Canadian manufacturers say supply chain disruptions are reducing production and increasing costs, jeopardizing the sector’s recovery and the economy as a whole.
A new survey by Canadian manufacturers and exporters found that nine out of ten companies in the sector were struggling with supply chain issues. More than half say the disruptions are having a significant 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 are facing a cost increase of nearly $1 billion. Eight out of ten factories say they have had to raise prices and delay meeting customer orders.
Demand for goods is strong, but manufacturers are increasingly unable to meet demand, says Dennis Darby, manufacturing group president and CEO. “Labour shortages, supply chain challenges and rising input costs are major issues,” he said in a statement. If we don’t address these issues, the Canadian economy will suffer. »
Bankruptcies on the horizon
Meanwhile, Canadian companies are struggling to pay off debts accumulated during pandemic lockdowns and some are contemplating bankruptcy despite the lifting of restrictions. The Canadian Federation of Independent Business (CFIB) reported that more than a quarter of hotel companies are considering filing for bankruptcy or permanently ending operations after accumulating an average of more than $205,000 in debt.
According to a recent survey of CFIB members, 67% of small and medium businesses (SMEs) in Canada have incurred an average of $158,000 in debt during the pandemic. Despite this, only 35% of SMEs have returned to their normal turnover, affecting their ability to repay their debts.
“The hurdle of overcoming the economic damage inflicted on the past two years is insurmountable for some,” noted Dan Kelly, Group Business Chairman. It’s not just about grappling with debt, he said, but also juggling supply chain issues and rising costs that make it difficult for small, independent businesses.
“Every line of the employer’s budget is under severe pressure right now,” Kelly said. With costs rising very quickly and the debts they incurred […], the accounts are not favorable for the future. »
The CFIB is calling on the federal government to extend its corporate hiring program and halt tax increases, including a planned increase in the alcohol excise tax and carbon tax.
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