This presentation will help guide business when it comes to competing in the Global Market place The presentation will discuss factors like hydro rates, labor rates and overhead The presentation will look at key government policies in areas like the following 1. Corporate Taxation 2. Carbon Pricing 3. Payroll Taxation 4. Investment and Trade Deals 5. Innovation and R&D - Research and Development

1. Canada Competitiveness
Analysis
By: Paul Young, CPA, CGA

2. Agenda
• Trade
• Hydro Rates
• Labor Rates
• Productivity
• Commodity Prices
• Taxation Policies
• Government Programs – R&D

3. Trade

4. Canada Trade/investment deals

5. Canada Trade/investment deals

6. Canada and Trade

7. Liberal Party / NDP comments -
• Ralph Goodale –
• Don Davies

8. Trade Analysis

9. Trade Analysis - Imports

10. Trade Imbalance

11. What does Canada Export?

12. What does Canada import

13. Where are the largest
imbalances/Product

14. Conclusion
• How do you reduced the trade balances
– Trade/Investment deals (i.e. fair deals)
– Investment in advance manufacturing/green
technology/food/forestry products
– Continue to develop natural resources like
uranium, lithium, nickel, oil, gas, vanadium,
iron/ore, agriculture sector
– Reduce internal trade barriers (i.e. East/West
Pipeline)
– Port/pipeline capacity

15. Overiew
• This slide deck will look at different factors that can impact on Canada’s competitiveness.

16. Power Generation

17. Large Customer comparison

18. Hydro Rates

19. R&D

20. R&D

21. R&D
• SDTC -
http://www.sdtc.ca/index.php?mact=News,cntnt01,detail,0&cntnt01articleid=333&cntnt01origid=34
1&cntnt01detailtemplate=news-details&cntnt01returnid=143&hl=en_CA
• Next Generation of Fuels - http://www.nrcan.gc.ca/energy/alternative-fuels/programs/3643
• R&D Program http://www.kpmg.com/ca/en/services/tax/r-d-incentives-and-
services/pages/canada.aspx
• CME -
http://www.parl.gc.ca/Content/HOC/Committee/412/FINA/WebDoc/WD6615327/412_FINA_PBC2
014_Briefs%5CCanadianManufacturersAndExporters-e.pdf
• http://www.researchinfosource.com/pdf/2013Top100List.pdf
• http://www.conferenceboard.ca/press/newsrelease/14-03-
26/canada_s_pharmaceutical_sector_could_get_r_d_boost_from_free_trade_agreement_with_eu
rope.aspx

22. R&D
• http://www.canadapharma.org/News.asp?a=view&id=96
• http://www.plant.ca/general/canada-remains-competitive-business-tax-environment-worldwide-
kpmg-infographic-137272/
• http://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-technology-oil-sands-report-2013-
11-en.pdf
• http://www.workingforest.com/canadian-forest-products-research-and-innovation-receives-global-
recognition/
• Advanced MFG - http://www.feddevontario.gc.ca/eic/site/723.nsf/eng/01547.html or
http://news.gc.ca/web/article-en.do?nid=984479 or http://cme-
mec.ca/_uploads/_media/52fqtx4b9.pdf
• Tesla - http://www.cbc.ca/news/canada/nova-scotia/tesla-announces-5-year-lithium-ion-research-
deal-with-dalhousie-1.3117126
• Harper and IBM - http://www.theglobeandmail.com/news/politics/ottawa-reveals-details-of-15-
billion-fund-for-science-strategy/article21957502/
• Canada’s Ranking - http://www.newswire.ca/news-releases/canada-moves-up-in-innovation-
rankings-but-weaknesses-remain-524047021.html
•
• There is more improvement required to continue to help move ideas from incubation to markets.
• Government Programs - http://www.slideshare.net/paulyoungcga/federal-government-programs-
canada

23. Canada Productivity

24. Canada Infrastructure

25. Tax Competitiveness

26. Policy Proposals
• Royalty review
• Provincial Corporate Tax Increases
• ORPP
• Carbon Taxation

27. Labor Costs

28. Labor Costs

29. Commodity Prices

30. Capital Investment

31. Canada Capital Spending

32. FDI/Canada

33. Government Polices - Overall

34. CME/Comments
• Key quotes:

35. Key Drivers/Manufacturing• This is a good article discussing the impact on currency rates as part of the production costs/cycle: http://research.cibcwm.com/economic_public/download/feature3.pdf. The
issue I see with this article is that it does not deal with growth in cost areas as part of the production cost management cycle:
• Hydro rates are ignored, but should have been included due to fact how much hydro rates have increased in terms of their overall growth:
http://www.electricity.ca/media/Electricity101/Electricity101.pdf or http://www.exchangemagazine.com/morningpost/2014/week18/Monday/paying-more-for-power.pdf or
business pleas for reduction in hydro rates: http://www.thestar.com/business/2014/02/26/ontarios_big_industries_plead_for_lower_hydro_rates.html . In theory the dollar
would help, but if dollar is change is slower than hydro costs increase then any savings will be lost over time. Here is latest from Ontario Chamber of Commerce:
http://www.theglobeandmail.com/news/national/skyrocketing-electricity-rates-wreaking-havoc-with-ontario-businesses/article25348882/
• Labor Rates – Labor rates benefit the most as they typically do not grow that fast in terms on the dollar depreciation and/or appreciation:
https://www.kpmg.com/Ca/en/IssuesAndInsights/ArticlesPublications/Documents/2014-compalt-execsum-fc-en.pdf or
https://www.bcgperspectives.com/Images/The_Shifting_Economics_of_Global_Manufacturing_Aug_2014.pdf/. USA healthcare costs are increasing as such that helps
Canadian companies: http://www.themanufacturinginstitute.org/Research/Facts-About-Manufacturing/Costs/Structural-
Costs/~/media/48CE1E3848B446ADAFEBF9E945D26FC8.ashx.
• Advance manufacturing - http://www.cbc.ca/news/canada/windsor/pm-stephen-harper-announces-tax-rules-that-allow-manufacturers-to-write-off-equipment-1.3074117 or
http://www.prnewswire.com/news-releases/2015-top-technologies-in-advanced-manufacturing-and-automation-technical-insights-300092861.html or
http://www.logisticslist.com/self-driving-truck.html
• Raw Material – Raw Material will be impacted when the Canadian dollar as many raw materials, like oil/Gas, nickel, copper, etc. are reflected in USD. A weakening Canada
dollar will force up the cost of raw materials
• Capital Investment – B of C had hoped that during the high Canadian dollars would have had companies investing in capital, but that did not happen due to fact the economy
had slowed as such capacity was not required during 2008-2009. http://www.cme-mec.ca/english/advocacy/your-issues/manufacturing-competitiveness.html. The recent
depreciation in the CDN$ will have impact on company’s ability to purchase capital assets, especially if the equipment is purchased outside of Canada:
http://www.cbj.ca/the_canadian-chamber_of_commerce_-_2014-15_economic_outlook/
• R&D Innovation – Canada http://www.conferenceboard.ca/hcp/details/innovation/berd.aspx. Canadian government have only increase investment in R&D by about 2% over
the past few years. Innovation is a key area that requires more a commitment, especially as it has impact on productivity as well as the ability of companies to stay
competitive with their products/services
• Exports – Exports are very sensitive to currency as such they likely will benefit with higher volume, especially to the USA: http://www.edc.ca/EN/Knowledge-
Centre/Economic-Analysis-and-Research/Documents/export-indicator-report.pdf. Exports have been growing at 4-5% range for the past few years. Trade/investment deals
with countries like China, South Korea, Colombia, CETA, etc. will have a benefit over time: http://www.slideshare.net/paulyoungcga/key-market-and-industry-indicators-for-
canada-december-2014.
• Automotive Production - http://www.theglobeandmail.com/report-on-business/international-business/toyota-moves-corolla-to-mexico-highlighting-high-costs-in-
canada/article23963034/
• Infrastructure – Ontario Liberal talk about Transit, but little on port expansion and/or other supply chain management issues related to infrastructure, why?
http://pm.gc.ca/eng/news/2014/11/24/pm-announces-new-infrastructure-investments-across-canada. So, does this mean Sousa will lay out a plan to move forward the east-
west pipeline or help with other flows of goods?
• Internal Trade Barriers – Will work with the provinces to bring barriers down? http://www.slideshare.net/paulyoungcga/internal-trade-canada
• Partnering with Ottawa to take advantage of federal programs - http://www.slideshare.net/paulyoungcga/federal-government-programs-canada
• Oil and Gas Sector and Ontario - http://www.albertaoilmagazine.com/2012/07/ontario-manufacturers-retool-to-take-advantage-of-a-prairie-energy-boom/
•

36. Canadian Manufacturing

37. Near-Shoring

38. Supply Chain
Trends for 2016
By: Paul Young, CPA, CGA

39. Technology Driven
• Big Data
– Turning data into answers for business on the
fly
• Agility to adjust to Consumers
– Keeping customers loyal
• Social Analytics
– Understanding social media trends and
translating those results into product
innovation

40. Sustainable, Flexible and
Transparent Supply chains
• Continue movement to clean business
practices through the reduction of the
carbon footprint
• Continue disclosure via sustainability
reporting as it relates to business practices

41. De-Centralization – Omni
Channels
• eCommerce in Canada will continue to
grow to reach 20% of all retail sales by
2019
– Re-look at distribution and fulfilment centers
are part managing customer orders
– More electronic tracking as part of fulfilment
via computer chips to align with smart devices
like iPads, iPhones or other modes of
communication – (real time Inventory Tracking

42. Near-shoring
• Companies are moving production closer
to their customer base
– Issues facing Near-shoring in Canada
• Labor rates
• Hydro Rates
• Logistics (roads, bridges, rail, ports, etc)

43. Collaborative relationships
• Integration of technology through out the
supply chain.
– Advances with Mobile devices/smart
technology has allow for better integration
of operations.