We are focussing on small scale manufacturing as it is a propulsive sector of our economy holds opportunity for all parts of our province, particularly rural areas, and can provide year-round stable employment for our people.

Development of this strategy has been a team effort, with extensive consultations involving provincial and federal government departments, industry, education and training institutions, and community based economic development organizations. The Strategies for Action contained in this document represent a consensus of all key stakeholders as to how we can best support the growth and diversification of small scale manufacturing enterprises in our province.

I look forward to working with our partner agencies, industry and other groups as we move ahead with implementation of this strategy.

Beaton Tulk

Minister for Development and Rural Renewal

For governments, industry associations and community development organizations seeking to foster manufacturing sector development, the comparison with other peripheral regions, provinces, and countries, also reveals Abest practices.@ Applying lessons from one location to another must take into account the significant differences which exist in creating a supportive socio-economic environment. The ability to tailor fiscal, monetary and trade policies to the needs of sector development in a region varies significantly from provinces like Newfoundland and Labrador to countries like Iceland and Ireland. Whatever the nature of the jurisdiction, however, a key lesson for sector development is the ability to take a coordinated and sustained approach to manufacturing development. Those places which marshal available resources for human resource development, infrastructure supports and business development in a coordinated, systematic manner for a sustained period of time greatly increase the chances of success in expanding the sector. This is enhanced by taking a strategic approach which identifies local strengths and external opportunities and targets specific sectors matching the region=s comparative advantages. To implement such strategies, governments must enter partnerships with industry, communities, education and training institutions and other stakeholders. Wherever there are individuals or groups which are Achampions@ for sector development in a region, they must be encouraged and supported. Finally, business supports must be available which address the best practices for small scale manufacturers.

4.0 Conclusion

5.0 Strategies for Action

Appendix I - Small Scale Manufacturing Study Advisory Group Participants

Appendix II - Development Support Study Jurisdictional Liaisons

Appendix III - GUIDELINES FOR ENTERPRISE INTERVIEWS

Since the industrial revolution, manufacturing has helped define economic development. Manufacturing is the process of taking resources and through packaging, processing, fabrication and/or assembly transforming the resources to a physical product demanded in the marketplace. In peripheral areas, manufacturing has consisted primarily of processing raw resources into semi-processed goods. These goods are then further processed into products. The additional processing usually takes place in areas close to the marketplace resulting in a clustering of the required technology, capital, services, management and workforce. Over time this centralization of value added production made regions with large urban populations strong in manufacturing development while peripheral areas remained dependent on primary resource production.

Since the 1950s, some opportunities rose for peripheral areas to attract Abranch plant@ production. This did not occur until decentralized production was made possible through the development of standardized manufacturing processes that could be applied to mature products. Branch plants, as a rule, located where expenses were minimal and the regulatory environment was less restrictive. These plants provided some employment but few of the higher value activities associated with manufacturing development and were always vulnerable to closure when more attractive, lower cost sites were available. As such, throughout recent history, efforts to transplant large-scale manufacturing with branch plant attraction efforts seldom succeeded. The absence in peripheral areas of the supportive network of related suppliers, specialized infrastructure and experienced management and labour also made successful transplants the exception rather than the rule.

For jurisdictions such as Newfoundland and Labrador efforts were made to promote large scale manufacturing. The promotion of manufacturing to support regional development is understandable as it is clearly a Apropulsive@ sector for any economy. Manufacturing usually creates well-paid, year-round employment which then increases economic activity through consumer spending. Manufacturing transmits wealth throughout the economy by encouraging up- and downstream production linkages, consisting of opportunities to produce inputs used in the manufacturing process (upstream) and to use the outputs for further manufacturing (downstream). Inputs can be primary resources or goods produced by other firms. Inputs can also be services in transportation, communications, enabling technology, accounting or any number of supports required for production. In addition, outputs of one manufacturer can become inputs for further production by other manufacturers ( eg. plastic bottles as inputs for bottled, flavoured iceberg water). There are examples of successful large scale manufacturing in Newfoundland and Labrador, but there have been significant changes in the nature of manufacturing production which point to new opportunities for smaller manufacturers as well.

The changes that are now providing opportunities for small manufacturers began in the 1970s and were characterized initially by a decline in large scale manufacturing employment in major urban centres as well as growth in the service sector. Some of the decline resulted from technological innovations that allowed productivity to increase while employment levels decreased. Much of the decline, though, occurred when in-house support service activities within manufacturing firms were outsourced to companies with the specific skills needed to satisfy the needs of the manufactures. This outsourcing of the 1970s is no longer limited to the service sector. Now large manufacturers are outsourcing specialized activities to smaller firms who have the special skills and capabilities to deliver products once produced in-house.

As these new opportunities were emerging, many peripheral regions started to look towards other sectors as the basis for development. Globally, in the 1980s, increased attention was focussed on the emergence of a post-industrial Ainformation age@ economy. This Anew economy@ was driven by information technology and knowledge-based workers, not the industrial activity and factory workers traditionally associated with manufacturing. Some, peripheral regions felt they could Aleapfrog@ the industrial age into the Anew economy@ defined by the production of knowledge based products rather than manufactured goods. Development efforts focussed on ways to harness new information and communications technologies to foster growth in business services.

What is now increasingly apparent is that small scale manufacturing is part of the Anew economy@. Market and technological forces have influenced operational, location and market decisions, and specialized small manufacturers are dealing with more knowledgeable and demanding clients who can compare local firms with those in other countries. New technologies are changing the scale and scope of manufacturing production. Some production of low cost, standardized, goods continues where low cost labour and few regulations apply. Increasingly, however, small batch production of sophisticated goods characterizes manufacturing which, with new technologies and production processes, can often be carried out in peripheral areas by small and medium sized firms.

This new reality of manufacturing development is addressed in this report by reviewing research conducted over the past year as part of the Small Scale Manufacturing Study, undertaken in conjunction with the North Atlantic Islands Program (NAIP). This research undertook an in-depth analysis of the global trends affecting manufacturing, a case analysis of sixty manufacturers in four jurisdictions (Newfoundland, PEI, Iceland and the Isle of Man), and a jurisdictional analysis of these four plus five additional distinct geographic areas. Large-scale manufacturing, with centrally-controlled branch plants, has not been the focus of this study. Neither were large-scale industrial operations, such as shipyards, oil refineries, mineral production plants or paper mills. These propulsive industries though, do create opportunities for small-scale manufacturers.

