To continue what I was saying about our other success stories, we have a variety of industries where production may now be lower today than it was at its peak, but we've seen strong growth coming out of the recession in things like wood products, chemicals, plastics, electronics, autos, and parts. So there are a lot of good news stories out there when you talk about our manufacturing sector.
We've done a variety of research trying to identify the success factors of Canadian businesses, particularly when they go overseas. I did share this with the clerk earlier today. It's available in English and French. I don't know if it was made available to the committee ahead of time.
The four key things we've identified include skilled executives. Your business leaders need to have entrepreneurial spirit, they need to have a commitment to growth, and it's also helpful if they to have an international exposure, so that they don't just know about Canada or even a particular region in Canada, but have a global view.
The second thing is international networks. This is around taking advantage of helping hands, if you will, to get out into global markets. This might be leveraging the networks that come with your existing customers. It might be government contacts, or things like our trade commissioners overseas and the variety of professional services firms out there that specialize in helping businesses make that leap into international markets.
The third thing is market knowledge. This means, first of all, knowing your customers. Too many businesses are making products for their own benefit rather than their customers' benefit. Know your customers, and know what they want. Have a local presence. You need to be there somehow. It's hard to serve a market remotely. Choose your markets wisely. Don't just say, “I'm going to go into China”. It's a big market. Try to identify what your key target market is there, and adapt your products to your clients' needs.
The fourth thing was innovation capabilities. To echo what Matt was saying earlier, it's not just about product development and not just about new whiz-bang products, but it's also about process improvement and doing things better. It's about adopting existing technologies that are out there and available, but which we just haven't implemented yet. Finally, invest in R and D. That's part of knowing your customer, knowing your market, and these sorts of things.
If we want our manufacturing sector to succeed and to continue to grow going forward, what can we do? There are a few things we've identified in our research. First is how Canadian companies become part of global value chains. Too often we're organized around serving just the U.S. market. How do we become globally successful number one companies, particularly in niche products, so that if If you want this particular thing, you go to this company in Canada? Countries like Germany and Israel have followed this sort of strategy in developing global champions. It's around creating world-class products, but not necessarily an Apple-type product. Maybe it's something a little more modest and being successful at that.
Second, pull, don't push. We have lots of programs in place trying to help Canadian businesses do different things, like incubator programs or those sorts of things. There are lots of them out there. It's about making them more effective. How do we do this? Make Canadian manufacturers hungry to make use of them. It's that old analogy that you can lead a horse to water, but you can't make it drink. They have to want to make use of those helping hands.
When we look at all of these different programs that we have out there, we want to make sure that the purpose of them is to solve the needs of industry rather than trying to push out a new idea onto the industry. If we look at where we see the most successful things, like business incubators and that, it's about strong, good relationships between business and our post-secondary institutions around solving the day-to-day problems that our businesses are facing.
Third, invest. I don't think it's any surprise that Canada's productivity performance has not been stellar for a long period of time now, going on 20 years, so we need to invest more in equipment and ICT, and those sorts of things. If you look at our manufacturing sector right now, we're capacity constrained. We are running flat out with our existing capital. If we're going to grow more, we need to invest more—and don't forget about investing in people. It's not just about machinery. For example, we've seen growing use of certain types of technicians and technologist jobs in manufacturing. We want to make sure that the people are there to meet the needs of manufacturers.
Finally, don't forget about services. What I mean by that is services are becoming an increasingly important part of the value proposition for manufacturers.
A really interesting study I saw quite recently talked about the aerospace industry, for example. They looked at various aerospace manufacturers. Basically, the higher the share of their revenues that came from services, the higher their profits. They were more profitable if they were using services to make their products more valuable to their customers. All that is to say that if you're looking at manufacturing, it's important to understand the linkage between the services, whether in transportation, engineering, all these sorts of things—all the things that enable our manufacturers to be world-class.
Thank you.