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InvestmentsFactories see silver lining in supply chain woes By Reuters

Factories see silver lining in supply chain woes By Reuters


© Reuters. A employee assembles bullet fairings for the Global 7500 plane at Bombardier Saint-Laurent Manufacturing Centre in Montreal, Quebec, Canada November 22, 2021. REUTERS/Christinne Muschi

By Allison Lampert and Julie Gordon

(Reuters) – Global delivery and supply chain bottlenecks are encouraging Canadian companies to deliver manufacturing again dwelling, however some corporations must soak up larger prices and construct experience in sure sectors for native manufacturing to select up tempo.

While fastidiously knitted world supply chains helped sectors from trend https://www.reuters.com/article/benetton-reshoring-idCNL8N2QQ3N0 to autos minimize prices and increase margins in current a long time, COVID-19 has eroded these benefits and uncovered weaknesses like shortages of semiconductor chips.

In Canada, supply chain woes, current rail and climate disruptions, together with strain to supply ethically and regionally to decrease emissions, are main corporations to purchase nearer to dwelling or produce in-house, executives say.

Even earlier than storms and Canada’s current floods stranded two of its containers on the Port of Vancouver, Toronto-based Progress Luv2Pak was on the lookout for extra Canadian and U.S. suppliers attributable to hovering delivery prices and delays.

“In some cases, the value of the goods in the container are less than the freight,” said Ben Hertzman, president of Luv2Pak, which supplies shopping bags and other packaging for retailers.

He said about half of Luv2Pak’s seven-member buying team now focuses on North American sourcing, up from one part-time position just a few months ago, even though the company often gets better pricing and quality for products offshore.

Canadian manufacturing activity rose to a seven-month high in October, according to IHS Markit. Although it is too early to tell whether reshoring contributed to this rise, economists say companies are taking concrete steps toward buying local, unlike during earlier crises.

“This time round there’s not simply speak of it, there’s truly motion,” said Peter Hall, chief economist for Export Development Canada.

That’s driving cautious optimism that reshoring could bolster Canada’s manufacturing sector, which according to Statistics Canada data, has been in steady decline since the late 1990s.

Quebec’s investment arm recently launched its first “purchase native” campaign aimed at companies and supply chains.

“The variety of calls our ‘Buy Quebec’ crew will get from corporations every week might be round 10 occasions larger than what it was even three months in the past,” said Stephane Drouin, an executive with Investissement Quebec.

Quebec Economy Minister Pierre Fitzgibbon said in an interview he is pitching the advantages of North American-based supply to U.S. automakers like Tesla (NASDAQ:) as the resource-rich province targets batteries for electric vehicles as a sector where it wants to compete globally.

Montreal-area furniture maker Artopex, which already sources mostly in Canada, is taking steps to make some components in-house that it once purchased in Asia due to delays and higher shipping costs, Chief Executive Daniel Pelletier said.

“It’s a serious drawback to not be capable of have certainty over the timing of deliveries.”

Montreal-based business jet maker Bombardier (OTC:) has already brought aerostructure work in-house from North American suppliers outside its home province of Quebec and is looking at further reshoring opportunities, a spokesperson said.

Bombardier saw fewer production delays and improved quality after it repatriated work, such as the machining of stringers used in aircraft wings from a U.S. supplier, spokesperson Marie-Andree Charron said.

But policymakers warn reshoring is a “two-way-street” that risks hurting business if American producers eschew Canadians for U.S. suppliers.

“Firms in Canada could relocate manufacturing from offshore to Canada,” said Bank of Canada Deputy Governor Lawrence Schembri last week. “But different producers, for instance the United States, could deliver manufacturing from Canada again to the United States.”

Another problem is a lack of awareness that might stop Canada from shortly growing industries like semi-conductor chips, regardless of a worldwide scarcity.

“The auto industry is being held hostage by Taiwan and Korea,” Jerry Dias, the president of the nation’s largest personal sector union, Unifor.

Companies, nonetheless, like Luv2Pak see the advantages of native sourcing, given the uncertainty of imports.

“It would just be so nice to settle into some good supply lines that don’t have to come over an ocean,” Hertzman mentioned.

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