Survey shows resiliency in auto supply chain despite pandemic

Saturday, March 28, 2020

The Windsor Star/Dave Waddell

https://windsorstar.com/news/local-news/survey-shows-resiliency-in-auto-supply-chain-despite-pandemic/

 

A Canada Association of Mold Makers (CAMM)/Automate Canada survey released Friday revealed 71 per cent of respondents haven’t laid off any employees due to the COVID-19 pandemic, but two-thirds of them have someone affected by quarantine or self-isolation.

The survey was completed by 93 companies, with three quarters of the respondents coming from the southwestern Ontario region.

“I was pleased to see there were a handful of new business awards and even some new hires,” CAMM president Mike Bilton said.

“It’s unfortunate to see a lot of the layoffs happening, but it’s understood it’s part of the landscape we’re in right now.”

The respondents represented firms in the tool and die, mould making, software and automation industries.

The survey was done from Sunday until noon Tuesday. It will be repeated with additional questions each week.

With COVID-19 gaining a firmer foothold in the area, Bilton said employers ranked employee anxiety as having the biggest impact on their business.

The survey reported 410 employees were in isolation as of Tuesday for precautionary reasons.

“I have heard in the past few days employers, who still have their doors open, are really distancing work stations and stepped up on the PPE, masks or wipes, just doing a high-end job of cleaning,” Bilton said.

“I respect the fact people are concerned about the spread of  the virus.”

Bilton said he wasn’t surprised with the early resiliency of the employment numbers of the Tier II and III automotive suppliers.

The 29 per cent of companies that laid off workers reported a combined 711 temporary layoffs and eight permanent layoffs.

There were also 16 new hires in the past week representing 12 per cent of respondents.

“Our members are less reactive to changes than high volume suppliers (like Tier Is),” Bilton said.

“Most of the projects in our industry are 18 to 36-weeks long. By the end of 36 weeks, we all hope we’re out of this slump.”

Bilton added the automakers, at least until now, are still preparing for long-term product launches. Local firms have also protected themselves better by diversifying in both their  customer base and the industries they’re supplying.

Despite the shutdown of the North American auto industry and the thousands of layoffs at OEMs and Tier I suppliers, the survey revealed that 34 new projects/products were awarded in the past week.

There were also 43 projects cancelled and another 39 delayed for less than four weeks.

“The feedback I’m getting from those who have read the report, they were surprised to see some hiring and new business awards,” Bilton said. “Under all this stress and anxiety, there are still some good things happening.”

Aside from employee health and retention, the biggest future  concern raised in the survey was cash flow.

Employers got a big boost Friday when the federal government announced it was boosting the wage subsidy from 10 to 75 per cent for small- and medium-sized businesses.

Business also got deferrals on HST and GST payments and the Business Development Bank of Canada is offering up to $40,000 in loans interest-free for a year.

“This is exactly the sort of thing we’ve been asking the government for,” Windsor-Essex Regional Chamber of Commerce CEO/president Rakesh Naidu said.

“This is a very positive step that will go a long way to helping with the recovery of the economy.”

Naidu said the wage subsidy is an investment that will cost significantly upfront, but will save even more money and time in the long run.

“It deals with the current situation and plans for the future,” Naidu said. “The recovery will be faster if businesses still have employees because it avoids a complete economic shutdown.”

Windsor-Essex Economic Development Corporation CEO/president Stephen Mackenzie is pleased to see the automotive sector avoid a total meltdown, but cautions the survey is only an early snapshot.

“The next two surveys will be interesting to see because they will be the indicator of what’s really going on,” Mackenzie said.

“Will things change in the area? Is there still new contracts and procurement going on?

“This data will be vital to helping us address the issues that arise.”