Home Month and Year November 2016 Diversify, Diversify, Diversify!

Diversify, Diversify, Diversify!

The future of manufacturing

Michael Hooper, president of Calgary-based Fiberbuilt

“Let’s face it! A lot of Alberta manufacturing is tied in to the energy sector. Whether that will change or not in the long term, it is the way it is,” says Mike Holden, the Calgary-based chief economist and acting vice president of Canadian Manufacturers & Exporters (CME) which has been the voice of the industry in Canada since 1871.

“And the stats show that in Calgary, and throughout Alberta, it has definitely been a rough year and a half. Manufacturing has tumbled. It was hit hard. The worst may be over. There are indications that it has stabilized and recovery has begun.”

Holden is a consistent straight shooter and his years of manufacturing and exporting expertise are usually laced with facts and reality. He underscores the irony that the Alberta positives about conventional manufacturing and exports may also be the shackles holding the sector back: energy prices, diversification and new markets.

The undisputed business fact is that petroleum and petroleum-related manufacturing is vital to Alberta manufacturing and many Calgary-based businesses. Unlike Montreal and Toronto, it is undisputedly the prime manufacturing market. And like dominoes, all the manufacturing and export aspects of the petroleum sector are impacted by the price effect.

Like other Alberta and Calgary manufacturing and export businesses, the low loonie and the high USD are usually positives. “One of the challenges a lot of Alberta manufacturers have is an urgent need to diversify markets, seek out new customers and businesses that have international exposure and rely less on just selling into the U.S. market,” Holden says. “Of course petroleum will always be an important driver of our economy but we need to move away from such a heavy reliance on the energy sector.”

Although manufacturing is a strong part of the Calgary GDP, according to recent CME figures, the mining, oil and gas industry made up almost 30 per cent of the total GDP. In comparison, finance and insurance is 15 per cent, construction is nine per cent, professional, scientific and technical services are seven per cent and manufacturing is six per cent.

Other notable segments of the Calgary business region are transportation, wholesale trade, retail trade, health and social services, and other business services.

Consultants and analysts agree, Calgary has transformed itself into a modern economy with a large services sector, while balancing it with its resource extraction.

“Manufacturing employment in the Calgary region is fairly equitably distributed across several manufacturing industries,” the CME’s Holden points out. “The top manufacturing employers of the region are fabricated metal products, machinery and food with around 5,000 employees each. The furniture, chemical products and printing industries also have a sizable employment level.

“However, the overall manufacturing employment levels have been in decline since 2006, dropping from around 48,000 to around 40,000 in 2013. Minor increases in manufacturing employment are expected during the next decade.

“There’s no doubt about it – the low dollar helps on the export side. But diversification and higher energy prices are the key for manufacturing and exports. Our manufacturers haven’t really done more poorly than American manufacturers. They planned on a strong recovery of the U.S. economy, and it hasn’t really happened.”

Despite number crunching and positive projections for Calgary manufacturing, the CME is cautious about yet another manufacturing sector speed bump on the horizon. It predicts the Calgary region will experience significant recruitment challenges in the manufacturing industry, facing a shortage of over 7,000 workers over the next 10 years, due primarily to:

  • A large demographic challenge, because the manufacturing workforce is older than the overall labour force and, as workers retire in the next 10 years, the manufacturing industry is projected to have difficulty filling skilled trades and technical positions.
  • Competition from other industries, because occupations such as sheet metal workers, electrical and electronics engineers and industrial mechanics are also highly in demand by other industries such as construction, utilities, and oil and gas.
  • Low levels of net migration will make it tougher to find workers.
  • Some occupations are harder to fill, due mostly to low supply. The Calgary area will be particularly challenged to find construction millwrights, electrical and electronics engineers, process control and machine operators, and industrial and manufacturing engineers.

Manufacturing, by the numbers

90,082 – total manufacturing companies

$609.8 billion – total sales

10.5% – manufacturing’s contribution to provincial GDP

9.7% – petroleum and coal products

20.2% – transportation equipment

15.7% – food products

1,710,900 – total employment in manufacturing

$348.6 billion – exports of manufactured goods

Major destinations for exports of manufactured goods:

USA: 80.1%

China: 3.4%

U.K.: 1.6%

One dynamic example of Calgary’s innovative manufacturing and exporting potential is Fiberbuilt, a leading manufacturer and exporter of an elaborate line of industrial and custom brushes as well as a world leader in brush design and development. They are also the creators of the Synthetic Grass-patented technology, producing “grass golf mats” and other related golf products for North American and global export.

“Diversification is what it’s all about,” says Michael Hooper, president of Calgary-based Fiberbuilt. “One product, completely dependent on one market, is a very risky, big gamble.”

Diversifying has been the Fiberbuilt vision and strategy for nearly 60 years. When his father, Jack, had a daring idea in the late ’50s, the business began as a hand assembly operation, focusing on floor brooms. With innovation, research and development and growing the market, Fiberbuilt evolved into a highly mechanized, complex and diversified industry.

“Right from the start, my father was a big booster of diversification. And it’s still a key focus for us. Diversification is vital. And understanding and growing your market is also very important. When they zig, you zag.”

Today, Fiberbuilt is the only industrial brush manufacturer in Western Canada and it has a global reputation for the design and manufacture of nearly every kind of brush imaginable. Fiberbuilt’s engineered and manufactured industrial brush solutions are sought after in industries like energy, agriculture and food, forestry and wood processing, construction, marine and mining, maintenance and others.

Hooper has a warm smile as he reminisces about the fluke that became an enormous Fiberbuilt success story. “In the ’90s, my father (an avid golfer) was at a driving range, hitting some balls and said, ‘There has to be a better way.’” After some extensive research and development, Fiberbuilt patented “Synthetic Grass” and has become the world’s premier manufacturer and supplier of grass golf mats (the golf industry’s popular, ‘real grass-like’ hitting surface), long fibre, tee dividers, fairway markers, yardage markers and signage.

Hooper is enthusiastic and proud that the golf industry association awarded Fiberbuilt the prestigious Certificate of Excellence, for the best golf mat in the industry.

“Manufacturing is a vital part of Canada’s economy,” Hooper points out from experience. “Manufacturing is a bit underrated in the West. Canada is very regional when it comes to attitudes about business and manufacturing. It’s different in other areas, like Ontario, which has a culture of manufacturing.

“But the West is innovative and has tremendous potential. Especially Alberta must diversify. Of course this is an energy-driven province and manufacturing is focused on energy. Keeping all our manufacturing eggs in one basket means we must accept a boom and a bust. Fiberbuilt is fortunate and forward thinking. Of course the energy sector is important for us and we are also affected by what’s going on but we make it up elsewhere. We have markets unrelated to energy and outside Canada.

“Our guiding light is to innovate and diversify … or die!” he adds with gung-ho positivity.