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Manufacturers: Costs up, productivity down, supplies stressed due to COVID-19
Created on 4/28/2020 8:14:01 AM

Mississauga, Ontario (Tuesday, April 28) — Leading food and consumer goods manufacturers report significant cost increases, productivity losses, and increasing concern about shortages of raw materials and personal protective equipment needed to keep producing essential goods.  

The results were published by Food & Consumer Products of Canada (FCPC) today (Tuesday) in the association’s second survey of members’ business impacts and responses related to the ongoing COVID-19 pandemic.  
 
FCPC CEO Michael Graydon commented: 

“While manufacturing has so far kept pace with continuing increased demand, the prolonged COVID-19 crisis is driving costs up, slowing production, and putting serious stress on supplies of everything from ingredients to packaging to personal protective equipment.” 
 
“COVID-19 is imposing extraordinary new costs and dramatically increasing uncertainty for Canada’s largest manufacturing workforce as we work to keep a steady supply of essential products while keeping employees and facilities safe.”  

Key findings include:

  • Demand remains significantly above normal.  
    • After orders dramatic initial spikes in orders, most FCPC members now report demand approximately 20-40% above the same time last year.  
    • Smaller businesses may be particularly vulnerable to shifts in demand and production.  80% of smaller business respondents report their sales are down by up to 50% compared to same time last year.
    • Increased retail demand does not appear to have offset food service losses.  FCPC estimates losses due to food service closures are at least two times greater than increased retail sales.
  • Significant cost increases and decreased productivity are contributing to cash flow concerns.
    • 75% of respondents report moderate to significant cost increases in the last 4-6 weeks. Key factors include increased wages, weak Canadian dollar, and increased freight charges.
    • 75% of respondents are experiencing increased absenteeism in manufacturing facilities, and 40% expect significant training costs to keep key jobs filled (approximately $2000/job for line production workers and up to $5000/job for more specialized roles).
    • 50% of respondents report productivity in manufacturing facilities is down by up to 25% due to COVID-19 mitigation measures, including physical distancing and enhanced screening procedures for production workers.
    • 20% of respondents expect liquidity issues within 3 months, and 50% of those who expect liquidity issues do not think current government and financial institution support will address their concerns.
  • Manufacturers are increasingly worried about supplies of ingredients, packaging, and personal protective equipment (PPE). 
    • Nearly ⅓ of survey respondents expect material supply issues within 2-4 months if current trends continue.
    • 35% of survey respondents are experiencing moderate to significant PPE shortages.    

Press contact: For media inquiries please contact pressinquiries@fcpc.ca.  

View the inforgraphic detailing the survey results: COVID-19: Continuing Impacts (French infographic)
 
Food & Consumer Products of Canada (FCPC) is the voice of the Canadian food, beverage and consumer products industry. We represent more than 100 food, beverage, and consumer product manufacturers of all sizes.
 
Food and consumer product manufacturing is the largest employer in the manufacturing sector in Canada, directly employing more than 300,000 workers in over 6,500 establishments from coast to coast. The industry contributes nearly $50 billion annually to Canada’s economy and provides safe, high-quality products found in virtually every single home in Canada.  
 
For more information, visit www.fcpc.ca/foodisfundamental.

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