Industry 4.0, the Future of Work & Skills - Ryerson University
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Industry 4.0, Building Collective
the Future of Resources for
the Canadian
Work & Skills Aerospace Industry
CENTRE DE RECHERCHE INTERUNIVERSITAIRE
The CRIMT Institutional Experimentation for
SUR LA MONDIALISATION ET LE TRAVAIL
INTERUNIVERSITY RESEARCH CENTRE
Better Work Partnership Project
ON GLOBALIZATION AND WORK
Partners
The Diversity Institute conducts and coordinates multi-disciplinary,
multi-stakeholder research to address the needs of diverse Canadians,
the changing nature of skills and competencies, and the policies,
processes and tools that advance economic inclusion and success.
Our action-oriented, evidence-based approach is advancing knowledge
of the complex barriers faced by underrepresented groups, leading
practices to effect change, and producing concrete results. The Diversity
Institute is a research lead for the Future Skills Centre.
Future Skills Centre is a forward-thinking research and collaboration
hub dedicated to preparing Canadians for employment success and
meeting the emerging talent needs of employers. As a pan-Canadian
community, FSC brings together experts and organizations across
sectors to rigorously identify, assess, and share innovative approaches
to develop the skills needed to drive prosperity and inclusion. FSC is
directly involved in innovation through investments in pilot projects
and academic research on the future of work and skills in Canada. The
Future Skills Centre is funded by the Government of Canada’s Future
Skills program.
The research activities of the Interuniversity Research Centre on
Globalization and Work (CRIMT) focus on the theoretical and practical
challenges of institutional and organizational renewal in the areas of
The CRIMT Institutional Experimentation for
Better Work Partnership Project
work and employment in the global era. Its Institutional Experimentation
for Better Work Partnership Project - funded by the Social Sciences and
Humanities Research Council of Canada and the Canada Foundation for
Innovation - brings together CRIMT (funded by the Fonds de recherche
du Québec - Société et culture) and an international network of leading
partner centres (20) and coresearchers (180). This vast multi-year project
seeks to build knowledge on and understanding of how to make work
better. The focus is on actors from the world of work who – in a context
of great uncertainty – engage in forms of social experimentation and on
why these sometimes lead to better or worse work.
HEC Montréal is a French-language university institution offering
internationally renowned management education and research. The
School has been training future managers who contribute to our
society’s growth and prosperity since 1907.
With financial support from the Fonds de recherche du Québec, the
Observatory helps communities, organizations and individuals maximize
the positive outcomes of artificial intelligence (AI) and digital technology
and minimize the negative effects of technology.
Funder
The Future Skills Centre – Centre des Compétences Funded by the
Government of Canada’s
futures is funded by the Government of Canada’s Future Skills Program
Future Skills Program.
The opinions and interpretations in this publication
are those of the author and do not necessarily
reflect those of the Government of Canada.
Contributors
Kai-Hsin Hung, PhD Candidate Lucie Morissette, PhD Benjamin Paré, Masters student
HEC Montréal HEC Montréal UQÀM
Marc-Antonin Hennebert, PhD Daniel Nicholson, PhD Laurence Solar Pelletier, PhD
HEC Montréal Candidate Polytechnique Montréal
Cardiff University
Publication Date:
April 2021
Authors
Christian Lévesque, PhD Cassandra Bowkett, PhD
HEC Montréal HEC Montréal
Christian Lévesque is full professor at HEC
Cassandra Bowkett is a postdoctoral researcher at
Montréal and the co-Director of the CRIMT
HEC Montréal, affiliated with the CRIMT research
research network and associated research centre,
network and associated research centre. She was
a partnership across 18 universities within Canada
employed full time on the project funded by the
and internationally. He is also co-responsible
Future Skills Centre, which focused on the impact
for the research activities on Industry 4.0, Work
of Industry 4.0 technologies on the future skill
and Employment undertaken at the International
needs of the aerospace sector in Canada. She
Observatory on the Societal Impacts of AI and
completed her PhD research at Cardiff University,
Digital Technology. He has conducted several
exploring the role of aerospace multinationals in
long-term research projects including one recent
the UK and Australia in shaping future skills for
international project on the aerospace industry.
engineers. Her research interests focus on future
His current research interests are focused on the
skills and talent management, including in the
impact of emerging technologies on work and
context of emerging technologies.
collective action.
Sara Pérez-Lauzon, PhD Candidate Blandine Emilien, PhD
HEC Montréal UQÀM
Sara Pérez-Lauzon is a PhD Candidate at HEC Blandine Emilien is an assistant professor in
Montréal, affiliated with CRIMT. Her dissertation human resource management (HRM) at the School
focuses on SMEs’ strategies within aerospace of Management at the Université du Québec à
clusters in Canada and Belgium in the context of Montréal. A postdoctoral research fellowship
skill development, where she examines interfirm brought her to explore the realms of the aerospace
collaboration on HRM issues and the role of cluster industry in Canada and abroad. Also a member of
governance in fostering these collaborations. CRIMT, Blandine pursues her research interests
Her research interests revolve around interfirm in understanding decent HRM practices (mainly
collaborations on work and HRM issues in the staffing and development, talent management)
context of sectoral and regional transformations. and variegated management styles by taking a
comparative lens across various industries and
types of organizations. Her current research
projects focus on the recruitment process for
migrant workers in the Québec food-processing
industry and the process of rethinking succession
planning and talent management in union
confederations as employers in Quebec and the
Spanish Basque country.
