CME’s biannual Management Issues Survey (MIS) is CME’s most important tool for taking the pulse of the manufacturing community. It provides valuable insight into the mindset and concerns of manufacturers – both in terms of their day-to-day struggles as well as their longer-term strategic goals.
Unfortunately, the economic scars of the pandemic will linger for years to come. While 30 per cent of manufacturers have already seen their production return to the pre-pandemic levels of February 2020 and an additional 6 per cent think they will reach this threshold by the end of this year, many more are anticipating a more drawn-out recovery. In fact, 10 per cent of those surveyed are very pessimistic about the outlook of their businesses, including 5 per cent that predict that their sales will never fully recover.
LABOUR AND SKILLS SHORTAGE
Notwithstanding the immediate and pressing issue of COVID-19, long-standing challenges for manufacturers also surfaced again in this year’s survey. For example, 60 per cent of respondents reported having immediate labour and skills shortages, down from about 70 per cent in 2018 but up from 40 per cent in 2016. Companies in Quebec, BC, and Ontario are having the most trouble finding the workers they need. While this year’s finding could be unsettling because the survey was conducted in a time of economic crisis and high unemployment, it is conceivable that the extreme circumstances of the COVID-19 pandemic may be exacerbating ongoing labour challenges. First, the Canada Emergency Response Benefit (CERB) and its successor, the Canada Recovery Benefit (CRB), may be acting as a disincentive to work. As well, people may have pulled back from the labour force because they fear for their health and safety or because they have childcare obligations.
ERODING BUSINESS COMPETITIVENESS
In addition, another perennial issue for manufacturers—Canada’s eroding business tax competitiveness—was once again identified as a top concern in the 2020 MIS. In fact, close to 40 per cent of survey participants said that actions to improve Canadian tax competitiveness should be at the top of governments’ agendas. Manufacturers prefer two specific measures: new and expanded tax credits to encourage machinery and equipment investment and lower headline corporate tax rates.