Demand is high yet labour shortages and other issues clouding manufacturing's outlookClick image to enlargeA host of pressing issues are hampering Canadian manufacturing’s economic recovery and clouding its outlook despite strong demand for goods, according to the results of a national business outlook survey of manufacturing companies released by Canadian Manufacturers & Exporters (CME) today.

 

 Labour shortages, supply chain disruptions and higher input costs ranked as the top challenges faced by Canadian manufacturers today.

“Our survey confirmed what we’ve been hearing from manufacturers on the ground for a long time. Demand for manufactured goods is strong but we are increasingly unable to keep up let alone take advantage of this boom. Labour shortages, supply chain challenges and higher input costs are big problems. If we don’t address these, Canada’s economy will suffer”, said Dennis Darby, president and CEO of CME.

The survey highlights, include:
• 77 per cent of respondents say attracting and retaining a quality workforce is their biggest challenge.
• More than 80 per cent of respondents say they face labour and skills shortages, up significantly from 60 per cent in the 2020 CME Management Issues Survey.
• Labour shortages are most acute in Quebec, Atlantic Canada, and British Columbia.
• 70 per cent of businesses say they are having the most trouble filling general labour and assembly positions. Shortages in the skilled trades are also growing, particularly for millwrights, welders and machinists.
• 42 per cent of manufacturers say they lost opportunities or paid penalties due to labour and skills shortages over the past two years.
• Labour and skills shortages are so severe today that almost 1 in 5 manufacturers are considering moving some or all their production outside Canada.
• Over the next year, 75% of respondents said they expect sales to increase.
• 88% of respondents said that their suppliers’ delivery times were slower compared with the situation one year ago.

Looking specifically at the labour shortage issue, CME points out that job vacancies in the manufacturing sector climbed to 65,900 in the second quarter of this year while the job vacancy rate reached 4.2%, both record highs. It warned that such tight conditions threaten to fuel rapid wage growth, which will place more upward pressure on prices.

CME believes the gravity of labour and skills shortages requires significant government action.

“We need the federal government to step up and set bold economic class immigration targets. CME believes we should aim for 500,000 economic class immigrants per year as of 2030, which is more than double of our current intake of this specific immigration class. We must also streamline the temporary foreign worker program so that it can act as a release valve on labour shortages in the short term. Bottom line, we need a lot more people coming into Canada in order to grow”, added Darby.

CME added that its survey results “clearly illustrate” the need for an industrial strategy with four main priorities: attract the workers we need in manufacturing, stimulate investment in innovation and advanced technologies, increase Canadian exports, and adopt an industrial net-zero strategy.

Download the full report here:

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