Contents
Executive Summary ii
Introduction 1
The Aerospace Industry 8
Innovation, I4.0, and the
Transformation of Work and Skills 16
Cluster Dynamics and Regional
Institutional Configurations in
Toronto and Montréal 41
Conclusion 67
Appendices 70
References 78
i
Executive Summary
For decades, Canada has built a robust and Second, the impacts of I4.0 on work and
competitive aerospace industry that plays skills vary, and they do not affect all workers
a crucial role in the Canadian economy, nor affect them all in the same way. While the
with 700 aerospace companies employing adoption of I4.0 is in its early stages and its
roughly 90,000 people. Prior to the COVID-19 impact on future skills and work remains an
pandemic, demand for labour outstripped open question, our findings suggest that it
supply in the industry, resulting in labour favours job polarization, creating some high-
shortages in many occupations. A major skill jobs but also many lower-skill ones.
ongoing challenge is attracting a new Thus, the industry is facing a real dilemma
generation of workers by offering good jobs that the adoption of I4.0 could exacerbate:
and better work. it has difficulty attracting talent due to the
combination of fewer high-skill jobs and less
The adoption of Industry 4.0 (I4.0) is high-quality work.
often presented as a way to increase the
competitiveness of the industry, while Third, in both clusters, the central challenge
improving the quality of work and increasing of I4.0 and future skills is the production
skills by reducing repetitive, routine tasks. of collective resources. In Montréal, at the
Our research in the Montreal and Toronto cluster level, many collective resources
aerospace clusters has two objectives: 1) to are offered through regional mediating
better understand the impact of I4.0 on work organizations in terms of training,
and skills; and 2) to identify the conditions knowledge, and material resources. These
that will enable the various stakeholders organizations also create space for low-
to meet the challenges of I4.0 and future power actors (e.g., small and medium-
skills. Four main findings emerge from this sized enterprises [SMEs] and unions) to
research. participate in decision-making, agenda
setting, and resource allocation. In Toronto,
First, there is much variation between firms there are fewer cluster-level resources to
in terms of I4.0 adoption. Some firms are support firms in adopting I4.0, yet there
fully engaged and are currently operating are more collaborative and experimental
a virtual factory, whereas others have yet initiatives driven by individual firms and
to begin the turn towards I4.0. In between, some colleges and universities. In recent
some firms sit at different stages, as they years, intermediary organizations have
build their digital infrastructure to capture also developed initiatives to encourage
and organize the relevant data.
ii
networking and collaboration among various In the context of the COVID-19 pandemic—
stakeholders. Nevertheless, large firms are in and the devastating impact it has had on
a better position to develop these initiatives the airline and aerospace industries—the
and to access resources in comparison to recovery of the industry will have to rely
SMEs. As such, each region has created more than ever on the collaboration of all
resources through a distinct approach: a stakeholders for the production of collective
firm-centric approach in Toronto and a more resources. It is essential for the industry to
coordinated approach in Montréal. be at the technological forefront of product
and process innovation. Canada needs a
Fourth, firms cannot meet the challenges of long-term strategy to achieve productivity
I4.0 and future skills alone. It is important to and cost-cutting, while also creating good
establish mechanisms to foster collaboration jobs and high-quality work through I4.0.
and coordination among the various
stakeholders, in order to produce collective
resources that favour the development
of a skilled workforce and technological
innovation. Although our research in both
Montréal and Toronto was conducted prior
to the COVID-19 pandemic, this proposition
holds even greater weight in the current time,
with firms in a significant downturn that has
caused many to make workforces redundant.
iii
Introduction
COVID-19, I4.0, and the “We’re on the brink of losing it all. Even
prior to the catastrophic consequences
future of work and skills
of COVID-19, Canada’s aerospace
in Canada’s aerospace
industry was losing ground... now,
industry facing pressures and losses that are the
The COVID-19 pandemic has shut down biggest in aviation history, Canada has
global travel and crippled airlines. This has slipped even further.”
had a knock-on effect on the aerospace
industry, as airlines are likely to put plans — CHAREST (2020)
to purchase aircraft on hold (Srocki, 2020).
This is bad news for the Canadian aerospace
As of the end of December 2020, the federal
industry, which was already struggling to
government had not announced a strategy
compete in a global market where other
for aerospace and had provided government
countries invest billions to support and retain
aid of only 1.3% of 2019 ticket sales to
their national aerospace industries.
the airline industry, which is the primary
Competitors’ investments have only purchaser of aircraft. This is incredibly low
increased following the pandemic; in support in comparison to pledges by the US
comparison, the Canadian aerospace (32.7%), France (36.1%), Germany (19.5%),
industry has been starved for resources. and the UK (7.1%) (Pearce, 2020; see also
The negative impact on the local industry is Leroux et al, 2020).
already being seen through high numbers of
redundancies and layoffs. The pandemic is
also likely to destroy the predicted industry
growth and production backlogs that the
global industry was facing. Additionally,
some firms are gauging the benefits
of moving their production to low-cost
countries—a significant threat to local
manufacturing and suppliers.
1
Additionally, the COVID-19 pandemic has delivery time while reducing costs. Global
placed an even greater spotlight on the role consultancy firms play an important role
of I4.0.1 The concept of I4.0 was launched in shaping the ideational elements in the
at the Hannover Trade fair in 2011 and was discourse about I4.0 through their reports
heralded as a new production paradigm and promotional materials (Pfeiffer, 2017).
to revolutionize both manufacturing and Data is considered to be the core driver of
services (Kagermann Wahlster & Helbig, I4.0—the new fuel of the economy (Agrawal,
2013). Yet I4.0 is a contested concept, Gans & Goldfarb, 2018). The ability of firms
with multiple meanings (Mertens & Wiener, to learn from and adjust to data in real
2018), and more than 100 definitions have time is critical for the success of I4.0. It is
been identified (Moeuf et al., 2018). It expected that workers will have to become
has even been likened to a management analysts of production-related data, with
“fad” or “fashion” (Madsen, 2019). In this the ability to derive meaningful insights on
report, I4.0 is defined as “a new approach process quality from a bulk of information.
for controlling production processes by Hence, it is assumed that robotics and
providing real-time synchronization of flows cognitive technology associated with I4.0 will
by enabling the unitary and customized transform the role of the workforce; however,
fabrication of products” (Kohler & Weisz, it can be difficult to envision precisely what
2016). In a manufacturing context, I4.0 those new roles would be (Sniderman et al.,
includes development of a virtual factory; 2016).
