FOR IMMEDIATE RELEASE

Product Design and Development: A Canadian Manufacturing Perspective

Toronto, March 14, 2008: For the first time, Canadian companies are able to compare their product design and development (PD&D) performance to local and international competitors. Design Exchange, Industry Canada and Canadian Manufacturers and Exporters together released new research this month that benchmarks the Canadian manufacturing sector against American competitors.

“There certainly is a sense of excitement in the air as everyone learned much about the importance of investment in product development to stimulate and drive innovative ‘manufacturing’ success in Canada”, explained Diane de Jong, Executive Director of Innovation Insights at Canadian Manufacturers & Exporters, at the Toronto launch of the study on March 4th. “There is no doubt that this touched only the ‘tip of the iceberg’, and I believe that further in-depth study is required to provide value-add in this field as well as much needed awareness.”

Karl Ulrich and Steven Eppinger define the activity of Product Design and Development (PD&D) as the design of all the goods and services that compose the process through which a good or a service is created. It incorporates not only the design of the product itself, but also the design of new technologies used in the manufacturing process. It includes the traditional design sectors that provide design services to firms, but also all the activity of PD&D that is done by firms in house.

This research benchmarks Canada’s PD&D activities across sectors against American competitors, and compares the use of design between best in class enterprises and laggards. Key performance indicators, such as percentage of revenue from new and improved products, and time to market also show how small and medium-sized enterprises (SMEs) compare to larger firms. Sectors include computer and electronics, aerospace, automotive, clothing, textiles, retail and furniture.

While findings indicate a steady increase in outsourced PD&D activity for all manufacturers of all sizes, PD&D investment overall as percentage of sales is lower for Canadian manufacturers than their American competitors.  In 2005, Canadian manufacturers experienced an average of 15% of total revenues from new products, with manufacturers in the United States averaging 25% of total revenues from new products. 

Research also shows that 60% of Best in Class (BIC) companies dedicate at least ten percent of their personnel in research and development, with just over 20% of laggards dedicating personnel to research and development. BIC companies excel at developing customized design products, searching for and developing new export markets, using distribution agreements, international marketing partnerships and after-sales consumer feedback. They also make better use of intellectual property tools. One area where BIC companies and laggards are similar is in their use of marketing personnel. Approximately half of all BIC companies and laggards commonly dedicate at least ten percent of their personnel to marketing.

It appears that size of a manufacturing firm does not necessarily increase ability to innovate. Both large firms and SME’s in Canada experience an average of fifteen percent of total revenue from new products.

Samantha Sannella, President and CEO of Design Exchange is pleased with initial findings: “We now have facts and figures that show that design pays. Whether you go with in-house or outsourced services, Canadian firms that use design outperform those that don’t”.

For the full report findings, visit www.ic.gc.ca/pdd

Research Contact: Paola Poletto, Senior Director of Development and Special Projects paola@dx.org, 416-216-2155