Saskatchewan: Manufacturing Success

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Saskatchewan Manufacturing Success

• Saskatchewan Industry and Resources
• Purchasers Showcase
• March 21, 2007

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Primary Sectors

• Oil and Gas - Saskatchewan is 2nd largest oil
  producer and 3rd largest gas producer in Canada.
• Mining World Leader in Uranium and Potash.
• Forestry Half of Saskatchewan covered by
  forests.
• Agriculture Nearly half of Canadas arable
  land.
• Saskatchewan depends on trade. Our exports of
  goods and services are equal to more than 60 of
  our Gross Domestic Product (GDP)

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Agriculture Agri-Value

• The largest portion of activity occurs in
• meat
• flour and baking
• dairy products
• 47 of Canadas agricultural land base
• 1/6 of Canadas agricultural revenue
• Highly volatile contributor to GDP (7.1 of GDP)
• The largest food companies include
• 1,000 Maple Leaf Foods
• 500 999 Dawn Foods
• 250 499 Lilydale
• 100 249 Robin Hood, World Wide Pork, XL
  Foods, Saputo, Harvest Meats, Centennial
  Foods, and Ready Bake

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Agri-Value

• Food Beverage Processing
• 2-billion industry
• 265 processors
• more than 6,500 employees (2004)
• Majority of companies are small
• employing less than 20 people
• serve the local provincial (or prairie regional)
  market
• 11 companies with more than 100 employees

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Industry Growth Opportunities
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Investment Opportunities

• Food and Beverage Market growth areas
• Meat Products
• Health nutritional foods (functional foods)
• Ingredient supplier market
• Convenience foods
• Frozen and refrigerated food
• Organic Foods

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Energy
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Investment Opportunities

• Value-added opportunities
• Ethanol
• Polygeneration
• Bio-Mass
• Petrochemicals
• CO2 Sequestration
• Hydrogen
• Nuclear Energy
• Goods and Services

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Minerals and Mining
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Current Conditions

• Mining
• Sales exceeding production
• Production increasing
• Prices increasing
• Revenues increasing

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• Potash Production
• Ten mines two solution / gt 200 years of reserves
• PCS IMC Kalium (Mosaic) in Top Five Canadian
  Mines
• 2004 all-time prod. Record _at_ 14.4 mt
• Industry in expansion 22 mt capacity forecast
  for 2008

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Value-Added Opportunities

• Health Side
• Medical devices
• Dyes

Fuel Side Opportunities
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Saskatchewan Kimberlites

• Kimberlite Size
• Saskatchewan bodies vary from 3 to 250 ha

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Forestry

• Recovering from softwood lumber tariffs
• Issues continue with the rising Canadian dollar
  and the over-supply of pulp and paper
• Strategy
• Full, sustainable utilization of the resource
• Use resource allocations to maximize value-added
  operations
• Areas with greatest potential
• Use leverage of natural resources and residual
  products to attract reliant value-added
  processing.

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Investment Opportunities

• Primary Forestry
• West side
• Small diameter black spruce
• lumber, pulp, OSB
• Wood Residues
• energy, manufactured products (MDF)
• Remanufacturing
• finger-jointing
• Value-Added Wood Products
• hardwood furniture components
• Pre-Manufactured Housing

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Manufacturing Current Conditions

• Manufacturing
• Sales and employment are steadily increasing
• Exports on the rise

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Manufacturing Growth
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Industry Cluster
Communications Technologies
Plastics Rubber Products
Fabricated Metal Products
Electronics Instrumentation
Cabinetry Wood Products
Textiles
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Manufacturing Sectors

• Key Sectors (2006 shipments)
• Food (21.5)
• Wood and Paper (6.8)
• Chemical (8.6)
• Printing and Related (1.1)

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Manufacturing Sectors

• Key Sectors (2006 shipments)
• Fabricated Metal Products (5.6)
• Machinery Manufacturing (7.7)
• Transportation (3.1)

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Manufacturing Sectors

• Key Sectors (2006 shipments)
• Electrical Equipment and Appliances (2.0)
• Plastics and Rubber (0.8)

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Strong Industrial Base

• This base is made up of companies that
• produce steel, wood, plastics composites,
• profile steel, plastics, fiberglass, wood,
  textile and other materials,
• router, mill and machine steel, plastics,
  fiberglass, wood and other materials,
• injection-mold parts, roto-mold parts, vacuum
  form and cast products,
• assemble, join and weld the various components
  into subcomponents and final products
• assemble electronics, instrumentation,
  communications technology and wiring,
• coat and finish the final products.