virtual supply chain management; predictive
maintenance; and real-time control of quality Beyond a general agreement that I4.0 is
and production volume and flows. going to transform manufacturing industries
and work, there is almost no consensus
However, I4.0 also operates as a frame about the impacts I4.0 will have on skills.
that aims to institutionalize technological Will it augment and complement worker
innovation and shape the future of work. tasks and improve worker skills, or will
It is a highly normative concept that it erode them? What types of skill sets
provides a prescriptive view on how will be needed in an I4.0 manufacturing
production processes can be controlled environment? The combination of personal
using new technological innovations, in abilities and attributes, skills, and knowledge
order to improve productivity, flexibility, and required to effectively perform a job in an
I4.0 environment has yet to be defined.2
However, it is likely that the existing training
1 In a recent report, the Organisation for Economic regimens will need to be updated, while the
Co-operation and Development (OECD) (2020)
argues that the pandemic is likely to accelerate the
existing workforce will also require some
adoption of digital technologies and that automation re-skilling. This investment in skill will be
is likely to replace tasks within jobs rather than expensive, in financial terms as well as in
replace jobs, which will have impact across the skill
spectrum. New technologies are likely to make some
skill sets obsolete and increase demand for new
skill sets and jobs related to data management and 2 We draw here on the definition of competency by
information technology (IT). Braham & Tobin (2020).
2
terms of human and technological resources. Our main proposition is that a coordinated
Data may be “the new oil,” (Agrawal et al., effort is needed to create collaborative
2018) but bottlenecks in implementing I4.0 spaces that enable firms and mediating
are not related solely to data, as skills and organizations4 to act together, pooling and
training are also significant considerations creating collective resources while also
(Brynjolfsson & McAfee, 2014). sharing risk. Any benefits created by this
collaboration should be equally accessible
In the absence of mechanisms to coordinate to the various stakeholders that need them.5
the needs of various stakeholders,3 one of An important contribution of Ostrom (1990)
the outcomes is that firms may then tend is to have highlighted that the nature of
to underinvest in training or invest more any good is defined not only according to
in firm-specific training (Crouch et al., its characteristics (exclusion and rivalry)
1999), which reduces the supply of skilled but also according to the institutions that
labour. Under these conditions, competition establish the conditions of its production
for (and poaching of) skilled workers is and use.6 We argue that while agility in skill
likely to flourish, as well as the pursuit of development institutions can support the
competitive market-based relationships development of future skills (Organisation for
between firms. These rivalries may also Economic Co-operation and Development
spread from firms to workers, unions, and [OECD], 2020), these skills are likely to be
even other organizations in the skill system best produced collaboratively as a collective
(e.g., colleges, universities, private training resource.
providers, or industry bodies). In this
business climate, individual firms are not
well-suited to address future skill challenges
and the broader challenge of I4.0.
4 Following Cooke, Boekholt & Tödtling (2000:104)
mediating organizations include industry
organizations, technology organizations, public
research organizations, education organizations, and
employer and worker associations.
5 Economists often define different types of “goods”
according to two criteria: 1) whether they are
“excludable” (the goods can only be used by one
person at a time or are available to all); and 2)
whether they are “rival” (their use by one individual
precludes their use by others) (See Crouch et al.,
1999). We draw on the work of several scholars
(e.g., Coriat, 2015; Ostrom, 1990) who put much
emphasize on the institutions that enable the
creation of collective resources.
3 A stakeholder is any actor (individual, group, 6 Institutions shape actor behaviour and patterns of
organization) concerned with the activities of relationships through rule setting; formal sanctions
the aerospace industry. These include firms; and incentives; shared conceptions and taken-for-
trade unions; industry organizations; government granted meanings; frames of interpretation; and
representatives; and various actors involved in binding norms (Scott, 2008). Institutions not only
research and skill development, such as universities constrain, but also enable social actors within a
and colleges. particular field.
3brief
The purpose of this report is twofold. First, Our report seeks to contribute
it seeks to assess the use and development to the literature by examining
of I4.0 to determine its impact on work how regional institutions
and skills. Second, it aims to understand
the dynamics through which actors and
can enhance the creation of
organizations experiment with institutions collective resources to meet
to produce collective resources to meet the the challenges of I4.0 and
challenges of I4.0.The report focuses on
future skills development.
two of the largest aerospace manufacturing
clusters in Canada: Montréal, Québec and
Toronto, Ontario. Québec and Ontario offer
an intriguing comparison. Haddon (2015)
argues that the two provinces have followed
different patterns of development, leading
methods section, outlining the boundaries
to distinct social and economic policy
of this project. The second section uses
choices. For instance, whereas Ontario has
Statistics Canada and industry data to
developed a firm-centric approach, Québec
illustrate the context of the aerospace
relies more heavily on a concerted form of
industry, and the main demographics of
interest intermediation between various
the two regions under study. The third
stakeholders. Galvin’s (2019) work on multi-
section draws on a combination of Statistics
level governance in the aerospace industry
Canada data and qualitative data gathered
in Ontario and Québec also suggests that
through interviews with a variety of actors
the two provinces rely on different types of
to examine the broader trends related to
economic development modelling. Several
adoption of I4.0, and explores the impact
studies analyzing or comparing subregions
that I4.0 is having on labour markets, work
and clusters in these two provinces reach
organization, and skill development. The
similar conclusions (Rutherford et al., 2018;
fourth section briefly presents the framework
Warrian et Mulhern, 2009; Tremblay et al.,
used to analyze regional institutional
2012; Niosi & Zhegu, 2005). Our report seeks
configurations in both Montréal and Toronto
to contribute to this literature by examining
and describes the current dynamics and the
how regional institutions in the two provinces
resources produced by these institutions
can enhance the creation of collective
to meet the challenges of I4.0 and future
resources to meet the challenges of I4.0 and
skills. Finally, the conclusion examines the
the development of future skills.
