Belt-Tech, Inc.
Industryweek 28834 Belt Tech Factory

NAFTA or Not, Quebec Is Putting Millions Into Manufacturing

March 29, 2018
Despite looming NAFTA concerns, a Canadian fabric OEM for car seat belts and pull straps is investing in digital technologies to give customers a better product.

The future of Canada’s trade relationship with the U.S. is in limbo but that didn’t stop Robert Belanger from investing C$3.6 million ($2.8 million) to upgrade his Quebec fabrics plant.

New weaving machines and a state-of-the-art dying system are helping his company, Belt-Tech Inc., produce enough of the webbing used in seat belts and pull straps to meet a 30% surge in orders from the North American auto industry. Part of the financing came from Quebec’s government, which is pushing manufacturers to modernize their factories despite uncertainties surrounding renegotiation of the North American Free Trade Agreement.

“I can’t tell my client ‘Apologies, but I’m waiting for NAFTA talks to conclude before investing to give you the product you need today,’” Belanger, Belt-Tech’s chief executive officer, said in a phone interview. “I need to forge ahead.”

With Canada’s federal government just beginning to focus on making businesses more competitive, provincially owned Investissement Quebec is more than a year into a push to spur investment in robotics and technology. After 18 months -- half the expected time -- it spent almost all of the C$825 million earmarked for loans and loan guarantees for innovation in manufacturing, according to the agency’s president, Pierre Gabriel Cote.

Belt-Tech is dying to provide the highest quality techniques in its plant, such as controlling webbing color via a spectrophotometer.

The province, however, has its work cut out for it. Less than 20% of Quebec’s manufacturers have automated at least half of their operations, compared with about 50% in the U.S., Cote said. Nationally, Canada’s level of automation tops that of France and the U.K., but trails Germany and South Korea. And with the Bank of Canada warning that trade uncertainties are curbing investment, it’s not clear how fast the northern nation can catch up.

Quebec’s hands-on approach -- which includes seminars, videos and tours of best-in-class companies for entrepreneurs -- also aims to break manufacturers of their habit of letting a weak loonie take care of competitiveness challenges. The Canadian dollar has been one of the worst performers among major currencies in the past six months, giving exporters an artificial edge.

“The exchange-rate effect has always been negative on the adoption of technology because people used to say ‘I am making money no matter what,” Cote said in an interview. “This is a mold we’re breaking.”

Belt-Tech is strapping in for the the Fourth Industrial Revolution by embracing modernization.

The weak currency, vigorous demand south of the border and a rebound in oil prices have been a boon for Canada’s industrial output, which is concentrated in Ontario and Quebec. And there are signs automation has intensified in the francophone province. A 2017 survey by the Business Development Bank of Canada showed 45% of manufacturers in Quebec had implemented digital technologies, compared to 39% in Ontario and 35% in Alberta.

Quebec’s current labor market makes it easier to follow the global trend toward automation, according to the Institut du Quebec, an economic think tank. Its population is aging, unemployment is hovering near a record low, and businesses can’t find workers. Vacant positions in manufacturing were up 53% in the third quarter from a year earlier, said Mia Homsy, the institute’s director.

On the ground, Quebec City-based tech entrepreneur Alexandre Leclerc has seen the manufacturing industry evolve over the three years since he created Poka, an online platform for workers to log issues or consult video tutorials on machines across factories.

“When we started there were no iPads in factories, no tablets, no Wi-Fi. Yes, there was automated equipment, but no infrastructure to support other technology platforms,” said Leclerc, whose firm services 200 factories in Quebec -- nearly half its total of 450. “Now when we contact clients, they’re open to tablets, to the cloud, they already have installed Wi-Fi. It’s much easier for us.”

‘Not Enough’

Still, Louis Duhamel, a strategic adviser with Deloitte LLP who has given dozens of presentations to manufacturers across Quebec, cautions the province is only taking the first steps toward the next industrial revolution, which will be based on advanced digitization and connectivity. Companies are starting to install sensors in their factories to compile data on temperatures or humidity, for example, but few are adjusting to it automatically yet or using data from clients to optimize their products.

“Lots of companies are moving, but not enough. The Chinese are completely transforming their manufacturing sector, they will soon jump on the ice,” he said using a hockey metaphor for entering the fray. “What will we do if we haven’t made the required investments?”

Belanger also takes a global view in pondering the future of Belt-Tech, which employs about 200 people about 50 miles east of Montreal. For now, he provides nearly a third of the webbing used in cars and trucks in North American. His next priority is to expand the firm’s reach through a tie-up with a competitor in Europe or Asia to better meet demands of the globally integrated automotive market.

“I don’t have a choice, I have to follow the clients,” he said. “If I don’t do it, I’ll put my company at risk.”

by Sandrine Rastello

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