Industry Canada collaborates to release first-ever report on product design & development

Product design and development (PD&D) is a critical $38.6-billion industry in Canada that far outperforms the economy in terms of growth, according to a first-ever report on the industry. The largest investing sectors in PD&D are industrial electronics, motor vehicle, chemical, machinery, aerospace, motor vehicle parts and primary metals, accounting for $22.3 billion or 57.6% of all activity in 2008.

Produced by Industry Canada in collaboration with The Design Exchange and Canadian Manufacturers and Exporters, State of Design: The Canadian Report 2010 found that Toronto, Montreal, Vancouver and Calgary dominate the PD&D industry and that it has outperformed the Canadian economy by 60% between 1999 and 2007. A small domestic market means much of the industry's services are exported and have an export intensity 2.25 times greater than that of its US counterpart.

PD&D activity is considered a crucial component of the innovation process that's often under-appreciated, possibly due to the small size of the vast majority of firms which tend to range between 1 and 19 employees, although the overall industry employs 225,000.

The PD&D process is a cycle of continuous improvement driven by shortening time-to-market and customer preferences and its adoption is seen as an essential tool for addressing the needs for product innovation and improved business performance. The report found that the two main challenges facing the industry are the gap between design and engineering departments to ensure that customer needs carry through to the end product, and making the PD&D process seamless with minimal time and expense modifying the design.

The report defines PD&D as a six-stage cycle beginning with assessment of opportunity, strategize (resource assessment and design research), conceptualize and develop (mock-up, product evaluation, modeling, prototyping/testing, refinement), implement and product launch.

"The PD&D service industry is a technologically vibrant part of the Canadian service economy that supplies critical information services to other sectors, notably manufacturers, distributors, and retailers," states the report. "PD&D serves as a link between creativity, innovation and commercialization."

The industrial electronics sector is the biggest PD&D investor at $5.4 billion in 2008, and it's also one of the most intensive, with PD&D outlays representing 28% of sales. Like many other sectors, the large majority of the industrial electronics PD&D is conducted in-house. An exception to the trend is motor vehicle PD&D, which outsources 76% of its activities. Nearly all of the motor vehicle sector's outsourced PD&D are engineering services required to integrate new product line requirements with partners in the supply chain.

The economic crisis reduced the amount of outsourcing investment by firms but they are forecast to bounce back to 2005 levels by 2012.

Protecting intellectual property rights (IPR) — secrecy, confidentiality agreements, patents, etc — is becoming increasing important as the pace of globalization accelerates. The report says one way to ensure IPR protection is to assign IPR to the PD&D service provider for the duration of the contract and then transfer it back to the firm upon completion.

Virtual product development and rapid prototyping are becoming increasingly common as firms seek to adopt advanced PD&D technologies to respond to the challenges of product innovation. PD&D processes include concurrent design/engineering, cross-functional design teams and e-based design and engineering processes. The report can be found at: www.ic.gc.ca/eic/site/dsib-dsib.nsf/eng/h_oq01776.html.

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