wider implications of our findings on the
The report is structured as follows: development of a strategy to strengthen
immediately following this introduction is a competitiveness and sustainability of the
4Canadian aerospace industry. and new technology (refer to the breakdown
of interviews in Appendix B). Through these
semi-structured interviews, we wanted to
understand: 1) how actors are implementing
Research design I4.0 in firms; 2) what are the challenges
and methods associated with I4.0 adoption; 3) how I4.0 is
changing the organization of work and the
This study forms part of a research agenda skill requirements of the workforce; 4) how
on the aerospace industry.7 During an actors use the regional resources available
early wave of research on the Montréal to them. In May 2019, we also conducted
region (beginning in 2010), we saw a four group interviews with 32 shopfloor
growing discourse around technological delegates in the Montreal cluster in order
advancement and the challenges firms to understand more fully the relationship
faced in implementing new technology and between I4.0, work organization, and future
developing the skills of their workforce. A skills.
further wave of research started in Montréal
All the interviews were recorded, transcribed,
in 2015, which we began to mirror in our
and anonymized. Where interviewees
study of Toronto in 2018, with interviews
requested no recording, notes were taken
continuing until 2020.
instead. The interview data were analyzed
We began our research by mapping the and coded by several members of the
aerospace industry in each cluster (firms, research team. Unfortunately, our final
trade unions, mediating organizations, fieldwork trips in Toronto were cancelled due
etc.). Several resources were leveraged to to the COVID-19 pandemic. We had planned
do this, such as websites, reports, event to do more visits in Toronto in March,
information, previous research on each undertaking group interviews with shopfloor
cluster, and various directories compiled delegates and conducting additional
by industry organizations. We conducted firm case studies. A small number were
a total of 139 interviews between 2010 conducted via Zoom. Although the research
and 2020 (97 from 2015 onward) across design used in Montreal could not be fully
the Montréal and Toronto clusters. For the replicated in Toronto, we are confident that
individual interviews, we included managers, the data collected provide a solid basis for
union representatives, representatives of comparison. An initial draft of this report was
industry or regional mediating organizations, sent to a dozen key informants in Montreal
government representatives, and various and Toronto to validate our findings. This
actors involved in the development of skills consultation gave us the opportunity to
sharpen our analysis and gain insight on the
impact of the pandemic on the industry.
7 This research was financed by the Social Sciences
and Humanities Research Council (SSHRC), with the
most recent phase being jointly funded by the Future
Skills Centre and the Diversity Institute at Ryerson
University’s Ted Rogers School of Management.
5the students and colleagues who helped
shape and frame this research project.
Finally, it should be emphasized that our
research team is solely responsible for the
We would like to thank all of the people
analysis and conclusions expressed in this
who were interviewed and shared their
report. Any omissions in fact or interpretation
experience with us. We are grateful to our
remain the sole responsibility of the authors,
key informants, who provided feedback
and the findings do not necessarily reflect
on the first iteration of the report and gave
the views of our research partners nor those
us the opportunity to validate our results.
of the many industry stakeholders with
We also want to thank the team at Ryerson
whom we discussed these issues. However,
and our broader research team: all of
67
The Aerospace Industry
we would be remiss if we did not emphasize regional aircraft), and they sit at the head
how much we have benefited from their input. of complex global supply chains. Beneath
them reside four tiers of suppliers, including
This section outlines the evolution of, and Tier 1 engine manufacturers and system
trends within, the aerospace industry—with integrators, who are responsible for work
a special focus on Montréal and Toronto— packages; Tier 2 suppliers, who manufacture
and highlights several challenges that the and develop parts; Tier 3 suppliers, who
industry faces. manufacture components; and Tier 4
suppliers, who provide processing services
The global aerospace or raw materials (Emerson, 2012; Supply
Chain Working Group, 2012).
industry
In the last five years, the global industry
The global aerospace industry includes has seen significant consolidation. The
all in-country activities related to the role of the duopoly has been strengthened
development, production, maintenance, through Airbus acquiring Bombardier’s C
and support of aircraft and spacecraft, Series and Boeing’s attempted partnership
with a total valuation argued to be worth with Embraer (Hader et al., 2018). There has
$838 billion (AeroDynamic Advisory & Teal also been significant consolidation among
Group Corporation, 2018). The industry is Tier 1 and Tier 2 suppliers, with merger and
cyclical, experiences strong competition, acquisition activity between Safran and
and has a highly skilled labour force. It has Zodiac, the formation of Collins Aerospace
a high dependence on R&D, as well as an from UTAS and Rockwell Collins, and the
international customer base and production emergence of Mitsubishi as an OEM with
capacity (Zhegu, 2013). The civil aviation their purchase of the Mitsubishi Regional Jet
manufacturing segment is a duopoly, program (Hader et al., 2018).
with two major competitors and original
equipment manufacturers (OEMs): Airbus Until recently, growth projections for
and Boeing, who specialize in aircraft with the industry have been strong (Deloitte ,
100 or more seats. Alongside these two, 2020). In 2018, the number of passengers
a handful of other OEMs of aircraft exist worldwide reached 4.3 billion and the
(e.g., private jets, smaller OEM competitors, world fleet grew from 9,700 aircraft in
81986 to 30,300 in 2018 (Organisation de
l’aviation civile internationale [OACI], 2018).
However, the impacts of the global COVID-19
pandemic—and the associated reduction of
global travel—will result in immediate and 69% of the industry’s
prolonged reductions in aircraft sales as contribution to GDP
airlines struggle to survive (Bruno, 2020). It is
comes from aerospace
estimated that the industry will take between
three to five years to recover (Chapman & manufacturing activity,
Wheatley, 2020). while 31% comes from
maintenance, repair, and
The Canadian aerospace
overhaul activities.
industry
The Canadian aerospace industry is primarily
oriented to commercial markets, as opposed
to defence or space orientations, and ranks
in the top three globally in the production
of civil simulators, turboprop and helicopter
code 3364)8 has increased by approximately
engines, business jets, and regional
88% from 1997 to 2017,9 in comparison
aircraft (Innovation, Science and Economic
to aggregate increases in Canadian
Development Canada [ISED] & Aerospace
manufacturing activity across all industries of
Industries Association of Canada [AIAC],
approximately 43% for the same time period.
