and for the rest of the world in the future.
In the same way that Canadian companies can benefit from more access to R&D, they can also benefit from investments in new machinery and equipment, as well as access to foreign markets. Canadian companies are typically smaller than in other countries, making it harder to make these investments themselves.
To this end, I'd like to tell you about one of our most successful partnerships in the manufacturing sector. FedDev Ontario has partnered with a national organization representing manufacturers, the Canadian Manufacturers & Exporters, or the CME. This partnership is helping manufacturers with an export focus to commercialize new technologies, enter new domestic and foreign markets, invest in sustainable and green technology, purchase new or upgraded equipment and technology, and implement efficiency improvements. FedDev Ontario has provided more than $38 million to the CME, which in turn has supported more than 730 southern Ontario businesses to improve their manufacturing productivity.
Finally, I wanted to mention that FedDev Ontario delivers a number of funding initiatives that can help manufacturers. In particular, the Advanced Manufacturing Fund represents an investment of $200 million over five years to promote the long-term growth, productivity, and competitiveness of Ontario's manufacturing sector. Our Government is encouraging our manufacturing sector to undertake transformative, game-changing projects. We are encouraging collaborations of manufacturing businesses with our very capable post-secondary institutions to work together on developing new technologies and products that are innovative, market relevant and generate economic spillover benefits.
It is my hope that we will start to see more Canadian manufacturers leverage emerging technologies, such as additive manufacturing. As you know, 3D printing has advantages over traditional manufacturing techniques. In particular, its use for rapid prototyping can lead to cost savings and reduce a product's time to market by shrinking the time between product design and testing. These are the types of technologies that will help our manufacturers.
As you can see, our Government has been and will continue to invest in manufacturing innovation, as this contributes to productivity, exports, and incomes, leading to a high quality of life for Canadians.
Here in Ontario, with all of the manufacturing clusters I've mentioned, innovation will help keep manufacturing companies open, help them bring Canadian-made products to the rest of the world and create positive spin-off benefits for the related supply chains.
Thank you for providing me with an opportunity to speak to you about helping to position manufacturing in Ontario as key driver of Canada's economic prosperity.
As you continue your dialogue here over the next few days, know that the Government of Canada is a committed partner in advancing manufacturing and helping the sector realize its innovative potential.
Thank you.
