Made in Canada - One Manufacturer's Approach

Due to the pressure exerted on foreign industry to build their products inCanada, extensive studies were conducted by Cooper-Bessemer of Canada over aseven year period. Their approach to the normal necessary large capitalexpenditure for a low unit volume, cyclic heavy equipment market, along withpictures of components produced, purchased or imported is presented. By leasinga plant in a surplus labour area and installing only general purpose machinetools that can be kept busy, overhead and direct labour costs can becontrolled. Components in various stages of manufacture are purchased fromforty to fifty Canadian suppliers. A formula applied to U.S. costs comparedwith Canadian costs dictates whether a component is made, purchased orimported. Canadian suppliers have done an outstanding job of producing pistons, cylinders, heads, flywheels, crossheads, nuts, bolts and so forth for the largeslow speed engines and compressors they are building. "Canadian content" isoften discussed in terms of man-hours, material, dollars or percentages. Due tothe differences in accounting policies of various companies, the results areoften misleading. A realistic and simplified interpretation that makescomparisons meaningful is gaining general acceptance. It is suggested that"Canadian content" should be interpreted as the difference between the sellingprice and the value of the goods and services imported. Customs set standardvaluations so comparisons are fair and easy to audit. Any money that does notleave the country adds to the gross national product, be it expenditure, profitor taxes. Introduction There has been a gradual increase of pressure put on suppliers who importtheir products to manufacture in Canada for about ten years now. The approachto the problem used by Cooper-Bessemer of Canada Ltd. may be of generalinterest. It should be understood that this Company is not recommending, oreven suggesting, that what it is doing would work for others. However, in theauthor's opinion, it can be said that there is no easy way to produce heavyengines and compressors in Canada at a profit. The concept which Cooper-Bessemer of Canada is using, does allow it to get a high Canadiancontent with a relatively low capital investment.