Thank you, Mr. Chairman.
Good afternoon. My name is Stephen Brown. I'm a consulting partner with Deloitte and, as the chairman said, I'm the leader of our consumer and industrial products practice in Canada. I have been with Deloitte for 20 years, serving Canadian, U.S., and global manufacturing clients. It is a pleasure to be with you here today.
My remarks are based on the details of Deloitte's 2016 global manufacturing competitiveness index, plus my own experience serving Deloitte's manufacturing clients.
As we sit here in 2016 and look toward the end of this decade, manufacturing-related activities across many nations are rapidly evolving. Manufacturing-based earnings and exports are stimulating economic prosperity, which is motivating nations to increase their focus on developing advanced manufacturing capabilities. To support this, nations are investing in high-technology infrastructure and education.
The manufacturing industry is striving to advance to the next technology frontier. As the digital and physical worlds of manufacturing converge, advanced technologies have become even more essential to company and country-level competitiveness.
That said, the number one driver of manufacturing competitiveness today, which is consistent with the two previous studies that Deloitte has done on this topic in 2013 and 2010, is talent. In this case, talent is defined as the quality and availability of high-skilled workers, which facilitates a shift towards innovation and advanced manufacturing strategies. I doubt that is a shock to this committee. We deal with it. I'm sure you deal with it on a daily basis. I see this issue with my current manufacturing clients, and it is a complex and multi-faceted one to solve. I'm sure we'll get into this in the questions that follow.
After talent, the next three most critical drivers of manufacturing competitiveness are, in order, cost-competitiveness, productivity, and supplier network.
When we look forward, manufacturing CEOs are saying that advanced manufacturing technologies are key to unlocking future competitiveness. The three specific technologies called out by our study participants—and there were over 500 global participants in this study—were, one, predictive analytics; two, the Internet of things; and three, advanced materials.
As the industry becomes increasingly more sophisticated, the traditional powerhouse manufacturing countries of the 20th century—the U.S., Germany, Japan, and the U.K.—are now seeing a resurgence in competitiveness ranking. Leveraging their foundational strengths in talent, innovation, and strong industrial ecosystem clusters—that's a mouthful—these nations are competing with renewed strength and surpassing their low-cost rivals. The shift to higher-value-added manufacturing is shaping a new battleground for global competitiveness going forward.
If we look specifically at how Canada fares based on manufacturing competitiveness, we are currently ranked ninth, with a prediction from the participants that we will fall one place to tenth by 2020. We have advantages such as an efficient regulatory environment, strong support for exports, reliable support for industry, and abundant natural resources, but challenges remain, and I suspect that our conversation this afternoon will be focused on those challenges.
Thank you.