SMEs in the manufacturing sector suffer from a shortage of labor to the point of transferring contracts to subcontractors outside the province, which is causing a net loss to the Quebec economy, regrets an association of manufacturing companies .
Posted at 10 am.
STIQ released the results of the 13thand Quebec Industrial Barometer edition. The telephone survey conducted by Bip Research was carried out between January 18 and February 16, 2022, referring to the state of these indicators in 2021. About 500 SMEs were questioned from a universe of 3,000 companies with 10 to 500 employees, a sample representative in in relation to the researched population. The margin of error is 3.9%, 19 times out of 20.
About 15% of the SMEs surveyed relocate their activities outside Quebec to combat labor shortages, causing a net loss to Quebec’s economy.
“Companies have to produce and deliver their orders and if the only way to do that is to send a small part of them out, this is not the first option, but they will do it”, says Richard Blanchet, president and CEO of STIQ.
Due to lack of manpower, 7 out of 10 companies resign themselves to delivering late orders and 6 out of 10 refuse contracts. One in five companies admit they are reducing the quality of their products and services.
“Compared to 2019, there is a significant increase in contracts or orders delivered late (+ 11 points) and in the loss or refusal of contracts or orders (+ 7 points)”, we read in the document that analyzes the survey.
This phenomenon is added to another trend that consists of opening establishments in the United States in order to meet the requirements of the buy american act. A company like Marmen, for example, has opened a subsidiary in Albany, New York, to build wind turbines.
The situation has never been worse in 13 years, according to STIQ. Nine out of ten SMEs consider the recruitment of skilled workers to be a crucial issue, while seven out of ten consider that the challenges of retaining this workforce are equally great. These are levels not reached since the beginning of the Barometer.
The proportion of companies, at 44%, that recruit abroad has jumped 11 percentage points since 2019.
The number of vacancies increased by 36% in just one year, with an average of 12 vacancies in companies. “If we distribute this average across our universe of 3,000 SMEs with 10 to 500 employees, we arrive at 36,000 vacancies in the target companies of our research. This is the highest level ever achieved,” says Mr. Blanchet.
The pandemic has shown the shortcomings of just-in-time. “The Barometer survey highlights the extent to which supply chain delays and disruption issues have major impacts on Quebec’s manufacturing sector. Almost all companies surveyed (95%) increased their prices and 80% delivered contracts or orders late,” the highlights read.
Whether because of labor shortages or supply disruptions, SMEs are feeling the effects on the bottom line.
Nine out of ten companies say they are raising salaries and benefits to attract employees to their businesses. Consequence: six out of ten see a drop in their profitability, even if a high proportion pass the bill to their customers.
Digital change is long overdue
Despite all the rhetoric, the switch to manufacturer 4.0 has not been accepted by everyone. “In three years, there have been no significant advances in the integration of new technologies between manufacturers,” noted STIQ. The organization points to the shortage of manpower, the boss putting all his energy into fulfilling his orders.
On this issue, the world of SMEs is divided in two, emphasizes Mr. Blanchet. Those who made the digital shift in the past and took advantage of the pandemic to go further, and others, resistant to change, who remained on their own. One in two companies has not implemented a single new technology. Worse still, companies that are not very advanced in digital change (28%) give little importance to the issue of digitalization.