This report highlights the opportunities for locally-based small and medium sized firms which are entrepreneurial and which can build on local strengths while exploiting external opportunities. Increasingly, the relationships between firms are blurring, as small firms enter long-term contracts with large, sometimes multinational firms. Small-scale manufacturers, by learning and applying the latest management techniques and adopting new production and information technologies - Abest practices@ - can create a competitive advantage which allows an export focus and which diminishes reliance on local raw material inputs. Access to local natural resources is still a strength to build on, but the basis of competitiveness is increasing the quality of human resources: management which has the ability to focus production, marketing and sales activities concentrated in those areas where the firm=s strengths can be best exploited, and the existence of a stable workforce with the skills to utilize the latest production techniques, implement quality processes and strive for continuous improvement and innovation. If small scale manufacturers can harness these strengths, distance from markets is no longer a barrier for many firms.

This report highlights the global trends and best practices small-scale manufacturers must address to succeed. It reveals that many local firms are doing just that and are succeeding in the four island jurisdictions studied. The research also reveals Abest practices@ for governments, industry associations, educators, and regional and community development organizations. If the small scale manufacturing sector is to grow and flourish in a jurisdiction, the institutions and organizations which support the efforts of individual firms and entrepreneurs must focus and coordinate their efforts. In Newfoundland and Labrador, government and industry have recognized the potential of small-scale manufacturing. The findings and strategies presented in this report build on current efforts to Amanufacture@ development in Newfoundland and Labrador.

The study approach was three pronged as illustrated in Figure 1.

The analysis of the global trends influencing small scale manufacturing entailed secondary research on the global environment by review of periodicals, journals, magazines, and other publications. Key informant interviews were also held in Newfoundland and Labrador to determine the prevalence and applicability of these trends and the impact on the manufacturing sector. The study began with research of information on outsourcing, private labelling, impacts of technology, just-in-time management systems, and total quality management. As the study progressed, research was broadened to include core competency and supply chain management. The findings of this research are discussed in Section 4.1.

Case studies in four island jurisdictions, undertaken in partnership with the North Atlantic Island=s Program, were completed to gain insight into sector development in island economies. In total, 60 case studies were conducted, as follows:

Companies were selected through consultation with jurisdictional key informants (see Appendix II) based on the following criteria:

• Companies had to be small to medium in size. Of the 60 companies interviewed, 56 had less than 200 employees, with an average of 38. The remaining four had exhibited extraordinary growth over the last few years. These four companies were included in the qualitative analysis but were excluded from quantitative analysis to prevent skewing the results.

• Companies had to be involved in secondary rather than primary processing.

• Companies had to be non-resource-based, such that proximity to resource inputs was not key to the manufacturer=s competitive advantage.

An interview guideline was generated, with assistance from Dr. André Joyal, Université du Québec a Trois-Rivières. Dr. Joyal has significant experience in researching small scale manufacturers in rural Quebec. The intent of the interview guideline was, through closed - and open-ended questions, to determine the attributes of successful firms by questioning companies on such topics as success factors, initial and current challenges, role of technology, role of networking, and competitive strategies. A copy of the interview guideline is contained in Appendix III. Interviews were conducted from May to October 1997 by researchers from Newfoundland and Labrador, Iceland, and the Isle of Man.

The individual firm information was then transcribed into three-page synopses. Quantitative and qualitative data were also entered into a database to allow for analysis by such factors as jurisdiction, company size, and the use of technology. Case study findings are included in Section 3.2 of this report.

The Development Support Study was conducted to analyse the development of the sector in a range of jurisdictions, including what has been done in each to foster development. Baseline data and the analysis of government support for the manufacturing sector was carried out in: Prince Edward Island; Nova Scotia; New Brunswick; the Isle of Man; Iceland; Appalachia Region, Kentucky; Galway Region, Ireland; and North Bay Region, Ontario (see Figure 2 - Study Map).

Jurisdictional profiles were developed and included information on geographic location, land mass, total gross domestic product, population, unemployment rates, and support structure.

Where possible, baseline indicators showing overall economic and manufacturing development from 1987 to 1996 were gathered. Manufacturing employment and manufacturing=s contribution to gross domestic product are examples of the indicators included. The indicators reported on in Section 3.3 have been limited to those which are comparable across jurisdictions when such factors as differing inflation, exchange rates, and purchasing powers are accounted for. An analysis of the trends arising in each jurisdiction, and possible causes for the trends and commentary regarding extraordinary events which may have impacted data, was then carried out.

This research included the following:

• Identification and analysis of the broad government policy toward the manufacturing sector in each jurisdiction.

• Identification and comparison of the supports in each jurisdiction for attracting and developing small scale manufacturers.

• Trend review and consultation with jurisdictional contacts to assess the impact of the support environment on small scale manufacturing. This encompassed views on: jurisdictional trends; the existence and importance of industry support services; how these supports contributed to sector development; government's role in aiding manufacturing sector development; the impact of government cooperation and coordination on industry development; and whether the absence of particular supports limited development.

The Global Trends, Case and Base Line/Development Support Studies provide clear evidence that the changes occurring in manufacturing internationally are creating opportunities for entrepreneurs and firms in Newfoundland and Labrador. For manufacturers striving to enhance their competitiveness and for regions striving to foster manufacturing sector development, a common requirement emerges from the research - the need to focus. The key manufacturing trend globally, which is corroborated by the case studies of individual firms, is that successful manufacturers must focus on what they do best and market it better, rather than trying to produce anything for which there is a market. As will be discussed in Section 3.1 on Global Trends, manufacturers must determine their area of core competence and place greater emphasis on marketing what they do best. The case study findings described in Section 3.2 clearly demonstrate that the small scale manufacturers that do this sell more, export more and grow more.

The same applies to regions, be they a province, state or independent country. As detailed in Section 3.3, the jurisdictions which have experienced the most success in manufacturing development are those which have established and maintained a coordinated and sustained commitment to development and taken a strategic approach to identifying those sectors or activities for which the region has the best chance of success. For both firms and regions, globalization is the driving imperative to focus efforts. Global markets create enormous opportunities for those firms and regions that develop and maintain a competitive advantage, while global competition between firms and between regions and countries is sure to compromise those who do not focus on what they do best.

The following sections expand upon these findings and advance strategies for industry, labour, community development organizations, education and training institutions, and government.

Globalization is having a major impact on manufacturing, both nationally and internationally. It creates new opportunities, yet at the same time exposes manufacturers to more competition. As an indication, in 1997, 65 percent of all goods manufactured in Canada were sold abroad as compared to only 25 percent in 1980 - a positive sign that Canadian manufacturers have done well in taking advantage of international opportunities. In turn, though, competition within the Canadian marketplace has increased. In 1980, for example, approximately 70 percent of the inputs purchased by Canadian manufacturers were manufactured by other Canadian companies. This decreased to 40 percent by 1997. This decrease was a result of Canadian companies realizing that in order to compete globally they have to source products from suppliers providing the best value - regardless of their geographic location. Hence, Canadian companies, while selling more product globally, also sourced increasing amounts of supplies internationally.

