Strengthening Canada’s Supply Chain Ecosystem

From a supply chain perspective, what do international companies look for when considering investing in a foreign country?

E-One Moli Energy is a manufacturer of lithium-ion cells, currently based in Taiwan and with research and development (R&D) in Canada. We are actually asking this exact same question as we are looking at expanding our manufacturing outside of Taiwan. There are a number of factors for consideration: number one is proximity to the market. Our major customers in North America are in the US. Manufacturing closer to the market means quicker delivery, which means a faster conversion of product to cash, which is really important in any business. Currently, with manufacturing in Taiwan, it takes roughly three to four weeks for the goods to come by ocean to land on the West Coast. For customers who have Net 30 terms where their invoices are due before they even receive the goods, this really puts a strain on their cash flow. On the flipside, that puts pressure on us to extend the payment terms in order to help support our small- and medium-enterprise customers.

The second factor is that “Made in Canada” is a valued brand. We are proud to put “Made in Canada” on our product as it means supporting the local economy and gives a sense of quality and workmanship. These are very attractive attributes to our customers in Canada and the US.

“Made in Canada” is a valued brand. We are proud to put “Made in Canada” on our product as it means supporting the local economy and gives a sense of quality and workmanship.

Finally, there are the trade benefits. Manufacturing in Canada has benefited from the free trade agreement with the US and Mexico. Right now, goods that are manufactured in Asia are taxed in both Canada and the US, whereas manufacturing products in Canada will alleviate that cost.

The same can be said for the European market and the manufacturing in the European Union (EU). There is an equal amount of benefit to expanding manufacturing there. So what is the difference? It really comes down to government support to tip that interest to bring manufacturers into Canada versus other parts of the world.

What are Canada’s competitive advantages from a supply chain perspective?

Canada has a lot to offer in terms of competitiveness. For our industry, which relies on advanced, highly automated, and high-volume manufacturing, we benefit from a well-educated workforce of operators, technicians, and professionals. Keep in mind that high school graduation is not a prerequisite to work in manufacturing in developing countries. For high-tech work, the focus is on equipment upkeep and not on simply getting people to complete tasks. This is our strength. There is a strong advantage for high-tech manufacturing in Canada.

There is a strong advantage for high-tech manufacturing in Canada.

As a country, we are fortunate to have an abundance of renewable energy needed for manufacturing. We have an abundance of natural resources that allows us to develop a vertical supply chain, and we have free trade with the US, which gives us an import advantage over other countries.

What is your assessment of the quality of Canada’s supply chain innovation ecosystem?

This is where we can really improve. Canada is strong at research and development and innovations, but not in the conversion of new technology to mass production. Many companies based in Canada develop products but then turn to Asia for volume supply. From our experience, experienced industrial engineers or manufacturing engineers are hard to find on the West Coast. Not all products can be manufactured profitably in Canada, and that is a fact as we do have a higher cost and standard of living. However, companies that can leverage our strengths, resources, and people can manufacture in Canada successfully.

What can key stakeholders do to strengthen Canadian supply chains?

To strengthen the Canadian supply chain, support is needed from all three levels of government: federal, provincial, and municipal. I see the federal government taking the lead in this area but there should be a more concerted effort to have all three levels of government working together. The three levels of government are working too much on their own and not collaboratively to create solutions for potential investors. In our industry, support is needed not only in the attraction of battery manufacturers, but also in building up the raw material supply channel, funding in material processing, and bringing innovations to market. There are a lot of good ideas across the country and the industry just needs a good push to turn innovations into product.