North American manufacturers are bringing their operations back to the continent after years of transferring jobs offshore to cheaper markets, according to a recent report by KPMG. The report suggests that fewer Canadian firms are pre-occupied with cost-saving and outsourcing production and are more focused on growth.
"There is a trend back to onshoring with more work being done here because you've got better consistency of quality," Don Matthews, KPMG's diversified industrials national sector leader, said.
Higher transportation costs have also convinced companies to move their sourcing back to North America. Southwestern Ontario, with its close proximity to the U.S., is slated to benefit from the trend.
"We have come through a period of tough times, but the manufacturers participating in this survey see there are some bright things on the horizon and they see things getting better,” Matthews said. “It might not be dramatic, it might not be overnight, but things are turning around and there are positive things happening out there.”
The KPMG survey, which polled 154 senior industry executives, found that only 14 percent planned to source from China in 2014, compared to 31 percent in 2013. Similarly, only three percent planned to source from India this year, down 12 percent from 2013.
The report noted that China and India are two jurisdictions that companies are drawing away from in order to find products manufactured with greater quality and consistency, two characteristics that Canadian manufacturing has a strong reputation for.
Globally, manufacturers are facing a shortage of skilled workers. KPMG believes that Canada has the “people, colleges, universities and trade institutions to train the right individuals for the right jobs.”
"We've got lots of workers available. We may not have the right match between the workers and the skills but we can overcome that," Matthews said.