Avoid group think on manufacturing
There were another series of articles last week about the decline in the manufacturing sector in Canada. Most economic developers I talk to don’t want to touch manufacturing with a ten foot poll. One group I work with ocassionally has even stricken manufacturing from its list of targeted sectors.
If manufacturing is collapsing, why are about half the large site selection projects listed on Expansion Management’s blog manufacturing projects? What’s the deal?
The truth is that ‘manufacturing’ is not an ‘industry’ per se. It is a term that describes the creation of hard goods in many industries.
So, in reality, while wood products manufacturing is going down tied to underlying industry conditions and other low value, offshoreable manufacturing is going offshore – numerous manufacturing ‘industries’ are growing including alternative energy products like wind turbines, biofuels plants, solar panels, certain food products sectors, anything that has a ‘national security’ consideration attached to it like certain electronics manufacturing, many aerospace/defence industries, etc.
Now, there may be a lot of reasons why economic development organizations decide not to target manufacturing as a growth area. They may not be able to compete (cost environment, incentive levels, etc.). They may not want this type of development.
But just because wood products manufacturing operations are closing in Atl. Canada does not mean the area is not a death sentence for all manufacturing. I talked with a guy that does contract manufacturing for the electronics sector and he says he can’t beat contracts away these days with a stick – even at 90 cent dollars.
The reality is that onshore/nearshore manufacturing in North America will increasingly look for the best locations – and it could be possible for this region to carve out niche as a manufacturing hub for North America.
At least we shouldn’t throw out the baby with the bath water.