Canadian Manufacturing

As trade bottlenecks weigh on economy, Feds urged to help reshape supply chains

Supply Chain Canada in a submission to senior federal officials last year proposed a concerted effort to modernize the country's supply-chain system.

November 3, 2021  The Canadian Press

For most of his years in manufacturing, Dennis Darby remembers sourcing goods from a single supplier and things arriving just on time.

The system worked well until the pandemic, which now has throttled the movement of goods globally, pushed up costs for shippers and helped fuel higher inflation rates.

As just one example, the cost of a shipping container has gone from just under $2,000 in 2019 to about $10,000 now, said Darby, president of Canadian Manufacturers and Exporters, a national industry association. That extra cost has to be passed on, ultimately to the consumer.

The situation is leading to calls on the federal government to use the current snarl in global supply chains to become more active in rethinking and reshaping the country’s reliance on foreign suppliers.

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The idea has been before the government for some time: Supply Chain Canada in a submission to senior federal officials last year proposed a concerted effort to modernize the country’s supply-chain system and make sure it could easily adapt to demand changes and reduce latency times in the future. The organization has put the idea to multiple cabinet ministers in recent days.

Still, opposition critics and experts say there is much out of the reach of the government and backlogs will simply have to work themselves out over the coming months, such as the high cost of shipping containers.

In the meantime, efforts to produce more goods domestically, such as masks, will take time to ramp up, Carolyn Wilkins, the former second-in-command at the Bank of Canada said in a speech last week where she also said it may not be practical or advisable to try to become completely self-sufficient.

NDP critic Daniel Blaikie said a continental supply-chain plan might be appropriate for critical goods for public health or manufacturing. Any plan should involve government planning with the private sector, he said, including for items critical for lowering greenhouse gas emissions like batteries for electric vehicles.

“We’re at a time where we need a government that’s prepared to show far more leadership, and in organizing how certain things that we deem are very important to our future get produced,” Blaikie said.

The Bank of Canada has warned that problems are likely to get worse towards the end of the calendar year, before improving in 2022, and help push high inflation rates even higher. Blaikie pointed to the rising cost of consumer goods as a reason why the Liberals shouldn’t have cut emergency benefits to workers last month.

Also acting as a hurdle is finding enough workers, such as truckers, to move goods across the country, Darby said.

The most recent jobs data from Statistics Canada noted that manufacturing in September remained 0.8 per cent below pre-pandemic employment levels, while transportation and warehousing was still 2.5 per cent below levels recorded in February 2020.