Quebec manufacturing companies start 2011 with renewed confidence: Ernst & Young

(Montreal – 12 January, 2011) Gearing up to take advantage of market opportunities outside the province is this year’s priority for Quebec manufacturing companies, reveals a new survey conducted by Ernst & Young, in collaboration with Manufacturiers et exportateurs du Québec (MEQ).

“Despite the slow economic recovery, there are good business opportunities for companies in the manufacturing industry,” says François Prud’homme, Partner at Ernst & Young. “The beginning of the year is the time to make sound resolutions, and launching strategies to improve innovation, risk management and cost control will enable companies to make aggressive inroads into new markets.”

The survey, conducted with MEQ members, reveals that 48% of respondents consider expansion to other Canadian provinces highly important, and 51% place importance on expansion to the US.

Only 14% of respondents expect to achieve expansion through mergers and acquisitions, while 50% believe their growth will be driven internally through increased sales. In this context, innovation will be key. To ensure sales, companies will have to strive to exceed customer expectations.

“Quebec-made products currently have an excellent reputation,” explains Prud’homme. “The competitive advantage of these products stems from their very high quality and fair selling price. Quebec manufacturing companies cannot hope to win market share strictly on the basis of price, due to fierce competition from other countries such as China, which offers lower-priced products.”

According to MEQ President Simon Prévost, manufacturing companies cannot rely solely on improved market conditions to increase sales volume. Company executives must make critical decisions in an uncertain economic environment, where risk management plays a vital role.

Manufacturing company executives have to contend with the strong Canadian dollar and the volatility of a number of operating costs, including energy and raw materials. “Before considering expansion, executives should ensure that their processes are efficient, particularly the supply chain,” says Prévost.

Close to 60% of respondents reported availability of skilled, experienced personnel and quality control as the two major supply chain challenges.

In short, economic recovery alone is not enough to help Quebec manufacturing companies return to growth. The future is bright, but to stand out in an uncertain, competitive environment, companies must meet critical conditions.

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