KPMG: Canadian Manufacturing Moving On-shore

A new report by KPMG predicts a rebound for Canadian manufacturing thanks to changes in global markets as well as cost cutting and new efficiencies introduced in the wake of the global economic crisis of several years ago.

As CBC reports, KPMG’s annual outlook on the Canadian manufacturing sector says there’s a coming shift from making goods in low-cost countries to producing them “on-shore” in North America.

Rising energy costs, a continued lack of quality and consistency from China and India and shrinking lead times in developing and manufacturing new products will encourage more on-shore manufacturing, according to authors Laurent Giguère and Don Matthew say.

If the predicted trend proves true, it’s good news not just for Canadian manufactures, but also the domestic transportation and logistics sectors that serve it.

“I think we found, somewhat surprisingly, the number of manufacturers who are thinking about offshoring production has significantly decreased,” Giguère told CBC.

In 2014, only 14 per cent of manufacturers planned to source from China, compared with 31 per cent in 2013 and just three per cent were looking to India compared to 12 per cent last year.

“Canadian companies have the opportunity to respond to the growing demand among their customer base for more and better products delivered faster, and gain competitive advantage by investing in R&D and increasing speed to market,” the report says.

Manufacturers who survived the global recession are more now resilient. They are also experiencing some tailwinds of a stronger U.S. dollar that supports Canadian exports to the US, Giguère explained.

“Canadian manufacturers are the busiest they’ve been in many years, and it is essential for these companies to remain focused on future success, thinking ahead rather than simply fighting to survive,” he said.

The KMPG findings,  based on a survey of 154 manufacturing executives, provides a more optimistic assessment of the future of manufacturing than other recent forecasts, such as the Bank of Canada, CBC reports

Full story here.


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