FEBRUARY 27, 1969
Manufacturing Past, Present and Future
AN ADDRESS BY John Roche O'Dea,
PRESIDENT, CANADIAN MANUFACTURERS ASSOCIATION
CHAIRMAN The President,
Edward B. Jolliffe, Q.C.
In times gone by Canada was predominantly a nation of farmers and other primary producers, but our growth and progress have been based upon manufacturing, which not only sustains our numbers and our standard of living but takes Canada more and more into the market-places of the world. Leading Canadian manufacturers through a banner year is our honoured guest today, Mr. John Roche O'Dea.
Mr. O'Dea comes of a family long prominent in the business and public life of Newfoundland. His father was the Hon. John O'Dea and his brother was recently Lieutenant-Governor of the province, but his own interests have spanned the continent. He completed his education in Montreal and later married a lady from Vancouver. He sat in the House of Assembly from 1959 to 1962, and has also served on the St. John's School Board, the Memorial University Board, the Board of Trade and the Executive Committee of the Boy Scouts' Association. He was President of the Atlantic Provinces Economic Council from 1965, and a member of the Royal Commission on the Economic Prospects of Newfoundland and Labrador. But his great and most consuming interests have been the Company he heads and the Canadian Manufacturers Association, of which he has long been a leading member. This year he is its President and his duties take him from coast to coast. I present to you Mr. O'Dea.
I appreciate very much the honour of appearing on this distinguished platform. I know you have been host to many eminent speakers in your long history, some of them international figures of great renown. I do not know how long it has been since you have had a native Newfoundlander to address you--nor do I know what that would have been--although I suppose it would be a good guess that his first name would be Joey.
Coming as I do from Canada's tenth province, I suppose I am as much a traditionalist as anyone. By that I mean I am rather glad that, while there is no longer any Empire in the old-fashioned sense, there is still an Empire Club. Newfoundland, after all, was the very first of the overseas possessions of the Old Country and, just in case you don't know it, our ties with her reflect that fact with undiminished intensity.
If you will forgive a personal reference, I might also note that I am the first Newfoundlander to be president of the Canadian Manufacturers' Association, in itself a source of no small pride to me. The CMA, of course, like the Empire Club, is hardly a recent addition to the Canadian scene; indeed, it had already been in existence some 32 years on that day in 1903 when the founders of your own august body met in Webb's restaurant in this city.
In other words, we in the CMA are on the brink of our centenary, an occasion on which we intend to make an appropriate acknowledgement of the role played by the manufacturing industry in changing the face of Canada since the birth of Confederation.
I hope you will not be in any sense disappointed if I say here that this role will to a large extent form the theme of my remarks to you today.
The story of Canada's growth and development from a four-province, infant dominion of three million people a century ago to a ten-province-strong nation of 21 million people today is in large measure also the story of the rise of the manufacturing industry.
I realize that this audience understands very well that the health of manufacturing is enormously important to the Canada of today, but, conscious as we are of the glittering contribution of our glamorous natural resources--our oil, our wheat, the products of our mines--we don't perhaps wholly grasp the full significance of the wealth added to our economy by our factory output. Allow me, then, to reel off a few basic and pertinent facts about what is now and has been for some years Canada's number one wealth-producing industry.
It directly employs one out of every four working Canadians and is the indirect source of livelihood for many more, for example the tens of thousands in the transportation and other service industries, and the many farmers whose products it buys for processing.
It is the leading industry in terms of net value of production in six of the ten provinces--Ontario, Quebec, British Columbia, Manitoba, Nova Scotia, New Brunswick and is beaten out for first place by a mere cat's whisker in Alberta and my own Newfoundland.
It accounts for more than a quarter of the gross domestic product--that is, the sum total of the goods and services we produce each year in Canada--a larger segment than any other single industry.
It accounts for fully 55 % of the total net value of Canadian production measured in terms of commodities as distinct from services.
It is the largest single source of government revenue when both corporation income taxes and federal sales taxes are taken into account.
Its contribution to the Canadian economy is such that Canada now ranks sixth among the manufacturing nations of the world.
Such, gentlemen, are the essential facts about the industrial giant which Canada is today. I recite them because I think they serve dramatically to underline the extent to which we have progressed beyond a frontier economy producing foodstuffs and the raw materials for the factories of other nations.
Hardly less important, they serve to remind us, too, that manufacturing today is very far from being important only to Ontario and Quebec. Its impact, as I have shown, is truly national.