2019). The industry includes firms from each
Figure 1 demonstrates the contributions of
of the supplier tiers, with each subsystem
the industry to GDP over the past 20 years.
of commercial manufacturing being
represented (i.e., landing gear, engines,
aircraft structures, and final assembly)
(Zhegu, 2013).
The majority (69%) of the industry’s
contribution to gross domestic product
(GDP) comes from aerospace manufacturing 8 NAICS code 3364 includes the following industries:
activity, while the remainder (31%) comes manufacturing aircraft, missiles, space vehicles and
from maintenance, repair, and overhaul their engines, propulsion units, auxiliary equipment,
and parts thereof. The development and production
(MRO) activities (ISED & AIAC, 2019). of prototypes is classified in this industry, as is the
Aerospace manufacturing activity (NAICS factory overhaul, and conversion of aircraft and
propulsion systems. Our qualitative data focuses
predominantly on civil aviation and all associated
activities: manufacturing aircraft, engines, propulsion
units, auxiliary equipment, and parts thereof.
9 This is the latest data point (released by Statistics
Canada in 2020).
9FIGURE 1
Contribution to Canada’s GDP by aerospace and manufacturing industries
12,000 250,000
Manufacturing GDP ($millions)
10,000
Aerospace GDP ($millions)
200,000
8,000
150,000
6,000
100,000
4,000
50,000
2,000
0 0
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Manufacturing aggregate Aerospace
Note: “Manufacturing aggregate” refers to the Canadian manufacturing aggregate (across all manufacturing industries),
while “Aerospace” refers to the aerospace industry (NAICS code 3364).
Source: Statistics Canada (2020a)
The Canadian aerospace manufacturing industry (including maintenance and repair
industry has a similar structure to the global operations) directly employs 89,500 people
aerospace industry in three ways: 1) it has a (ISED & AIC, 2019), with 51,349 of them
small number of aircraft and engine OEMs; employed in aerospace manufacturing
2) it has a limited number of Tier 1 engine (see Figure 2). Although, on average,
manufacturers and system integrators; and manufacturing employment has seen a
3) a larger number (around 670) of small decline of approximately 14% from 2005 to
and medium-sized enterprises (SMEs) are 2019, aerospace has seen an increase of
integrated into local and global supply approximately 22% in employment numbers
chains (Emerson, 2012). The aerospace (see Figure 2).
10FIGURE 2
Employment in aerospace and manufacturing industries in Canada
60,000 2,500,000
Number of Employees
Number of Employees
50,000
(Manufacturing)
2,000,000
(Aerospace)
40,000
1,500,000
30,000
1,000,000
20,000
10,000 500,000
0 0
2001 2005 2010 2015 2019
Manufacturing aggregate Aerospace
Note: “Manufacturing aggregate” refers to the Canadian manufacturing aggregate (across all manufacturing industries),
while “Aerospace” refers to the aerospace industry (NAICS code 3364).
Source: Statistics Canada (2020b)
The aerospace industry of its aerospace industry. In Québec, the
contribution of the aerospace industry is
in Montréal and Toronto more marked, notably because there is
comparatively less manufacturing activity.
Two provinces make up 81% of Canadian
aerospace manufacturing activity: Québec There are also differences between the two
(51%) and Ontario (30%) (ISED & AIC, 2019). provinces in terms of industry composition.
In 2019, the aerospace industry as a whole Of the approximately 700 aerospace
generated $17.8 billion in annual sales companies operating across Canada,
in Québec, and over $6 billion in annual approximately 300 operate in Ontario
sales in Ontario (Ministère de l’Économie (OAC, 2019) and 185 operate in Québec
et de l’Innovation Québec [MEIQ], 2020; (MEIQ, 2020). The majority of aerospace
Ontario Aerospace Council [OAC], 2019). manufacturing activities take place in two
The importance of the industry within regions, concentrated either in the Greater
each province differs—the industry’s Montréal Area (98%) or Greater Toronto Area
GDP contribution is larger in Québec than (80%) (Canada 2020, 2012; Global Business
Ontario—the impact of which is magnified Reports, 2017; MEIQ, 2020).10 Pressure from
when considered alongside the contribution OEMs for suppliers to become integrators,
of manufacturing to each province’s GDP combined with their willingness to reduce
(see Figure 3). In Ontario, the contribution of the overall number of suppliers, has resulted
the aerospace industry is less pronounced in a declining number of aerospace firms in
because of the importance of the Canada overall (see Figure 4 on page 13).
manufacturing sector overall, partially due
to the prominence of its automotive industry, 10 The Greater Montréal Area and Greater Toronto
which reduces the relative contribution Area will be referred to simply as “Montréal” and
“Toronto” throughout this report.
11FIGURE 3
Aerospace GDP versus manufacturing GDP by province
7,000 120,000
Aerospace GDP ($millions)
Manufacturing GDP ($millions)
6,000 100,000
5,000
80,000
4,000
60,000
3,000
40,000
2,000
1,000 20,000
0 0
1997 2000 2005 2010 2015 2019
Manufacturing aggregate-Quebec Manufacturing aggregate-Ontario
Aerospace-Quebec Aerospace-Ontario
Note: “Manufacturing aggregate” refers to the provincial manufacturing aggregate (across all manufacturing industries),
while “Aerospace” refers to the aerospace industry (NAICS code 3364).
Source: Statistics Canada (2020c).
