Competitive study has useful insights: consultant

Stephen Shepherdson

Canada needs to step it up when it comes to business sophistication and the adoption of new technology, says a transportation and logistics consultant.

Speaking at the 24th annual Conference on Transportation Innovation and Cost Savings in Toronto last week, Stephen Shepherdson said the World Economic Forum’s Global Competitiveness Study sheds an interesting light on the relative competitiveness of firms in the United States and Canada.

Most notably, he said, it shows where Canadians excel… as well as where they need to put more effort.

Shepherdson, a director at PricewaterhouseCoopers LLP, and a consultant on transportation and logistics matters, said many company executives he speaks to are concerned about staying competitive in a world of cost reduction.

“They’re looking to their suppliers to help them do that, he said. “The whole issue of competition is something we continually need to think about.”

He parsed the results of the World Economic Forum’s Global Competitiveness Study for 2010-2011 which looks at business factors in 139 countries around the world, with an eye to comparing North America’s two leading economies: Canada and the United States.

Of the 12 factors that the World Economic Forum looked at, he concentrated on three that are heavily influenced by government policy (transportation infrastructure, goods market efficiency, and innovation), and three that are largely controlled by companies (the development of talent, business sophistication, and technological readiness).

He found that Canada leads the way in transport infrastructure, goods market efficiency, and development of talent, but lags in business sophistication and technological readiness.

“Both Canada and the United States have a (global) competitive advantage in terms of available airline seat kilometers,” he said. “ In terms of overall quality of infrastructure, Canada has an advantage – not a competitive advantage necessarily – but a definite advantage over the United States.”

Canada ranks higher than the U.S. on the quality of its air transport infrastructure, port infrastructure, railroad infrastructure, and roads. In terms of overall quality of infrastructure Canada ranks 13th in the world, and the U.S. ranks 23rd.

Similarly, Canada has a significant advantage over the U.S. in terms of goods market efficiency, where Canada ranks in the top 10 globally in several categories, and is number one in time required to start a company.

“We make it very, very easy to start a business up in Canada,” he said. “If you have a competitive advantage, it’s something to exploit.”

Canada is also generally higher in training and education – particularly in quality of education system, and quality of math and science education. In both categories, Canada is in the top-10 globally, whereas the United States ranks 26th and 52nd respectively.

In terms of innovation, however, the United States beats Canada on four of the measures, and it leaves Canada far behind on the question of business sophistication.

“This is something I believe companies here in Canada could do something about. The dimensions that we have to deal with include value chain breadth and control of international distribution,” he said. “We’re disadvantaged relative to the United States.”

The comparison is useful, he said, if it gets Canadian firms to consider how they can improve on the global stage.

Take a look at your companies and ask yourself, are there areas that you believe you could improve, and if you did, what’s the return on investment you’d get,” he said. “That’s something I think we have to do increasingly if we’re going to be competitive.

The Conference on Transportation and Cost Savings featured dozens of speakers with expertise in law, economics, transportation, and supply chain management.