Because the future of Canada is so closely bound up with the well-being of the manufacturing industry, it is worth perhaps taking a look at how we have arrived at our present situation and speculating on the future goals which motivate our present day actions.
"The times, they are a-changing," as a current pop song has it, and certainly the world looks very different as we approach the seventh decade of the 20th Century than it did when Sir John A. Macdonald won his second term as Prime Minister of Canada on the platform of the National Policy.
It's fair to say, I think, that this policy, supported by Conservative and Liberal governments alike, has been the bedrock on which manufacturing in this country has been built. It survived several serious challenges, the most famous of which was the reciprocity election of 1911.
Looking back, one can only speculate as to where Canada would be today if the National Policy had been abandoned in the early formative years of our development. Certainly, it provided the incentive to establish factories this side of the border, small and scattered as the market was. And, beyond any question, it provided, too, the only effective counterweight to the natural north-south pull of continental trade.
It is hard to visualize Canada today without its great steel industry, its automobile industry, its textile, electrical and chemical industries, to mention but a few. But one may well wonder if these industries would ever have been built north of the 49th Parallel had the Canadians of the day succumbed to the lure of free trade and cheaper living.
It may be that we today would be no less prosperous as a people and that our economy would be no less developed, but at the very least we must count that highly doubtful. What is not in any doubt at all is that the National Policy of adequate tariffs for our industries through these first decades of Canadian nationhood provided the economic justification for the maintenance of our political sovereignty. There are still many of us, I think, who would not have it otherwise.
I shall pass quickly over the tremendous fillip given to Canadian industrial production by the two great world wars, except to say that the new and expanded industries born here as a result of these two cataclysms provided much of the impetus and sinew for the stronger economy which emerged in both 1918 and 1945.
But it is in the past quarter century or so that the manufacturing industry has really come of age and achieved unquestioned pre-eminence in the Canadian economy. The discovery of oil and natural gas, of new rich iron ore and base metal deposits, the construction of pipe lines and highways and railways, the demands of municipal and educational growth in the wake of our transformation into a society in which 80% of the people live in the cities, our burgeoning population--helped, I might modestly note, by the entry of Newfoundland into Confederation in 1949-the sustained and rising consumer demand for goods and services, which are the concomitants of prosperity, and our inexhaustible appetite for more housing, apartments, shopping plazas, office blocks and public buildings of every shape and size all these are within our own experience. I mention them merely to recall the factors which have made for the most spectacular expansion and diversification of the manufacturing industry that we have ever known in so short a period of time. And, of course, it goes without saying that the industry is to the forefront in the rapid adaptation of new technology and innovation.
Yet even this is but half the story. For, as we all know, much of our postwar prosperity is explained by the marked increase in world trade which has not only been good for our natural resource exports but has also resulted in sales of fully finished goods beyond all our expectations. How many Canadians realize, I wonder, that such factory goods now account for more than one quarter of our total foreign sales, by far the largest chunk of our entire export pie?
It's a salutory corrective to some of the lamentations in which manufacturers, along with everyone else these days, are apt to indulge to realize that nearly all the problems we face are problems of growth and change. Our predecessors were not always so fortunate. They didn't have to contend with the twin menaces of rising inflation and high taxes as we know them, but then neither were they witnesses to the kind of accelerating economic development, mass prosperity and rapidly rising living standards which have been characteristic of the past two decades.
I am the last one to minimize the very serious implications of current tax levels and the inflationary psychology which permeates our whole economic existence at this time and which, if not checked, could certainly becloud our future. All the same, it's worth remembering we faced problems of a different kind altogether 35 years ago and none of us here, I am sure, wish to return to those days.
The point is that, while the problems of today are a whole lot different, we do know quite a bit more than we used to about social engineering and have made some progress in our search for solutions. Granted, we haven't come up with a formula for permanent prosperity without inflation and high taxation and may never do so, but, after eight uninterrupted years of strong North American expansion, we should surely not be excessively pessimistic about our ability to cope with what ails us.
After all, the greatest single economic fact of the Sixties has been the incredible rate at which we in North America have been adding to our wealth. The United States' gross national product was massive enough in all conscience when President Eisenhower left office eight years ago. Since then it has risen year by year at a dizzying rate to a point where the trillion dollar economy is just around the corner. Our own GNP performance has been in proportion and hardly less impressive.