The results of the sixty case studies clearly demonstrate that the experience of the manufacturers studied verify the global trends identified through secondary research. It is important to note that the companies interviewed were not selected by a random sample, nor was the sample large enough to make statistical inferences. Firms were selected consistent with the criteria set out in Section 2.2, and within each jurisdiction a cross section of regions and sub-sectors was included. While not statistically representative of all firms in these jurisdictions, the results highlight practices and experiences which are common in the sixty firms studied and in the four island jurisdictions. Lessons can thus be generalized on the basis of this analysis to point to best practices from which the entire industry may benefit.

Table 2 provides a demographic profile of the companies studied.

The average number of employees in the case study firms was 36, ranging from 19 in Newfoundland to 56 in Prince Edward Island. Employee turnover was relatively low at an average of 7% per year. The percentage of sales derived from outside the jurisdiction ranged from 25% in Iceland to 97% in the Isle of Man. Past growth averaged 15%, ranging from 9% in the Isle of Man to 21% in Prince Edward Island. Past growth was possibly higher for Newfoundland and Prince Edward Island as there were a greater proportion of younger firms interviewed in these jurisdictions and new firms would normally attain a higher annual percentage growth given that they are in the growth phase of the company life cycle.

Table 2 provides an overview of the case studies by jurisdiction. In conducting the case study analysis, emphasis was placed on determining what distinguished the more successful firms across all jurisdictions rather than doing jurisdictional comparisons, which would be limited due to insufficient sample size. Detailed financial data were not available to determine return on investment rates, but success could be measured based on sales per employee, growth and exports. In light of this, the primary determinant of competitiveness identified in the global trends study, core competency, was used as the basis for analysis. Determination of whether a manufacturer was concentrating on core competency was based on a review of responses to interview questions. Emphasis was placed on whether the company had identified its competitive advantages and success factors and whether it was focussed on a specific product type, market niche, and/or manufacturing process.

The remaining analysis compares the core competent and generalist firms on a number of attributes. Tables 4 to 6 deal with differences between core competent firms and generalist firms concerning the adoption of technology, proactive market development and proactive product development. Tables 7 to 11 present the case study findings on how these firms access information and network with other firms, including trade show attendance, which also relates to marketing. All these factors relate to the broad but crucial area of innovation in business development. A recent Strategy for Enterprise in Ireland placed innovation as a central focus for manufacturing as Ait is the key to profitable growth.@ The strategy notes that innovation includes all aspects of business operations and is not limited to technology, and that much innovation involves incremental continuous change rather than radical changes based on adoption of entirely new processes. A study of 500 medium to large scale manufacturing firms in the United Kingdom showed that, over a twelve-year period, the innovators averaged higher profits, higher growth and a market share of about five times the share of the non-innovators.

Table 4 shows the differences in new information and manufacturing technology adoption between the two firm types. In the companies interviewed, technology use could be broken into four categories. Firstly, where the manufacturer did not use new technology in its business activities. Secondly, where the company used computer technology in the office to aid payroll, accounting, and other clerical functions. The third category is the use of new technology for the office and marketing functions. Examples of marketing technology include customer databases, management information systems, electronic ordering systems and web pages. The final category was the use of new office and marketing technology along with the use of relatively advanced technology in the production process. This could range from computerized machinery and electronic drafting software to robotics. Table 4 shows that almost half of the generalist companies do not use technology in either marketing or production functions. As outlined previously, the market is becoming more global and customers are demanding greater value from manufacturers. As a company=s ability to gather information, maintain customer service, improve product quality, and control costs is enhanced through technology, the lack of technology adoption by generalists is limiting their ability to compete globally.

Table 5 indicates that core-competent and generalist firms take a much different approach to marketing. The core competent firms were more likely to actively identify and research new markets. The generalist firms, were more reactive with respect to marketing. In light of the need to integrate marketing and sales with production, highlighted in the Global Trends study, it is clear that generalist firms focus on production, not on producing what they are best at and marketing it better.

Core competent firms also ranked themselves high in ability to react to changes in the marketplace and to be flexible in terms of introducing new and modifying existing products, as shown in Table 6. This is important given the need for flexibility as outlined in the Global Trends study. These are also crucial elements for firms to be innovative. A focus on core competence requires bench marking and quality processes to proactively monitor and respond to changing production and market demands and opportunities. A core competent firm may not need to innovate in the short term to be profitable, but when faced with increased global competition and changing customer demands, only the innovative firm will keep ahead of the competition in the long term.

The manner by which firms gather information was also different for core competent versus generalist firms. Table 7 shows the different philosophy with respect to trade show attendance between the two groups. The interviews provided evidence that the core competent firms used trade shows strategically and as a source of competitor information whereas many generalists believed trade shows had little value and considered trade show participation detrimental, as competitors might learn about their company=s products and operations.

Table 8 illustrates the value placed on journals, magazines, and periodicals as a source of information. Once again, the core competent firms were more apt to gather information from external sources.

If generalist manufacturers relied on other firms for marketing and information their lack of pro-activeness in these areas would be less of an issue. Yet, as is indicated in Table 9, these firms are also less likely to partner with others. The core competent firms are more likely to be involved in formal networks which directly contribute to business operations such as joint ventures, partnerships, and strategic alliances. Generalist firms, in contrast, are more likely to avoid partnerships and participate in informal networking activities only. Once again, this is an important distinction given the role of networking in core competency attainment and managing supply chain opportunities.

It is instructive to note that generalist firms place greater importance on industry associations as a source of information, as indicated in Table 10. Given this, associations are good avenues to supply relevant information to generalist firms.

Generalist firms, though, place less value on government as a source of information as indicated in Table 11. This is not surprising as governments more often react to requests for information and since generalists are not information seekers, government would not be a good source. This differs from industry associations, as associations are more likely to forward general information to members.

The core-competent and generalist manufacturers also differ when making location selection decisions. As seen in Table 12, the core competent manufacturers are more likely to base decisions on business criteria such as access to markets, labour supply, access to inputs, and available assistance rather than non-business reasons such as lifestyle and long-term residency. This suggests that core competent manufacturers are more apt to be attracted to areas offering competitive advantages.

With respect to current challenges, while there were many commonalities between the two groups, there were a few areas where the groups differed, as can be seen in Table 13. Core competent firms identified transportation and quality as an issue more often, which is not surprising given their focus on global markets. Generalist firms were more likely to identify capital as the major challenge. Once again this is not surprising given the different levels of success between core competent and generalist firms. Core competent firms have more resources because of their profitability and the business case is likely to be more attractive when seeking commercial financing.

