Worsening labour shortages stifling B.C. manufacturing sector growth and recovery

Metro Vancouver’s high cost of living, inferior incentives and lack of skilled workers threaten one of B.C.’s high-paying job generators

Labour shortages risk undermining the recovery of B.C.’s manufacturing sector, which posted the strongest job gains in more than two decades in 2012.

According to Statistics Canada, the number of people employed in the sector rose 9.3% last year – to 179,000 jobs from 164,000 in 2011 – the largest year-over-year increase since at least 1990.

Some of that growth has come from fast-growing firms like Richmond’s Corvus Energy, a three-year-old manufacturer of industrial batteries that doubled its number of staff last year to nearly 50. (See “Richmond firm lights up industrial battery sector” – BIV issue 1215; February 5-11.)

Corvus CEO Brent Perry plans to increase the size of the company’s staff by another 50% to help it service the growing demand for its heavy-duty rechargeable lithium ion batteries.

That is, if he can find the right people.

Since founding the company in the Lower Mainland three years ago, Perry has struggled to find the skilled labour and expertise in B.C. he needs to expand his business, which is on track to post $60 million in sales in fiscal 2013. That’s up from $100,000 in its first year.

“The challenge has always been finding highly skilled application engineers, software engineers, mechanical engineers and top-notch talent on the business development side,” said Perry. “Right now, I’ve quit looking in Vancouver. Most of our employment inquiries now come from Ontario, if they are in Canada at all, but mostly from California.”

Perry is not alone in the struggle to find talent in the industry.

Since November, Nora O’Donnell, a human resources manager at Burnaby’s Creation Technologies, has had a hard time finding just six additional people to support the company’s expanding electronics manufacturing business, which employs 480 in the Lower Mainland.

The dearth of talent in B.C. has forced her to expand the search across Canada. “If we don’t find anyone by the end of the month, we’re going to go abroad, which is way more expensive,” she said. “A headhunter can charge 20% to 25% of annual salary. That’s a lot if you’re talking about an engineer who’s going to be making $80,000 to $100,000.”

The human resources challenges will worsen if the company’s clients expand orders as forecast. That would require another six production staff as early as May.

More skilled trades training, less university focus needed

The growing deficit of skilled labour in B.C. has been growing partially because of an increasing number of baby boomers retiring and leaving the workforce. But the challenge has been amplified by the growing talent gap between the skills and training needed by industry and the education that new entrants to the workforce are receiving.

Justin Williams, CEO of Burnaby’s Williams & White, noted that it’s been difficult finding experienced machinists and other tradesmen, because there have been relatively fewer people entering those programs in B.C.

“There is such a pressure and push for a university education that people aren’t as inclined to go into a skilled trade,” he said. “What scares me is that there is such a focus on high-tech, clean- tech, all those really sexy [industries], but we need to realize that we need skilled tradesmen working to push forward the knowledge-based economy. You need the baseline manufacturing, machining, fabrication, foundries – things of that nature that sometimes people say are lower skilled but are not.”

Peter Jeffrey, B.C. vice-president of the Canadian Manufacturers and Exporters (CME), noted that much of the government funding available to provide training focuses almost exclusively on providing basic essential skills rather than expanding the capacity and experience for higher level jobs – the area that’s most needed by the industry. He said funding should be made available to support programs that help companies turn employees into trainers, who then support more junior staff and incoming apprentices who might not otherwise be hired because of their lack of experience.

“The skills gap is so big and small companies today can’t take the productivity hit that it would take to get a new person on a production line. Apprenticeship programs are good, but training at a much higher experience level is what’s missing,” said Jeffrey. “We’re not saying to give money for companies to do the training, but put money in to teach them best practices of training trainers within industry, which is a self-sustaining program. Once they’ve learned the methodology, no more funding is needed.”

Some technical post-secondary institutions such as BCIT have been working with the CME to provide training workshops in communities across the province. With manufacturers facing shorter supply chains and smaller orders, such programs have been welcomed by the industry, because they limit the costs of sending employees away for training.

But expanding such programs will need more support and co-ordination from institutions, industry and government.

Said Perry: “It needs the political will at the provincial and city levels to support this in the colleges so these kids can get an education that will give them a meaningful existence and help them earn some real money.”

Vancouver incentives lag behind other regions

While the results of any change in industry training programs would take years, some argue better incentives are urgently needed to help companies offset the costs of bringing in skilled labour from other jurisdictions.

Williams noted that while companies receive tax incentives for hiring apprentices, the amounts are paltry.

Perry added that the competition for talent is global, and many countries are far more attractive either because their wages are higher, their governments provide lucrative income tax incentives or their cost of living is lower.

“The bigger issue is that Vancouver is expensive as all bejesus. It’s hard to bring people here for that reason. That puts a big spanner in the works for everybody,” said Perry. “If I knew in 2010 what I know now, I probably would have started the company in another city, even outside of Canada. We chose Vancouver because we wanted to live here, but I can tell you, I’m paying a heavy price for the quality of life that Vancouver represents.” •

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