Last week Mark Carney, the Governor of the Bank of Canada, the Canadian equivalent of the US Federal Reserve, our central bank, made a very interesting speech in St. John’s Newfoundland. In the speech he went over the past recession with the usual collection of numbers that bankers love. The interesting point however, was left to the end of the speech.
He titled the section Private Boldness: Thriving in a Multi-Polar Economy. The section basically stated that private Canadian business has been slow and too cautious to invest and take advantage of a unique set of economic vectors. It was a kick in the proverbial you know where.
So what did he say… and I quote from his speech from the Bank of Canada web site.
- Canada underinvests in machinery and equipment (M&E), training, and innovation – in fact, all of the underlying drivers of productivity.
- Canadian workers have about half the amount of information and communications technology of their American counterparts.
- Canada is 16th among the member countries of the OECD in the intensity of business research and development.
- Even when we do invest, we are mediocre. Our poor multifactor productivity growth indicates that Canadian firms do not effectively use the capital that they purchase. “
This is not so far off the message The TD Bank’s Economic research unit put out last month, as well as the research Dr. Len Waverman of the University of Calgary recently published. So yet another siren call to Canadian businesses. But the million-dollar question is are they listening?
Mr. Carney puts it very politely and I quote directly from the speech….
” Business will need to step up. Productivity growth fell in the latest recession, the first time this has happened in three decades. Despite the availability of capital, relatively strong balance sheets, and improving economic conditions, business investment has been subdued compared with past downturns and the scale of the challenge. Investment intentions for 2010 remain modest and largely driven by the public sector.
This needs to change for a balanced recovery and a more competitive economy.
This is not just a challenge for our largest corporations. Our small- and medium-sized enterprises are, in many respects, the engines of our economy. The rapidly changing global economy will mean that more, too, will be asked of them.
The imperatives for Canadian businesses appear clear. New suppliers need to be sourced; new markets opened; a new approach to managing for a more volatile environment developed. “
So here we are and yet another siren call, the third one in the past 6 weeks. What will it take to see change happen? My own sense is that people don’t buy and adopt what they don’t understand (digital literacy again) and when people make money hand over fist there is no incentive to innovate. Times are not really that tough so why change? As the Governor says we can’t rest on our laurels!