The core competent and generalist firms also differed somewhat with respect to human resource issues. Core competent firms were less likely to identify any human resource problems, but when they did, the major problem identified was actually sourcing employees. Generalist firms, though, were more likely to identify other problems, such as staff turnover. Core competent firms place greater emphasis on human resources suited to a work environment requiring innovation and learning. On average, generalists do not require the same level of expertise and therefore would have fewer problems finding employees, but do not offer the opportunities for skills development and advancement in a growing business that helps keep employees. This was corroborated by the interviewers= observations of the work environment and by other comments made by interviewees. As an example, one core competent firm in Newfoundland spent in excess of one year interviewing and hiring personnel to ensure they had the proper human resources upon which to build the company.

In summary, the firms interviewed which showed greater success were those identified as being core competent. A jurisdiction wishing to develop its manufacturing sector would be wise to support the attraction and development of core competent firms. As indicated, core competency is not dependent on size, resources, or location but rather it is a function of the company=s management ability, strategic focus, information utilization, and resource application. If a jurisdiction targets core competency in its programs and supports it can have significant impact on sector development. Evidence of this exists within the case studies from the Isle of Man given the prevalence of core competent firms in that jurisdiction. This is possibly due to its small local market which forced Manx companies to seek global opportunities rather than relying on import substitution. The Manx government recognized this and tailored its supports to enhancing global competitiveness. This has encouraged the development of technologically-able, market-oriented firms which view human resources as an integral component of the business operation. As is elaborated on in the next section, few other jurisdictions have employed such a targeted strategy.

The Development Support Study assessed nine jurisdictions to provide further lessons from the experience of similar maritime jurisdictions (Nova Scotia and New Brunswick), other resource-dependent regions in Canada and the United States (the North Bay region of Ontario and the Appalachian region of Kentucky) and the apparent success story of Ireland. Baseline data were gathered on the status of the economy and manufacturing in particular, as well as information on the way each jurisdiction supports manufacturing development. Some data were unavailable for the North Bay region and the Appalachian region, as they are sub-regions of a province and a state, but data are provided for both Ontario and Kentucky.

The research in all nine jurisdictions revealed that there is no obvious explanation for level of economic development based on location, population or other factors essentially out of the control of private and public sector actors. The political and economic powers harnessed to meet the needs of the region are significant, as are cultural and traditional approaches to education and cooperation in the society. Factors involving specific conditions required for manufacturing sector development are available to all jurisdictions: having a coordinated and sustained commitment to sector development; taking a strategic approach; and harnessing partnerships and champions for strategy development/implementation. All jurisdictions have essentially the same range of business supports and no particular program or financial incentive can be seen as decisive in the development of the sector - there are no Asilver bullets.@ Increasingly, nonetheless, the more successful jurisdictions are gearing the range of supports to address the emerging trends in manufacturing. These jurisdictional Abest practices@ are outlined in the following sections.

Table 2 provides a jurisdictional overview showing the general strength and performance of each economy over the past ten years. From this, inferences are made as to the jurisdictions successful in spurring general economic and specific manufacturing sector growth. It is important to note that the jurisdictions studied varied in terms of size and government structure, which helped to isolate factors contributing or impeding sector development across the jurisdictions. In addition to the four NAIP islands, this section includes statistical comparisons with the other Atlantic Canadian provinces as well as Ontario, Kentucky and Ireland. This enables a broader consideration of the relative success of sector development, as small island economies are often dismissed as unable to provide the basis for competitive success. The analysis of how jurisdictional authority, resources and strategy are used in supporting sector development also draws on this broader comparative analysis to assist in delineating the general jurisdictional Abest practices@ and those which indicate the unique advantages or disadvantages of island jurisdictions.

When reviewing general economic strength Iceland, the Isle of Man, Kentucky, and Ontario have to be highlighted given their low unemployment rates and high GDP per capita. In terms of overall economic growth, Ireland=s 5.0 percent, the Isle of Man=s 5.3 percent, and Kentucky=s 3.1 percent annual growth rates stood out when compared to the other jurisdictions. Much of this growth was driven by expansion in the manufacturing sector, especially in Ireland and Kentucky as in these jurisdictions growth in the manufacturing sector outpaced overall economic growth. This sector growth was largely achieved through productivity improvements.

Ireland=s growth has yet to produce the low unemployment and high economic output as compared to the other jurisdictions but remains remarkable given that Ireland was one of Europe=s least developed economies a decade ago. The Kentucky experience should be viewed as a indication of the strength associated with an economy built on manufacturing. The state of the Irish, Kentucky and Ontario economies must be qualified by the fact there are significant regional disparities within each jurisdiction which are not indicated by aggregate statistics. Many rural areas within these jurisdictions still lag in terms of development. The Isle of Man=s performance proves that small, peripheral economies can outperform larger, central economies.

Newfoundland & Labrador holds similar promise if current trends can be built upon. In the past two years the manufacturing sector=s contribution to the provincial economy has grown by more than 20 percent and in 1998 the industry accounted for over 17000 "full-time, equivalent@ jobs. Growth is occurring in areas the province has traditionally had strength, such as in fish processing and newsprint. These two sectors have experienced combined employment growth of approximately 15 percent since 1996 and account for 50 percent of the provincial manufacturing sector. Growth is also occurring in areas in which provincial companies are acquiring new core competencies such as in manufacturing recreational vehicles, marine animal tracking equipment, windows, metal fabrication and electrical products. There are now over 800 manufacturing companies in the province, 20 percent more than in 1994, manufacturing and selling products within the province, across Canada, and throughout the world.

It is clear that, individually, government form, location, land mass, economic strength, and population size do not predetermine sector growth. When jurisdictions as different as Kentucky, Ireland and the Isle of Man can experience success it is obvious that it results from a combination of factors. The indicators presented provide both an overall appreciation of the context within which manufacturers operate and an understanding of the manufacturing status within the respective jurisdictions. They do not provide a clear understanding of how small-scale manufacturers have fared, nor do they assist in discerning what factors have contributed to manufacturing development. To determine this, the Development Support Environment in each jurisdiction was reviewed.

The economic indicators for each of the jurisdictions studied provide an overall appreciation of the context within which small-scale manufacturers operate. The statistics on manufacturing provide an understanding of the status of all manufacturing in the respective jurisdictions, including large-scale as well as small-scale manufacturing.

