Strategic Policy Priorities
Manufacturing is a significant contributor to B.C.’s economy as one of the largest employers and contributors to provincial GDP. Unfortunately, manufacturers in the province face a number of barriers which constrain their growth potential.
CME is pursuing the following policy priorities:
1. INCREASE RECOGNITION OF WHY MANUFACTURING MATTERS
Governments need to recognize the importance of manufacturing and express more support for it. Manufacturing is one of the largest sources of employment in BC. For every new manufacturing job created almost 2 new jobs are created. Manufacturing remains the fourth largest contributor to provincial GDP and is the primary source of exports for BC, not natural resources. Investing in manufacturing pays significant returns. Every dollar spent by a manufacturer injects $3.50 into the local economy. Almost 30% of business taxes paid to government come from manufacturing.
Unfortunately, manufacturing is poorly understood and often overlooked in favor of the stereotypical image of our economy – film, gaming, forestry and mining. This results in manufacturers facing a number of barriers which constrain their growth potential. The BC economy will be better off with more manufacturing.
Why? Many people think manufacturing has all moved overseas. Wrong! Lots of amazing unique world-class products are manufactured in BC. Industry needs to better educate governments on the importance of their contribution so policy decisions promote growth and not new barriers to competitiveness. It is also important to educate youth with respect to the large number of well paying jobs coming available.
2. ENSURE COMPETITIVENESS OF THE INDUSTRY
Small and Medium sized manufacturers in BC are at a potential tipping point. Competitiveness is currently being undermined by many items, some of which include the re-introduction of the PST, high cost of land for a business and high cost of housing for employees, significantly increasing property taxes and the removal of tax credits geared at light industry, increasing utility rates and the fact that British Columbia is the only province with a broad-based carbon tax. Any one of these issues can challenge the profitability of a small and medium-sized enterprise. Together they pose a major risk, a perfect storm, to squash small and medium sized enterprises in our province. Other jurisdictions take advantage of these facts and court BC-based companies to move to other provinces or states.
We believe British Columbia has the potential to foster a sustainable and strong manufacturing sector. If one looks at the great economies of the world, they are built on manufacturing foundation. This drives a strong economy with sustainable jobs that quietly generate wealth day after day. In high cost economies like Germany, Korea, and Japan manufacturing represents 20% of the economy. In Canada the percentage is a lot less. The provincial government needs to work with industry to establish a Manufacturing Strategy to ensure a future that a strong manufacturing industry in the province.
Why? More manufacturing means more high paying technical jobs which in turns drives a strong services economy. Furthermore, more manufacturing means higher tax revenues for government which means more funds for education and healthcare.
3. ENHANCE SKILLED LABOUR DEVELOPMENT
Manufacturers face significant challenges when attracting and retaining skilled labour. At relatively modest growth rates, the manufacturing sector in BC will need to attract up to 88,000 new workers through 2020. If these vacancies are not filled manufacturing will be at a major risk in the province.
Businesses need skilled workers today. Yet, we know that wait lists at technical colleges are long and more training capacity is needed. We also see that opportunities exist to modernize the training model recognizing that training can no longer happen just in the classroom. The next generation of workers demands flexibility. Many cultural studies confirm this. In addition, given the high costs of living in BC students need to work in order to pay bills.
Employers are also reluctant to have employees unavailable for lengthy periods. Employers also raise concerns that people enter the workforce ill-prepared and requiring significant amounts of foundation training. Businesses have to invest significant time and money getting hires job-ready. This leads to additional worries that a company may than lose the employee to higher paying jobs in the north or competitors in a tight labour market.
The tax regime could be adjusted to reward businesses for carrying the additional risk of training new entrants to the workforce. We also see a need for government, educators, and industry to work together to reinforce that that skilled trades jobs are proud and prosperous career paths to be pursued. These are not “dirty” jobs!
Why? Labour shortages remain the number one challenge raised by business leaders. In order to attract more Canadians to the manufacturing workforce, industry also has to work with government to change the mindset of parents, youth and job-seekers so they see that manufacturing jobs are cool and well paid.
