Supply-chain delays continue to dog BC manufacturers

It could take another year for supply chains to catch up with COVID’s shock to the manufacturing system, leaving companies facing delays and increased costs in the meantime.

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The global supply-chain squeeze is hitting Surrey-based ACR Systems Inc. in the form of delays of a year-and-a-half or more for delivery of materials and parts for the high-tech data logging devices they manufacture.

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“And those are ones that actually give you dates,” said Wayne Thompson, ACR’s general manager. “A lot of suppliers say, ‘We can’t even supply you a date’ ” for high-demand integrated circuits, ordinary resistors, capacitors and even plastic connectors.

The company is managing, for now, but it plays havoc with cash flow when ACR has had to delay 20 per cent of its own deliveries and jeopardizes the rollout of new products the company wants to sell, according to Thompson.

“We still get the orders and will be able to fill them, but if you can’t fill the order for a year, we still have expenses that we have to pay,” Thompson said.

RCA isn’t alone. Some 90 per cent of BC-based manufacturers who responded to a recent Canadian Manufacturers and Exporters survey reported problems in their own supply chains, with 56 per cent rating their problems as major or severe.

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The three biggest were rising transportation costs, difficulty sourcing components from foreign suppliers and production bottlenecks due to shortages of employees, according to the CME survey.

“It’s going to be reflected in the bottom line of the companies, and it’s going to be reflected in the bottom line of households when they look at the way prices of BC-made groups are going to have to change as a result of this, ” said Andrew Wynn-Williams, the trade association’s vice-president for BC

For BC respondents to the CME survey able to tally the damage already, it has added up to $103 million in lost sales and $84 million in increased costs passed on by suppliers farther up their supply chains.

Thompson said there are long lead times involved in manufacturing electronic components to begin with, so “if there’s a big interruption in that continuous state of production, which there was with COVID, then it’s (a matter of) getting that restart going.”

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“It’s almost like there was this fear to ramp-up (manufacturing), because people didn’t know, if we ramped-up, is there going to be the demand?” Thompson said. “And all of a sudden demand surged back, and everybody was kind of caught off-guard.”

At VMAC Global Technologies Inc. on Vancouver Island, the company has resorted to stocking up bigger inventories of the parts they can get to guard against shortages of electronic components and materials, said Yolande Freed, the firm’s supply-chain manager, but they still run into delays.

“Normally, (delivery) times would be … a six-to-eight-weeks type of thing,” Freed said, but lead times for “pretty much anything that’s not domestic” have been extended by almost two months.

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“We’ve had to absorb some astronomical air-freight costs to keep the lines moving,” Freed said.

VMAC, a company with about 160 employees at their Nanaimo factory, manufactures mobile air-compressor systems worth $5,000 to $20,000, and Freed said the company worked hard to keep prices stable, but recently had to introduce a surcharge to cover some costs.

The potential for delays to get longer now has VMAC working on finding alternate suppliers to “dual-source” some of their components, because “we feel like that, inevitably, is the way to go,” Freed said.

She estimates that their inability to get all the parts they wanted probably cost VMAC a 20 per cent increase in its sales.

And a lot of manufacturers don’t expect conditions to get better soon.

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“The rumblings are probably 2023,” Thompson said. “I’ve got orders, but they won’t be delivered until probably April, May of 2023. So after that is where I’m starting to see things probably start to improve.”

But that also depends on how geopolitical affairs develop. Russia is a major source of the metals used in making integrated circuits, which might become in shorter supply due to sanctions over its invasion of Ukraine.

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