To understand what factors have contributed to small-scale manufacturing development in these jurisdictions, government and industry publications were reviewed from each and site visits were made to interview key informants from the private, public and community sectors. From this research five key aspects of the development support environment emerged as crucial components for the development of the sector. No one jurisdiction can be considered to have them all Aright@, and indeed, what is the right way to manage them in one jurisdiction may not be appropriate in another. It is clear that maximizing the opportunities for sector development requires each of the five to be considered and comparing how they are approached across these jurisdictions can be seen as a form of Adevelopment support benchmarking.@

The five components to consider in shaping the development support environment are:

1) Supportive Socio-Economic Environment;
2) Coordinated and Sustained Commitment to Sector Development;
3) Strategic Approach;
4) Partnerships and Champions for Implementation;
5) Business Supports for Best Practices.

These components constitute a continuum of interventions, from the very macro to firm-specific micro supports. All these factors effect the ability to develop the manufacturing sector. As the review of these factors will reveal, applying these Ajurisdictional best practices@ requires adaptation to the specific conditions of each location. There is no template for economic development that can be universally applied. There are lessons, however, which will contribute to manufacturing development if applied in manner complementary to the specific conditions in each location.

This section will draw from the review of the nine jurisdictions to outline these best practices. It does not provide a comprehensive listing of how each jurisdiction applies - or fails to apply - each type of intervention. The background research reports for this study and government and industry publications from each location provided this detailed accounting. The intent here is to highlight the elements of a successful manufacturing development strategy by drawing on this research. For Newfoundland and Labrador, and for any jurisdiction wanting to maximize the contribution of the manufacturing sector in its economy, these best practices must be understood and, as much as possible, harnessed.

Business Financing. There are many business financing issues which are common to all small and medium sized firms, but which have not been reviewed in detail by this study. However, the case study findings yield evidence that for core competent firms, focussing on what you do best - whether it is a product, a market and / or a manufacturing process - leads to greater sales, exports and growth. It is therefore not surprising that core competent firms have fewer problems accessing capital than more generalist firms.

It is also clear, however, that private and public funding agencies require a better understanding of the needs of manufacturers, particularly in light of the emerging trends in manufacturing production. All case study firms indicated that commercial banks are not responsive to manufacturers for start-up or expansion capital. Private venture capital and government financial supports, in that order, are noted as the primary sources of such financing. For firms in areas with depressed economies or dispersed populations, venture capital can be particularly hard to access because investment capital clusters where business clusters - more money is in circulation in developed areas and venture capitalists can meet prospective investments face-to-face. In underdeveloped regions, government and community-based sources of financing are addressing a market gap in business finance availability. As evidence of this, only one of the case companies interviewed cited financial institutions as a primary source of start-up or growth capital.

The criteria used by funding agencies can vary, however, based on the context and the resulting policy objectives of the jurisdiction. As an example, the Isle of Man uses net economic benefit, productivity increases, and increased export sales as funding criteria. If, as in other jurisdictions, job creation were a central part of the criteria, different decisions and business approaches would likely result. Ironically, it can be argued that placing undue weight on job creation criteria alone in business financing can diminish a focus on core competency attainment, as specialization can result in leaner, albeit more productive, firms. In the long run, a viable manufacturing sector will contribute to long-term, viable employment.

In general terms, manufacturing is favoured by existing government business finance support programs in Newfoundland and Labrador. Approximately 35 percent of funding under the Business Development Program of ACOA has been approved annually on manufacturing projects, in the form of repayable loans. The Department of Development and Rural Renewal has invested 25 percent of its Strategic Enterprise Development Fund in manufacturing since the department was created in March 1996. Some 70 percent of this was outside St. John=s and over 80 percent was for start-ups and expansions. These funds can take the form of loans, guarantees or equity investments. The Business Development Bank of Canada (BDC) and fifteen Community Business Development Corporations (CBDCs) are also available to provide funding to businesses which meet their approval criteria. The BDC also provides targeted support for firms to achieve ISO certification with re-payable loans.

Since the BDC and CBDCs aim to achieve self-sustainability through their lending portfolios it is difficult for them to assist firms which are not already competitive. This is consistent with the fact that core competent case study firms were generally well able to access capital. In essence, repayability or equity considerations limit funding to those firms which have a well established track record or which can demonstrate that they have the best chances of success. For firms not possessing this, agencies with a greater developmental focus (such as the Department of Development and Rural Renewal) are challenged to help generalist firms focus their activities, adopt best practices and enhance their competitiveness. In this, existing funding must be targeted, to help in the pre-commercial development of a product, assessment of new markets or the adoption of best practices so that they can reach the stage where other funding sources will assist them.

Incentives. The approach taken by Ireland through tax incentives, financial support and human resource development geared to meet the needs of external investors was cited above as key to its early success in positioning itself as a launching pad for American and Japanese firms to access the EU. American cities and states have long practised Arecruitment@ activities as the basis of industrial development, and Kentucky=s experience is no different. Such incentives are now seen as prerequisite to being in the game, but they alone do not account for differences in success in manufacturing development. The increased effort by all jurisdictions to integrate domestic development, infrastructure, human resource development, and investment prospecting, bears witness to the need to create competitive advantage in targeted sectors. While Kentucky has had great success in investment attraction, there is an emerging consensus there amongst economic development officials that the existing loan and tax-based supports alone are insufficient for entrepreneurial start-ups, and that more equity capital support is needed, coupled with professional support for business plan development, marketing assistance and other counselling and mentoring activities.

In 1995, Newfoundland and Labrador introduced the Economic Diversification and Growth Enterprises (EDGE) program to stake its place in the investment attraction competition. Eligible firms can be external or local. They receive a ten-year holiday from provincial corporate income and payroll taxes, a further five-year tax phase-in, unserviced Crown land for $ 1 and municipal tax breaks in some areas. A government facilitator is also appointed to work with each firm to address regulatory issues and other business needs. Minimum investment and employment creation criteria must be met and the firm must not compete with existing firms in the province. To date, 70 percent of the firms to receive EDGE status have been manufacturers. Again, as with business financing, manufacturing is the favoured sector for investment attraction efforts utilizing tax incentives.

The establishment of Regional Economic Development Boards in the twenty economic zones provides the opportunity for the Department of Industry, Trade and Technology, which administers the EDGE program, to link investment prospecting with the economic opportunities identified in zone strategic economic plans. The incentives and supports available from EDGE, combined with business financing supports, constitute the means to close a deal with an investor rather than as the basis for a deal. As has been seen from each of the jurisdictions studied, success in manufacturing development requires a focussed approach, with strategic infrastructure and human resource development coordinated with the needs of the sector. As revealed in the review of global trends, and confirmed in the case studies, understanding the relationships between firms in outsourcing, supply chain management and business networks is critical in targeting external firms which complement local needs and strengths.