In comparison to Toronto, the Montréal Most of the national employment for
cluster is smaller in terms of number of aerospace manufacturing is located within
overall firms, notably SMEs, but has a the Montréal and Toronto clusters (see Figure
larger number of multinational companies, 5). Montréal captures the highest share of
including four OEMs, and more than ten Tier employment; however, comparing 2005 to
1 suppliers (e.g., CAE and Pratt & Whitney) 2019, Ontario has shown a higher overall
(MEIQ, 2020). The cluster in Toronto is percentage in growth rate (30%, compared
more geographically dispersed, has a far to Québec’s 22%).
higher number of firms, most of which are
SMEs, and has around ten Tier 1 suppliers Roughly 70% of workers in the aviation and
(Canada 2020, 2012). Historically, the Toronto aerospace industry are men, and 26% are
cluster has been dominated by one OEM: immigrant workers (Canadian Council for
Bombardier (Niosi & Zhegu, 2005). Recent Aviation & Aerospace [CCAA], 2018). These
changes following Bombardier selling off figures may overestimate the proportion
some of its product lines have increased the of women in the aerospace industry.
number of OEMs to include DeHavilland and The latest data from Québec shows that
Mitsubishi.11 women comprise 21% of the workforce,
but that these employees are mainly (80%)
concentrated in administration. Women
represent only 12% of the workforce in
11 Although the composition of the clusters in Montréal trades, and roughly 20% of both scientific
and Toronto is different, it should be emphasized
that there are many firms operating in both clusters, and technical staff (Comité sectoriel de
as subsidiaries of the same multinational company.
12FIGURE 4
Number of aerospace manufacturing firms by province (NAICS code 3364)
600
500
Number of Firms
400
300
200
100
0
2004 2005 2006 2007 2008 2009 2010
Quebec Ontario Rest of Canada
Note: Data for firm numbers was discontinued after 2010, and the data set was fully archived in 2012.
Source: Statistics Canada (2012).
FIGURE 5
Employment in the aerospace industry by province (NAICS code 3364)
60,000
50,000
Employment
40,000
30,000
20,000
10,000
0
2001 2005 2010 2015 2019
Quebec Ontario Rest of Canada
Source: Statistics Canada (2020b)
13main-d’œuvre en aérospatiale au Québec Roughly 70% of workers in
[CAMAQ], 2016, p. 7). There are several the aviation and aerospace
studies documenting that, even in fields
with skill-scarcity, immigrants and women
industry are men, and 26% are
face barriers to entry (Braham & Tobin, immigrant workers.
2020; Ng & Gagnon, 2020). Firms in both
clusters report12 that they have made inroads
into achieving diversity of ethnicity in their
workforce composition. However, many of
these same firms argue that gender diversity
is a bigger challenge due to low numbers of Women represent only 12%
women graduates in science, technology,
of the workforce in trades, and
engineering and math (STEM) fields and
trades. roughly 20% of both scientific
and technical staff.
The industry in both Ontario and Québec is
also characterized by an aging workforce,
with an average age of around 45 years
(CAMAQ, 2016; CCAA, 2018). This is
partially correlated to the difficulty of Canadian aerospace (IAMAW, 2019; UNIFOR,
attracting a younger generation of workers 2019). However, the aerospace industry does
to Canadian aerospace. According to the have several qualities that make it attractive
two dominant trade unions in the industry— to workers, as it is a high-tech industry that
the International Association of Machinists offers competitive salaries. In 2016, average
and Aerospace Workers (IAMAW)13 and hourly earnings were roughly $33 per hour—
UNIFOR, who represent roughly one third 40% higher than the Canadian average
of the workforce in Québec and one fifth (UNIFOR, 2016).
of the workforce in Ontario (Castonguay,
2017)—this trend is exacerbated by the fact
that firms are often recruiting experienced
workers, as opposed to young people via
apprenticeships. Both trade unions argue
that the recruitment of younger workers is
problematic and requires the provision of
good, stable jobs with meaningful work.
To address this issue, they have been
pressuring the federal government to
develop a national strategy for the future of
12 Via interview data.
13 Their acronym in French is AIMTA.
14Looking ahead Second, the acquisition of the C Series by
Airbus—and, consequently, the withdrawal
The Canadian aerospace industry is still in a of Bombardier from the market of regional
relatively good position, even in the context aircraft—has not only weakened the only
of the pandemic and other economic and Canadian anchor firm present in both
financial hardships. These challenges will Toronto and Montréal, it can also have a
continue to place a significant amount of negative impact on Canada’s employment
pressure on all labour market stakeholders— potential and investment in R&D. As
including employers, workers, and an illustration, the development of the
policymakers—but there are also other Bombardier C Series, initially estimated
important trends that pose additional threats. at $3.5 billion, ended up costing nearly $6
billion (Dubuc, 2020).
First, the concentration of Canada’s industry
in the commercial aerospace markets, as Finally, the aging workforce—and Canada’s
opposed to defence or space programs, difficulty recruiting youth to aerospace
significantly reduces access to federal jobs—may reduce the capacity of the
investment; this contrasts with major industry to make the shift toward I4.0.
competitors located in the USA, Brazil, or A successful transition will require not
Europe. Business associations and trade only investment in training, but also in
unions have been arguing for a long time that the development of good jobs that offer
the Canadian industry is at a comparative meaningful and high-quality work.
disadvantage, and have urged the federal
government to invest more for the industry
to compete at the same level.
15Innovation, I4.0, and the
Transformation of Work
and Skills
This section draws on a combination of Technology and skills
Statistics Canada data and qualitative data
from our field work to examine the broader development in the
trends related to I4.0 adoption, identifying Canadian aerospace
four stages that firms move through in their
implementation of I4.0. The impact of I4.0 on industry
labour markets, work organization, and skills The global aerospace industry has a high
are explored through the following questions: dependence on R&D (Zhegu, 2013) and a
high R&D intensity in comparison to other
> How are employment structures and
manufacturing industries. The industry is
occupations changing? What occupations
often perceived to be at the cutting edge
are most affected by labour shortages?
of technological innovation (Hartley, 2014);
> Are new technologies increasing worker however, the industry is not considered to
autonomy and discretion over the be at the forefront in the adoption of I4.0.
organization of work? How are forms of At a global level, some reports indicate that
control over work evolving? Is there an aerospace and defence firms are falling
increase in monitoring and surveillance? behind the curve in terms of implementing
new technologies related to I4.0 and
> How are the skill and competency
automation (Hader et al., 2018).
requirements changing? Where are skills
being upgraded and downgraded? What There are various reasons given for this
are the new skill requirements? underinvestment in emerging technologies.
