In Ontario, the automotive manufacturing sector was hit particularly hard in the last recession. Although automation of the industry was blamed for many of the job losses, that very same technology is now changing the landscape of Ontario manufacturing. Automation and innovation are the keys to preparing your business for the next recession.
You may have heard the rumours that there is a recession looming in the near future. The Financial Post explains that with increasing household debt and interest rates, the Canadian economy could be headed for the next downturn.
In the April issue of the Harvard Business Review (see References), a study of 3500 companies found that those who prepared for the next recession by taking company-wide action saw growth during and after the economic slowdown. The unprepared companies did not see that same increase in earnings before interest and taxes.
Depending on the particular industry, there are various ways to recession proof. You’re essentially setting up your company to weather the economic storm. In the Harvard Business Review article, sales tactics included eliminating marginal accounts, improving low-cost channels for small clients, automating account management, and using data/market research to set prices. In the case of manufacturing here are tips you can use to prepare for the next recession.
3 Tips to Recession Proof Ontario Manufacturing:
1. Lean Into Innovation
There are two key reasons to lean into innovation: putting yourself ahead of the competition and diversification. Given Ontario manufacturing’s evolution into a high-tech, automated industry, you’ve likely already innovated with your processes, systems, and new products. You’ve also got employees who have embraced innovation and understand how to work in a changing and improving atmosphere.
Empower your employees to create, innovate, and improve on your existing products and services. Create a culture that puts continuous improvement at the forefront and fosters creative problem solving. By improving on existing products, you’ll put yourself ahead of your competition by using your in-house assets: your employees. In addition, consider diversifying your products into other industries that are less prone to being affected by the economic climate. Examples include healthcare, waste disposal, discount retailers, etc.
2. Increase Investment in Training
You likely already know that it is more cost-effective to retain and invest in your current employees than to hire new ones. In light of the looming recession and the tip about innovation and improvement, your limited resources will go further if you invest in your current workforce through training.
Continuous improvement and process efficiency training programs can be conducted easily in your company to communicate your vision in light of the economic climate. When employees are well informed on how they can help the company succeed, and they know that you are investing in them long-term, morale is boosted and employee retention is increased.
Training will also cut down on the number of mistakes made in your business, saving you money when you can’t afford unexpected expenses. With the numerous cloud-based learning platforms available, training can be specifically tailored to your company’s needs at an affordable price. For example, Area9 Lyceum’s product delivers individualized adaptive training to each employee, optimizing the learning process and maximizing your investment.
3. Don’t Cut Marketing
It might be tempting to make cuts to marketing during a recession, but let’s take a look at how we can maximize the first tip about setting yourself apart from your competitors. You need to be able to effectively communicate the innovative solutions you’ve developed in order to increase sales. However, rather than continuing to spend money on traditional advertising, given the economic climate, it’s time to look at a more efficient approach to reaching your potential customers: inbound marketing (sometimes also called attraction marketing).
Inbound marketing uses a variety of tactics to create content and develop websites that will attract your ideal customers. During a recession, that might be international markets or industries that are relatively indifferent to the downturn. By tailoring your marketing efforts to these potential customers, your leads will be better qualified and your sales team will be able to close with less effort.
Instead of spending more money on traditional advertisements or time on travelling to meet new potential customers, let inbound marketing do the leg work for you. SEO websites, email campaigns, and blog posts carefully crafted for your customer base will get you seen online (ranking high on Google). You can then focus your attention on running a lean operation, investing in your employees, and guiding the company through whatever the economy has to throw at it.
Attract Talent to Support the Future of Manufacturing
Even if a recession is further away than the rumours suggest, the tips will strengthen your position in the marketplace and set your company up for long-term success. As you plan for the future of your workforce, consider these additional factors:
External links are provided as informational resources only and are not necessarily endorsed by Ontario East.
References:
https://business.financialpost.com/news/economy/is-canada-headed-for-a-recession
“Get Ahead of the Next Recession.” Harvard Business Review, vol. 97, iss. 2, March-April 2019.
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