Great White North
By Mark Gottlieb, Manufacturing.net
Manufacturing.Net - January 2, 2007
When you hear or read the term “North American Free Trade Agreement,” which country comes immediately to mind?
If you’re like most people, you will think first of Mexico.
But there is, of course, another big player on the continent, one whose significance as a manufacturing locale is profound and has been growing steadily for even longer than NAFTA has been around.
What was that name again?
Oh, right — Canada.
Seldom has so large a land mass been so often overlooked — not to mention dismissed, disparaged and denigrated. In the global ranking of national geographic areas, Canada is second in size only to Russia, dwarfing the continental U.S., China, India, Brazil and Australia. But because Canada’s population is so small — little more than 32 million people, or about the same as the combined populations of Shanghai and New York City — she is to many a blank spot on the map and a cipher to even her closest neighbor.
The popular image of Canada is usually limited to moose, Mounties and the infamous poutine, a dish of white cheese curds over lard-fried spuds, the whole being drenched in dark brown gravy. (Poutine is an acquired taste everywhere on earth except Quebec, where it is considered part of the provincial birthright.)
But according to the World Bank, Canada was the world’s ninth-largest economy in 2005. While Canadian Gross Domestic Product ranked far behind that of the U.S., Japan, Germany, China, the United Kingdom and France, it was closing fast on those of Italy and Spain, both of which are far more populous. And it was already well ahead of Mexico’s, as well as those of India, Brazil, Korea, Russia and Australia.
Turkey? Indonesia? Sweden? Argentina? Malaysia? Not even close.
Preliminary figures for 2006 show Canada moving up a notch to eighth place globally in GDP. And while Canada is also the world’s eighth-largest producer of petroleum and natural gas — with reserves in oil shale and oil sands so great as to be almost incalculable — it may surprise you to learn that roughly half of all Canadian exports are manufactured goods. Everything from Bauer hockey skates to Bombardier aircraft and Research in Motion BlackBerry handheld communication devices comes to us from the Great White North.
Automobiles constitute by far the country’s largest manufacturing export. Canada is the world’s third-largest exporter of automotive products, shipping more than $100 billion in vehicles and parts every year. Today, the country is home to manufacturing and assembly facilities of General Motors, DaimlerChrysler, Ford, Toyota, Honda and Suzuki.
Indeed, a milestone was passed in 2004, when for the first time the largest car-producing region in the world was not the state of Michigan. The new Motown could be found across the Ambassador Bridge from Detroit, in the Canadian province of Ontario.
It would seem, then, that Canada is fighting far above its weight class. So how to explain the remarkable performance of the Quiet Giant?
In the automotive sector at least, four reasons stand out.
First: productivity. When measured in terms of hours per vehicle assembled, Canadian car and light-truck plants beat U.S. facilities by more than 7 percent.
Second: quality. Canadian plants are routinely rated at the top in terms of quality production. In fact, GM’s facility in Oshawa, Ontario, has three times been ranked by J.D. Power and Associates’ annual initial-quality studies as the best in the entire western hemisphere. And in 2003, a Canadian Toyota plant became the first venue outside Japan to be allowed to produce the luxury Lexus vehicle.
Third: smarts. Carmakers in Canada have access to a highly educated workforce and a robust system of knowledge transfer with Canadian universities.
Fourth: publicly funded national health insurance. In the U.S. — where employer-supplied health insurance is the norm — General Motors incurs nearly $6 billion annually in medical and health-care costs for its employees and retirees, adding some $1,500 to the price of every vehicle it produces. Not so in Canada, where the national health insurance system is paid for through universal taxation and covers everyone. As a result, the average real cost of health care to employers in Canada works out to about one-eighth that incurred in the United States.
Give it a moment’s thought and you may begin to see a pattern there. Could it be that Canada’s first three advantages might all be related in some way to the fourth? Could it be that a healthy workforce — employees whose medical needs, both curative and preventive, are attended to with a minimum of fuss, stress and paperwork — is a more productive, more conscientious and more intelligent workforce? And could it be that such a workforce does a better job than its counterparts in countries like, say, the United States?
If there are lessons to be learned from Canada’s success as a manufacturing nation, the most important of them may well derive not from the factory floor but from the doctor’s waiting room. And that is something to consider seriously the next time the subject of universal health insurance comes up for debate in that other country in North America — the one found on Canada’s southern border.