In some accounts, firms have reported
being unsure of which areas of business
the new digital technologies can be applied
to and how to apply them (Hader et al.,
2018). Other barriers slowing adoption rates
16FIGURE 6
R&D intensity in aerospace versus manufacturing industries in Canada
25%
20%
R&D Intensity
15%
10%
5%
0%
2014 2016 2017 2018
Manufacturing aggregate Aerospace
Note: “Manufacturing aggregate” refers to the Canadian manufacturing aggregate (across all manufacturing industries),
while “Aerospace” refers to the aerospace industry (NAICS code 3364).
Source: Authors’ calculations completed for this study based on data from Statistics Canada for GDP (Statistics Canada,
2020a) and manufacturing R&D figures (Statistics Canada, 2020d), as well as data from ISED and AIAC for bespoke R&D
figures (ISED & AIAC, 2015; 2017; 2018; 2019).14
include stringent safety regulations and The Canadian aerospace industry is
associated compliance certification, as well important in Canada not only because the
as the immaturity of certain technologies industry is a large contributor of GDP, but
such as artificial intelligence (AI) (Russell also because the industry makes large
et al., 2019). Many of the major firms in the investments in innovation activities. These
industry are not currently using the more contribute to the wider Canadian innovation
radical or fundamental applications of I4.0, system and create highly skilled jobs.
including the deployment of new business Firms in the Canadian aerospace industry
models (Hader et al., 2019). When adopted collaborate with a variety of actors for R&D,
by firms, I4.0 technologies are predominantly including academia, government, other
being applied to improve existing processes firms, suppliers, and customers (ISED &
within factory manufacturing and supply AIAC, 2018). Aerospace firms collaborate
chain management (Hader et al., 2018). at a significantly higher rate than the
Additionally, there have been some manufacturing average: over three times
applications of I4.0 in automated solutions higher with academia (73%) and two times
and big data among Tier 1 suppliers, related higher with government (39%) (ISED & AIAC,
to the profitable and growing aftermarket 2019). In 2019, R&D investment for the
services segment (Deloitte, 2020). Canadian industry was calculated at $1.4
billion (ISED & AIAC, 2019). As an industry,
aerospace’s R&D intensity15 has remained
14 To produce comparable figures from industry
publications, we used bespoke R&D figures for
significantly high—at least 15% more than
aerospace. The GDP figures were compared with
the R&D figures from the same year of release, as
per the formula utilised by ISED & AIAC (2015; 2017; 15 R&D intensity refers to the ratio of R&D investment
2018; 2019). to GDP for the industry.
17the manufacturing average of 3% since
2014 (see Figure 6). In part, this is likely
due to a combination of factors, including
the industry’s acquisition or integration of Aerospace firms in Canada
new technology, the development of new
are almost twice as likely
products such as the C Series, and the
incremental innovation associated with (29% vs. 15%)
the modular nature of this mature industry to be involved in developing
(Industry Canada, 2013). new technologies than the
manufacturing average.
I4.0 adoption
Aerospace firms (NAICS code 3364) in
Canada are almost twice as likely (29%
vs. 15%) to be involved in developing new
technologies than the manufacturing average
(Statistics Canada, 2014). Statistics Canada
A recent Statistics Canada
(2014) data indicate that they do so through report focused on robotics
partnerships, either with academia (15% notes that between 2014 and
for aerospace vs. 4% for the manufacturing 2017, adoption of robots has
average) or with the private sector (11% vs.
rapidly expanded beyond the
5% respectively). A recent Statistics Canada
report focused on robotics16 notes that
automotive industry to a wider
between 2014 and 2017, adoption of robots range of manufacturing and
has rapidly expanded beyond the automotive service industries in Canada.
industry to a wider range of manufacturing
and service industries in Canada (Dixon,
2020). Geographically, adoption is
concentrated around major cities, including
the greater areas of both Montréal and piece without fully embracing the concept
Toronto. of I4.0—while some are considered to be
“emerging” technologies. Figure 7 displays
While there are no direct metrics on rates data from 2017, which indicates that all
of I4.0 adoption in the Canadian industry, the technologies featured are more widely
there are indicators of the diffusion of used in the aerospace industry than the
technologies associated to I4.0. Many of manufacturing average, though the gap
these I4.0 technologies are referred to as varies by type of technology.17
“advanced”—which firms adopt piece by
16 We refer to pre-I4.0 infrastructure as “Industry 3.0”
(I3.0). 17 For full definitions, see ISED and AIAC (2019).
18FIGURE 7
Use of I4.0 advanced and emerging technologies in manufacturing and aerospace in
Canada
Percentage of Firms
60%
50%
40%
30%
20%
10%
0%
Design or Processing or Business Artificial intelligence Integrated Internet
information control fabrication intelligence (AI) of Things (IoT)
technologies technologies technologies systems
Advanced and Emerging Technologies Linked to I4.0
Manufacturing average Aerospace
Note: “Manufacturing average” refers to the Canadian manufacturing average (across all manufacturing industries), while
“Aerospace” refers to the aerospace industry (NAICS code 3364).
Source: Statistics Canada (2017).
Some of these advanced technologies (e.g., the aerospace industry in both clusters
processing or fabrication technologies) (see Figure 8). Only two technologies
are widely utilized, with 56% of aerospace demonstrate a 7% or higher provincial
firms incorporating technologies such utilization gap: 1) business intelligence
as computer numerical control (CNC) technologies, such as real-time monitoring
machining, additive manufacturing, and and leveraging data for decision-making,
robots. For design and information control which are used more widely in Ontario; and
technologies, the figures indicate that, 2) artificial intelligence, which has been
at most, 41% of firms have an enterprise adopted more by Québec firms.
