Nine Out of Ten Manufacturers Experiencing Supply Chain Disruptions
A new member survey by Canadian Manufacturers & Exporters (CME) shows that nine out of 10 Canadian manufacturers are encountering supply chain issues, with over 60% rating the impact of these disruptions as either significant or severe.
In addition, Canadian manufacturers surveyed say they have lost about $10.5 billion in sales because of disruptions in the supply chain and are now experiencing nearly $1 billion in increased costs.
These problems are holding back the manufacturing sector’s recovery and, by extension, the overall economy’s recovery.
The national survey intended to provide context to the significant supply chain issues affecting manufacturers, how companies address them, and potential solutions.
“Our survey confirmed what we’ve been hearing from manufacturers on the ground for a long time. Demand for manufactured goods is strong, but we are increasingly unable to keep up, let alone take advantage of this boom. Labour shortages, supply chain challenges, and higher input costs are big problems. If we don’t address these, Canada’s economy will suffer”, said Dennis Darby, President and CEO of CME.
These are some of the survey’s other main highlights:
- Eight out of ten manufacturers facing supply chain challenges say they have been forced to increase prices and delay fulfilling customer orders.
- Only 18% of manufacturers plan to outsource more of their inputs to Canada in response to these disruptions when asked why; 44% cited the fact that there are no Canadian suppliers of their critical inputs.
- Just 28% of manufacturers said they are likely or very likely to relocate or scale up production in Canada to mitigate supply chain bottlenecks, with the availability and cost of labour as the biggest hurdles to relocating or scaling up production in Canada.
- Most manufacturers predict that these disruptions will not end this year but rather sometime in 2023 or even as late as 2024
Although these disruptions are mainly global, addressing them still requires significant Canadian government action. Manufacturers feel the government needs to increase the inflow of temporary foreign workers and immigrants to ease labour shortages, provide financial support to help scale-up domestic manufacturing, and increase investments in transportation infrastructure.
“Manufacturers have been feeling supply chain pressures for months now as a result of the COVID-19 pandemic,” said Darby. “Omicron, the flooding in BC, the trucker vaccine mandate, and border blockades have all added to the crisis.”
Darby also asked the government to:
- Address all transportation bottlenecks and avoid policies that will aggravate them further
- Speed up immigration into Canada to fill vacant jobs in manufacturing and other key sectors
- Provide more support to help manufacturers accelerate the adoption of automation technologies
- Increase investments in infrastructure that facilitates trade and industrial development
- Lead and support a comprehensive supply chain mapping of Canada’s domestic capacity of strategically important intermediate and final manufactured goods
“Bottom line, there are many things Canada must do to tackle the supply chain problem. But it all starts with a firm commitment from government to work with industry to resolve these challenges,” concluded Darby.