A final aspect of investment prospecting which emerged from the jurisdictional comparisons may be of most benefit to island jurisdictions or other areas with a strong sense of identity. In Ireland, once strategic analysis determines a sector which offers potential for development, and particular inward investment needs are identified, particular firms are targeted which match these requirements with sector development possibilities. The IDA then determines which firms have senior management of Irish descent who can be approached in the first instance as the means to develop some personal relationship with the firm. As with business financing, investment prospecting requires building trust on both sides, and the common bond of culture and heritage produces results for the IDA.

The Isle of Man has formalized this approach with the creation of Manx Business Connections (MBC), an arms-length agency with an independent board and a full-time administrator. The MBC was established to create a world wide network of people willing and able to assist the economic development of the Isle of Man. These people are generally previous residents of the Island or are affiliated with the Manx people in other ways. It was introduced to help government develop and implement its strategy for attracting quality companies compatible with the Isle of Man, promoting Manx companies globally, and identifying international opportunities. The Department of Industry, Trade and Technology in Newfoundland and Labrador operates the Ambassador Program in much the same way. At the local level, Bishop=s Falls similarly targeted Newfoundlanders operating businesses in mainland Canada.

Generally, the case studies conducted for this research revealed that business operators citing lifestyle or staying in their home town as the reason for their location were less likely to be core competent firms. These were individuals who decided they did not want to leave their community and started a business to meet local needs as a means of making a living where they want to live. By contrast, specialized firms locate based on the business case. Insufficient cases were studied to make conclusive statements, but based on several cases - in Newfoundland, PEI and the Isle of Man - those individuals who returned home with specialized skills and contacts, did achieve core competence. A case can therefore be made that investment prospecting is greatly assisted by targeting individuals from your region or jurisdiction, whether as a conduit into larger firms or as potential operators willing to re-locate. These individuals appreciate the quality of life of the region but have gained the product, management or market knowledge necessary to achieve core competence. For regions that have historically experienced significant out-migration, this presents a very real opportunity to benefit from the networks of expatriates living worldwide.

Business Operations. As listed in Table 15, supports for business operations, as categorized for this study, include support for R&D, marketing and exporting, quality and productivity, business planning and human resource training and development. These are all business functional areas that relate to any sector, and are not dealt with comprehensively by this report. However, there are particular lessons concerning the trends in manufacturing development that require tailored approaches if jurisdictions hope to maximize the benefits of their business operations supports for manufacturing. In most cases, no new programs are required by governments to address these approaches. Rather, existing programs can be targeted more effectively once development agency staff, private sector and community-based clients have a better understanding of the latest manufacturing best practices. Where existing programs cannot address the requirements of best practice adoption, new programs or funding sources may be required.

The Isle of Man provides financial support for international marketing activities, quality attainment through total quality management programs and for ISO 9000, and technology acquisition through financial support for technology, plant and equipment purchases that improve quality while reducing human resource requirements. The Isle of Man government also provides training assistance for new employees requiring aid with new processes and technology.

Ireland, Iceland, and Kentucky can also be cited for significantly targeting global trends. Ireland has specific supports for export-oriented manufacturers, new technology acquisition, quality management systems, bench marking, core competency attainment, and ISO 9000. Iceland promotes inter-firm linkages and strategic alliances, core competency, ISO 9000 attainment, technology development and skill transfer through the Technology Institute of Iceland (ICETEC). Kentucky has focused heavily on technology transfer, human resource development, and quality assurance through its 17 regional technology training centres and 54 area training centres. Kentucky also provides technology assistance through the Kentucky Technology Service and actively promotes business networking amongst companies.

Several new approaches to manufacturing development support have been piloted in the United States in the past decade. Business Retention and Expansion (BRE) programs have been supported by local and county governments, in partnership with state governments, universities and technical colleges and institutes, and the private sector. These efforts have attempted to work with local businesses as opposed to the traditional focus on recruitment of outside firms. BRE programs involve local Amanufacturing improvement outreach teams@ which survey the needs of local manufacturers and work with municipalities, private utilities, training institutions and other support structures outside the control of the individual firm. The various support agencies are represented on the teams. They collaborate with manufacturers to address their tax and infrastructure issues, utility rates and human resource development requirements.

Another approach taken in the United States has been supported by funding from the United States Department of Commerce, delivered through the National Institute of Standards and Technology. Modelled on the long-standing agricultural extension service in the US, manufacturing modernization centres have been established in universities and technical colleges to provide industrial engineers and other technical support to individual small scale manufacturers. Total assessment audits are performed through one-day visits to manufacturers, in consultation with management and production staff. Within days an audit report is produced, identifying a prioritized list of improvement opportunities, sources of assistance to address immediate needs and suggesting options to address more complex issues, such as accessing more specialized expertise. Such internal analysis is provided on a confidential basis and evaluations of results have shown clear benefits, often in the short-term.

A study of the national system of manufacturing modernization centres sponsored by the Appalachian Regional Commission (ARC), which included its experience in Kentucky, noted that there was a role for such a service to be provided by the public sector. Small scale manufacturers were usually so occupied with their day-to-day operational issues that they were unable to scan the horizon for available best practices or new market opportunities. Accessing private sector consulting support in the first instance, however, was seen as suspect because of concerns that such sources were often biased, nonspecific and costly. Once an objective assessment audit identified opportunities and sources of specialized expertise, firms were eager to access them. One criticism of the federally-supported program was that unlike the agricultural extension service, the manufacturing centres were implemented across state lines and ignored the strong role of counties in economic development. If programs were to be fully utilized, they needed to be delivered through local agencies, where firms could have frequent interaction and develop the trust necessary to utilize supports and where supports could be tailored to the specific needs of firms in particular sub-sectors.

In Canada, the lead national department is Industry Canada, which has produced numerous studies and reports of best practices for small business and sectoral development, including manufacturing. Significant efforts have been made to develop information products for dissemination to industry associations, development agencies and individual firms. AStrategis@ was developed as an INTERNET-based source of business support, sectoral development and export information. Support is provided to the Alliance of Manufacturers and Exporters of Canada to work on behalf of manufacturers and exporters across the country. The Alliance has assigned staff to such areas as bench marking, human resources, industrial research (in cooperation with the National Research Council), intelligent manufacturing systems, and a technology visits program focussed on best practices.

