Printed
with permission from TCI
Management Consultants. A group of senior-level management
consultants, offering strategic planning and marketing services
to a wide range of public and private sector clients.
The Next Century Why Canada Wins
Nuala Beck
HarperBusiness, Toronto, 1998
ISBN 0-00-255742-8
In her previous two books, Shifting Gears - Thriving in
the New Economy and Excelerate - Growing in the New Economy,
Nuala Beck has extolled the virtures of this entity she
calls the New EconomyTM. This consists of industries that
have had, and will continue to have, extremely favorable
growth prospects. They are characterized by having a high
proportion of what Beck calls 'Knowledge Workers', an elite
comprised of occupations in three categories: 1) professionals
such as engineers, lawyers, doctors, management consultants,
etc.; 2) the senior ranks of management; and 3) engineering,
scientific and technical workers. The engines (i.e. driving
industries) of the New Economy are computers and semiconductors,
health and medical technology, communications and telecommunications,
and instrumentation. (This contrasts with the older ('Mass
Manufacturing') economy of most of the twentieth century,
where the driving industries were automobiles, machine tool
industries, housing and retailing - and the still older
('Commodity') economy of the 1800s, driven by textiles,
coal and steel, and the railroads.)
This
is all ground amply covered in her previous books. In The
Next Century - Why Canada Wins, she presents her view that
Canada will be one of the big winners among nations in the
years ahead - indeed, until well into the next century.
Her reasoning for this is as follows:
- the obsession with the globalization of investment and
the integration of the world economy will soon fade: "The
collapse of Asia Pacific, the deep systematic restructuring
Japan faces, the economic and political turmoil in the former
Soviet Union, South America's fragile grip on economic stability,
and the possibility that France, Italy and Germany could
be the world's next "surprises" diminish the attractiveness
of globalization in a very fundamental way." (p.4)
- in the book, she presents an analysis of the return-to-risk
profiles her firm has done of these various economies (which
essentially measures both economic growth as well as volatility
in developing a balanced measure of the attractiveness of
these economies to investment) - these profiles clearly
show that US-based industries are the most stable and attractive
to investment
- as
a result, the United States will emerge as the most powerful
and dominant economy of the twenty-first century
- Canada's
proximity to the US, and our shared culture, poises us well
to participate in this growth.
Indeed, Canada is already participating strongly in the
New Economy. Another analysis in the book ranks various
nations in terms of their Knowledge Workers as a percentage
of their total employed labour force. Canada scores 11th
in the world by this measure, actually ahead of the US (scoring
13th) and (surprisingly) Japan (scoring 28th):
Country
and Rank % of Knowledge Workers, 1996
1. Netherlands 44.1%
2. Singapore 37.3%
3. Germany 37.2%
4. Denmark 36.7%
5. New Zealand 36.2%
6. United Kingdom 35.9%
7. Sweden 35.6% (1995)
8. Iceland 35.0%
9. Czech Republic 34.0%
10. Finland 33.3%
11. Canada 32.8%
12. Norway 32.4% (1995)
13. United States 31.9%
14. Ireland 31.2%
... ...
28. Japan 16.1%
Beck
identifies 38 industries in Canada and the United States
that have the best growth and investment prospects (and
which are part of the New Economy). These are:
In Canada:
1. electrical
and electronic products
2. communications
3. telecommunication carriers
4. banks and credit unions
5. truck transport
6. business
services
7. educational services
8. wood preservation, particle & wafer board
9. primary metals
10. machine shops
11. hardware, tool & cutlery
12. rubber products
13. plastics products
14. motor vehicle parts and accessories
15. plastic and synthetic resins
in the United States:
16. communications equipment, excluding defense
17. electronics and electrical equipment
18. telecommunications equipment
19. computer & office equipment
20. semiconductor and electronics components
21. medical equipment & supplies
22. instrumentation
23. medical instruments and supplies
24. opthalmic goods, watches and clocks
25. information technology
26. agricultural chemicals
27. construction and mining equipment
28. industrial machinery
29. metalworking machinery
30. cutlery and handtools
31. transformers, switchgears and switchboards
32. travel trailers and campers
33. wood building and mobile homes
34. lubricating oils and greases
35. household furniture
36. petroleum and coal products
37. miscellaneous manufacturing industries
38. miscellaneous personal goods
Some of these industries are obvious candidates, given her
thesis, but others leave one wondering (particleboard? mobile
homes?). Nonetheless, the book contains detailed information
on shipments, growth, volatility, and the 'return to risk'
measure for each of these sectors.
Another factor that will accelerate the growth of Canada's
(and North America's) New Economy will be very low-cost money.
As deficits are paid off, the cost of money will fall (She
actually talks about entering an age of 'free money', where
0 interest rate financing for some period of time will become
the norm. This very low cost or "free" money will
fuel rapid growth into the next century in New Economy industries.
Despite
her rosy forecast for Canada overall, she does not see a
bright future for Quebec. This is because the professional
services sector in the province has been particularly hard
hit in recent years due to the relatively small size of
the market in Quebec, language barriers, and differences
in the requirements and practices of some professional occupations
in Quebec with the rest of North America. (As an example
of this latter factor, Beck cites a laid-off lawyer who,
trained in Quebec's unique Civil Code, would find it difficult
to practice outside the province). These difficulties she
sees will continue. Accordingly, New Economy industries,
which rely heavily upon professional services, will not
find Quebec a good place to grow and develop.
She
also conveys certain thoughts about how to maintain Canada's
competitiveness into the future. She is clearly very enamoured
with Ireland's commitment to education, mentioning several
times in the book the universality of access to post-high
school age education (i.e. free university education to
all who qualify) as being a key factor in their rapid rise
to a leading knowledge-based economy.
The
Next Century - Why Canada Wins is very optimistic - perhaps
too much so - but it does put the economic drivers of North
America's economy into clear perspective. It is a very quick
and thought-provoking read.
