Design Engineering

Canadian companies too timid says Deloitte productivity report

By Design Engineering Staff   

General Canada competitiveness Deloitte productivity

Study suggests reluctance to invest and grow puts Canadian companies at competitive disadvantage.

In its latest report (The Future of Productivity: Clear choices for a competitive Canada), professional services firm Deloitte says that, instead of size and sector composition, the real drag on Canadian productivity is companies’ inability to sustain growth over the longer term. In addition, the report suggests companies need to be bolder, investing more aggressively in productivity-boosting measures and seeking out growth, both within Canada and internationally.

In turn, governments must provide the right conditions by eliminating barriers to trade; encouraging competition and foreign direct investment; and adjusting Canada’s immigration system to deal with an aging population and looming skills shortage. Academia can also play an important role in fostering growth by focusing on commercializing research and developing curricula that supports productivity and innovation.

“Canada’s productivity performance has been declining for many years, in part because Canadians appear to be more concerned about protecting and preserving what they have than creating something new,” said Frank Vettese, Managing Partner and Chief Executive of Deloitte Canada. “Trying to maintain the status quo in an environment of increased global competition will simply leave us falling further behind other countries.”

The Deloitte report found that Canada’s productivity lags the United States in virtually every instance, regardless of a company’s size, sector, business type or location. The gap in competitiveness has widened in mining, oil and gas, and financial services. It also has been significant in the manufacturing sector where, since 2000, U.S. productivity has grown six times faster than in Canada.


Some key findings from the latest Future of Productivity report include:

Exporting firms outperform their non-exporting peers in terms of productivity growth, but fewer than three per cent of Canadian firms export.

Canadian businesses spend at only 65.2 percent the U.S. rate on machinery and equipment; investment in Information and Communication Technology (ICT) is at 66 percent and 80 percent of U.S. levels in manufacturing and financial services respectively.

Canada needs to continue developing new trading partners to lessen reliance on the U.S. market.

Government should increase the transparency of the foreign direct investment review process to encourage more foreign companies to invest in Canada, which would force Canadian businesses to invest and innovate in order to remain competitive.

Download a copy of The Future of Productivity: Clear choices for a competitive Canada


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