Canadian manufacturers say supply chain disruptions are reducing production and increasing costs, jeopardizing the recovery of the sector and the economy as a whole.
A new survey from Canadian Manufacturers & Exporters found that nine out of ten companies in the sector were struggling with supply chain issues. More than half say the disruptions have a major or severe impact on their business.
The report says Canadian manufacturers have lost more than $10 billion in sales due to supply chain disruptions and face increased costs of nearly $1 billion. Eight in ten manufacturers say they have been forced to raise prices and delay fulfillment of customer orders.
Manufacturing industry group president and chief executive Dennis Darby says demand for goods is strong but manufacturers are increasingly unable to meet orders. “Labour shortages, supply chain challenges and rising input costs are big issues,” he said in a statement. If we don’t address these issues, Canada’s economy will suffer. »
Bankruptcies in sight
Meanwhile, Canadian businesses are struggling to repay debt accumulated during the pandemic lockdowns and some of them are considering bankruptcy despite the lifting of restrictions. The Canadian Federation of Independent Business (CFIB) reported that more than a quarter of hotel businesses were considering declaring bankruptcy or permanently ceasing operations after racking up an average debt of more than $205,000.
According to a recent survey of CFIB members, 67% of small and medium-sized enterprises (SMEs) in Canada have incurred an average debt of $158,000 during the pandemic. Despite this, only 35% of SMEs have returned to normal sales, which affects their ability to repay their debts.
“The hurdle to overcome the economic damage of the past two years is insurmountable for some,” noted the group of companies’ chairman, Dan Kelly. It’s not just about grappling with debt, but also about juggling supply chain issues and rising costs that make it difficult for small, independent businesses, he said.
“Every line of a business owner’s budget is under severe pressure right now,” Kelly said. With costs rising pretty fast and the debt they’ve taken on […], the calculations are not favorable for the future. »
CFIB is calling on the federal government to extend its corporate hiring program and halt tax hikes, including a planned increase in the alcohol excise tax and carbon tax.