Canadian Manufacturers and Exporters — Roadmap to Recovery Summit

Speaking Points

The Honourable Tony Clement, PC, MP
Minister of Industry

Ottawa, Ontario
February 2, 2010

Check Against Delivery

Thank you, Jayson and good afternoon, everyone.

Let me begin by congratulating Canadian Manufacturers & Exporters (CME) for its initiative in arranging today’s discussions. In many ways, this Roadmap to Recovery Summit typifies the approach of your organization. Dynamic. Engaged. Forward-looking. Understanding that within moments of challenge and change lie opportunity. Indeed, as Jayson has said, “the time of opportunity is now.”

That’s leadership. That’s vision. That’s what the CME does best — and I applaud its effort.

In December, our government started national consultations on how best to lead Canada’s economic recovery before next month’s budget — the second phase of Canada’s Economic Action Plan. Minister Flaherty will provide further detail during his address later this afternoon.

Today, I want to hear from you how best to keep Canada on track toward prosperity and the economy of tomorrow.

Charting the course to recovery is not only the name of this summit — it’s also the central focus of our government’s agenda. And manufacturing is a key part of our plans.

The fact is that a vibrant manufacturing base is what first made this country great. I believe it can be so again. That said, it can’t be business as usual anymore. The landscape has been fundamentally changed over the past two years. Today, the question is no longer, “What worked in the past and how do we repeat it?” but, “What’s necessary for the future and how do we create it?”

The past year, I know, has not been easy for many of you. Manufacturing — from traditional manufacturing industries to forestry to aerospace — has been hit particularly hard by this recession. The challenges are well known and have been well covered here today — the crippling recession, a strong Canadian dollar, powerful new competitors, and, closer to home, rising protectionism from our largest trading partner.

On that last point, make no mistake. We are standing up for Canadian interests. We are also working with provinces and territories to secure immediate relief for Canadian businesses from the Buy American provisions. And we are building a coalition of U.S. allies to advocate against “Buy American” and the spread of these provisions into other legislation.

Whether it be me, Minister Day and now Minister Van Loan, Minister Flaherty or Prime Minister Harper, I can assure you that each time we visit Washington this is a key point of discussion.

Our government has been very clear on this topic. We want to see Canadians — and exporters in all countries — able to freely move their products and services around the world.

The challenges facing each of us in this room today are great. So, too are the opportunities. We must use innovation to develop high value-added products. To equip our manufacturing sector with the tools it needs to help lead our economic recovery.

When it comes to creating the economy of tomorrow, one thing is clear. We’re not going to beat China or India or Brazil on wages. We’re going to do it through raising our productivity standards and through the development of higher-end products and services. In other words, through innovation.

Innovation is the key — the catalyst — to revitalizing manufacturing. Your website states, “It’s not just about making things anymore. It’s about finding solutions for your customers.” I would counter that manufacturing is now, more than ever, about making things, but making them better, as a solution to the needs of your customers.

That means advanced manufacturing driven by a significant commitment to research and development (R&D). It means investing in technology. And employing sophisticated systems integration to coordinate supply chains, build relationships with customers and manage human resources. This will create highly skilled, knowledge-intensive jobs and businesses for the overall benefit of Canadian industry and our economy.

Of course, many of your members are doing just that. The Innovation Award winners we will honour in a moment are not just showing us the future — they’re creating it. Seizing opportunities. Finding new markets. Reinventing how they do business — not once or twice, but every day. I congratulate all of the nominees. They represent the best of Canadian innovation, initiative and imagination.

And just as successful companies embrace innovation, successful countries must promote it.

That is why, in 2007, the Prime Minister launched a comprehensive Science and Technology (S&T) Strategy to spur innovation by focusing our efforts in areas, such as manufacturing, where Canada can lead and connect the competitive energy of our entrepreneurs to the creative genius of our scientists.

In the last two years, the government has invested more than $7 billion to support S&T and to stimulate economic activity through large-scale S&T investments.

Canada’s commitment to space exploration and development is a great example of the future that science and innovation can create. Building on Canada’s strengths in space robotics, satellite communications and earth observation, our government is working hard to ensure that our country remains at the forefront of this dynamic sector.

This not only supports space research, but other key priorities, such as the environment, coastal surveillance, the sustainable development of the North, and national security and sovereignty.

Taking a glance back to 2009 shows that we took significant measures, through Canada’s Economic Action Plan, to help create the right environment for innovation to flourish. Our Action Plan invests in communities hardest hit by the recession, builds on corporate income tax reductions for business, and eliminates tariffs on a range of machinery and equipment.

Of course, while innovation and R&D are important, how we translate their results matters just as much. That’s why our government is focusing on the gaps around commercialization in Canada — creating the Business-Led Networks of Centres of Excellence program, which funds research in private sector innovation, and the Centres of Excellence for Commercialization and Research program, to encourage private sector involvement in science and technology.

We also empowered the Business Development Bank of Canada by providing it with $75 million for venture capital to further assist the commercialization of Canadian companies. This “Tandem Expansion Fund” will help technology companies penetrate new markets, expand production and fund late-stage research.

We boosted funding by $200 million to the National Research Council of Canada’s Industrial Research Assistance Program to directly help businesses become more innovative and expanded the Canada Graduate Scholarships Program to connect our brightest young minds with our savviest entrepreneurs.

In line with these commercialization measures, today, I am pleased to announce the funding for the Natural Sciences and Engineering Research Council’s (NSERC’s) Strategic Network Grants for 2009–10. This year’s awards total $56 million for 11 networks over five years.

These grants will fund large-scale, multidisciplinary research projects in key areas, such as fisheries and aquaculture, manufacturing and the environment. The networks play an important role in training students and in connecting academic researchers to Canadian-based organizations. And they will generate new knowledge and enable its transfer to Canadian-based companies.

Congratulations to all of this year’s winners.

Looking ahead, one of the areas that has become a real focus for me is the digital economy. Information and communications technologies (ICTs) have a profound impact on businesses large and small, enabling them to better serve customers near and far. ICTs can transform the ways businesses manage their supply chains, expand their reach and enhance their ability to get access to information, in order to gain market share and to customize their products. Saving time. Improving quality. And making their operations more efficient.

That’s the good news. The bad news is that we’re not adopting ICTs as aggressively as we should.

The Council of Canadian Academies was succinct in its innovation and business strategy report when it said, and I quote, “Canadian business has lagged in information and communications technologies — about 40 percent less on a per-worker basis than the U.S.” The panel concludes, “Too many businesses in Canada are technological followers, not leaders.”

Let’s be clear. We in Canada are creating a productivity gap with our largest trading partner. If we continue to lag behind in adopting ICTs, and are unable to bridge this widening gap, we will not regain the lead we used to enjoy in the digital economy.  

Our competitors are already a step ahead. In 2009, the U.S. released its manufacturing strategy, which relies on ICTs to increase efficiency across sectors.

We will not close the productivity gap with the U.S. We will not be as competitive in international markets. And Canadians will not enjoy the standard of living they expect and deserve if we do not fully embrace and lead in the digital economy.

And that’s particularly true for the manufacturing sector. We need to aggressively adopt ICTs so that we can manufacture products in a more competitive way. We need to embed ICT in every aspect of production, every aspect of our businesses.

Now, I know that I’ve covered a lot of ground today, but behind all the programs and initiatives is a simple story and a single goal — to create an economy propelled by innovation. That economy will not be driven, designed or developed by government. It will be created by people like you who are on the ground, generating ideas, creating new products and developing new markets.

That said, there is still an important role for government in creating the conditions that will connect ideas to industry, research to resources and help to bring the results of that research to market.

Since coming to office, our government has worked hard to create those conditions and to provide the foundation on which you can build. Like the CME, we understand that the way ahead is not by racing to the bottom, but by climbing up the value chain. Not by returning to business as usual but by looking for the unusual business opportunities presented by changing times.

Above all, this calls for leadership and vision. Leadership like that demonstrated by the CME in arranging today’s summit. And vision that looks not five yards down the field, but 50. That takes the longer view. By looking at the demand for innovation to enhance our competitiveness and drive our recovery. It is time to get the fundamentals right. It is time to understand that “good enough” is no longer enough. And to make our common goal to make our best, the world’s best.

I believe we can do just that — creating a vibrant manufacturing base that drives innovation and creates jobs, from the shop floor to research labs to retail shops. Because making things — real, tangible things — still matters. Because manufacturing in Canada is still, and will always be, an essential part of a well-balanced economy.

I look forward to working with all of you as we chart the road to recovery and the path to a better and brighter future.

Thank you.