That was no problem. Thanks for the opportunity.
Celestica came into existence just over 10 years ago when IBM divested itself of its Canadian manufacturing operations at the corner of Don Mills and Eglinton here in Toronto. At that time we had about 1,000 people at the site, which was our single location. Since then we've grown to have 40 sites around the world. Our total workforce is approximately 55,000, and we've gone from a $1 billion operation at that time to about $9 billion in turnover now.
Our Canadian operation peaked at $4 billion in output per year and 7,000 people. Now it's down to $1 billion of annual revenue and just over 2,000 people. Our competition is global. We are in an industry where there's overcapacity.
I'm sorry, I need to explain what the company does. We are in the business of manufacturing the electronics that go inside the OEM products, and we continue to build for IBM and HP and a lot of leading-edge companies in communications and IT and consumer products. So we build for them; it's not a Celestica-branded product, but their product. We do the manufacturing of the internal electronics, and often the finished product.
So there is overcapacity in the industry, with many strong players. The largest company in the industry is Hon Hai, a Taiwanese company with 18% market share. Celestica is number six in the industry, at just under 7% market share. So it's very fragmented, with a lot of very strong players. Eighty-five per cent of our revenue is material flow-through. We are happy to realize 6% or 7% gross on 2% or 3% net earnings, which is typical in our industry. Fifty per cent of our costs are labour. We have to compete, depending on the opportunity, by either having a unique offering or more speed in our production process than our competitors. Obviously cost is always a factor at the end of the day in our competitive structure.
Among things that would help us compete would be attracting a workforce that brings us the skills we need from day one, and there are two elements to that. One is that manufacturing is typically not the destination of choice for people coming out of our universities or community colleges, in spite of the fact that there are some great opportunities and a lot of very interesting content in engineering design—maybe not in products, but in our manufacturing processes and material management processes. Anyway, we need to attract people to come to this industry and we need to retain them. They have to come to us not just with the technical knowledge, which we find they have, but with manufacturing knowledge, which they don't have. You've heard a number of people talk about lean manufacturing or Six Sigma techniques; for us, materials management skills are critical. Those are things for which we typically have to provide the training, and it can take people a few years to get up to speed and contribute to the benefit of the company. So having people come to us with those skills is one thing that would help us be competitive.
Almost all of the material we buy is imported; it's typically all silicon of some sort, electronics of various shapes and sizes. So getting it in and out of the country expeditiously in a manner that makes the border seem transparent to us and our customers is paramount. Very little of our product stays in Canada; most of it what we build in Canada goes to the U.S. When bidding for business, often we have to convince them that doing business in Canada would be the same as if we were building for them in one of our operations in the U.S. I would say, to a large degree, that's true; we have very few problems getting things in and out of the border, but occasionally they do crop up. Sometimes it's our fault because we haven't done the documentation properly. Sometimes other factors have slowed it down, but every one of those puts a seed of doubt in our customers' minds about whether they should be doing business with us here in Canada.
The last thing I would talk about in the way of competitiveness is the Canadian dollar. All of our contracts are in U.S. dollars. Because the material flows in and out of the country, this kind of nets out for us. But we pay our workforce in Canadian dollars, so as the Canadian dollar rises, we need more U.S. dollars to pay that part of our expenses. To some degree the dollar going up and down is a fact of life, and there are pluses and minuses, but it is a factor for us that we have to keep in mind as we try to improve the competitiveness of our Canadian operations.
So in net, it's having a workforce that can hit the ground running for us through the curriculum in our schools, having borders that are transparent to us and our customers, and having a Canadian dollar that doesn't put us at too much of a disadvantage in our competitiveness here in the Canadian operations.
Thank you.