Industry turns to budget for help on supply chain issues and domestic production

OTTAWA – The federal Liberals are urged to make room in next week’s budget to help Canada become more productive and invest to attract new businesses as part of a campaign to simplify supply chains strained by the pandemic.

For years, Canadian companies have underinvested in technology and other measures that could help workers achieve the same performance more easily than they do today.

Coming out of the COVID-19 pandemic, an association of manufacturers and exporters fears the country could fall even further behind competitors in peer countries without the right push now.

Supply chains that have been gummed up by the reopening of the global economy that has led to a nationwide and U.S. campaign to expand continental manufacturing capacity are thrown into the mix.

Dennis Darby, president of Canadian Manufacturers & Exporters, said the confluence of circumstances is why his group and others are seeking investment and incentives to spur post-pandemic change and address current tensions.

He said the country needs to attract the necessary capital now and get companies to invest in Canada before they start looking elsewhere, including the United States, to plant their money.

That’s why his sector is seeking tax incentives for companies to buy new machinery, equipment and technology, and the expansion of an existing federal fund that would allow it to provide $2.5 billion a year to support projects. large-scale fixed assets.

Darby pointed to the Liberals’ recent promise of more social programs — and therefore more spending — as part of a political pact with the New Democrats.

“There’s always a lot of pressure on budgets, especially this one,” he said. “But we have to make those investments, put a real stake in the ground and say, yes, we’re going to attract the capital that we need to be competitive.”

Canada’s risk of problems with global supply chains has been on the minds of federal officials since the fall of 2020, when they began to identify pressure points that could cause economic hardship for the country if not addressed. controlled.

At a meeting in July 2021, senior officials decided to focus their efforts on critical supply chains facing the risks of geopolitical events and national structural issues such as labor shortages and labor shortages. just-in-time delivery models.

Officials have identified 10 supply chains vulnerable to problems with the importation and availability of essential goods, though they were all covered up in documents obtained by The Canadian Press under the Freedom of Information Act. information.

Officials framed work on supply chains as part of positioning the country “in the economy of the future, ensuring economic prosperity and COVID-19 recovery efforts.”

On Friday, Darby and members of his association met virtually with International Trade Minister Mary Ng. In a tweet, Ng wrote that the group was talking about “creating opportunities for exporters through trade and ensuring the resilience of our supply chains.”

Pandemic-induced delivery delays mean businesses have been challenged to keep up with consumer demand, which has contributed to high inflation rates for three decades.

Reliance on long supply chains has made the country vulnerable to problems delivering goods, Darby said.

He said the budget plan is also expected to provide the sector with help to address a labor shortage which stands at around 80,000 vacancies. Darby said companies could fill those positions quickly given demand, but simply can’t find available workers — a common refrain across large swaths of the Canadian economy.

Tu Nguyen, an economist at RSM Canada, said the current management of supply chain pressures could help spur longer-term growth in trade-dependent sectors, including commodities like oil and gas. .

She said the trick is to make sure the economy can absorb this growth without further fueling demand and further straining supply chains.

“We just need to make sure our growth offsets the challenges of high inflation and supply chain disruption.”

This report from The Canadian Press was first published on April 1, 2022.

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