The Promoting Business Excellence Program (PROBE), administered by the Alliance with the support of IBM and Industry Canada, provides diagnostic tools for manufacturers to determine their core competence and identify how to maintain it. The program is based on an approach developed by IBM and the London Business School over the past four years. Over 900 manufacturing sites have participated in the program worldwide, providing a database of global best practices. PROBE benchmarks performance and practices against other manufacturers and highlights areas for improvement. It employs a certified facilitator to work with staff from a participating firm in two one-day fact-finding sessions and provides results, analysis and a final feedback report. It includes consideration of total quality, concurrent engineering, lean production, innovation and product development, manufacturing and engineering systems, logistics, company organization and culture. To date, however, firms in Newfoundland and Labrador have not accessed PROBE, indicating that the type of sector-specific outreach supported in the United States may be needed at the regional or local level to foster awareness of the benefits of such bench marking and best practices adoption.

The National Research Council of the federal government does provide financial and advisory support for firms to create and adopt innovative technologies through the Industrial Research and Assistance Program (IRAP). IRAP draws on specialized scientific and technological expertise within the NRC across Canada, and employs outreach staff who partner with provincial business development agencies, regional colleges and other organizations to integrate technology development and commercialization with business development support. This model has been applauded as a means to match federal technical and financial resources with regional and local delivery. In Newfoundland and Labrador, the NRC has IRAP staff in five locations across the province, providing access to many of the technical supports for manufacturing firms with products and processes related to innovative technologies. IRAP provides non-repayable contributions to firms for the development of new technologies and can provide re-payable support to assist with bringing new technologies to market. The funding budgeted for the program is insufficient to meet the demand, however, so pro-active marketing of the support is limited. While the program targets firms developing leading edge technologies, it also supports the adoption of new technologies and processes. With increased resources, IRAP could play a key role in assisting small scale manufacturers in adopting many of the technology-related best practices identified in this study.

Within Newfoundland and Labrador, the Federal-Provincial Agreement on Strategic Investment and Industrial Development (SIID) was established in 1992 with $ 43.5 million to support development of emerging industries (including support for industry associations), working with existing firms and investment attraction. SIID addressed many of the areas highlighted by this study: first-time technology adoption, diagnostic analysis and implementation (including quality assurance and control programs, management information systems and CAD/CAM technology), strategic alliance and consortia formation, product development and testing, industrial skills enhancement, and training and management development. When the SIID Agreement expired in 1998, federal cuts to funding for Federal-Provincial Agreements meant that the new Comprehensive Economic Development Agreement (CEDA) was limited to a $ 10 million Technology Development Program, which cannot provide direct support to business clients.

ACOA and the provincial Departments of Development and Rural Renewal and Industry, Trade and Technology do provide support to manufacturing operations in addition to federal-provincial agreements and the national strategies and supports of Industry Canada. ACOA=s business finance support can assist firms with the same business development activities covered in the SIID agreement, but on a re-payable basis. The Department of Development and Rural Renewal can also support such business development activities, including non-repayable contributions. Through its Economic Development Officers in each of the twenty economic zones, this Department also provides business counselling support in cooperation with the community-based CBDCs. It also cooperates with the NRC in delivering IRAP support in five centres across the province. The Department of Industry, Trade and Technology is the provincial government=s economic development arm for promoting business investment in the Province and the export of goods, technology and services to markets worldwide. This Department also has a mandate to maximize local industrial benefits from large scale natural resource-based initiatives. It also produces an annual Directory of Manufacturers and recently announced that a registry of manufactured goods in Newfoundland and Labrador would be produced to ensure that government purchasing specifications facilitate bids from manufacturers within the province.

Nova Scotia, New Brunswick and PEI deliver similar supports through ACOA and their Departments of Economic Development and Tourism. In North Bay, FEDNOR provides the same types of supports as ACOA. As well, North Bay has supported sector development using the Industrial Adjustment Service Program (IAS), which now comes under Federal-Provincial Labour Market Development Agreements. IAS provides for private sector and community-based participants to hire a consultant to chair a research and implementation process for community development.

The Ontario Government has significantly downsized its business support outreach under the Ministry of Economic Development, Trade and Tourism, but the Ministry of Agriculture, Food and Rural Affairs launched a $ 30 million Rural Job Strategy Fund in 1997. This fund targets quality enhancement, information technology and marketing to enhance investment in rural communities and to promote increased exports from them. It follows many of the key lessons for manufacturing and economic development identified in this study: building new alliances and partnerships along the production, processing and marketing chain; developing and implementing quality standards and programs; improving access to and increasing the use of global information resources; increasing efficiency by using new and innovative technology and management practices; and developing community-based economic strategies. Funds are available on a cost-shared basis with the private sector. Applicants cannot be individual businesses but must involve alliances or partnerships to advance the development of the sector or a community. The Ministry has also launched a BRE program, based upon the American experience.

In addition to government funding programs and staff for manufacturing support, there are numerous approaches to research and development infrastructure for innovation in manufacturing in each of the jurisdictions. In the Atlantic Provinces alone there is a significant degree of variation. All four of the Atlantic provinces, to varying degrees, have developed agencies or organizations to address three key elements of encouraging technological innovation in manufacturing: technology transfer, research and development, and training. They differ on the emphasis placed on each of the elements, in the geographic scope of the delivery, and in the level of direct government participation.

Newfoundland and New Brunswick rely heavily on the transfer of technological innovation from universities and colleges to the manufacturing sector. In Newfoundland, however, the manufacturing technological support infrastructure is largely undeveloped. The Seabright Corporation has been established at Memorial University, with a mandate to facilitate the commercialization of university-generated Ainventions.@ The Genesis Centre, also at the University, is an incubator facility for Ahigh-tech@ start-up companies. The Genesis Centre attempts to link the resources of the University with the needs of its clients to achieve technical innovation. Perhaps the most direct University-based technical support for the manufacturing sector will result from the recent establishment of the Manufacturing Technology Centre. This is a collaborative effort between Memorial University and the College of the North Atlantic, in partnership with the Alliance of Manufacturers and Exporters of Newfoundland. While reasonably well outfitted with advanced manufacturing equipment, this Centre has limited human resources which limits its capacity to respond to requests and precludes a proactive approach. In addition, there have not been significant efforts to provide regional outreach, hence manufacturers outside of the St. John=s area are currently disadvantaged with respect to access to the Centre.

New Brunswick has established ten Manufacturing Technology Centers (MTCs) as partnerships between universities, colleges and the government through its Research and Productivity Council (RPC). The RPC keeps a provincial focus on assisting industry with high-end research and development and commercialization services. The MTCs are self-supporting technology transfer and training organizations. While each MTC has its own areas of specialization, all offer similar services in the areas of business training, research and development, and technology transfer.

