The Daily. Friday, September 21, 2001

Challenges to advanced technology adoption

Two research papers available today investigate challenges that firms in the manufacturing sector face in adopting new technologies.

Impediments to advanced technology adoption for Canadian manufacturers investigates the relative importance of various impediments, using data from the 1993 Survey of Innovation and Advanced Technology.

Skill shortages and advanced technology adoption focusses on the importance of skill shortages, using data from the 1998 Survey of Technology Adoption.

During the 1990s, the number of manufacturing plants using advanced technologies increased substantially (11F0019MIE01105; 11F0019MPE01105). Previous work has shown that plants that have successfully incorporated advanced technologies into their operations have enjoyed higher productivity and increased market share (11F0019MIE01175; 11F0019MPE01175). However, despite these advantages, in 1998 more than half the plants in the manufacturing sector did not use any individual advanced technologies connected with design and engineering, processing and fabrication, network communications, or integration and control.

According to the study Impediments to advanced technology adoption for Canadian manufacturers, these firms faced five broad groups of problems. As could be expected, cost-related impediments were reported most frequently. These included equipment costs, as well as the costs of capital investment, technology acquisition, software development and maintenance expenses.

Other impediments related to: institutional problems, such as taxation and government regulation; labour problems, such as a shortage of skills and training difficulties; organizational problems, such as poor management attitude or worker resistance; and information problems, such as a lack of scientific and technical information or insufficient technical support from vendors. Of these, labour problems are most often cited, followed by organizational problems.

The study found that the more technologically complex a firm is, the greater the likelihood that it would report an impediment. Interestingly, the study found these barriers such as costs, labour and organization were not insurmountable, which suggests that problems arise as technologies are adopted but firms are able to deal with them. In addition, the nature of impediments differed from firm to firm. Younger establishments were more likely to report labour-related problems, while those related to organization were more likely in older, unionized firms.

The study Skill shortages and advanced technology adoption reports that, between 1993 and 1998, rates of adopting advanced technology doubled, raising concerns about shortages of skilled labour. The demand for skilled labour has increased as technological growth and expansion in the economy has accelerated. This growth has been particularly rapid in network communications technologies, which require a highly skilled work force.

The study concludes that labour shortages were not the impediment that blocked adoption of technology. Rather, plants for which skill shortages were considered an obstacle were more likely to adopt advanced technologies, and to adopt greater numbers of them.

According to this study, shortages developed as plants adopted new technologies. Plants for which shortages were a problem were also more likely to take action to resolve them, by hiring and training new employees and improving wages and benefits. This suggests that the lack of skilled labour, while a challenge, is not insurmountable.

Two-thirds of manufacturing firms that adopted advanced technology in the late 1990s reported a skill shortage, according to data from the 1998 Survey of Advanced Technology in Canadian Manufacturing. Shortages were greatest for machine operators, industrial engineers and machinists; one-quarter of plant managers reported a shortage in each of these areas. On a broader scale, shortages were greatest for professional and skilled trade workers; 40% of technology users saw a shortage in each of these areas. The category with the fewest shortages was management.

Overcoming the challenges associated with adopting new technology, including upgrading labour skills, had its rewards. Firms that did so generally incurred increased productivity and higher growth.

Impediments to advanced technology adoption for Canadian manufacturers (11F0019MPE01173, $5/$25; 11F0019MIE2001173, free), and Skill shortages and advanced technology adoption (11F0019MPE01175, $5/$25; 11F0019MIE2001175, free) are now available. The free versions can be downloaded from Statistics Canada's Web site (). From the Our products and services page, choose Research papers (free), then Science and technology. The paper versions are available at the cost shown.

Research papers provide useful analyses that are, however, sensitive to the type of analytical model chosen, set of variables selected, and quality of the data used. All publications produced at Statistics Canada go through a peer review process to ensure that they meet professional standards.

For more information, or to enquire about the concepts, methods or data quality of this release, contact David Sabourin (613-951-3735; sabodav@statcan.gc.ca), or John Baldwin (613-951-8588; baldjoh@statcan.gc.ca), Micro-Economic Studies and Analysis Division.