4. CLARIFY MEGA-PROJECT STAFFING AND PROCUREMENT
Large-scale opportunities like LNG, Northern Gateway, shipbuilding and new natural resource and transportation infrastructure projects come once in a generation. BC is blessed to have several major economic projects potentially happening at once.
As infrastructure and major natural resource projects move forward, manufacturers are worried that if proactive efforts are not made by Government to coordinate and fill strategic and critical technical positions new projects will compete against each other for limited skilled workers. Existing skilled workers will flow from their current long-standing manufacturing jobs to those associated with short-term mega-projects. This could gut traditional manufacturing in the province and will have a significantly detrimental effect on sustainable jobs that have been employing people and paying taxes for decades.
Mega-projects should also create opportunities for BC manufacturers to be suppliers. Procurement managers need to share their plans and standards to ensure companies that are interested are able and qualified to bid. Companies need sufficient time to become certified against various procurement standards. Small and medium sized companies also need time to form relationships with larger partners so a “supplier consortia” can offset risk and create opportunities for smaller players that they would not likely have on their own.
Why? Small manufacturers have thrived for decades providing good jobs and paying taxes. Worker migration could force manufacturers to close if they become short staffed or can’t afford to compete with mega-project wages. Mega-projects should be viewed as opportunities not threats. Local suppliers should have a fair chance in a procurement process.
5. SEEK INTEGRATED TRANSPORTATION STRATEGY
A manufacturer cannot sell their goods if they cannot get them to market. Value-added manufactured products are the primary source of exports for BC covering almost 65% of what is shipped internationally. More than 70% of road-based cargo between BC and the US is manufactured goods. High value manufactured goods are even shipped by air.
A lot of Canada’s transportation infrastructure is decades old. Since then, significant economic growth has occurred. Rapid urbanization has also added more non-commercial vehicles to the roads. New investment is needed to replace aging infrastructure and to help reduce congestion. A longer term strategy for transportation also needs to recognize land utilization and the locations of where industrial activity happens currently and where is could happen in the future. Industrial land needs to be set-aside so factories can be situated in cost-effective non-residential areas. Even workforce commuting is an issue as workers need to live further away from jobs to find affordable housing and transit options may not be sufficient.
Transportation issues can also be frustrated by border and security challenges. The US border remains a policy priority of CME. We are strong supporters of an integrated transportation strategy that takes into account industrial land utilization.
Why? An efficient intermodal transportation network (road, rail, sea and air) for cargo is critical for manufacturers so they have speed to market. An efficient transit system also helps improve worker productivity.
6. ENCOURAGE PRODUCTIVITY AND INNOVATION
Productivity means increasing output and reducing costs. Higher productivity is good because it creates money that can be reinvested in a business or to increase prosperity or the business owner and employees. Productivity in Canada lags behinds that of our key competitor countries. Improvements to productivity can come from capital investment, research and development, and improvements to business process.
Even though manufacturers account for 42% of private sector research and development spending in the province, more needs to be done to incentivize further investment in productivity and innovation to help bring new products to market. Small and medium sized businesses are the backbone of the provincial economy and steps need to be taken to improve acquisition and utilization of new machinery and technologies.
Global supply chains are highly competitive and very price sensitive. A couple extra pennies in cost can mean that a BC company could lose a contract to a competitor somewhere else on the planet.
BC needs similar industrial funding programs found in other provinces to support the introduction of new technologies and support the installation, and sharing, of leading-edge industrial equipment and robotics.
Why? Improving productivity can pay huge dividends for a business especially if they are facing operational cost pressures and labour shortages. We want to see businesses succeed!
7. PROMOTE A SAFETY CULTURE
Operating industrial sites and machinery can sometimes have risks. Manufacturers work hard to ensure their health and safety practices are in compliance with WorkSafeBC’s regulations and guidelines. We believe safety leaders within the manufacturing community go beyond meeting their legal obligations knowing that organizational performance depends on healthy, safe, engaged employees.
Manufacturers want a safety association that recognizes their needs and acts as a partner. This can lead to better risk identification and innovation in safety practices. These can be brought to WorkSafeBC so that new practices or guidelines can be introduced and distributed before someone gets hurt.
Why? At the end of the workday every worker deserves the right to go home to his or her family uninjured.