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Investment Opportunities
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Advanced Technology

• Information and communications technologies
• Life Sciences
• Environmental Services
• Innovation and Infrastructure Services

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Investment Opportunities

• New crop varieties and crop variety
  identification systems
• Crop and animal product processing and
  fractionation
• New food and industrial products from biological
  feedstock
• Bio-fuels, bio-oils and renewable energy
• Bio-chemicals and bio-composites
• Bio-pharmaceuticals and therapeutics
• Genomics
• Animal health products, animal vaccines and food
  safety products
• Microbial bio-controls
• Microbial bio-fertilizers and plant nutrient
  systems
• Information technology systems and hardware

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Investment Opportunities

• Vibrant and growing / world-class abilities in
• Life sciences / agricultural biotechnology /
  molecular farming
• Information communications technologies,
• Controls and electronics
• Bioproducts
• Biofuels / biodiesel
• nutraceuticals,
• biocomposites, etc.
• Micro-electro-mechanical systems (MEMS)
  nanotechnology
• Genomics proteomics

MEMS/Nanotechnology
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International Desk

• Conduct team Saskatchewan trade missions to
  targeted regions
• Increased pubic identification with
  Saskatchewans and the Government of
  Saskatchewans relationship with trade and the
  international market
• Increased participation in the development and
  attendance in trade missions.
• Increased investment activities by Saskatchewan
  companies.

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Where Manufacturing Fits
Saskatchewan GDP- 2005
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Where Manufacturing Fits
Saskatchewan Employment - 2005
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Jobs in Manufacturing
Employment by Key Sub Sectors - 2005
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Jobs in Manufacturing
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Manufacturing in Saskatchewan

• Employs over 30,000 employees
• 10.4 billion in shipments in 2006
• Employ state of the art manufacturing
  technologies and equipment
• Embrace lean manufacturing practices to be more
  competitive

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The Saskatchewan Edge

• Tax structure 10 lowest corporate income tax
  in Western Canada for Manufacturers and
  processors (MP)
• 5 provincial tax credit on equipment purchased
  for MP
• 100 of eligible RD expenses can be used against
  net income for the purpose of calculating federal
  tax credits
• 15 provincial income tax credit for RD

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Lower Costs, Great Location

• A recent KPMG study comparing business costs in
  121 cities across Europe, Japan and North America
  finds Sask cities very cost competitive for
  manufacturing
• A days drive to 250,000 farm businesses in
  Canada and US Midwest

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Government Committed to Growth

• Programs to encourage the development of new
  technologies
• Programs to help companies become more efficient
• Training programs JobStart/FutureSkills
• SIIT Manufacturing Project

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What are the Opportunities?

• Jobs well paying, skilled jobs in a dynamic
  industry
• Training
• Business opportunities joint ventures, start ups

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What do we do?

• The Manufacturing Team of Saskatchewan Industry
  and Resources is dedicated to the growth and
  promotion of Saskatchewans Manufacturing Sector.
• To do this, we focus on several areas

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I. Lean Initiatives

• Since 1999 SIR has introduced manufacturing
  companies to Lean Thinking.
• We work with individual companies as well as
  national organizations like the Canadian
  Manufacturers and Exporters (CME) that have
  developed consortium building and lean enterprise
  expertise.

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Lean Thinking

• What is Lean Thinking?
• Simply put, Lean Thinking is a focus on
  eliminating waste so that all processes in the
  total system, process, or production line add
  value from the Customer perspective.

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Lean Thinking is About

• Creating a positive and safe work environment
• Empowering all staff to make improvements to
  their processes and workplace
• Encouragement from the leaders of the company

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Why Become Lean?

