The manufacturing industry is the most vulnerable to global supply chain issues in Canada. But it is not the only one: animal feed producers, electric companies or even provincial governments are also more exposed to trade disruptions than one might think.
Nearly two-thirds of industries (63%) representing almost half of the Canadian economy (47%) are highly vulnerable to disruptions in global supply chains — either on the import side, the export side, or the two — finds a study by the Canadian Department of International Trade, the outline of which was presented Friday at the annual conference of the Association of Quebec Economists.
Conducted before the pandemic derailed these chains, Global Affairs Canada’s study covers 216 of the 236 industries that make up the Canadian economy. It measures the direct or indirect dependence of each of them, both in terms of imports and exports, while taking into account the more or less limited number of foreign partners.
It can be seen that two out of five industries, accounting for a quarter of the Canadian economy, show “high vulnerability” to shocks from abroad, both in terms of their inputs and their sales. These include companies in the manufacturing sector, but also those involved in oil and gas extraction.
Automotive manufacturing is the most important industry in the group, with almost two-thirds of inputs directly or indirectly imported, 86% of production exported and, in any case, with the main (if not only) foreign partner, the States -United.
Conversely, just over a third of industries in Canada, accounting for half of its economy, are weakly exposed to disruptions in global supply and demand. This group “is dominated by [services professionnels]education, health and other service industries, which require few inputs from foreign sources and sell their services mainly on the domestic Canadian market,” explain the authors of the study.
From dog food to the roads
And there are all the other industries that lie in between that you wouldn’t necessarily think of. This is the case, for example, of electricity companies, of which only 6% of production is directly sold abroad, but 16% of which is indirectly sold because it goes into the production of goods which will themselves be even exported.
This is also the case for animal feed manufacturers. Yet they find most of their customers in the Canadian market, as well as a large part of their inputs. But here it is, it is the producers of these inputs who are largely dependent on imports.
This high vulnerability with regard to foreign suppliers for sectors which mainly serve the domestic market is found in several other areas, report the authors of the study, including culture, transport, as well as in two industries “of a particularly large: restaurants and bars, and provincial government services”.
In the case of provincial governments, their vulnerability to disruptions in global supply chains stems in part from their heavy use of agri-food, chemical, and metal/mineral products sourced from a limited number of foreign suppliers.