Canadian manufacturers invest in the future

Toronto, ON, December 20, 2011

Canadian manufacturers are making investments today that will put them in a position to cash in on business opportunities when global economic conditions settle, according to a survey of senior executives.

The 2012 Business Outlook: Investing in the future manufacturing survey conducted by Grant Thornton LLP and Canadian PLANT magazine, attracted 367 responses, the majority of which came from privately-owned, small to medium-sized enterprises (SMEs) with average annual revenues of $62.3 million.

The survey shows that business confidence in the manufacturing and distribution sector is strong. While respondents are naturally concerned about economic conditions, 83% are confident about their 2012 forecasts, 58% expect orders to increase and 59% are looking at sales dollar values rising next year. In addition, 31% anticipate higher prices and 41% are banking on higher profits. However, confidence in the three-year forecast fell 37 points.

"With the Canadian dollar seemingly stabilized and continuing to ride high, many in the manufacturing sector are planning to take advantage by investing in machinery and equipment, which promises to help foster Canadian innovation and increase the demand for skilled labour," said Jim Menzies, National Leader, Manufacturing and Distribution, Grant Thornton LLP. "The expected impact on the Canadian economy from these trends alone should be a positive one."

When asked about investment priorities over the next two years, machinery and equipment (61%), training (55%), technology (51%) and R&D (49%) ranked the highest. Almost half (47%) the companies will be hiring new employees next year, and 43% of them intend to do so over the next three years.

Estimated investment in machinery, equipment and technology this year is approximately $1.4 million, higher than last year's forecast, and Canadian companies prefer to do their shopping closer to home: 88% look for machinery from Canada, while 83% source from the US. Germany is a distant third (34%) followed by Japan (18%) and Italy (15%).

Most (26%) are investing under $100,000 next year, while 19% are putting up between $100,000 and just less than $500,000. On average, the companies anticipate investing a healthy $1.3 million in 2012, and the vast majority of manufacturers report feeling confident (86%) in their ability to finance their capital projects.

These numbers are good for the Canadian economy since manufacturers are still playing primarily to a home audience. On average, almost 70% of them derive most of their sales from Canada. Trade with the US is slowing (down to 20.7% from 23% last year), but trade with China is slowly increasing (from 0.7% to 3%).

This year's Business Outlook survey shows manufacturers are also focussing on addressing productivity issues. The majority (96%) have already taken steps to improve productivity, and have invested more heavily in improving internal resources (58% improving employee training and 50% investing in technologies) than outsourcing.

The Business Outlook 2012 survey was conducted in September and October 2011. The margin of error is +/- 4.3%, 18 times out of 20.

About Grant Thornton LLP
Grant Thornton LLP is a leading Canadian accounting and advisory firm providing audit, tax and advisory services to private and public organizations. Together with the Quebec firm Raymond Chabot Grant Thornton LLP, Grant Thornton in Canada has approximately 4,000 people in offices across Canada. Grant Thornton LLP is a Canadian member of Grant Thornton International Ltd, whose member firms operate in close to 100 countries worldwide. www.grantthornton.ca.

About Canadian PLANT
Canadian PLANT is a Business Information Group business publication serving Canada's manufacturing and process industry sectors. Visit www.plant.ca.

For further information:
For media interviews with Jim Menzies, contact:
Tania Freedman,
Senior Manager, Media Relations
Grant Thornton LLP
T +1 416 607 2745
C +1 416 302 3561
E tania.freedman@ca.gt.com