Nova Scotia has taken a generalist strategy in support of technological innovation through research and development. Innovacorp and NovaKnowledge, based in Halifax, act as catalysts for the introduction and commercialization of industrial, engineering and information technology respectively. Innovacorp provides a wide range of scientific and engineering research and development as well as commercialization services to the private sector. Innovacorp also partners with other agencies to provide specific programs for technology adoption and innovation. One example is the Technical People in Industry Program, delivered in partnership with ACOA, which places technical employees on a project basis in businesses requiring technical assistance. Prince Edward Island=s Food Technology Center provides research and development and product development services to the agriculture and fisheries sectors. While these services are similar to those offered by Innovacorp and the MTCs, they are limited in applicability outside of the target sectors.

All provinces use community colleges as key delivery agents of generic manufacturing, technological and business training and support. In Newfoundland, the 18 campuses of the College of the North Atlantic offer courses in various areas of technology that are developed to meet the needs of emerging sectors, such as offshore oil and gas. Nova Scotia=s 14 community colleges offer manufacturing technology courses and can also develop customized courses as requested by industries or firms. New Brunswick=s nine community colleges offer a similar custom-design service. Prince Edward Island=s network of campuses of Holland College works closely with local industry to design their overall curriculum.

In addition to all these supports to the business operations needs of manufacturers, greater awareness of the emerging trends in manufacturing is needed by business and support agency staff and the faculty and staff of educational institutions. Greater coordination of these agencies is also required to provide the targeted support that this research has revealed is essential to the development of the sector. The establishment of single window business service centres in the twenty economic zones to coordinate ACOA, CBDC and Development and Rural Renewal supports should advance this effort significantly in Newfoundland and Labrador.

Business Networks. Several of the programs and supports described in this report relate to the promotion of sectoral clusters and the formation of business networks. For example, Ireland has linked its strategic approach to the identification of key sectors and, on a regional basis within the jurisdiction, has integrated supports to create the infrastructure and specialized workforce needed by the sector. This enhances opportunities for inter-firm supply relationships which benefit from close proximity. Not only does this benefit firms in terms of transportation and human resource issues, but it also creates opportunities for product innovations through user-producer interaction. When related firms are situated in a region, synergies occur as ideas are shared and products and processes adapted in response to changing needs along the supply chain. ALearning-by-doing@ on the shop floor is the source of most innovation, rather than technology transfer from science parks. Geographic clustering facilitates this.

Industry Canada, in partnership with the Canadian Chamber of Commerce, supported the formation of business networks which did not require geographic clustering but rather facilitated the formation of consortia or other alliances between two or more firms. The key support provided was the provision of a trained network broker, who could determine the need for a business network and could also broker the personal relationships between business operators who had to learn to depend upon one another. The North Bay area was particularly active in accessing this program, with 17 business networks formed with the support of the national program, all clustered geographically in the North Bay region as a result of the coordinated approach taken at the local level. In Newfoundland, a separate business networks program was created under a federal-provincial fund instituted in response to the fisheries crisis. It adopted the same approach as the national program. To date, eight business networks have been supported, four of which are related to manufacturing.

The findings of this research indicate that while business network programs are beneficial, it is essential that all industry, community and government stakeholders learn the benefits and techniques for successful partnering. Supply chain management, business network formation and marketing in long-term relationships require an ability to build trust and partner effectively. Small jurisdictions have the mixed blessing of fewer people to get to know, especially in a single sector, sub-region or community. This allows easier networking but it also means that old relationships bring baggage that can undermine trust. By understanding the best practices necessary for successful development, manufacturers can systematically tackle these emerging ways of doing business.

For small scale manufacturers, and for jurisdictions targeting the development of the sector, this research indicates a common requirement - the need to focus. Globalization is more than a buzz word supporting trade liberalization efforts; it has become a fact of life in business and economic development. Manufacturers now face competition from firms world-wide and jurisdictions are vying to determine how they can position themselves to support and attract development in this environment. These trends are creating opportunities as well as threats for islands and regions with small economies, relatively dispersed populations and which are distant from markets. The previous dynamic of centralization and concentration of secondary manufacturing in the industrial core of developed countries impeded diversification in these regions, but these characteristics no longer prevail for many manufacturing activities. For firms and regions able to focus on what they do best and harness and build on emerging socio-economic, technological and market trends, opportunities abound.

For small scale manufacturers, the new environment of production can be a very different terrain from that to which they have grown accustomed. Manufacturing quality products at competitive cost is no longer a guarantee of long-term viability. Quality and cost are still prerequisites for success, but now the firm must understand how its production relates to customers who can source most products from outside the region or the country. Whether they are end users or other firms purchasing inputs for further value added, customers demand responsiveness to changing demands, reliability of quality, combined with flexibility in production, and delivery timed to meet demand. To achieve success in this environment, small scale manufacturers must know what their competitive advantage is, how to improve and maintain it and how to market and deliver it when and where it is needed. Firms must understand and apply the lessons and practices of core competence and how that relates to out-sourcing, supply chain management, integrating sales and marketing with production, flexible manufacturing and business networks. Governments, industry organizations and communities targeting the sector must adapt and apply rigorous business supports to address these lessons and practices, along with the techniques and tools which assist in their implementation.

For jurisdictions to facilitate the development of the sector in a region or country, implementing supports which address the emerging needs of individual manufacturing firms is key but insufficient. Just as with individual firms, jurisdictions must decide what they are best at - or what they intend to be best at - and focus their efforts to achieve it. Many high-end services - research and development, finance, venture capital - remain in metropolitan centres (although new centres have emerged around new industries), but production can locate where the level of expertise, cost and quality, can be matched to the component or product required.

Newfoundland and Labrador and other Aperipheral@ jurisdictions have the potential to determine their relative strengths and harness available resources to focus infrastructure, training and investment on those sectors or sub-sectors, which are - or can be - their core competence. Just as with individual firms, they must maintain the ability to apply jurisdictional core competence flexibly to meet varying and changing opportunities. Scanning of markets, technology and other jurisdictions (competitors and collaborators) must be ongoing. To achieve results, though, governments must commit to the development of the sector through a coordinated and sustained approach, strategically target the opportunities which build on local strengths, and enter partnerships for implementation and support champions to lead it.

For firms and jurisdictions alike, globalization presents forces and conditions which must be understood and acted upon. Determining and achieving core competence must be rooted in an understanding of these forces, but it does not guarantee success as markets, technologies and geo-political relationships evolve. In the end, workers, entrepreneurs, community and industry leaders and governments must learn to adapt to changing conditions while maintaining and exploiting their unique strengths and opportunities. The following strategies for action present a means for businesses, educators, community organizations and governments to meet this challenge and advance the development of manufacturing in Newfoundland and Labrador.