Too few Canadian factories have embraced digitization: BDC

Small and medium-sized manufacturing companies in Canada that have adopted digitization in their production forecast higher growth and enjoy increased productivity and lower operating costs, according to a new study from Business Development Bank of Canada (BDC). However, the study, based on a Canada-wide business survey, found that 42 percent of small manufacturers have not yet “initiated their digital shift.” Another 39 percent are currently implementing projects, while 17 percent are preparing to do so. Only 3 percent of companies have fully digitized their production.

PRESS RELEASE

Digital technologies gaining traction in many Canadian factories: BDC Study

Montreal, May 29, 2017 – Breakthroughs in digital technology are revolutionizing how factories operate around the world. A new Business Development Bank of Canada (BDC) study released today finds that 39% of Canadian manufacturing businesses have started to implement digital projects. The study also found that, while only 3% of manufacturing SMEs have fully digitized their production, 17% of manufacturing SMEs are preparing to do so.

The impact of this revolution promises to be remarkable and Canadian manufacturers have a lot of work to do to catch up. The BDC study draws its conclusions from a recent Canada-wide survey of 960 Canadian SME entrepreneurs.

Quote from Pierre Cléroux, Chief Economist and Vice President of Research at BDC:

“Our study clearly demonstrates that it pays to embrace the digital shift. The Canadian businesses that have been early adopters of digital technologies have increased their productivity, reduced their costs and improved the quality of their products.”

“However, 42% of Canadian manufacturing businesses have not yet initiated their digital shift. These businesses will be at a disadvantage against their competitors.”

“We are already witnessing the impact digital transformation is having in Europe and the U.S., where highly automated and flexible factories can now compete against low-cost factories in Asia.”

“In order to survive, Canadian businesses must innovate, because the international competition is on the cutting edge of the digital Revolution.”

Highlights of the study:

Businesses in Canada that have adopted the digitization of their production forecast higher growth and enjoy increased productivity and lower operating costs.
Quebec (45%), Manitoba and Saskatchewan (44%) top the list of provinces that have initiated the digital shift. British Columbia (39%) and Ontario (39%) come in mid-pack, Alberta follows with 35% and the Atlantic provinces trail behind at 32%.
The overall level of investment in these technologies remains low. The majority of Canadian SMEs have invested less than $100,000 compared with an international average of $261,000.
The main obstacles to implementation of digital technologies are the lack of a qualified workforce, excessive costs and the difficulty in understanding the benefits.

Quote from Joe Loparco, Co-President at AGS Automotive Systems:

“The auto industry has strengthened considerably over the past few years. At the same time, digital technologies have become more affordable, user-friendly and robust. This convergence has allowed us to make more investment in the area of digital technologies. This has helped increase our productivity by allowing us to better mine and understand the data which drives our business success,” says AGS’s co-President Joe Loparco.

Ontario’s AGS Automotive Systems is a company using digital technology to gain a competitive edge. AGS is using high tech sensors, monitors, data mining, and plans to use 3D printers. AGS’s head office is in Toronto with 6 manufacturing facilities in Canada and US.

The full study, Industry 4.0: The New Industrial Revolution – Are Canadian manufacturers ready? can be downloaded here: www.bdc.ca/industrystudy

About BDC
BDC is the only bank exclusively dedicated to entrepreneurs. Its purpose is to support Canadian entrepreneurship with a focus on small and medium-sized businesses. With its 110+ business centres from coast to coast, BDC provides businesses in all industries with financing and advisory services. Its investment arm, BDC Capital, offers equity, venture capital and flexible growth and transition capital solutions. Visit bdc.ca for more information.

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