• In todays global marketplace with a high
  Canadian dollar and trade border issues,
  companies must become more competitive.
• The application of Lean Thinking will reduce
  waste, improve productivity, and give companies
  that competitive edge needed to survive.

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The 5 Principles of Lean Thinking

• Define value from the customer perspective
• Identify the value stream
• Make the process flow
• Pull from the customer
• Head toward perfection

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7 Forms of Waste

• Overproduction
• Waiting (time)
• Transporting
• Inappropriate processing
• Unnecessary inventory
• Unnecessary motions
• defects

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Success in Lean

• There are many Lean resources available.
• Lean Training is not a one time course, but must
  be a corporate long term commitment.
• In our experience companies have a greater chance
  of success by working together.

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Lean Consortiums

• The Manufacturing Team works with Saskatchewan
  companies to form consortiums of manufacturers

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Results

• Some results from our Consortiums
• Reduce Inventory by 56
• Decrease bank debt by 50
• Deliver product in 10 days rather that 2 months
• Engineering time reduced to 2 hours from 2 weeks
• Space requirements reduced by 35
• Space requirement reduced by 200
• Productivity increased by an average of 55

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II.Corporate Procurement Committee

• The Manufacturing Team chairs the provincial
  Corporate Procurement Committee (CPC)
• The CPC consists of members from major
  Saskatchewan corporations representing the
  Crowns, the private sector, and government
  departments.

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CPC Mission Statement

• The Mission of the Corporate Procurement
  Committee is to promote Saskatchewan economic
  growth by developing quality, competitive
  suppliers of goods and services in Saskatchewan.

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CPC Goals and Objectives

• To maximize Saskatchewan content in the
  acquisition of goods and services
• To increase awareness of Saskatchewan supplier
  capabilities
• To encourage the export of goods and services by
  Saskatchewan suppliers

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CPC Goals and Objectives

• To identify opportunities to Saskatchewan
  suppliers
• To maximize Aboriginal content in the acquisition
  of goods and services
• To encourage the implementation of Quality
  Assurance Programs by Saskatchewan suppliers.

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CPC Action Plan

• Meet as a committee five times per year
• Share information on suppliers, new products,
  success stories, and Saskatchewan content
  statistics
• Visit supplier facilities in conjunction with
  meetings

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CPC Action Plan

• Prove information to SIR to maintain databases
  i.e. Manufacturers Guide
• Share information on policies and programs
• Promote the selective use of offset counter trade
  agreements to support Saskatchewan suppliers.

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CPC Success Stories

• Hitachi Canadian Industries manufacture of wind
  towers for SaskPower
• Del-Air manufacture of pedestals for SaskTel
  and SaskPower
• Country Leather manufacture of leather gloves
  for SaskPower
• Crestline Coach manufacture of specialty
  vehicle for Casino Regina
• SaskPower developed Montrose Metals near Donovan
  to fabricate cylindrical buried cable warning
  markers among other line hardware items. SaskTel
  and SaskEnergy also purchase warning signs and
  sign posts from Montrose Metals.

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CPC Success Stories

• The major crowns combined requirements to have
  Daily Diaries manufactured in Saskatchewan.
  Mercury Graphics, Saskatoon continue to print the
  diaries on an annual basis. The major crowns
  along with the support from IPSCO combined to
  have plastic window scrapers manufactured in
  Saskatchewan. The plastic scrapers are still
  available from Ellenn Plastics Manufacturing
  Ltd., Saskatoon. The committee participation
  has allowed the opportunity for continual
  exchange of valuable information between the
  participating members.

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CPC Meetings for 2007

• April 18-19 Lloydminster
• June 5-6 Weyburn
• September 18-19 La Ronge
• November 28 Regina
• Interested in presenting to CPC? Call us.

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III. Federal procurement

• The federal governments Industrial and Regional
  Benefit (IRB) policy is designed to bring highly
  technical and highly skilled work to Canadian
  companies and educational institutions.
• Winners of large defence contracts must spend the
  contract equivalent in Canada either directly in
  the form of suppliers to the project or
  indirectly, through research and investment in
  high tech areas.

