Manufacturing in a Flat World

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Manufacturing in a Flat World

• SAG Conference Winkler MB
• November 23, 2007

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Agenda

• Importance of Manufacturing
• Change is happening in the world
• Impact on Manufacturing
• Impact on occupations, skills, careers
• Impact on Education / other parts of society

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The Importance of Manufacturing in Canada

• Single largest business sector in Canada
• Directly accounts for 16 of Canadas GDP
• Every 1 of manufacturing output generates 3.00
  in total economic activity largest economic
  multiplier
• Approximately 600 billion in annual shipments
• 2 million Canadians employed in manufacturing

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The Importance of Manufacturing in Canada

• Wage levels 15 - 20 above national average
• Accounts for 2/3 of Canadas goods services
  exports 450 billion
• Accounts for 2/3 of private sector RD in Canada
• Manufacturers reduced GHG emissions by 9.3
  between 1990 and 2005. No other sector came close
• Huge contributor to Government revenue - Services

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Jobs Depend on Manufacturing
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The World is Flat

• Population Demographics
• 9 Billion by 2050 with 2 Billion over 60
• Resource Management
• Asia has 35 fresh water and 60 of Population
• One drop of water out of Gallon is fresh. / Oil,
  gas, coal!
• Technology
• Information
• Economic integration
• 225 people have more wealth than the poorest 2.7
  Billion
• China, India, Russia, Brazil will surpass G6
  wealth by 2040
• Conflict
• Governance

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Flattened

• What do corporate tax returns, Medical x-ray
  analysis, lost luggage tracking, and software
  have in common?
• More science and technology grads.
• Where is the largest Microsoft research
  development site?
• Education system
• What will our future be?

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Did You Know?

• China will soon be the 1 English speaking
  country
• The top 10 jobs that will be in demand in 2010
  didnt exist in 2004.
• We are currently preparing students for jobs that
  dont exist yet using technologies that havent
  yet been invented in order to solve problems we
  dont even know are problems yet.
• 1 of 8 couples married in US last year met on
  line.
• More than 3000 new books published daily

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Name this Country

• Richest in the world
• Largest military
• Control of world business finance
• Strongest education system
• World center of innovation invention
• Currency is world standard of value
• Highest standard of living ?

England
In 1900
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Did You Know?

• New technology info is doubling every 2 years.
  For students starting a 4-year college degree,
  half of what they learn in their first year of
  study will be outdated by their 3rd year of
  study. It is predicted
  to double every 72 hrs. by 2010.
• Its estimated that 1.5 exabytes (1.5 x 10) of
  unique new info will be generated worldwide this
  year. Thats estimated to be more than in the
  previous 5,000 yrs.

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Did You Know?

• Its estimated that a weeks worth of NY times
  contains more info than a person was likely to
  come across in a lifetime in 18th century.
• Predictions are that
• by 2013, a super computer will be built that
  exceeds the computation capability of the human
  brain.
• By 2023 a 1,000 computer will likely exceed the
  capabilities of the human brain.

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Wikinomics

• Open doors to the world transparency, openness,
  co-innovate with customers and the world
• Research being done outside of companies
• IBM collaborating with Linex Open source -
  Skype Will much of government become open
  source?
• Grade 10 History curriculum in California
• MIT courses
• History of Capitalism is success due to openness

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The Long Tail Chris Anderson

• Economics of Abundance
• Supply Demandeverything available to everyone
• Therefore many small producers able to sell to
  many customers looking for unique products
• Sears Roebuck 1886 Watches
• 1897 catalogue (786 pages 200,000 items)
• Walmart
• Web

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The Long Tail - Music
Walmart 4,500 albums
Hits 1,000 albums
Web Almost unlimited
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3 Forces of the Long Tail

• Democratize Tools of Production - Lengthens tail
• Computers cheap everyone can produce music
• Democratize Distribution Fattens tail
• Internet allows everyone to access all types of
  music
• Amazon, ITune, NetFlix, Lulu (write
  book..sell/produce online)
• Connect Supply and Demand Drives business to
  Tail
• Filter / references allow people to find any
  product
• Google eliminates barriers of big marketing

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Six Revolutions to Contend With

• Globalization competitors are only one
  mouse-click away from them on their customers
  computer. (Flat)
• Collaboration Time - the currency of the 21st
  Century. Competitiveness demands internal
  collaboration (employees), as well as external
  collaboration (all elements of the extended
  enterprise) to accelerate designs and throughput
  to customers. (Wikinomics)
• Innovation - Formidable are the competitors who
  develop the culture of innovation that inspires
  the openness, involvement, achievement, and
  deployment of streams of continuously improving
  new products and services.

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Six Revolutions to Contend With

• Humanation It is people who make processes and
  technology productive.
• Information You cannot move parts and products
  through your plant faster than the information
  that precedes them.
• Perpetuation Sustainability. Includes Life
  Cycle thinking, and the pursuit of perfection.

