From Endurance Mode to Automation Advantage: What the KPMG Survey Means for Canada’s Robotics Future

I was reading the recent KPMG survey (May 2026, 275 Canadian manufacturers) report this week and it shows 42% of Canadian Manufactures have already moved some or all production to the US or are actively considering it.

Of these, 29% have shifted operations, and another 13% plan to do so most within two years. This is driven primarily by tariffs and trade uncertainty, followed by lower US operating costs, a more favourable tax environment, and better supply chain integration/optimization for US-centric customers.

57% have paused, reduced, or cancelled capital expenditures in Canada, and 42% have scaled back R&D. Over half describe themselves as operating in “endurance mode.” While 80% intend to keep headquarters in Canada, 11% expect to relocate them to the US within five years. 61% say their business cannot survive without reliable US market access, and most exporters are CUSMA-compliant.

KPMG experts note this is no longer just short-term adaptation; companies are making longer-term decisions about where future investment, production capacity, and growth will occur. Tariffs and the June 2026 US Executive Order on customs enforcement (requiring tangible US assets for certain importers) are accelerators, but the underlying reassessment is broader.

The Robotics Economy Shift (2030 and Beyond) Changes the Calculus

The new robotics/AI economy marked by collaborative robots (cobots), autonomous mobile robots, humanoid systems, AI-orchestrated fleets, and “factories of the future” fundamentally weakens the traditional logic of offshoring for labour cost arbitrage. Robots and intelligent automation handle repetitive, precision, hazardous, or high-variability tasks at scale, making high-wage locations (US, Canada, Europe) far more competitive. Labour cost differentials matter less when machines do the work.

Key dynamics emerging now and accelerating toward 2030+:

• Reshoring + nearshoring momentum is robotics-enabled. US manufacturers and foreign investors are pouring capital into domestic capacity (hundreds of billions in announced projects). Much of this is tied to automation to offset labour shortages, boost productivity, and create resilient supply chains. PwC surveys show executives prioritizing nearshoring and intelligent automation; many expect the majority of operations to be highly automated by 2030. Distant, fully offshore suppliers become strategic liabilities.
• Smaller, modular, AI-driven factories become viable. Traditional economics favoured giant centralized plants in low-wage regions. Advanced robotics + AI reduces minimum efficient scale, enabling flexible production closer to end markets or in regional clusters. This favours North American locations with strong talent ecosystems.
• Talent density and integration capability become decisive. Success hinges on access to robotics technicians, integrators, AI/physical intelligence engineers, and applied research hubs — not just cheap labour. The US leads in absolute scale and momentum (higher robot density ~307 vs. Canada’s ~241 per 10,000 manufacturing workers; vastly larger installations and AI infrastructure). Canada has strong pockets (e.g., Waterloo-Toronto robotics and automation cluster, Clearpath/Rockwell, emerging humanoids, RoboHub, SMART Centre) but lower overall density outside automotive and a smaller domestic market.
• “Factory of the future” competitiveness can offset location disadvantages. Upgrading existing high-cost sites with AI, robotics, predictive systems, and energy optimization can outperform offshoring in many cases. Sectors with high logistics sensitivity or customization needs particularly benefit from proximity.

How This Interacts with the KPMG-Driven Pressures

Tariffs and trade uncertainty are forcing near-term relocation or investment pauses in Canada. In a pure labour-cost world, this would accelerate a structural shift south. In the robotics economy, however, the picture is more nuanced:

• US advantages compound: Larger customer base (critical for the 61% of Canadian manufacturers highly dependent on the US market), deeper robotics talent and integrator ecosystem, massive policy tailwinds for advanced manufacturing/reshoring, and existing supply chain density. Moving production inside the US (or Mexico under USMCA dynamics) reduces tariff exposure and positions firms closer to the automation talent and capital flowing into US factories.
• Canada’s structural advantages remain relevant but require activation: Cheaper energy in key provinces, skilled workforce (with clusters like Toronto-Waterloo offering robotics/automation depth), political stability, and innovation programs (SR&ED, etc.). Ontario has attracted major EV/battery and advanced manufacturing investments and hosts Canada’s largest robotics cluster. However, interprovincial barriers, higher corporate taxes relative to some US states, housing/affordability pressures on talent, and slower broad adoption of automation outside auto create headwinds.
• Hybrid and selective strategies will dominate. Many firms will keep HQ/R&D/IP in Canada (aligning with the 80% who plan to stay) while shifting or expanding production capacity in the US for tariff resilience, supply chain optimization, and market access. Others will double down on aggressive automation in Canadian facilities to neutralize cost gaps and serve both markets efficiently. Pure “move everything south” is less likely in a robotics-enabled world than in the old offshoring paradigm.
• Investment pauses today shape 2030+ capacity. The CAPEX and R&D slowdowns in Canada mean future robotics-integrated production lines and smart factories are more likely to be built in the US unless policy and ecosystem signals change quickly. This creates a self-reinforcing loop: less Canadian investment → thinner local demand for robotics integrators/talent → weaker cluster momentum.

Implications for Decision-Making (Especially in Robotics-Adjacent Manufacturing)

For manufacturers and ecosystem players (autonomous robotics platforms, integration, AI orchestration, related hardware/software):

• Location decisions will prioritize “produce where you sell + automate where you produce.” Proximity to US customers + ability to deploy flexible automation will outweigh pure labour savings.
• Ecosystem density matters enormously. Building or expanding in/near strong robotics clusters (Waterloo-Toronto corridor strengths in industrial, mobile, and applied robotics) or US equivalents provides access to integrators, testbeds, talent pipelines, and co-innovation. For cross-border plays (e.g., Korean robotics integrations into North American platforms), hybrid models or US production footprints with Canadian orchestration/IP layers become attractive.
• Policy and competitiveness levers are decisive now. To retain or attract future capacity: trade certainty (CUSMA stability + tariff relief mechanisms), lower corporate taxes or targeted incentives for automation/reshoring, cheaper/reliable energy, skills development (robotics technicians, physical AI), and easing interprovincial barriers. Manufacturers explicitly cite these as top reasons to stay.
• Opportunity for enablers: Platforms that help manufacturers automate existing Canadian operations (boosting productivity to compete) or optimize hybrid US-Canada footprints (orchestration, security, integration, data/AI layers) are well-positioned. The “endurance mode” pause creates urgency for solutions that deliver quick ROI on automation.

In short, the KPMG trends reflect real, immediate pressures that are accelerating shifts today. The robotics economy of 2030+ does not eliminate those pressures but changes which locations win long-term. The US has scale and momentum; Canada has defensible strengths in energy, clusters, and stability but only if it moves decisively on automation adoption, talent pipelines, and policy competitiveness.

Decisions made in the next 2–4 years on where to site new automated capacity will lock in competitive positions for the decade beyond.

This dynamic directly intersects with efforts to build Canadian innovation capacity, commercialize robotics ecosystems, and develop playbooks for advanced manufacturing resilience. The window to shape where the next generation of smart factories lands is open now.