Lift All Boats: The Opportunity in Digitizing Canada’s Traditional Industries
In recent years, Canada’s economy has been configured around two increasingly disparate parts.
One segment encompasses highly productive and tech-driven sectors, including advanced manufacturing, pharmaceuticals, biotech, food processing, aerospace, logistics, fintech and engineering services. The players in these sectors have invested heavily in a broad range of digital technologies, from enterprise-management systems to robotics to artificial intelligence and machine-learning tools. Health-care innovators, in turn, are building transformative technologies that use AI, “Internet of Things” (IoT) devices and next-generation networks to improve medical services from diagnostics to telehealth, homecare and electronic patient records. Altogether, Canada’s digital economy now accounts for 11 per cent of all employment, while a 2020 study by the Innovation Economy Council found that advanced manufacturing has produced most of the new jobs created in Ontario in the past decade.
The other segment encompasses Canada’s most traditional industries—sectors that trace their roots to the country’s origins, such as mining, forestry, agriculture, heavy industry and energy. These sectors, which are now deeply enmeshed in global supply chains and are increasingly dominated by multinationals, have been far slower to embrace established and emerging Industry 4.0 tools, from the use of IoT sensors to automation and predictive analytics. According to the World Economic Forum, just 13 to 16 per cent of oil-and-gas exploration firms currently use robotics, drones or AI applications.
Some of these industries operate in the hinterland, beyond the reach of 5G broadband networks. Others rely on long-established industrial processes and extremely capital-intensive facilities that are difficult to retrofit. Most are highly exposed to global commodity-price fluctuations that directly impact investment in productivity-enhancing technology.
These factors aren’t unique to Canada, but Canada has a particularly long tradition of underinvesting in R&D, and nowhere is this deficit more apparent than in its traditional industries, observes Jean-Charles Fahmy, president and CEO of CENGN, Canada’s Centre of Excellence in Next Generation Networks. “There’s been a lot written over the last couple of decades about Canada’s productivity gap relative to the OECD and the U.S.,” he says. “While there are many factors, one of the biggest is our lag in the adoption of technologies that help enable this productivity.”
These traditional sectors, which account for about a quarter of Canada’s GDP, face enormous and mounting pressure to accelerate their modernization efforts. This pressure stems from trends that include sharply rising demand for minerals and food; increased demands to reduce carbon or hit net-zero targets; worsening labour shortages; and mounting societal and legal expectations that extraction-based industries must do more to fully involve Indigenous communities.
But there can be little debate over the core question of whether these investments are truly necessary. As a 2019 IDC Canada technology-gap analysis commissioned by CENGN concluded, “All economic sectors must be digital sectors. Enterprises in all sectors must develop processes for applying digital innovation enabled by [next generation network] technologies and services … for full benefits to accrue across society and for firms to remain competitive.”
Potential value generated by digital technology for the mining industry and environment in the form of reduced CO2 emissions
13 to 16 per cent
Proportion of oil-and-gas exploration firms currently using robotics, drones or AI, according to the WEF
U.S. agricultural technology deal growth over the past five years
- Author: John Lorinc | Freelance Writer
- Data and analytics: Nigel Biggar, Sana Maqbool
- Editor: Guy Nicholson
- Executive editor: Karen Mazurkewich
- Research associate: Heather O’Brien