- Foreign investors are looking for true partners who can provide them with access to markets, talent, and opportunities to innovate new technologies.
- Academia will play an important role in partnering with industry to train workers for the future economy, and also to work with industry on research and development.
- COVID-19 has shown that there is a need to be more agile and ensure the economy will not be severely impacted by inefficient supply chains.
From a supply chain perspective, what do international companies look for when investing in a foreign country?
From a supply chain perspective, companies are looking for partners in all aspects. Companies want their partners to have access to diverse markets, talent pools, and the ability to develop those talent pools. They want a strong economic forecast, stable government, proximity to the customer, which was a big factor for MHI Japan to send product and abilities to Canada, and the strength of in-country supply chain capabilities. It is one thing to have access to diverse markets, but it is also a great asset to have supply chain capability within the country.
It is one thing to have access to diverse markets, but it is also a great asset to have supply chain capability within the country.
What are Canada’s competitive advantages from a supply chain perspective?
Our biggest competitive advantage is our trade agreements. With us having agreements with all seven countries in the G7 plus 14 other trade agreements, Canada has quite the competitive advantage. The ability to trade needs to be supplemented by a really good transportation infrastructure, which Canada has. We have air, rail, road, and sea infrastructure that helps us kind of move that product and be diverse. I always have to add the biggest thing that Canada has are our skills. We have great universities and colleges. MHI partners with all those academic institutions to not only build skills but also on innovation and research and development (R&D).
What are the major global trends that will impact the future of supply chains?
From everything I see in aerospace, Industry 4.0 is going to be huge. Canada has to find that sweet spot between automation and touch labour and determine exactly what that is to keep us competitive.
Our supply chains, through digitization, are going to become more transparent with the original equipment manufacturers (OEMs) and Tier 1s. Transparency with Industry 4.0 is going to really help companies understand where everyone is going. With everyone being on the same page and understanding the future in front of us, that will help move us from working as independent companies to becoming a true ecosystem. To move forward in our supply chains in Canada, we need transparency through Industry 4.0 efforts.
To move forward in our supply chains in Canada, we need transparency through Industry 4.0 efforts.
Right now, with the supply chain the way it is, there is so much automation happening. We are looking at unmanned drones doing deliveries, so we need to make sure our skills in the country match those requests and requirements. We need to make sure people are trained properly on ensuring the supply chain is maintained and keeps moving. Academia needs to work hand-in-hand with industry through supply chain development to make sure we know where it is moving and how to get where we need to go.
How has COVID-19 forced us to rethink how we organize our supply chains in Canada?
COVID-19 has made everyone rethink their business models. It has everyone rethinking their family models as well, but it has brought to the forefront that we need to be agile and figure out ways to react quickly to changes. Right now, it is a pandemic, but in the future, it could be some kind of economic stress or environmental impact. I do not have the answers, but we need to determine ways to be agile. A lot of industries have done that. There is an aerospace company out of Quebec, CAE, which went from building simulators to ventilators. It is amazing that they were able to react that quickly to support our government.
COVID-19 has made everyone rethink their business models. It has everyone rethinking their family models as well, but it has brought to the forefront that we need to be agile and figure out ways to react quickly to changes.
In aerospace, 80% of our business is exported. This puts Canadian companies at high risk because other countries are looking to manufacture locally. That is going to affect our supply chain. All of a sudden, supply chains that support worldwide and global markets are going to be diminished because countries are trying to protect their own. COVID-19 has really highlighted to Canadian companies, especially in aerospace, that it is a weakness to have 80% of our business exported. That puts us all at risk and my biggest concerns are for the small to medium-sized enterprises that support Tier 1s like myself and OEMs.
COVID-19 has really highlighted to Canadian companies, especially in aerospace, that it is a weakness to have 80% of our business exported.
Those other bigger countries, especially France and the US, are investing in things like green technology, whether that is for engines or landing gears. They are looking at how they can become green in aerospace. Therefore, they are supporting those companies and requiring them to build in-country. They also have a procurement piece where they are forcing companies to buy their country’s product.
I do not know how we compete with that except that we need to build technologies in Canada like green technologies and sustainable energy technologies. We have the skill set and the talent pool to do it. We need to work with our government, Tier 1s, OEMs, and the whole supply chain ecosystem to build new technologies to make sure we are ready. Again, we have the talent to do it. I am worried that talent is going to go to the US and the UK to develop those technologies when we have them here in Canada.
Coming from a foreign-owned Canadian manufacturing company, how do you view foreign direct investment?
From the standpoint of putting investment into Canada, it is important that we do not want to stand alone as Canada. We want to build on those agreements that we have and work with those other countries. It would be counterintuitive if everybody was working on an eco-friendly engine, but then one country gets there first and all the money spent by other countries goes to the wayside. There needs to be a way for government, OEMs, and Tier 1s to all work together on one strategy for green technology or in-country procurement, for example. We need to work together and make sure we are spending our investment and innovation on the same things. That would help us and having those other countries involved in those conversations is going to be important.
What would you pitch to foreign investors as to why they should consider Canada as an investment destination?
There are a lot of things that Canada has to offer. The Canadian government has done a lot for investment. Twenty years ago, taxation was close to 40%, and now it is closer to 15%. That is huge.
I would tell a foreign investor that Canada is a great place to invest. Not only do we have talent far beyond others, with amazing universities and technical schools, but the government also supports us with trade agreements and access to markets. Canada is a true partner. We would be transparent, work with them and not against them, and not be protectionist but work with others as partners. What we need more of in the supply chain ecosystem are partners, and Canada is definitely a partner. If you went back to MHI and asked about that, they would confirm that they are involved with all levels of our government, including federal, provincial, and even here in Mississauga with our mayor. They know that we have support from our government and that that is important. That is how I would sell Canada in terms of talent, access to markets, and governmental support at all levels.
How does your company’s HQ view Canada’s brand?
Japan is no different from some of these other countries that we mentioned on protectionism. They have been hit hard too. They would look at Canada from an environmental standpoint as a country that they should partner with. MHI would look to partner with Canada on that environmental portion of the economy to develop sustainable energies. MHI now has another program with the MHI RJ Aviation Group, where they bought the Canadair Regional Jet (CRJ) from Bombardier. They are seeing that the Canadian ecosystem is one that they want to be a part of.