Canadian manufacturers say supply chain disruptions are reducing their production while increasing costs, jeopardizing the sector’s recovery and the entire economy.
A new survey from Canadian Manufacturers & Exporters has found that nine out of ten companies in the sector are struggling with supply chain issues.
More than half said the disruptions had a major or severe effect on operations.
“We are seeing long delays and higher costs,” said Dennis Darby, president and chief executive of the manufacturing industry group. “There’s just no slack in the system.”
Demand for goods is strong, but manufacturers just can’t keep up with orders, Darby said.
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Indeed, Canadian manufacturers have lost more than $10 billion in sales due to supply chain disruptions and face increased costs of nearly $1 billion, according to the report.
Eight in 10 said they were forced to raise prices and delay fulfillment of customer orders.
The situation risks stalling Canada’s economic recovery and could linger for several more months — or even longer, Darby said.
“There’s a good degree of pessimism,” Darby said. “The majority of manufacturers don’t believe supply chain issues will be resolved until 2023 or later.”
He added: “We are in a continuous injury.”
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Meanwhile, businesses in Canada are struggling to repay debt accumulated during the pandemic shutdowns, with some contemplating bankruptcy even as restrictions are lifted.
The Canadian Federation of Independent Business said 67% of small and medium-sized businesses had incurred an average debt of $158,000 during the pandemic, according to a recent member survey.
Yet only 35% have returned to normal sales, hurting their ability to pay off debt and cope with higher costs.
The numbers are even worse for companies in the hospitality sector. Nearly a third are considering bankruptcy or going out of business altogether after racking up an average debt of more than $205,000, CFIB found.
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“The hurdle to overcome the economic damage of the past two years is insurmountable for some,” said Dan Kelly, chairman of the group of companies.
It’s not just the fight against debt that challenges companies, but also the fight against supply chain problems and higher costs, he said.
“Every line of a business owner’s budget is under severe pressure right now,” Kelly said.
“With costs rising quite rapidly and the debt they’ve taken on…the math isn’t favorable for the future.”
CFIB is calling on the federal government to extend its corporate hiring program and end tax hikes, including a planned increase in the alcohol excise tax and carbon tax.
© 2022 The Canadian Press