Supply chain issues have consequences for Canadians
Seems bad!
Today’s global supply chain is a multi-faceted system that connects almost every populated region in the world. For those who don’t work directly in that chain, it can often seem invisible. Every aspect of the supply chain is heavily monitored and tracked by companies in order to ensure the efficient – and profitable – movement of goods throughout the world. It is an important aspect of the Canadian economy, impacting everything from food to fuel to the fertilizer used in agriculture.
As a result of the economic repercussions of COVID-19, many world governments, as well as corporations, have expressed concerns about the stability of global supply chains. At the beginning of October, Canada’s Finance Minister Chrystia Freeland stated that the ports all over Canada are being monitored. When speaking to reporters in Washington after the World Bank and the International Monetary Fund’s meetings, Freeland highlighted that she was optimistic regarding Canada’s strength when it comes to recovering from the economic repercussions of COVID-19, however, the financial well-being and GDP of the Canadian state does not directly translate into financial well-being for people living in Canada. And neither Freeland nor the Canadian government have any control over the crises impacting the supply chain, challenges that range from congestion in ports of call to a lack of truck drivers due to the fact that many died from COVID-19 or are refusing to work for meagre wages.
Much of the government’s energy is focused on ensuring that the supply chain issues don’t interfere with the profitability of corporations or the financial health of the state. “We are definitely mindful of the supply chain issues in the Canadian economy. We are monitoring the supply chain and Canadian ports, very, very closely.” Freeland said. The reality is that jumpstarting the economy after the shutdowns brought on by COVID-19 was ultimately bound to be uneven, Freeland emphasized.
RSM Canada is a multinational organization that focuses on audit, tax, and consultation. It launched its latest fall issue of “The Real Economy, Canada” on October 19. This is a report that comes out quarterly. It aims to provide Canadian businesses with a wide array of insight on the economy, including economic growth, what to expect from Canada’s middle market, as well as potential threats. The fourth edition of 2021’s The Real Economy, Canada focuses on the country’s decreased supply of goods. The report emphasized that the disruptions that have occurred as a result of ports closing, factories shutting down, as well as labour shortages brought on by low wages and poor working conditions are expected to put a temporary halt to supply chain production until the middle of 2022. As a result, businesses in Canada are expected to deal with hefty international shipping costs and dwindling inventories.
The most important factor to note is that labour shortages, which have largely been driven by the refusal of corporations to pay workers adequate wages for working during a deadly pandemic, are a threat to the economic recovery of the country. The report emphasizes that labour shortage is expected to become a problem over the next year. At the start of 2021, job vacancies in the country were 550,000. By the second quarter of the year, job vacancies climbed to 730,000.
Canada’s supply chain issue has impacted many households who shop online. Shipping is taking longer and as a result, many households are forced to wait months just to receive their orders. This has also affected businesses who have to order inventory as they are forced to wait longer for products to arrive, affecting the company’s profits.
The supply chain issues not only hinder the country’s economic recovery; they drive the increase to the prices of goods. The head of the Bank of Canada, governor Tiff Macklem, stated that the price increases are expected to continue in the next while. The reality is that, as a result of supply chain problems, we have seen a delay in spending, hindering economic growth. “We’re still expecting a good rebound. It may be not as fast as we had expected,” Macklem emphasized on a video conference with reporters.
The price of beef, chicken, and pork have all increased as well. The director of Dalhousie University’s Agri-Food Analytics Lab in Halifax, Sylvain Charlebois, emphasized that the price of beef has gone up approximately 12 per cent. The Dalhousie food lab stated that issues resulting from the supply chain as well as poor weather are the culprit for the increase in prices. The Dalhousie food lab organized a survey of over 10,000 Canadians, and around half of the survey’s respondents stated that they had decreased their purchases of meat during the last six months as a result of the increased prices. The survey also highlighted that Canadians are purchasing store brand products more today. Furthermore, they are looking at weekly flyers in order to find deals. Thus, it is evident that Canadians are utilizing coupons more than ever, according to Charlebois. According to the Dalhousie food lab’s survey, four out of ten people said that they look for food at decreased prices more today in comparison to last year. They also stated that another factor is the expiration date of the item.
Canadian companies have also faced difficulties due to the reduced supply chain. The difficulty comes when companies have to wait longer times for the computer chips and goods needed for their products. General Motors decided to lay off 1,500 workers at one of its plants in Ingersoll, Ontario due to the absence of chips that are needed for its vehicles – a decision that is interesting to juxtapose against the claims from corporations and the government that there is a labour shortage at Spin Master Corp, a Canadian toymaker brand that states it will have to take measures such as increasing its prices on its products in order to deal with the issue. The supply chain has affected many sectors of the economy that many people rely on. Areas from food and produce to furniture and tech are affected by the reduction in the supply chain.
