COVID-19 is having a significant impact on food and consumer goods manufacturers according to the latest survey by Food & Consumer Products of Canada (FCPC).
Manufacturers report that costs have increased significantly, productivity has declined and there is increasing concern about shortages of raw materials and personal protective equipment needed to keep producing essential goods.
The results are the association’s second survey of FCPC members’ business impacts and responses related to the ongoing COVID-19 pandemic.
“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," says Michael Graydon, FCPC CEO.
“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.”
Demand remains significantly above normal.
After 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
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.
Nearly 1⁄3 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.