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Lagging vaccination rate puts Canadian factories at competitive disadvantage

EconomyMar 14, 2021 09:31AM ET
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5/5 © Reuters. Darryl Spector, president at Promation, wears a protective mask amid COVID-19 pandemic in Oakville 2/5

By Allison Lampert and Julie Gordon

(Reuters) - 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.

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.

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)

Lagging vaccination rate puts Canadian factories at competitive disadvantage
 

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Comments (3)
Chris Sundo
Chris Sundo Mar 14, 2021 12:57PM ET
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Social distancing still dominates effectiveness over vaccines. - Dont waste readers' time with fake and sensationalized news!
Jose Maderno
Jose Maderno Mar 14, 2021 11:02AM ET
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Another garbage news article by a garbage news organization.  First, the Loonie isn't strong due to vaccination policy in Canda, but from rising commodity prices.  Second, essential workers are allowed to cross borders, and in the U.S. just about every industry is considered essential.  Especially in manufacturing.  However, in person sales calls are not common as office workers toil from home, but every U.S. company is operating with the same restrictions.  Don't get me wrong, Justin is absolutely terrible at governing and is more concerned with aligning with Hollywood liberals than delivering for Canadians, but that is what voters deserve when they elect people based on being pretty.  So, to recap, the author blames vaccination rates and having to import the medicine instead of blaming Justin.  Liberal propaganda at its finest.
Godwin Philip
Godwin Philip Mar 14, 2021 9:38AM ET
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