Export Development Canada’s President and CEO Benoit Daignault will be in Davos, Switzerland, this week to attend the World Economic Forum’s Annual Meeting, where the theme is “Mastering the Fourth Industrial Revolution.”* ExportWise recently spoke with Mr. Daignault to get his thoughts in advance of the meeting.
Q. Why are you going to Davos?
Benoit Daignault: EDC’s business spans the globe, so we need to be where our customers are. Davos is where many of the world’s most forward-thinkers meet to discuss ideas and trends. The contacts we make there and the knowledge we derive from something like Davos will inform the work that we do helping Canadian companies navigate an ever-evolving business landscape.
Q. The theme of this year’s Annual Meeting in Davos is the “Mastering the Fourth Industrial Revolution”, a collective term embracing a number of modern automation, data exchange and manufacturing technologies. What should Canadian business be doing to get ready for this revolution?
BD: Most Canadian businesspeople are aware of Big Data, but I think we’re just at the very early stages of exploiting it. For companies to really be prepared for that level of change, it will be critical that leadership really embraces it and sets the tone from the top. One of the more interesting questions about Big Data preparedness that I have seen came from McKinsey, which asked “If you could test all of your decisions, how would that change the way you compete?” I can’t think of any business owner or CEO who wouldn’t love to have that competitive advantage, so we need to see more companies jump into the Big Data pool. Having that level of data allows for more adept management of rapid and disruptive change, which is especially important as we head into what EDC believes to be a protracted period of market volatility.
Q. What business sectors are poised to capitalize on the Fourth Industrial Revolution?
BD: The answer is, in fact, all of them. If we look at the concepts of Big Data or the Internet of Things, there isn’t any sector that won’t be impacted by the quantum leap of interconnectivity. One could even argue that the least tech-intensive sectors stand to gain the most.
The agri-food sector is one example of this. The Industrial Internet can be a game-changer in helping this sector rise to the challenge of feeding nine billion people by 2050. Farmers and agri-food companies are just beginning to embrace precision agriculture, a technological concept that measures and responds to field variability for crops, often using satellites and GPS tracking systems. Advanced technology systems available on farms are really ramping up, with companies like John Deere building data systems into their machinery so soil samples are measured and transmitted daily.
Canada has a healthy tech sector, and we already do some very innovative things, but one area where we have a clear competitive advantage is clean tech. We’re already at the leading edge in many important areas, including smart grids, smart water, and capturing gas by-products and converting them to energy. Look to this sector for a jump in growth over the coming decade.
Q. What can EDC do to help Canadian businesses succeed in this Fourth Industrial Revolution?
BD: One of the key questions posed by Klaus Schwab (the founder and executive chairman of the World Economic Forum) for Davos is “How can governments build institutions capable of making decisions when the challenges they face are more complex, fast-moving and interconnected than ever before?” It’s a very timely question, as EDC evolves to meet the needs of exporters and we continue to adapt to greater volatility, both in markets and sectors.
In EDC’s case, it’s about remaining relevant to the ultimate beneficiaries of trade policy: Canadian companies. Relevance means having the agility to continuously and quickly adapt and evolve. That’s the reality our customers live and we need to be there with them.
Q. What is the overall outlook for Canadians exports in 2016?
BD: There’s no doubt that 2015 was tough for Canadian energy and mining exporters, but if you take out the impact of the slump in oil and base metals prices, other sectors – such as automobiles, equipment, aerospace and consumer goods – grew at a double-digit pace. In 2016, all sectors should grow, thanks largely to increasing demand from the United States, a weaker Canadian dollar and a mild rebound in commodity prices. Overall, we are forecasting export growth of about seven per cent this year. Canada has some distinct advantages – well-managed fiscal policy, solid financial institutions and a diverse export base – so we are well positioned to act quickly when opportunities arise amidst the current volatility.
Having said that, Canada’s growth is still being challenged by two key constraints: our lagging national productivity performance and our ability to participate in global supply chains. Both of these constraints can be alleviated, to an important degree, through improved trade performance. A 2014 Deloitte study showed that the productivity of Canadian exporters outperformed that of non-exporters by over 30%. The same study found that entering international markets made companies 37% more likely to adopt innovative technologies from around the world, which are key drivers of productivity and breaking into global supply chains. If Canadian companies want to improve their outlook overall, we already have the tools we need to make a real impact. We just need to make a concerted effort to realize Canada’s trade potential.
Q. Does the economic situation in China give you cause for concern?
BD: China is definitely going through some economic turbulence at the moment, but it remains the world’s second-largest economy and a strong prospect for Canadian exporters. And even a slow-growth China remains a huge opportunity for Canadian exporters. The slowdown and volatility in China’s economy as it comes off government stimulus is bound to produce a few more surprises along the road and lead to a bumpier ride than we have been accustomed to, but in our view, the bumps will, in general, be worth it.
* “Earlier Industrial Revolutions advanced human progress through new forms of power generation, mass production and information processing. Building on a ubiquitous and mobile internet, smaller, cheaper and more powerful sensors, as well as artificial intelligence and machine learning, the Fourth Industrial Revolution is distinct in the speed, scale and force at which it transforms entire systems of production, distribution, consumption – and possibly the very essence of human nature.” – Fon Mathuros, “What is the theme of Davos 2016?” , World Economic Forum, November 16, 2015.