Heeding the call to address productivity challenges, three quarters of Canadian business leaders say their companies now invest as much as – if not more – than their U.S. and global competitors in technology, machinery, equipment and intellectual property, but American tariffs have put a stranglehold on revenue and are cutting off the funds earmarked for continued investment, according to a new survey by KPMG in Canada,
Most leaders (92 per cent) also acknowledged that they must be bolder and further ramp up their investments in technology and innovation to build a more resilient, prosperous economy. However, six in 10 (59 per cent) say the current economic environment prevents them from investing in the “kind of technologies” that would improve their company’s productivity, said KPMG.
“These results reflect a more ambitious mindset within Canadian business, but they also acutely underscore the difficulties our economy faces right now,” said Benjie Thomas, Chief Executive Officer and Senior Partner, KPMG in Canada. “Tech investment requires a strong bottom line and nine in 10 business leaders say it is essential that governments ‘act with urgency’ and not fall ‘prey to complacency’ in driving tax reform, eliminating interprovincial trade barriers, improving access to capital, and building infrastructure that unites us and opens new markets.”
A 2024 KPMG International survey of global businesses found that large Canadian companies are also outspending their counterparts, but, like the new Canadian survey, many of these investments are still in the early stages and have yet to make up for the extended period when Canadian firms undercapitalized on technology, said the company.
“Canadian firms are at a critical junction in their efforts to modernize and boost productivity,” added Thomas. “The investments they have made in the last few years are making a difference with 75 per cent saying that their digitization efforts have generated the expected returns and benefits. A further three-quarters found their investments in artificial intelligence boosted their productivity by 10 per cent or more, with over a third saying these investments improved it by over 20 per cent.
“There is a big risk that these investments will be stranded if companies don’t have the capital to continue to invest.”
Key KPMG Survey Findings:
- 75 per cent of 250 Canadian business leaders say their company invests the same if not more than their U.S. and global competitors
- 92 per cent agree Canadian companies need to ramp up their investments in technologies or risk falling further behind the U.S.
- 88 per cent say Canadian companies need to be bolder, and not wait around for everyone else to adopt a certain technology
- 59 per cent say they can’t afford to invest in the kind of technologies that would improve their productivity given the current economic environment
- 90 per cent say governments “must act with urgency to ensure Canada remains competitive and prosperous,” adding “it’s essential that our governments don’t fall prey to complacency”
- 75 per cent say their digitization efforts have generated the expected returns and benefits
- 75 per cent say their investments in AI boosted their productivity by 10 per cent or more, with 37 per cent saying these investments improved it by over 20 per cent
Given ongoing trade uncertainty, three quarters (76 per cent) of respondents are bracing for the worst and taking steps to prepare for a Canadian recession, said KPMG.
To mitigate the effects of a potential downturn, business leaders laid out their top priorities for the Canadian government:
- Remove interprovincial trade barriers and harmonize regulations and credentials (64 per cent)
- Undertake a comprehensive tax review to improve competitiveness (58 per cent)
- Streamline processes and expedite resource and major infrastructure projects (56 per cent)
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