Good morning, Mr. Chairman and honourable members of the committee. Thank you very much for coming to Edmonton and for the opportunity to address you this morning. I trust that everybody will have a pleasant and productive time in our city in spite of this unseasonably cold weather we're having here.
On behalf of the Edmonton Economic Development Corporation and the Edmonton Chamber of Commerce, who could not attend today, I'd like to zero in on the critical challenge facing manufacturers from an Edmonton perspective.
Edmonton's diverse manufacturing sector—with over 2,200 companies—is probably the fastest growing manufacturing cluster in Canada and a major driver of this region's economy, which generates in total $42 billion of GDP on an annual basis.
At present, Edmonton's manufacturing sector is obviously closely linked with northern Alberta's oil sands and the conventional oil and gas sectors. We all know about the $81 billion that is forecast to be invested here over the next 15 to 20 years, and it's clearly a sign of the significant manufacturing potential that exists here. In addition, we have the other burgeoning sectors, including agrifood processing and emerging life sciences and nanotechnologies, all of which will require specialized manufacturing expertise.
Maybe surprisingly for many, the future of many of Edmonton's manufacturers is one of global customers, global supply chains, and international business networks. With customers demanding improved quality, quicker response times, and shorter times to market for new production, Edmonton's manufacturers need to embrace production efficiencies and the new technologies and techniques that offer maximum precision and high flexibility.
Your committee has done a good job of highlighting the many challenges facing the sector, including the high value of the Canadian dollar right now; competition from low-cost producers like China; rising input costs, including energy and material supplies; and extreme labour shortages, all of which are really high on the agenda here in the Edmonton area. These factors are obviously critically and negatively impacting our ability to compete in the global marketplace, let alone allowing us to retain our local market share against low-cost offshore manufacturers.
Our manufacturers are working to restructure their businesses in response to the challenges they face, but the future of competitiveness and growth in the manufacturing sector, I believe, depends to a great degree on productivity enhancement, building on the process efficiencies and improvements that emerge from innovation and skills development.
We at EEDC have already initiated many programs to support the region's manufacturing sector. We continually connect with industry through surveys, on-site company visits, and manufacturing leadership network groups. The examples of activities in this area are based on collaboration with various levels of government and, of course, the Canadian Manufacturers & Exporters.
To date we've been focusing on lean manufacturing efficiencies, linking Edmonton industry with seminar offerings, one-on-one expertise and major conferences on lean manufacturing at key educational institutions. Successful partnerships with NAIT's Shell Manufacturing Centre, and that college's production enhancement certificate program have already produced significant improvements in the industry. But this work needs to continue on a much larger scale to effect the long-term improvements required. Our work to date in this area has made it clear—especially with our current labour environment—that efforts need to continue to focus on productivity improvement, taking it to an even higher level.
The gap between Canadian and U.S. productivity has continued to widen since 1999. This productivity weakness has been shown, significantly, to be related to lower investment in machinery and equipment, in information and communications technologies adoption, and in automated processes and technologies implementation.
We know that once Edmonton's core manufacturers have built a solid business foundation based on productivity improvements, they find themselves in a much better position to explore further innovations, such as automation in welding and joining processes, and specialized materials.
We believe that support for productivity programs and innovation through automation is essential. We also support the key recommendation of the Canadian Manufacturing Coalition, made through a letter dated November 9, 2006, to Prime Minister Stephen Harper, which requested “a two-year write-off (CCA) for investments in new manufacturing, processing and associated information and communication, energy, and environmental technologies”.
We echo this recommendation because this is a visionary and very direct way that the federal government can quickly stimulate valuable investment that can lead to productivity gains across the manufacturing sector at this critical time in Canada, for this province, and for this region. By adopting and supporting these initiatives, the federal government will demonstrate a renewed focus on building a more competitive and sustainable economy. There will be continuing global market opportunities for Edmonton region businesses, and overall productivity increases will ensure that we are able to be a true global player.
In closing, I understand that you're going to have an opportunity to tour some of our manufacturing firms today. We thank you for taking the time to do that. Hopefully it will be an interesting process.
Thank you very much for this opportunity to comment on the Edmonton situation.