Lagging vaccination rate puts Canadian factories at competitive disadvantage
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Author of the article:

Reuters

Allison Lampert and Julie Gordon

Canadian automation company Promation had been banking on a weaker currency to help it win a new U.S. contract, but a slower pace of vaccinations in Canada could erase that competitive edge, President Darryl Spector said.

Pandemic travel restrictions make it harder for Promation’s technicians to travel across the border to service and repair plant equipment, a drawback when competing against an increasingly vaccinated U.S. workforce.

“With a fully vaccinated U.S. supply base, why buy from Canada if you can’t access the labor to support it?,” said Spector.

To prevent spread of the coronavirus, the U.S.-Canadian border has been closed for nearly a year to crossings by all but essential workers and a handful of other exceptions. In Canada, manufacturers fear the slower vaccination rollout could delay an easing of those restrictions.

U.S. President Joe Biden told states on Thursday to make all adults eligible for a coronavirus vaccine by May 1. Canadian Prime Minister Justin Trudeau has set a September target for having all Canadian adults vaccinated.

In the United States, some manufacturing workers are already receiving inoculations, such as in Detroit-area auto plants. By contrast, general manufacturing workers like those at Spector’s Ontario-based firm, are not eligible in Canada yet.

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The lag handicaps Canadian firms, they said, and may threaten Canada’s economic rebound in coming months.

While the recovery has picked up pace, the Bank of Canada warned on Wednesday the virus will continue posing a risk to the economy until the population is widely vaccinated.

U.S. health authorities have issued guidelines exempting asymptomatic vaccinated workers from strict COVID-19 protocols in case of exposure, but Canada has not yet considered similar action.

That leaves Canadian firms at greater risk of lost working hours or shutdown for COVID-19 tests and contact tracing if an employee tests positive.

“People can’t work as easily together if they are looking over their shoulder in case someone has COVID,” said Spector, who recently sent eight workers home and covered the costs of their test results when an employee’s wife tested positive.

Matt Poirier, director of trade policy for Canadian Manufacturers & Exporters, said his association has asked provincial governments to prioritize factory workers for vaccination to curb the impact of outbreaks on plants.

As of March 10, Canada had administered 7.20 COVID-19 vaccine doses per 100 people, compared with 29.67 in United States, according to University of Oxford data.

Canada’s vaccination campaign has been hampered by its dependence on imports, but deliveries are expected to rise in the second quarter.

INVESTMENTS SUFFER

The uncertainty is holding back investment by Canadian companies, with 2021 capital intentions still 12% below pre-pandemic levels, according to Statistics Canada.

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By comparison, capital expenditures for S&P 500 companies are forecast to rise by 11.8% in 2021 after dropping 13.7% in 2020, according to IBES data from Refinitiv.

“Businesses … might choose to put their capital where they’ll have faster return on investment,” said Trevin Stratton, chief economist at the Canada Chamber of Commerce. “The vaccination timeline certainly impacts that.”

In Quebec and Ontario, the provinces hardest hit by COVID-19 and home to much of Canada’s manufacturing sector, days of work lost jumped 13.9% and 12.0% respectively in 2020. Businesses there are hoping that higher vaccination rates could help reverse that trend.

($1 = 1.2548 Canadian dollars)

(Reporting By Allison Lampert in Montreal and Julie Gordon in Ottawa; additional reporting by Caroline Valetkevitch in New York Editing by Denny Thomas and Cynthia Osterman)

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