A turbulent start to the year under price pressure
Yesterday's 30-day reprieve is no reason to turn back. At a time when the "America First" policy is in serious danger of turning into "America Alone", we must continue to invest in our manufacturing startups and provide them with local growth space. Scaling up an innovative manufacturing process may require massive investment, but it's imperative that we keep these companies here, or risk seeing them migrate to the USA.
For several years now, we've been experiencing a general economic slowdown, which began in 2022 and has particularly affected the manufacturing sector. This economic contraction, linked to high interest rates and persistent inflation, has had a direct impact on manufacturing GDP, down 0.8% in 2023 after growth of 2.8% in 2022. Against this already difficult backdrop, the tariffs announced by the Trump administration and the ensuing trade war are likely to hit the manufacturing ecosystem and hardware technology start-ups even harder.
As Julie White, the new CEO of Manufacturiers et Exportateurs du Québec(MEQ), points out, "the manufacturing industry [is] more than just factories. It's innovation hubs, talent incubators, research and development centers that propel Quebec into the future. But this vital ecosystem is now threatened by an unprecedented commercial storm. The Garage&co team shares this conviction about the major repercussions of these tariffs, not only on the manufacturing industry, but also on the development of new hardware technology startups.
Read Julie White's open letter
What impact for hardtech startups?
Despite the postponement of the application of the tariff threats until next month, it is crucial to anticipate their effects to enable Quebec's hardtech and manufacturing startups to weather the storm. Quebec is well placed to meet this challenge, and to turn the turbulence into an opportunity to accelerate the growth of its hardtech sector. As the Hardtechfest white paper reveals : where the future of technology is taking shape, four key levers can be activated:
1. Improving access to pre-seed financing: optimizing early-stage financing mechanisms is crucial. Canada needs to develop dedicated funding programs to provide grants and investment vehicles tailored to the specific needs of hardtech entrepreneurs.
2. Investment in fundamental infrastructure: corporate development labs for material technologies are not always accessible to entrepreneurs who have never had access to university labs.
3. Accessibility to the local supply chain and national manufacturing innovation network: adding tax incentives and policies encouraging hardtech startups will enable them to integrate into local supply chains. Targeted tax credits, subsidies or offsets can encourage sourcing from local suppliers, strengthening the resilience of our manufacturing ecosystem.
4. Scale-up support system : creating clear pathways from prototype to production requires a comprehensive support system including: manufacturing readiness programs, access to specialized equipment and facilities, networks of technical expertise, and support for market expansion. This system must bridge the gap between innovation and commercial production, enabling companies to grow in Canada.
We could also add to this the opportunity that all levels of government have to become prime adopters for Quebec hardtech start-ups and growth companies.
At the same time, Quebec manufacturing companies need to focus on diversifying their markets and customers, developing innovative new products and continuously improving their operational efficiency, while remaining agile in the face of a volatile economic environment.
From Micro-Series to Mass Production": an invitation to share visions and roadmaps
Join us for "From Micro-Series to Mass Production: Scaling a Unique Manufacturing Process", a meetup featuring four entrepreneurs who have built and scaled innovative manufacturing processes in Quebec:
- Katherine Homuth(SRTX),
- Nick Saltarelli(Mid-Day Squares),
- Sophie Roy (ex-Oatbox)
- Pierre-Édouard Goriaux(Fabli)
Moderated by Julie White (MEQ), this inspiring conversation will explore the challenges, opportunities and innovations shaping our manufacturing ecosystem. The ambition: to bring out the roadmaps for positioning Quebec as a global champion of innovative reindustrialization.
🎟 Book your ticket here (33% off with code Community)
Information for action: Webinars not to be missed
A number of online events are being organized to help us better understand tariff issues and identify levers for action:
- CCI's U.S. Tariffs Briefing by CCI 🗓 February 4, 1 - 2 pm | Register
- Tariff threats: Mitigate the impact of tariffs by CCMM 🗓 February 5, 1:00 pm to 1:45 pm | Register
- FCCQ rates and support measures 🗓 February 6 from 8am | Register
- Impact of the new U.S. administration on the Quebec economy by Desjardins Entreprises 🗓 February 10, 8:30 to 9:30 a.m. | Register
A resilient ecosystem driving responsible innovation
Beyond the simple issue of pricing, our ambition is to create a resilient and ambitious hardtech ecosystem, capable of international expansion by drawing on its unique strengths:
- Cutting-edge interdisciplinary research at the convergence of major technological fields (AI, advanced materials, bio-manufacturing, etc.).
- A creative entrepreneurial culture, driven by a new generation of visionary startups
- A resolute commitment to social and environmental issues, at the heart of the new paradigms of "techno-responsible" innovation
The next few months will be decisive in unlocking this potential and making Quebec a global beacon for hardtech. The mobilization of the entire ecosystem - entrepreneurs, investors, researchers, public decision-makers - will be essential if we are to transform this momentum and build an agile, creative and high-performance industry of the future.
Let's continue the discussion
Are tariff issues of direct concern to you? Join our LinkedIn HardTech group to exchange ideas, ask questions and keep up to date with the latest industry news.