Resiliency and adaptability define outlook for Canadian manufacturing and distribution industry amid complex economic environment: BDO Canada survey

Digital transformation and AI adoption essential to tackling productivity gap and fueling sector progress.

TORONTO, Feb. 19, 2025 /CNW/ - Amid economic and geopolitical uncertainties, Canada's manufacturing and distribution industry is finding ways to evolve and overcome challenges. According to data from BDO Canada's Momentum: Manufacturing and Distribution Leadership Report, industry leaders highlighted the importance of digital transformation and the adoption of AI in the face of Canada's productivity gap and increasing global supply chain complexity.

A blend of telephone interviews and online surveys of more than 120 C-suite executives and leaders from Canadian manufacturing, wholesale, and distribution companies was conducted to gain insight into the priorities, opportunities, and challenges shaping the future of the sector. Respondents represented the food and beverage; metals, rubber, and plastics; transportation and logistics; automotive; aerospace; chemical; and other significant industries from across the country.

The survey revealed that one-third of respondents are already implementing an existing digital transformation strategy and nearly two-thirds are experiencing a positive ROI from these efforts, particularly in production and operations. From a digital priority perspective, 37 per cent of respondents identified enhancing cybersecurity measures as the top priority in their transformation journey, with digitizing supply chain operations being the next most important at 28 per cent.

While digital transformation continues to accelerate in the sector with larger organizations leading the way, there is a growing commitment to modernization, and the integration of advanced digital systems and automation processes.

"Embracing digital transformation is a strategic imperative, necessary for maintaining competitiveness in a rapidly evolving landscape," says Paul Dostaler, Partner, National Manufacturing and Distribution Industry Leader at BDO Canada. "And, in order to fuel progress and growth, the rapid evolution and positive impact of AI cannot be ignored. AI has the potential to enhance productivity and streamline regulatory processes — however, success hinges on those willing to invest wisely and seek expert guidance in navigating this transformation."

AI's growing influence is evident, with nearly half (48 per cent) of businesses surveyed reporting that they are using these applications. This promises to materially improve productivity and profitability.

Even before President Trump threatened tariffs on Canadian imports, the survey found leaders were committed to streamlining operations and improving efficiencies. A significant 75 per cent of respondents acknowledge a national productivity issue, prompting them to implement steps such as engaging external consultants, investing in infrastructure, and fostering employee engagement to drive efficiency.

Government incentives are also playing a pivotal role in shaping investment decisions. Over 40 per cent of respondents indicated that recent grants for clean tech have influenced their strategies, highlighting the importance of these incentives in supporting sustainable growth and technological advancement.

Feedback from respondents suggests that addressing this productivity gap requires a holistic approach, focusing not only on attracting and retaining talent but also on upskilling the workforce and fostering strong leadership. This underscores the industry's commitment to leveraging technology and strategic planning to overcome current challenges and be set up for success in the future.

"Increasing efficiency is absolutely critical in the manufacturing and distribution industry, given the traditionally tighter margins compared to other industries," says Jesus Ballesteros, Partner and National Manufacturing and Distribution Advisory Leader at BDO Canada. "The more a company is able to streamline its operations, the greater its potential for profitability."

The report emphasizes that AI's potential aligns seamlessly with the principles of Industry 4.0 and the shift toward smart manufacturing, where interconnected systems and real-time data drive smarter, faster decisions. With the industry's proactive adoption of technology and strategic foresight, leaders are well-positioned to overcome challenges and achieve future success.

Methodology
BDO Canada conducted this survey in partnership with Environics Research between September and October 2024. A total of 126 C-suite executives and leaders of manufacturing, wholesale, and distribution companies in Canada were included. This online and telephone study utilized a convenience sample of C-suite executives who signed up for a survey through a market research panel. There are approximately 10,677 businesses with 50+ employees in manufacturing, wholesale, and distribution. If using a random sample, a sample of 100 interviews yields a margin of error of ±10% at a 95% confidence level.

About BDO
BDO Canada LLP is a leading provider of professional services to clients across a variety of sectors and segments. For over 100 years, our team has served communities across Canada through an integrated service offering including accounting, assurance, tax, and consulting services. This is complemented by deep industry knowledge and positions BDO to advise clients with both domestic and global needs.

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO member Firms.

SOURCE BDO Canada

Media Contact: Tara MacPherson, Senior Consultant, Proof Strategies Inc., [email protected], 905-870-1771