Taking Advantage of the Powerful Dollar
Maintenance has a role to play in the opportunity a high Canadian dollar offers in increasing industrial safety and productivity.
BY: SIMON FRIDLYAND
The latest news is full of speculation and predictions about what the high Canadian dollar versus the U.S. dollar will do to Canada’s manufacturing sector. Just a short while ago, a 62-cent Canadian dollar was a reality. It gave products manufactured in Canada a price advantage in the U.S. marketplace. However, during the past several months, it has been rising steadily. At press time, it had reached $1.10. Some economists are saying it may go as high as $1.25, while others predict it will go back below par. Nobody knows for sure.
In order to stay competitive, the high dollar here means Canadian manufacturers must improve productivity in their plants to compensate. So what do we need to do to make our plants more productive and what can maintenance professionals do to facilitate this process?
First, some background. The process of this restructuring actually began several years ago. After three years of poor growth — averaging 0.1% per year and even a decline in some years — labour productivity grew by 3.5% and 5.7% in 2004 and 2005, respectively. Indeed, because of considerable industrial restructuring that included plant closures and employee layoffs, the manufacturing sector outperformed the larger business sector in the past two years.
Labour productivity growth in the Canadian manufacturing sector has been three times that of Canada’s business sector since 2004. However, the plant closures came at a huge price. In the past five years, 300,000 jobs have been lost in the manufacturing sector, including 44,000 in 2007 so far, according to CIBC World Markets. Worse still, CIBC is forecasting another 200,000 job losses in the manufacturing industry, which is concentrated in the province of Ontario, by the end of the decade.
Restructuring is absolutely necessary; however productivity gains could be achieved through purchasing of new key pieces of equipment and retrofitting existing equipment, thereby increasing its efficiency and safety at the same time.
Let’s look at purchasing and retrofitting more closely.
Purchasing new equipment
Since most machinery is priced in U.S. currency, firms can take advantage of the strong Canadian dollar now to invest in machinery and equipment in order to improve their productivity. Since 2003, the Canadian business sector’s investment in machinery and equipment has rebounded, with an annual growth approaching 8%. In this case, the powerful Canadian dollar presents us with an opportunity to save money on new equipment.
However, there’s more to consider than price when shopping for new machinery. While preparing specifications for the new equipment, the purchaser should be aware of the liabilities associated with the process.
In Ontario, the owner, lessee or employer must ensure that before the processes or machine become operational, a PSR report (Pre-Start Health and Safety Review) is issued to a joint health and safety committee. In a pioneering purchasing specification approach by S.A.F.E. Engineering Inc., the responsibility for PSRs can be passed to the suppliers by the purchasers through us before accepting a shipment.
We are involved with suppliers and end users at the time of equipment manufacture itself, advising the suppliers on the requirements of local compliance and coordinating with the end users for all potential issues. This ensures that the equipment is ready to use as soon as it arrives at the factory and installed. Following this process, the equipment will be accompanied by the PSR. The associated liability of the process is assumed by S.A.F.E Engineering.
Retrofitting existing equipment
The majority of Canada’s industrial infrastructure is between 20 and 30 years old. The most economical way to increase productivity is through equipment upgrades. Safety upgrades of the machine and improved productivity go hand-in-hand.
If you take into account two identical machines with the just the difference that one does not comply with safety requirements (is open and unguarded) while the other one does using a solution developed by operations, maintenance and engineering professionals, you can very well judge which one will be more efficient.
While the open machine can function in various ways, there is only one way, decided at the time of set up and installation, in which the guarded machine will function. This process, called standard work, is a lean term where lean principles function at a micro level. The guarded machine will go from point A to point B without any unrequired turns or twists.
Thus, it is clear that the guarded machine will be more consistent and also last longer. This why models with manual transmission are not rented by North American car rental agencies as different usage techniques will most likely end up damaging the transmissions.
Unwanted scrap, damage, equipment downtime and personal injury is directly proportional to procedural mistakes and variability. Operational efficiency is driven by human activity.
According to various large studies, the productivity resulting from better machine guarding resulted in employee productivity increase by 25% over a five year period and reduction in associated indirect operating costs by 20%. Due to the proven theory that the human mind will change methods of working to increase our chances of survival, a risky environment causes slow and cautious work while a safe environment promotes faster and efficient work.
The retrofitting approach can succeed only with the active participation of the maintenance professionals who best the know the machine.