TORONTO, ONTARIO--(Marketwire - Oct 1, 2012) - Disputing decades of speculation that size and sector composition restricts Canada''s productivity performance, Deloitte''s newest report shows that the real drag on our competitiveness is the inability of Canadian companies to sustain growth over the longer term. The report details several reasons for this, including a reluctance by Canadian companies to invest in growing their business and government policies that encourage companies to remain small.
The new Deloitte report - The Future of Productivity: Clear choices for a competitive Canada - makes it clear that Canadian companies need to be bolder when it comes to investing 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, and has been particularly significant in the manufacturing sector where, since 2000, U.S. productivity has grown six times faster than in Canada. A rare bright spot is the retail sector, where Canadian productivity has outperformed the U.S., largely due to its exposure to the full force of global competition as foreign retailers have aggressively entered the Canadian market.
"Canadians know how to compete and win globally, but not enough of our business leaders follow this path," said Bill Currie, Deloitte Canada''s Vice Chair and Americas Managing Director who co-authored the report. "They need to exploit growth opportunities wherever they occur, and government needs to support them by making growth a business imperative and removing barriers to competition, both inside Canada and with the rest of the world."
Some key findings from the latest Future of Productivity report are:
- 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% the U.S. rate on machinery and equipment; investment in Information and Communication Technology (ICT) is at 66% and 80% of U.S. levels in manufacturing and financial services respectively.
- Canada needs to continue developing new trading partners to lessen our 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.
To download a copy of The Future of Productivity: Clear choices for a competitive Canada, please visit http://productivity.deloitte.ca.
Deloitte, one of Canada''s leading professional services firms, provides audit, tax, consulting and financial advisory services through more than 8,000 people in 56 offices. Deloitte operates in Québec as Samson Bélair/Deloitte & Touche s.e.n.c.r.l. Deloitte & Touche LLP, an Ontario Limited Liability Partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.