While Canada scores high on the level of research and development, the commercialization rate of Canadian new-to-market products is among the lowest of OECD countries. This means that Canadian businesses and the government are not receiving the full value of their investment in R&D. The following series examines multiple options available to Canadian companies to bridge the major commercialization gaps in the Manufacturing, ICT, Agri-Food and the Healthcare industries to maximize the return on R&D investment.
In this four part series, we explore how Canadian companies can ease the transition from performing R&D to commercializing their products or services. Part 1 provided an overview of business growth in the Information and Communications Technology (ICT) sector. Parts 2 and 3 will together focus on solutions to bridge the commercialization gap that exists in the manufacturing sector between small-scale R&D and full-scale production, beginning with training and hiring, and then addressing capital investment opportunities. The final installment of this series will tackle innovation specific to the Agri-Food industry.
The current gap in Canada between innovation and commercial production, results from challenges associated with achieving a sufficiently large and skilled workforce, and implementing the necessary capital; these two factors are preventing Canadian companies from reaching the high rates of commercialization as similar socio-economic countries based on the amount invested in R&D. Significant investment is required in the hiring and training of employees to develop and grow the necessary advanced manufacturing skills that companies require to compete on a national and global level.
With the rapid progress being made in such fields as artificial intelligence and collaborative robotics, the evolution of “Advanced Manufacturing” during what is being called the fourth industrial revolution is providing a means to integrate these innovative technologies into manufacturing processes, and improve the transition from R&D to commercialization while increasing efficiency and output. But, as the manufacturing industry shifts, the skills required for labourers shift as well, particularly with manufacturing jobs that require expertise in automation, programming, electronics, or mechanical systems growing in demand. By meeting the increasing demand for an adaptable and highly-skilled workforce, companies can accelerate their level of innovation and consequently increase the rate of commercialization. However, though more trained employees with the right skills are needed, less Canadians are entering skilled trades. This, along with the challenges of keeping relevant, high demand skills within Canada, leads to many manufacturing companies experiencing a shortage in skilled labour. While industry analysts are forecasting the global AI and robotics market to grow to US$153B by 2020, the recruitment gap in the skilled trades is also expected to grow, with one million skilled trade workers that will be needed in Canada by that point. The challenge is to attract, build and maintain a strong workforce with the proper skills to enhance the innovation and resultant commercialization coming out of the manufacturing sector.
Various federal and provincial programs can offset the costs of hiring staff or training employees to help companies attain the skills necessary for working with advanced machinery, integrated and automated systems, or new manufacturing processes, for example.
Financing Workforce/Skills Development:
The creation of skilled jobs is a crucial component of diversifying and strengthening the economy while also advancing innovation and expansion, and thus is something that the Canadian government is keen to support through funding opportunities. Therefore, various government funding opportunities are available to support hiring and advanced training of employees in the manufacturing sector by reimbursing a portion of eligible costs.
The Canada Job Grant, a six year federal-provincial program initiated in 2014, provides a key source of direct funding to support workforce development, covering two-thirds of the eligible training costs, up to $10,000 per employee. Eligible costs include tuition or training fees and required materials such as textbooks or software. Recent changes have been made to the initiative, such as the possibility of small businesses with less than 50 employees to have 100% of eligible costs covered, up to $15,000 per trainee, when hiring and training unemployed individuals.
Similarly, the Industrial Research Assistance Program (IRAP) Youth Employment Strategy program provides small and medium-sized enterprises (SMEs) funding for employing Canadians graduating from post-secondary institutions in order to foster skills that will translate to innovation and commercialization. Half of the new hire’s salary could be covered—up to $30,000—for SMEs focusing on technology development or commercialization through R&D. Also, through the National Research Council-IRAP, non-repayable financial assistance as much as $250,000 is available to SMEs whose objective is to generate or grow profits through the commercialization of R&D.
Additionally, the Work-Integrated Learning (WIL) Digital Program (“The WIL to Succeed in Tomorrow’s Digital Job Market – Innovation Ready Grads”) was recently launched by the Information and Communications Technology Council (ICTC), included in Canada’s Innovation and Skills Plan. This five year program can provide up to 70% of the wages from a student in a Canadian post-secondary institution, to a maximum of $7,000 over four months, in emerging sectors such as advanced manufacturing.
Combining Hiring/Training Grants with Funding for Innovation & Export
Hiring and training grants can be combined with the SR&ED tax credit program to capture the eligible labour hours of the skilled workforce. R&D efforts that result in technological advancements, such as the development of advanced full-scale processes, are eligible for refundable and non-refundable tax credits. Not only do these tax credits increase the feasibility of undertaking R&D projects at their onset but they also can be reinvested for further innovation and subsequent commercialization.
Bridging the gap between R&D and commercialization is a complex endeavour that will require manufacturing companies to transition toward an advanced workforce. Fortunately, there are sources of funding that companies can access to navigate the hiring and training of employees. These programs can support businesses of all sizes by reimbursing labour costs, which can then be used to further R&D efforts or to explore other business development initiatives.
In the next installment of this series, we will focus on capital investment funding opportunities that aid in bridging the commercialization gap in the manufacturing sector.