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Originally Posted by Envitro
^ to this point, I agree to a large extent.
The only issue is that in certain specialized fields there are only a handful of companies in the world that can manufacture products at a price point that is not $5,500 per unit.
Let me give you an example, albeit a fairly specific one.
Our company wanted to manufacture and market high-end sporting optics (i.e. binos, spotting scopes, riflescopes, etc.) for competition users. We saw a gap in the market and want to take advantage of it. No Canadian company exists in this space, except for one.
Said company produces a very high quality product for about $5,000-6,000 per unit, depending on model. It's made in Canada, and has an amazing reputation.
We want to be able to sell a comparable product (even a bit better in my mind) and we plan to market it for around $2,100 CAD.
There is no way that we'd be able to do this on our own without partnering with a Japanese ODM manufacturer that already has all of the very expensive machinery, tooling, inspection and testing equipment, not to mention the expertise (they'd been doing this for 50 years, and make products for some of the best brands in the world).
My startup costs are negligible, apart from sweat equity and some consultants, and my per-unit price is acceptable for a good margin. Less risk up-front means that I can actually afford to take this risk.
If I were to do the same thing in Canada it would cost me a few million in startup capital, I'd have to get investors, dilute my share in the company, and hope that it works out. On top of it taking at least 6 months to a year to acquire the equipment, talent and know-how, and we'd still probably have to import things like optical lenses from overseas anyway.
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I actually think this is the problem many are referencing, you jumped to a complex direct to market product, and sighted that we don't have the ability to produce components. The problem of course being that we don't have a a big enough market to justify production of these components. So in reality the gap in the market is probably finding versatile equipment that can produce similar subcomponents for different industries. Looking at direct to consumer finished products isn't going to fix the problems we have competing in manufacturing.
Where you were absolutely right is the money problem, what comes first the investment in the subcomponent manufacturing or the goods manufacturers to buy the parts. If you're going to buy the parts in china, why not just buy the goods in china where it's cheaper? If nobody is buying the parts why start manufacturing them? This leave you with the problem of needed to bear the cost of an integrated supply chain from the beginning, before there is a proven market. Very expensive, but if we're wild levels of government investment in the economy right now, these are probably the types of things they want to be thinking about.