Financial impact from COVID-19 could last 9 months: survey
- May 6, 2020
Manufacturers in southwestern Ontario think the COVID-19 crisis will have a lingering negative impact on their business for nine months or more, according to results from a recent survey of financials conducted by the Canadian Association of Moldmakers and Automate Canada.
The survey is a complementary document to another round of surveys currently in the field by the pair of industry associations. The other survey captures manufacturers’ sentiments on operations during the COVID-19 shutdown.
The financial survey uncovers that the majority of respondents (38 per cent) think the impact of COVID-19 measures will be felt for more than nine months, while an additional 26 per cent think the impact will be most apparent for the next six months to nine months. Another five per cent think the impact will be felt for fewer than three months.
The survey respondents are made up of mould and die makers and general manufacturing companies, with automation integrators and software firms making up about 23 per cent of the responses. Most of the companies employ between 10 and 150 workers.
Receiving payment for work completed is another area of concern indicated in the survey, with companies citing significant portions of their account receivables being past due. Respondents report that between 30 and 90 per cent of their order books are overdue by up to 90 days, and 10 per cent of receivables past due by more than 90 days.
Banking and financial institutions
The survey reports that more than 60 per cent of companies have spoken to their financial institutions about the current predicament, with many of those finance firms asking for revised forecasts and cash flow information.
However, so far there have not been a lot of relief measures reported, with 66 per cent of respondents saying their banks have not offered a postponement on loan principle. About 82 per cent said are receiving no interest deferral assistance from lenders, and 87 per cent reporting that no increase to operating lines of credit have been made.
This is a major concern, considering manufacturers are falling through the cracks of the federal and provincial assistance programs currently being offered. Some of the prominent gaps reported in the survey include bank administration fees, Cash flow assistance and Small Business Financing. Companies with a large portion of sales going to overseas subsidiaries are also in the lurch, because those lost sales are not being counted against the revenue reduction limits set by the assistance programs.
For more results on the CAMM surveys visit https://canadianassociationofmoldmakers.com/resources
Responses to week two of the financial survey results will be closed May 11.