Deconstructing the Budget
With an eye to the future, government shouldn’t forget about the present
As the federal budget came down, manufacturers from coast to coast held their breaths, hoping this was the year the government in Ottawa would make a difference.
More than 1.8 million Canadians are employed in manufacturing. The investment to support advancing technology and develop a skilled workforce, coupled with tax relief and accelerated depreciation, will provide manufacturers with the tools they need to be globally competitive.
As the federal budget came down, manufacturers from coast to coast held their breaths, hoping this was the year the government in Ottawa would make a difference. Money for this year and beyond now has been earmarked, and Canadian Industrial Machinery (CIM) asked Debbie Holton, Society of Manufacturing Engineers director of events and industry strategy, to help guess at the outcomes. Here is what she had to say.
CIM: What is the role of the government in manufacturing: protector, babysitter, or partner?
Holton: Currently, government plays all three of those roles. Export and trade becomes the protector role, regulations are the babysitting piece, and partnership occurs through programs like CNRC/NRC and IRAP.
Driving innovation and technology through the supply chain with programs like IRAP seems to be the most well-received. The companies SME works with that have interacted with IRAP have been pleased with the results of that government interaction. Industry experts providing knowledge (and some funding) to small and medium-sized manufacturers to help them to be more productive and innovative has been a good model. Scalability is the challenge; how do we reach more?
CIM: What role should government play?
Holton: Ideally, government should work to provide support that will foster a culture of innovation and productivity. Supporting public/private partnerships and providing funding that transitions technology into the marketplace are key.
Government should not be in a position to pick winners and losers, but to open the market to those who can innovate and gather the most momentum around their technologies and applications. The market should decide.
CIM: Is the two-year extension to the accelerated capital cost allowance enough?
Holton: Manufacturers would have liked to see a longer extension, but after the recession and its effect on Canadian manufacturers, this incentive, which is designed to increase the adoption of new technology and purchase of equipment, will help Canada's industry respond to global pressures and continue to innovate and expand. This extension, if successful, could lead to additional measures.
CIM: This budget seems to include a lot of measures that take effect in 2014. How important is it to keep an eye on this current year?
Holton: This is a critical year for manufacturers, and we are nearing the midway point. Manufacturers should start planning now for how they will take advantage of these incentives and government support.
Investigating technologies and processes, evaluating their operations— including talent resources and needs for the future—will allow them to hit the ground running in 2014 and access these funds.
CIM: What will the Advanced Manufacturing Fund mean for southern Ontario's manufacturing base?
Holton: Because southern Ontario is heavily automotive-oriented, this funding is key in diversifying the manufacturing base.
This fund will provide resources for advanced R&D in industries that will help broaden the economy to serve new markets. Biotechnology, energy, and IT all are potential growth areas for manufacturing. Advancements in IT could directly impact manufacturers with not only new high-tech products to manufacture, but advancements in machine controls and interoperability that provide efficiencies directly to their operations.
This fund also supports manufacturing innovation with small and medium-sized manufacturers, which are key to economic growth.
CIM: How can manufacturers get a piece of the announced funding?
Holton: For the Jobs Grant, for example, any manufacturer who puts together a plan to train unemployed or underemployed Canadians for an existing job, or a better job, will be eligible to apply for the grant.
CIM: Will this budget help solve the job gap?
Holton: The Canada Jobs Grant is a key piece to addressing this problem.
The manufacturers we work with are telling us there is a significant shortage of technically skilled labor, including CNC programmers, technicians, and engineering technologists, and skilled trades like welders and millwrights. The $1.8 billion in direct grants to employers for workforce training allows manufacturers to receive funding to train workers for those jobs that are in most demand. Whether it's welding certification through CWB, apprenticeships, technical workshops, college classes, or online learning, the manufacturers themselves can determine what skills are most important to their success and train to those specifications.
Because funding is given directly to employers, it mitigates some of the historical issues. Companies we work with sometimes hesitate to train their workers because of their bad experiences (spending money on training and then having the employee leave for a higher wage elsewhere).
With the government supporting this education financially, and manufacturers benefiting from it as a whole, it could foster a larger community approach to what is a growing industry challenge—the lack of skilled labor.
CIM: How can educational institutions best prepare students for these jobs?
Holton: Attracting more students to these careers is a multifaceted responsibility between educators, counselors, and parents—and the industry itself. Images of advanced manufacturing as a high-tech, challenging, and rewarding pursuit are not widespread. Young people think manufacturing and see dark, dirty, and dangerous factories in their mind, not the automated, sophisticated operations that comprise today's advanced manufacturing. Spreading the truth about manufacturing is important to changing our image and attracting more young people to these jobs.
STEM [science, technology, engineering, and math] curricula are also key to preparing students for careers in manufacturing and technology. Grade 7 is a key turning point for students where those who pursue algebra and geometry will have the option of a STEM career, and those who don't will need to catch up. Canadian high school students rank in the top 10 for math and science internationally, yet not enough are attracted to careers in industry.
CIM: What would government funding accomplish?
Holton: Industry organizations across Canada are creating videos and educational resources, but an overarching government initiative could provide additional reach and scope. These private efforts could be greatly accelerated and amplified with government support and a Canada-wide initiative in schools and communities.