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U S Study

• Men in their 30s lag behind fathers in pay and
  today are worse off than their fathers'
  generation, a reversal from just a decade ago.
• The typical American family's income has lagged
  far behind productivity growth since 2000, a
  departure from most of the post-World War II
  period.
• Between 1947 and 1974, productivity, or output
  per hour, and median family income, adjusted for
  inflation, both roughly doubled.
  
  
• Between 1974 and 2000, productivity rose 56
  while income rose 29.
  
• Between 2000 and 2005, productivity rose 16
  while median income fell 2

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Challenges in Canada

• Competing infrastructure against infrastructure
• Competition bad word in Canada (jobs -
  monopolies)
• Provincial segmentation
• Apprenticeship compulsory certification,
  inter-provincial trade barriers and regulations,
  safety standards, training and education
  differences, etc
• Barriers / WASTEFUL
• How can Europe (EU) get it together? UK -
  one education strategy and evaluation process
  (ALI).

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Why Mexicans dont drink Molson Andrea
Mandel-Campbell

• Canadian companies are weak in the international
  market. Reasons? Protectionism, trade barriers,
  marketing boards, subsidies all contribute to
  an inability to compete.
• Crocs (rubber shoes) - a Quebec invention but a
  Colorado company marketed and dominates. We need
  to learn how to capitalize on opportunity
• Most large firms foreign owners / leaders

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Manufacturers Cost Squeeze(1st Qtr 2002 3rd
Qtr 2007)
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The Dollar Revisited!
Thats more than a 40 reduction in the value of
our manufactured exports over five years!
Jan.18, 2002 - 1 U.S. 1.6125 CDN.
Nov. 1, 2007 - 1 U.S. .95 CDN.
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What does that Mean?

• If ..income at a 0.62 dollar was 60,000
• Income at a 1.05 dollar would be 35,400
• This is like a drop in your income of
• 24,600 or 41

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-47
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Destinations for Canadian ExportsJuly 2007
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China Threat or Opportunity?
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AMI December 2004
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www.daretocompete.ca
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CME Activity

• Dare to Compete
• Communication campaign (perspective)
• Dare to Compete Summit (Andrea, Jerry, David,
  Micro Pilot, Sustainability, Tech, etc)
• Discovery Program
• Lean / Training
• Media

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AMI Focus on Productivity
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HR - a Strategic Issue

• Attraction retention of skilled personnel
• Basic employability skills missing
• Training Basic specialized technical skills
• Demographics women, immigrants, aboriginal
  workers.
• (P Eng. 50 in 3 years - APEGM)
• Leadership, teamwork, problem-solving
• Cultural change workforce mobilization Lean,
  flexibility, innovation

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So What?

• Why Discuss here? Why should Education care?
• What are the implications of these changes
• What do manufacturers say about new entrants into
  work? See Business Issues Survey

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How does Canada fare

• Canada has one of the lowest pay differences
  between University grads and High school grads.
  WHY?
• Canada is stunningly poor at innovation
  Conference Board of Canada (14th out of 17
  countries)
• Why Mexicans dont drink Molson (Crocs)
• Current boom in resources
• We spend about 50 in RD compared to U.S. and
  graduate fewer ST grads than other countries

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Most Pressing Challenges
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Strategic Challenges
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Constraints on Performance Improvement
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Constraints on Flexibility
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Overcoming Constraints
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Top Skill Shortages
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Unsatisfactory Skill Sets
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Education Training
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Impact of Skills Shortages
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Strategies to Address Future Labour Needs
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Little Secrets

• Science Engineering
• S E Jobs growing at 5 Others at 1
• More S Tech grads in one University
• 40 of PhD's are immigrants (was 15)
• Ambition / Attitude
• Outsourcing is cheaper but also productive
• Natural resources are impediment
• Attitude / complacency (entitlement)
• Bill Gates or Brittany Spears

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Little Secrets

• Education
• Rote teaching leads to best innovators??
  (Japan)
• Microsoft Beijing most productive research (post
  docs). Development money follows brains
• N.A. weak in Math / Science (2/3 top students
  immigrants)
• Decentralized and not contextualized
• Teachers generally do not convey value of
  technical skills
• Self esteem, protectionism, and gratification
  versus character (hard work, honesty, thrift,
  patience)
• Our kids versus theirs.

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Questions

• Should career planning be more accessible
  (earlier and more focused on skills vs jobs)?
• Should these be more of a pan-Canadian approach
  to education (local policies / standards impede
  mobility and effectiveness?
• Could learning cut across disciplinary
  boundaries?
• Are we measuring the right results?
• Are we training entrepreneurs? Leaders?
• Will manufacturing here be around in the future?

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• We are competing with Infrastructures
• Developing countries are not hamstrung by old
  ideologies and are eager to help youth access the
  global opportunities
• Progress is impossible without the ability to
  admit mistakes. Masaaki Imai

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• Thanks