This spring, Reshoring Canada was created by a group of concerned Canadians who believe that how we think about our supply chains must change. Since then, problems in those chains that were created by the pandemic have reached critical levels. Shipping containers are scarce and their costs are sky-high, disruptions are commonplace, and there are serious concerns about national and health security, the latter especially important during a pandemic, as we’ve recently learned.
It’s in this new world that Reshoring Canada commissioned the first-ever national survey of business leaders’ thoughts about the supply chain and reshoring. The survey was conducted from May to August of this year by Mainstreet Research to analyze their attitudes and plans in these disruptive times.
The fact that 40 per cent of respondents were C-suite executives was unusual, illustrating the fundamental importance of this issue to their business. Mainstreet got responses from industries as diverse as manufacturing, pharma, metals, and textiles.
Their top supply-chain concerns were cost instability, logistics problems, and capacity constraints. While not new, their severity and extent is. Not surprisingly, the commodities in shortest supply are steel and aluminum, electronics, and plastics.
What’s interesting is that 34 per cent of industry respondents didn’t point to legislative or regulatory change to solve these problems. Rather, they’re trying to find solutions themselves, and, to that end, they’re examining internal systemic problems that have been 30 years in the making.
Thirty-two per cent consider action taken by Ottawa to support trade and tariffs helpful, however. Meanwhile, 77 per cent are trying to diversify their supply chains as quickly as possible. Again, this demonstrates the seriousness of the current situation. While today’s governments aren’t being blamed for their inaction, this will change the longer the crisis continues, especially as Canadians face inflation pressures and product shortages.
We asked respondents about their immediate plans, and found that only seven per cent are completely reshoring their factories to Canada. It should be noted that 28 per cent don’t have any international facilities to begin with, while others are considering reshoring segments of their supply chains to increase redundancy and reduce delays. Even as companies struggle to think of new ways to meet this challenge, the Top 2 barriers they identified are labour shortages and costs. A business has a hard time overcoming these challenges on its own.
We expect this trend to accelerate in the months ahead. Businesses need security of supply. With disruptions of supply chains increasing, sole-sourcing from countries like China continuing, and more scrutiny of supply chains as businesses set environmental, social, and governance goals, this is no mere blip. It’s the new reality.
Sandra Pupatello, Reshoring Canada’s co-chair and a former Industry minister in Ontario, says she’s “shared these survey results with participants and government officials over the past few weeks. The next steps are to convene a series of ‘solutions tables’ with key industry leaders to discuss immediate and long-term ways to improve Canadian supply chains.”
Added Tony Clement, her Reshoring Canada co-chair and a former federal Industry minister: “These will include government regulatory and legislative action, as well as potential industry initiatives. Reshoring Canada is (also) working on better analytical tools to assist businesses, if reshoring makes good business sense.”
The survey results make clear that supply-chain disruptions are the new reality. What might have been a single weather event affecting a single continent has turned into multiple events affecting multiple continents — all at the same time. Canadian businesses are struggling with the fallout. It’s time for businesses and governments to support Canada’s national and health security to ensure its future economic vitality.
Details of the survey conducted by Mainstreet Research for Reshoring Canada can be found here.
Pupatello encourages readers who want to support the work of Reshoring Canada, and who are interested in encouraging federal and provincial governments to prioritize reshoring, to visit reshoringcanada.ca.
