Labour and supply chain top concerns for manufacturers

by Emily Atkins

Labour shortages, supply chain disruptions, and higher input costs are Canadian Manufacturers’ main concerns going into 2022.

According to the results of Canadian Manufacturers & Exporters’s (CME) national business outlook survey of manufacturing companies, these problems are hampering the sector’s recovery despite strong demand for their goods and an optimistic outlook.

“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,” said Dennis Darby, president and CEO of CME.

“Labour shortages, supply chain challenges and higher input costs are big problems. If we don’t address these, Canada’s economy will suffer.”

Nearly 90 percent of respondents said that their suppliers’ delivery times were slower compared with the situation one year ago.

More than three quarters (77 percent) of respondents say attracting and retaining a quality workforce is their biggest challenge.

Likewise, more than 80 percent of respondents say they face labour and skills shortages, up significantly from 60 percent in the 2020 CME Management Issues Survey. Labour shortages are felt most acutely in Quebec, Atlantic Canada, and British Columbia.

The hardest positions to fill are general labour and assembly positions, with 70 per cent of businesses reporting challenges filling these jobs. Shortages in the skilled trades are also growing, particularly for millwrights, welders and machinists.

Labour and skills shortages are so severe today that almost 20 percent of manufacturers are considering moving some or all their production outside Canada. Close to half (42 percent) of manufacturers say they lost opportunities or paid penalties due to labour and skills shortages over the past two years.

CME suggests the survey results illustrate the need for an industrial strategy with four main priorities: attract the workers we need in manufacturing, stimulate investment in innovation and advanced technologies, increase Canadian exports, and adopt an industrial net-zero strategy.

“In the context where manufacturers are affected by supply chain disruptions, increasing protectionism through Buy American and labour shortages, it is now time for the federal government to put in place an overarching strategy for the manufacturing sector”, concluded Darby.

The organization is calling on the federal government to increase the intake of economic class immigrants.

“We need the federal government to step up and set bold economic class immigration targets. CME believes we should aim for 500,000 economic class immigrants per year as of 2030, which is more than double of our current intake of this specific immigration class,” Darby said.

“We must also streamline the temporary foreign worker program so that it can act as a release valve on labour shortages in the short term. Bottom line, we need a lot more people coming into Canada in order to grow.”

Canada’s manufacturing sector represents more than 10 percent of Canada’s gross domestic product. Manufacturing sales in 2019 surpassed $685 billion.