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Role of Government

• The Government of Saskatchewan, through the
  department of Industry and Resources, assists
  Saskatchewan companies in finding IRB
  opportunities in aerospace and defence.

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Attracting Investment (COND)

• In October 2007, Saskatchewan will host the
  Western Aerospace Alliance Conference.
  www.waa-sask2007.com
• With NATO Flying Training in Canada (NFTC) in
  Moose Jaw, the presence of major aerospace
  companies such as Bombardier, CAE, BAE Systems,
  and Frontec provides a positive influence and
  nucleus for the growth of the aerospace sector in
  Saskatchewan.

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Saskatchewan aerospace and defence capabilities
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Whos visited our Manufacturers?

• Boeing
• Agusta Westland
• Rockwell Collins
• BAE Systems
• Northrop Grumman
• Rheinmetall

• General Dynamics Land Systems (Canada)
• L3
• Rolls Royce
• Alenia North America

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Defence Spending

• Projected defence spending is 20 billion over
  the next 5 years!
• Tremendous opportunity for Saskatchewan companies
  and educational institutions to explore this
  market.

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Trade Shows and Conferences

• CANSEC Defence Industries trade show Ottawa
  April 11-12, 2007
• Atlantic Canada Aerospace, Security and Defence
  exhibition Sept 2007
• Western Aerospace Alliance, Saskatoon, October
  24-26, 2007

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IV. Manufacturers Guide

• Over 1300 companies are currently listed
• free of charge to any manufacturer that
  manufactures at least 51 of the product in
  Saskatchewan
• Follow the link at www.ir.gov.sk.ca
• Guide is searchable by company name, product and
  location

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V. Labour market development

• Canadian Manufacturers and Exporters
• - Management Issues Survey (2006)
• 46 of manufacturers reported difficulties in
  finding people
• 23 indicated difficulties in attracting entry
  level workers and 20 noting difficulty in
  retaining employees these numbers were 43 and
  38 respectively in Saskatchewan.
• Other areas of difficulty in recruiting included
  plant managers, general managers, IT
  professional/technicians, equipment operators,
  engineers, sales and marketing, welders,
  electricians and machinists.

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What Industry in Saying
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What Industry is Saying

• Canadian Manufacturers and Exporters
• - Management Issues Survey (2006)
• 13 - No problem attracting or retaining skilled
  workers
• 23 - Significant increases in Labour Costs
• 19 - Experiencing shortages but not a constraint
  on growth
• 26 - Specific skill shortages constraining
  growth
• 13 - General labour shortages constraining
  growth
• 2 - Shortages require firm to close/forgo
  product lines

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What Industry is Saying

• Statistics Canadas Business Conditions Survey
  October 2006
• Of the 300 manufacturers surveyed in
  Saskatchewan
• 44 saw employment increasing in the next three
  months
• 15 indicated that a Skilled Labour Shortage was
  a source of production difficulties and
• 10 indicated that Unskilled Labour Shortages was
  a source of production difficulties.
• Note results from 300 manufacturers are weighted
  by a manufactures shipment or employment,
  therefore, larger manufacturers have a larger
  impact on results.

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V. Labour market development

• Saskatchewan Industry and Resources is working
  with employers and training institutes to find
  solutions to the skilled labour shortage
• The SIIT Welding project is one example. We also
  work with education/industry councils and the
  K-12 school system to find innovative options.

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Conclusion

• The Manufacturing Team would like to work with
  you to grow and expand our manufacturing sector.
  Please contact us for further information on
  Lean, the CPC, federal procurement or anything
  else related to manufacturing.

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Questions
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Manufacturing Team

• Scott Summach, Manager
• Manufacturing Team
• [phone]
• ssummach_at_ir.gov.sk.ca

• Colleen Mackenzie
• Business Development Mgr, Manufacturing Aerospace
  Defence
• [phone]
• cmackenzie_at_ir.gov.sk.ca

• Monique Lischynski
• Business Development Mgr
• Manufacturing
• [phone]
• mlischynski_at_ir.gov.sk.ca