Supply chain woes slashing Canadian manufacturing, hurting small businesses: Surveys

Canadian manufacturers say supply chain disruptions are cutting into their production and raising costs, putting the recovery of the sector and the overall economy at risk.

A new survey by Canadian Manufacturers and Exporters found nine out of 10 companies in the sector are grappling with supply chain issues.

More than half said the disruptions are having a major or severe impact on operations.

The report said Canadian manufacturers have lost more than $10 billion in sales as a result of supply chain disruptions and are facing nearly $1 billion in increased costs.

Eight in 10 said they have been forced to hike prices and delay fulfilling customer orders.

Dennis Darby, president and CEO of the manufacturing industry group, said demand for goods is strong, but manufacturers are increasingly unable to keep up with orders.

“Labour shortages, supply chain challenges and higher input costs are big problems,” he said in a statement. “If we don’t address these, Canada’s economy will suffer.”

Meanwhile, businesses in Canada are struggling to pay down debt amassed during pandemic shutdowns, with some considering bankruptcy even as restrictions lift.

The Canadian Federation of Independent Business said nearly a third of hospitality businesses are considering bankruptcy or permanently winding down operations after amassing average debt of more than $205,000.

It says 67% of small- and medium-sized businesses in Canada took on an average of $158,000 in debt during the pandemic, according to a recent survey of CFIB members.

Yet only 35% have returned to normal sales, hurting their capacity to pay off debt.

“The hurdle to get past the economic damage of the last two years is insurmountable for some,” said Dan Kelly, president of the business group.

It’s not just wrestling down debt but also supply chain issues and higher costs challenging small and independent businesses, he said.

“Every single line of a business owner’s budget is under severe pressure right now,” Kelly said.

“With costs rising fairly rapidly and the debt they have taken on … the math is not favourable to the future.”

The CFIB is calling on the federal government to extend its hiring program for businesses and halt tax hikes, including a planned increase in the alcohol excise tax and carbon tax.