Home Month and Year January 2021 Survey Says: Big Challenges and Opportunities for Manufacturers in 2021

Survey Says: Big Challenges and Opportunities for Manufacturers in 2021

David McLean

Canadian Manufacturers & Exporters’ biennial Management Issues Survey (MIS) is one of our most important tools for taking the pulse of the manufacturing community. It provides important insights into the current conditions of manufacturers, their expectations for the future, and their most pressing challenges and needs.

Once again, survey participants represented a broad cross-section of the Canadian manufacturing sector, with 563 respondents spanning at least 19 industries. We heard from small businesses with only a handful of workers, all the way up to large, multinational corporations that boast over 1,000 employees.

The MIS has taken on greater significance this year since it was conducted in the middle of a once-in-a-century pandemic.

While the overall industry experienced a strong rebound coming out of the first lockdown, activity has cooled markedly in line with exhausted pent-up demand and a second wave of infections. Not surprisingly, our survey found that more manufacturers have seen their production decrease on a year-over-year basis than those that have seen it increase. Many manufacturers are welcoming government support to help get through the crisis, including more than half that have received or are receiving Canada Emergency Wage Subsidy (CEWS) payments.

Unfortunately, the economic scars of the pandemic will linger for years to come. While 30 per cent of manufacturers have already seen their production return to the pre-pandemic levels of February 2020 and an additional 6 per cent think they will reach this threshold by the end of this year, many more are anticipating a more drawn-out recovery.

About 60 per cent are purchasing personal protective equipment (PPE) to keep their workers safe. This has emerged as a major new expense for manufacturers. For those that are purchasing PPE this year due to COVID-19, average costs to-date were estimated at $201,500. For the full year, average costs were expected to rise to $373,400.

Longstanding challenges for manufacturers also resurfaced. For example, 60 per cent reported having immediate labour and skills shortages, down from about 70 per cent in 2018 but up from 40 per cent in 2016. While this year’s finding may be counterintuitive, it is conceivable that the extreme circumstances of the COVID-19 pandemic are exacerbating existing labour challenges. First, the Canada Emergency Response Benefit (CERB) and its successor, the Canada Recovery Benefit (CRB), may disincentivize work. Also, people may have pulled back from the labour force because of health concerns or childcare obligations.

We mustn’t be complacent. Once the current crisis has passed, Canada has an opportunity to win back manufacturing investment. Due to the disruptions in supply at the beginning of the pandemic, more than half said they are looking to diversify supply chains to avoid overreliance on foreign markets. Canada should step up its global competitiveness so it can attract investment from firms looking to reshore manufacturing. But to stand any chance of success, attention must turn quickly to addressing the main issues identified in this survey—labour and skills shortages and the overall business tax environment.

Canadian Manufacturers & Exporters (CME) is the voice of Canadian manufacturing. CME represents more than 2,500 companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports.