Supply chain delays continue to plague British Columbia manufacturers

It can take another year for the supply chain to catch up with the shock to COVID’s manufacturing system, during which time companies face delays and increased costs.

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Pressure on the global supply chain has hit Sally-based ACR Systems Inc. in the form of delaying the delivery of materials and components for the high-tech data logging devices they manufacture by more than a year and a half.

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“And they really give you a date,” said Wayne Thompson, ACR’s general manager. “Many suppliers say they can’t even provide dates,” even for the demanding integrated circuits, regular resistors, capacitors, and even plastic connectors.

According to Thompson, the company currently manages it, but if ACR has to delay 20% of its deliveries, jeopardizing the rollout of new products the company wants to sell, it can disrupt cash flow. Bring.

“We can still receive orders and process them, but even if we can’t process orders for a year, there are still costs we have to pay,” Thompson said.

It’s not just ACR. Approximately 90% of BC-based manufacturers who responded to a recent survey of Canadian manufacturers and exporters reported problems in their supply chains, and 56% rated the problems as serious or serious.

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According to a CME survey, the three biggest were production bottlenecks due to rising shipping costs, difficulty procuring parts from foreign suppliers, and a shortage of employees.

“This is reflected in corporate profits, and when we look at how the prices of groups in British Columbia must change as a result, they are reflected in household profits,” said BC Deputy Industry Association. Chairman Andrew Wynn-Williams said.

For BC respondents to a CME survey that can already aggregate damage, it resulted in a loss of up to $ 103 million in sales and an increase in costs of $ 84 million passed by suppliers further upstream in the supply chain. ..

Mr. Thompson said that there is a long lead time in the manufacture of electronic components in the first place, so “if there is a big interruption in continuous production conditions like COVID, it will start to resume (as a problem). increase”.

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“When we got up, people didn’t know if there was demand, so it seems there was this fear of getting up (manufacturing),” Thompson said. “And suddenly there was a surge in demand, and everyone was surprised.”

At VMAC Global Technologies Inc. on Vancouver Island, the company has relied on stocking more inventories of available components to prevent shortages of electronic components and materials, said Yolande Freed, its supply chain manager. To delay.

“Usually (delivery) time is … 6-8 weeks type,” Fried said, but the lead time for “almost everything outside the country” has been extended by almost two months.

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“We had to absorb astronomical air cargo costs to keep the line moving,” Fried said.

With about 160 employees at the Nanaimo factory, VMAC manufactures $ 5,000 to $ 20,000 worth of mobile air compressor systems, and Fried worked hard to stabilize prices, but recently. Said that it was necessary to introduce additional charges to cover some costs.

Fried says that because of the potential for longer delays, VMAC is working to find alternative suppliers that “dual source” some of its components.

She estimates that VMAC sales have increased by 20% because not all the necessary parts are available.

And many manufacturers do not expect the situation to improve soon.

“Rumbling is probably 2023,” Thompson said. “I have an order, but it probably won’t be delivered until April 2023, so I’m starting to see things start to improve after that.”

But it also depends on how geopolitical issues develop. Russia is the main source of metal used in the manufacture of integrated circuits, and sanctions against the invasion of Ukraine could lead to a shortage.

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Supply chain delays continue to plague British Columbia manufacturers

Source link Supply chain delays continue to plague British Columbia manufacturers

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