Manufacturers Predict Growth

It’s a time of change for the Canadian manufacturing sector, and new markets, new industries, and new products will all be part of the change.

Change can be good because it can lead to previously unknown customers, both domestically and internationally.

It’s like author and business consultant Peter Drucker said: “The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”

It seems that change, at least in the short term, will be coming from growth – if the industry’s expectations of growth turn out to be accurate.

Growth, or at least the expectation of growth, means the industry may have finally moved past relying solely on the economic theory of adaptive expectations when looking to the future.

Adaptive expectations base all future predictions on what occurred in the past. It’s a simple model that uses data that is already old to try to foresee the unknowable. But even something as commonplace as inflation and currency fluctuations can derail this type of growth forecasting. This limitation is what led to the founding of the rational expectations model.

Rational expectations incorporate all of the expectations of management, employees, and customers into a predictive model. While some expectations may turn out to be wrong, over time consensus among these stakeholders typically is correct. In other words, the more opinions you seek out, the better your predictions will be.

A recent study by Canadian Skills Training & Employment Coalition (CSTEC) and Canadian Manufacturers & Exporters (CME) revealed a couple of very interesting, but frankly easy-to-foresee, truths.

First, it was revealed that 75 per cent of surveyed manufacturers expect their businesses to grow over the next three years, which is a definite positive for an industry often described recently as “spinning its wheels.”

Second, while a growing manufacturing industry is good news, it also comes at a time when skilled labour is becoming harder and harder to find.

As part of the survey, manufacturers were asked if they had difficulty finding qualified staff. A staggering 86 per cent of those surveyed called it a challenge.

Also according to the report, this shortage is only expected to get worse because 22 per cent of the manufacturing workforce is due to retire within the next decade.