resource planning (ERP) system (or a sensor
network) to collect data from their machines. One report addressing I4.0 adoption in the
Furthermore, 26% have reported using Montréal cluster (CAMAQ, 2016) is quite
business intelligence technologies, such consistent with these figures. Among the
as real-time monitoring and data displays 163 aerospace firms that responded to the
for decision-making. This figure indicates questionnaire, 47% have implemented a
that, at most, a quarter of firms have the ERP system; 42% have an HR business
technological infrastructure capable of intelligence system; 26% have robots; 19%
operating a fully virtual factory. Finally, only have introduced a system of big data; 13%
16% report having an internet of things (IoT) have implemented additive manufacturing;
ecosystem operating, and just 11% use AI. and 10% have implemented IoT (CAMAQ,
2016). These figures suggest that there is
At a provincial level, adoption of the significant variation between firms in terms
advanced and emerging technologies of the adoption of I4.0 technologies.
needed for I4.0 are similar for firms in
19FIGURE 8
Use of I4.0 advanced and emerging technologies in Québec and Ontario
% of Manufacturing Firms
% of Aerospace Firms
40%
60%
30%
40%
20%
20% 10%
0% 0%
Design or Processing or Business Artificial Integrated
information fabrication intelligence intelligence (AI) Internet of Things
control technologies technologies (IoT) systems
technologies
Advanced and Emerging Technologies Linked to I4.0
Manufacturing average-Quebec Manufacturing average-Ontario
Aerospace-Quebec Aerospace-Ontario
Note: “Manufacturing average” refers to the Canadian manufacturing average (across all manufacturing industries), while
“Aerospace” refers to the aerospace industry (NAICS code 3364).
Source: Statistics Canada (2017).
Our qualitative data mirror these broader Capturing and formatting data
tendencies, highlighting that many firms—
both large and small—have not begun to These firms are at the I3.0 stage of
adopt any of the I4.0 technologies. These the implementation process but are
firms either do not see the relevance of implementing these technologies as part
adopting these technologies, do not have of a strategy to move toward I4.0. These
the resources and capacity, or have a niche beginning stages typically consist of firms
that is secure enough to reduce pressure improving their technological infrastructure,
to implement I4.0. Some firms are clearly such as by purchasing robots, ERP systems,
engaged in implementing I4.0, but at varying and sensors, or improving data production
paces. Drawing on our qualitative data, it and collection. At this phase, firms generally
is possible to distinguish four stages of have problems with the reliability of the data
development in the shift toward I4.0, as that they have gathered:
illustrated in Figure 9. The machines can give us data on tool wear.
For example, when to change and measure
them, and adjust them automatically. That’s
already a big, big challenge. It’s not easy to do
that… I still have trouble connecting certain
things. I don’t have the real data. So, for
example, the machine—it tells me it’s running.
I go to the floor, and it’s stopped.
—MANAGER, SME, MONTRÉAL
20FIGURE 9
I4.0 progression: Firms transition in a non-sequential manner
Capturing Connecting Operationalizing
Interconnecting
& formatting systems intelligent
systems
data to work teams systems
Firms improve their Integration of basic Digital technologies An intelligent system
technological digital technologies, allow devices to be uses data to make
infrastructure for allowing the interconnected to decisions and
data production and connection of work teams to formulate predictions
collection. machines. produce real-time in real time.
data to support
decision making.
Source: Created by authors
Interconnecting systems The data exist, but we just don’t use a tonne
of it right now. So really, we have to spend
This phase is based on the integration of
more time using our data and acting on it…
basic digital technologies that enable the
Once you know what you’re looking for, then it
connection of machines. These include
becomes more attractive to pull the data out of
digital control computers, touch screens,
the machine, or sometimes to create the data,
computer servers, and other management
software (e.g., ERP, and manufacturing because it’s there, but it’s not really made use of.
execution systems). This step allows —MANAGER, SME, TORONTO
machines to generate data related to,
among other things, their productivity and/ Connecting systems to
or operating status. Automated control also work teams
reduces manual data entry, but the data is
not integrated or linked to decision-making. This phase results in the interconnection
One of the major issues in this phase is data of automated systems and work teams.
analytics. Firms generally gather a large New digital technologies (particularly
amount of data, but experience difficulty in process control systems and IoT) enable
processing them: technological devices to be interconnected,
allowing work teams to have real-time data
at their disposal to support decision-making.
This interconnection of technologies within
the plant can also be coupled with an
21external integration dimension by directly
connecting machines to suppliers and
customers:
These observations from
Enterprise synchronization is something big
quantitative and qualitative data
within [the firm] now… if you synchronize
activities between those organizations, you show significant variation in
can execute faster, but you can also leverage the stages of adopting I4.0.
data between organizations better. So again, While many firms are not even
it’s about competitive advantage. Data is the at the starting line, others are
enabler. Data and the whole digitization of
fully engaged.
the data, so that the data isn’t going through
people—it’s going through systems.
—MANAGER, LARGE FIRM, TORONTO
gives feedback to all the different functions.
Operationalizing intelligent I mean, it goes both ways… Everybody
systems comes to talk to each other. So, it’s really the
The fourth phase refers to the interconnection between the different systems
operationalization of an intelligent system to use the data that’s available.
that processes the generated data to make
—MANAGER, SME, MONTRÉAL
decisions and then formulates predictions.
These can be analyzed either by work These observations from quantitative and
teams or by an algorithm with autonomous qualitative data show significant variation in
decision-making capabilities. These the stages of adopting I4.0. While many firms
decisions guide the actions of the machines, are not even at the starting line, others are
giving workers a primarily monitoring role. fully engaged. Looking ahead, some of these
The responsibility of production managers firms will be operating a virtual factory, as
and employees therefore lies in ensuring the they consider whether to alter their business
optimal functionality and operation of the models.
system when a problem arises:
Some aerospace firms are even monetizing
Each machine has a control. We have people
the data they produce, with the owners
with different functions— supervisors, describing their firms as “IT firms,” as
programmers, machinists—and we have opposed to machine shops or component
programming systems like ERP and quality manufacturers. In between these two
systems. All these systems, we direct them extremes, we find firms at different stages,
to a central office. The central office has a with many of them building their digital
database; there are servers, applications, infrastructure to capture and organize
algorithms, analyzers. And analyzing that [data] relevant data. Firms are transitioning
22You can also read