Making every allowance for higher prices, it is still a staggering record and a breath-taking testimony to the potential of free men in a modern industrial society. And, I say again, it should surely help us keep our problems in proportion. All this, and the moon, too!
The problems of change, unlike those of growth, are a constant factor in our business life. We sometimes forget that our fathers and grandfathers had also, in their time, to adapt to change. The impact of the telegraph cable, the telephone, the electric light and the new-fangled typewriter, the internal combustion engine and the early prototypes of today's industrial plant and equipment was hardly insignificant. Certainly, the survival of the industrialists of two and three generations ago depended on the extent to which they, too, moved with the times.
The big difference between then and now, of course, is in the accelerated pace of change and in the infinitely stiffer challenge inherent in anticipating the rate and nature of technological advance. These particular challenges, combined with the harsher disciplines of the international marketplace to which we have increasingly committed ourselves and the necessity of creating new jobs as the work force expands, have required of industry and government in this country a degree of investment in capital equipment and education beyond anything which our grandfathers could possibly have comprehended.
This kind of colossal outlay in itself, along with the ever more sophisticated changes in business methodology, has inevitably taken its toll of those who were either unwilling or unable to meet it. More and more, the spotlight has focused on achievements of the great corporations of industry whose huge resources best fit them to respond to the needs of our changing times.
And yet, the marvellous thing is that, with all this, there are today more small businesses in Canada than there ever were before, many of them of quite recent origin. That, too, says something about the opportunities still to be found in an industrial society which, while more complex and exacting than ever before, is still a long way from being monopolized by the giants of industry and commerce.
And all this, remember, at a time of diminishing tariff protection and a greater degree of foreign competition in our home market than ever before in our history! The extent to which our manufacturers have accepted and adapted themselves to this new postwar world of less protection and freer trade is eloquent testimony to our own growing sense of industrial maturity and self-confidence.
Another major change affecting industry these past two decades has to do with its relations with the community as a whole. The social responsibilities of industry are recognized today to be much broader and far-reaching than was the case in the years between the two great wars. Intelligent corporate management will understand that a company's social obligations extend beyond being a good employer, important and fundamental as that is. There is more to this than the multiplicity of laws, rules and regulations and the rise of big government. Any company wishing to prosper in an age of educated consumers, a watchful press, the all-seeing eye of television and powerful unions will automatically have a healthy respect for public opinion.
The competition between companies to show themselves as socially conscious and publicly accountable institutions has grown apace and will certainly continue to do so. Good corporate citizenship, in other words, while it begins with the earning of a profit does not end there.
The challenge to industrial management in the next 30 years--even more than in the last--will have to do not only with improving efficiency and quality and range of products, but with improving human relations and the quality of life of all of us in our time.
Not all of us can expect to see the dawn of the 21st Century, but many here may very well have an influence on the course of events between now and then and we have, in any event, a natural interest in the kind of country and society that we bequeath to those who follow us.
As I have noted, the problems and challenges confronting manufacturers have greatly altered in the past generation or so and no doubt will alter again in the course of the final three decades of the century as we head into the push-button, small change society that lies ahead.
Some of these challenges are not yet apparent, but I suspect we will not be far wrong in according rising importance to the challenge of social responsibilities, as I have mentioned. Many of our social problems, after all, are going to continue to be the product of ever-increasing urbanization.
To date, business involvement in the solution of such problems as urban renewal, improved transportation within the cities, air and water contamination, rehabilitation of slum dwellers, school dropouts, juvenile delinquency and so on has been relatively peripheral. The time may well be coming when not only industry's money but its management and technical skills will be called upon to play a more significant role in dealing with such social problems.
All this may seem far removed from the primary objective of any company, which is the earning of a profit by the provision of needed goods or services. In fact, however, in the years ahead, such social involvement is all too likely to be seen by industry as a logical extension of earning a corporate living.
All of this will be a far cry from what was expected of industry in the uncomplicated days of Sir John A. Macdonald, but, looking back, as the president of the Canadian Manufacturers Association, at the extent to which industry has succeeded in meeting the various problems and challenges of the past century, I do not find the prospect either surprising or disturbing.
I am confident, in short, of the ability of Canada's manufacturing industry to respond to the gauntlet of our future needs and, as in the past, add significantly to the advancement, happiness and prosperity of our people.
Thanks of the meeting were expressed by Mr. Graham M. Gore.