Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA). His column was originally published in Sudbury Mining Solutions Journal, a magazine that showcases the mining expertise of North Bay, Timmins and Sudbury.
“We are reaching a point where the mining supply industry in Sudbury and Northern Ontario is as important for the global mining industry as the orebodies. This is exemplified by the fact that the large mining firms located in the area expend on average 80 per cent of their supply dollars locally as compared to 30 per cent anywhere else in the world”.
-Professor Jean-Charles Cachon, Laurentian University, Sudbury, July 2008
This reliance on the local supply sector translates into an estimated $750 million spent on a local basis, annually.
A recent comparative study entitled Innovation, Marketing & Management Strategies among Mining Supply Firms: A Comparison between Canada & Chile (Antofagasta) written by Jean–Charles Cachon and Huguette Blanco, School of Commerce & Administration, Faculty of Management, Laurentian University, demonstrates again that the Sudbury mining cluster is a world leader.
The study, completed in June of 2008, compared strategies for innovation, marketing, and management, including human resources training, financing and quality control.
“This study builds upon two bodies of previous research, one by recognizing the factors related to various categories of innovation, the other examining technological clusters and regional systems of innovation. The empirical part of the research involves two comparisons of mining supply firms in two mining regions: Northern Ontario, Canada, and Northern Chile. Evidence of a regional system of innovation in Sudbury was inferred from results. All companies surveyed had high quality control levels and difficulties recruiting qualified staff, but Northern Ontario companies displayed higher levels of incremental innovation, IT use, exporting and bank financing for expansion.”
The Antofagasta Region has for a long time had a larger economic role in Chile than Northern Ontario in Canada and it appears to be treated according to its importance by Chilean policy decision-makers. A G&K (2006) Canadian Mining Association report stated that with 8,918 metal mining employees in 2005, Northern Ontario accounted for 42.5per cent of the total employment in the metals mining industry in Canada.
Without a clear measurement from Statistics Canada we can only estimate from surveys that there are more than 16,500 trades people working in more than 420 supply and service sector companies in Northern Ontario, which is double the direct mining jobs. Despite this, there is no government-identified policy to support this large wealth-creating sector in Northern Ontario. If one does a conservative projection, Sudbury and Northern Ontario’s output (sales generated) is over $10 billion annually.
Northern Ontario is well founded on incremental innovation, which is defined in the study as improvements in products or services that are not deemed disruptive but respond to changing conditions and requirements in the marketplace. More than 50 per cent of the 420 mining supply and service companies in Northern Ontario meet the general criteria as innovative firms, while 95 per cent of these firms cited have used internal sources as the main driver of their improvements. Eighty-one per cent cited clients as the impetus for innovation, indicating a significant push-pull relationship in the Northern Ontario cluster.
The survey found that five per cent cited universities and research centres as sources of innovation.
Strategic alliances for innovative companies are a necessity for success in all sectors where technology plays an important role. The study indicated that 93 per cent of Northern Ontario mining supply companies have had cooperative agreements with other firms over the last three years, while only 49 per cent of the respondents in Chile (Antofagasta) have worked together. It is interesting to note that proximity and history in Northern Ontario play a major role for success.
Evidence is mounting that the mining supply corridor in Northern Ontario can now be classified as a Regional System of Innovation (RSI). Typically, this involves the presence of large firms attracting smaller ones in specific regions, creating a local market between suppliers and customers, the presence of high technology firms which are intensive in knowledge research and development, and the presence of other organizations from which companies gather knowledge and resources. These include universities, trades colleges, government labs and private business organizations. The existence of associations that bring private sector market information to its constituents is also an important factor.