Rising Interest Rates and Economic Uncertainty for Quebec Manufacturers
With the Bank of Canada raising its key interest rate by 0.75 percentage points to 3.25% and many experts predicting an economic slowdown or recession in the coming months, Manufacturers and Exporters of Québec (MEQ) is calling on the various political parties in the Quebec election to propose concrete measures to support the manufacturing sector better.
“Since the beginning of the election campaign, there has been no mention of the manufacturing sector and the measures to be put in place to support manufacturing companies in a context of inflation, while interest rates are rising, profit margins are shrinking, and debt levels are increasing,” said Véronique Proulx, President and CEO of MEQ. “There is currently a lot of uncertainty for our companies, which must prepare for further disruption. We are therefore asking all political parties to propose specific measures for manufacturers, which are essential to fulfilling election commitments given their weight in the Quebec economy.”
MEQ recently presented its election platform, which includes 12 concrete proposals to ensure the competitiveness and growth of the manufacturing sector. It echoes manufacturers’ concerns currently facing three main challenges: labour shortages, innovation, supply chains and inflation.
Pressure is currently high for Quebec manufacturers, who must deal with a significant labour shortage with nearly 31,000 vacant positions. They must also manage cost increases and supply issues.
“In this context, companies are stockpiling more, which impacts their liquidity and debt,” said Proulx. “Some are telling us that they are putting the brakes on purchasing equipment or integrating new technologies because they don’t know what to do. However, it is important to ensure that these companies remain competitive to face the next few months of economic difficulty.”
MEQ believes that the next government should focus on two critical levers to help manufacturers:
- Increase the pool of workers, notably by raising the immigration thresholds;
- Investing to accelerate the integration of new technologies that will increase the productivity of businesses.
“The manufacturing sector is the largest contributor to Quebec’s GDP, accounting for 86.1% of exports and employing half a million workers,” concluded Proulx. “The parties must put forward their game plan for these 13,000 manufacturing companies, the pillars of our region’s economic development.”