Workplace Challenges
Threat #2: GlobalizationWorking in a global worldIn our global market, we can buy clothes from Colombia and eat food from France. But can having the world’s products at our fingertips threaten the stability of jobs here at home? By Jennifer McFee |
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 [ 2009-03-03 ] |
According to Statistics Canada, employment in industries affected by outsourcing grew by 1.8 per cent each year between 2000 and 2006 — the same rate of growth as other occupations not typically threatened by this issue. As a result, Canada has experienced a slow but steady job growth rate.
Nonetheless, the experts agree that some facets of the globalized economy — like free trade, outsourcing and the fluctuating value of the Canadian dollar — have impacted Canadian industries and consequently Canadian jobs.
Trade troubles
Ian Hudson, University of Manitoba economics professor, says Canada was hardest hit by the impacts of globalization in the early ’90s after signing the North American Free Trade Agreement.
“There was a big industrial shift in Canada where the protected industries declined and the ones that were more internationally competitive expanded,” Hudson explains, citing the Quebec textile industry as one sector that was particularly hard hit.
But the worst has passed, says Hudson, and workers need not fear the trend will continue. “Most of that shake-up has already happened. The firms that are left in Canada are already by and large globally competitive,” he says.
Currency concerns
The dramatic upswing of the Canadian dollar over the past few years added to the disparity between labour costs at home and abroad. In five years, the value of the loonie nearly doubled from 60 cents per U.S. dollar in 2002 to $1.10 in 2007.
For Canadian manufacturers, this spike intensified the challenge of exporting goods. “The value of the Canadian dollar skyrocketed, which presented a huge problem for Canada globally because everything you sell becomes more expensive for foreigners. Combine that with the financial crisis and decreased exports to the United States, and you can turn a fairly competitive company into one that’s really struggling,” says Hudson.
Since the value of the Canadian dollar has taken a nosedive over the past few months, with a dip down to 74 cents U.S. in October, local goods may become easier to export, but the current financial crisis makes it harder to predict what will happen ont that front in the next few months.
Outsourcing options
To keep costs down and remain competitive in the global arena, Canadian companies sometimes choose to outsource a portion of their work. “Outsourcing basically means you are getting a third party to do work you were doing yourself,” explains John Chang of PricewaterhouseCoopers’ global sourcing advisory.
Some Canadians have already seen their jobs fly overseas — particularly phone operators and data-entry clerks, according to a 2007 Statistics Canada report.
However, companies from other countries also set up shop in Canada, creating jobs here at home. Statistics Canada reports that in 2004 Canada outsourced $34.5 billion worth of commercial services — like telecommunications, accounting and architectural tasks — mainly to the U.S., the U.K., China and Japan.
But the same year, Canada brought in even more revenue — $38.9 billion — to perform the same type of work, mostly for the U.S.
In other words, we’ve lost some jobs but we’ve gained some too. “Work gets outsourced to Canada as well as work gets outsourced outside Canada. It’s a dynamic situation,” says Chang.
Savvy solutions
To remain competitive against increased globalization and outsourcing trends, an April 2008 Conference Board of Canada report makes a few suggestions for Canadian industries.
The first task at hand is to improve product quality to meet consumer demands. This principle has been a boon to Cherubini Metal Works Ltd. of Dartmouth, Nova Scotia, a company that specializes in the design and construction of steel buildings, bridges and structures. They've created a niche for themselves by tackling projects that are particularly complex and guaranteeing their results. To do so, they've had to design specialized equipment and even modify their facilities – but the effort is paying off. Cherubini recently beat out companies from Brazil and China for a major international contract.
Another strategy is for companies to adopt “lean” principles by trying to reduce waste, while also improving delivery times. TD economist James Marple says if companies invest in new equipment and technology, they will have an advantage over foreign competitors because they can increase production — without having to ship goods from half a world away.
“What is very important is productivity growth. Having the newest equipment and the newest technologies is the only way that we’ll compete with areas that have such a surplus of workers,” he says.
If we can produce more goods and deliver them faster, we will have a distinct advantage over our competitors.
It’s not always easy to adapt, but Canadian companies need foresight and flexibility to keep up with a changing worldwide marketplace.
“We’re living in a global world. That’s not a political statement. I’m stating a reality,” says PricewaterhouseCoopers’ Chang.
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