Momentum building in recovery of southwestern Ontario's manufacturing sector
Tuesday, August 18, 2020
The Windsor Star/Dave Waddell
For the first time since the COVID-19 pandemic shut down the automotive industry, a survey of southwestern Ontario’s manufacturing sector shows new business and program starts are consistently exceeding cancellations over the past month.
With work picking up, there was a 20 per cent drop in the number of companies reporting temporary layoffs compared to a month ago. There were 70 employees on temporary layoff last week compared to 408 a month ago.
The monthly survey closed last week.
“I think it’s too early to say we’ve recovered, but we’re definitely in the recovery mode,” said Canadian Association of Mold Makers president Mike Bilton.
“We’re starting to see new business being awarded and new opportunities are right around the corner. The automotive industry is what’s driving this.”
The CAMM/Automate Canada survey also reported for the first time there were no companies completely shut down.
In the past three weeks, 53 new projects have been awarded, 27 projects that were cancelled are back on and 60 programs that were delayed have restarted.
In addition to those 140 programs, companies have received another 86 requests for proposals for new work.
In comparison, 73 projects have been cancelled or delayed indefinitely and 40 have been delayed four weeks or less.
“I’m not so concerned about new business,” Bilton said.
“The OEMs (Original Equipment Manufacturers) aren’t changing their products so quickly so as to decrease business for our members. The post-COVID lockdown recovery in the auto industry is moving along as we thought it would.”
Canadian Manufacturers and Exporters released June’s manufacturing sales figures Monday with the automotive and parts sector enjoying a 217 per cent jump in sales.
The sector accounted for over half of the record 20.7 per cent national increase in the manufacturing sector in June.
Bilton said companies are continuing to adjust to what many feel will be their new reality.
Eight out of ten companies feel they’ll have to operate in a COVID-19-tinged environment for the next nine months.
“The best term is they’re right-sizing in terms of numbers and skill sets,” Bilton said.
“A lot of companies have learned to be more efficient with a few less employees.”
It has resulted in a strange period where hiring and permanent layoff numbers are almost identical.
In the past three weeks 166 new hires have been on-boarded while 165 people have been let go permanently.
Among the companies hiring workers the past month was Cavalier Tool and Manufacturing.
The Windsor-based firm added 10 employees, including a sales rep for South America and Mexico, and is seeking more.
“Our strategic diversification planning over the past five to eight years has left us in a good position to ride out the pandemic,” said Cavalier’s sales manager Tim Galbraith.
“Local companies are only doing a fraction of all the molds and tools being produced around the world. There are opportunities out there to go after.
“I’m cautiously optimistic we’re moving towards recovery.”
The number of furloughed workers, who were receiving all or part of their wages but not working, has plummeted.
As of Aug. 11 there were only 19 furloughed workers compared to 329 the week before as more employees returned to work.
“Companies are getting busier and employees are more comfortable going back to work,” Automate Canada chair Shelley Fellows said.
Fellows added the other encouraging factor is the degree of diversification the pandemic has triggered.
About a third of companies who started making medical supplies during the pandemic intend to continue while aerospace and food and beverage sectors were close behind.
Mexico, South America and Europe were the regions singled out as the most promising potential new markets.
“It wasn’t a gentle nudge, it was a slap up the side of the head,” Fellows said of COVID-19’s role in the diversification.
“You can get comfortable doing things a certain way. The pandemic forced people to get creative to ensure the sustainability of their business.”