Canadian Manufacturers Expect Recovery to Take a Year or More

From AEM reports

While the lion’s share of coverage on COVID-19’s economic impact has centered on U.S. businesses, a recent survey spells out the pandemic’s toll on some Canadian equipment manufacturers.

The survey, conducted by the Association of Equipment Manufacturers, polled presidents, CEOs, and owners of Canadian AEM-member companies from June 22 to Aug. 5. Twenty-four executives responded to the survey. The results were released Aug. 20. Percentages for some results do not add up to 100% because respondents could pick more than one answer.

Nearly half of the respondents, 47%, said they expect it to take a year or more for their companies to return to prepandemic business levels.

More than three out of four, 76%, identified the pandemic’s primary impact on their business and manufacturing operations as a decrease in demand, as measured by new orders. The next largest impacts were employee absenteeism, identified by 43%, a decline in the company’s financial situation, named by 43%, and cancelation of orders, cited by 38%. Another top impact was employee furloughs, named by 29%, and layoffs, also cited by 29%.

Four out of ten, 43%, identified supply-chain issues as a major impact.

Half of the respondents said they have used or intend to use Canada’s federal COVID-19 assistance programs to help their business. The remaining 50% said they have not or will not take advantage of the programs.

Of Canadian equipment manufacturers accessing the Canada Emergency Wage Subsidy program, which covered part of employee wages for employers whose revenue dropped as a result of the pandemic, 55% said it was easy to access, while 22% said it was relatively easy, and another 22% said it was moderately difficult.

The survey asked the company executives what additional policies the Canadian government should adopt to help their businesses through the pandemic. Sixty-five percent said the government should recognize the importance of Canadian manufacturing capacity, implement measures to increase the competitiveness of the sector, and reward innovative Canadian manufacturers.

Sixty percent said that investing more federal money in infrastructure projects, including increasing the federal portion of funding for provincial and municipal projects, should be the top policy. Another 60% responded that creating a program to replace older equipment with new, lower-emission equipment through tax credits or government funds should be a top policy priority.

“Equipment manufacturers, suppliers, and distributors in Canada have largely remained open and continue to supply the equipment necessary to keep the country moving forward and help lead the recovery and renewal of the Canadian economy,” AEM said in a press release announcing the findings.

“The COVID-19 pandemic has clearly impacted equipment manufacturers and the communities we proudly serve across Canada,” Alexander Russ, AEN’s director of government affairs, said in the statement. “From new orders drying up to supply-chain disruptions, this unprecedented crisis has caused many companies to reduce their immediate financial outlook. AEM continues to help our industry navigate these challenging times to come back stronger and fuel Canada’s economic recovery.”

AEM’s report on the survey can be accessed here.