North American manufacturers and retailers haven’t yet experienced widespread disruptions from the coronavirus outbreak. But contingency plans are in effect for industries that use Chinese suppliers — which, these days, means a lot of different businesses.
China was Canada’s second biggest source of imports in 2019, trailing far behind the U.S. (which supplies half of what Canada buys) but supplying more than double the imports from Mexico or any European or Asian country. And a lot of those American products are made with Chinese supplies, too.
What happens if closed factories and transport restrictions in China mean all those products stop shipping to North America for a while?
“It’s a unique challenge, in the sense that businesses are facing both supply and demand issues at the same time,” Finance Minister Bill Morneau told a Toronto business audience Friday, as he previewed at his government’s plan to mitigate the possible recessionary effects of the now-global outbreak.
“There’s certainly reduced supply already, so we are thinking about how we help the business sector.”
Hard data pinpointing those supply disruptions is hard to find.
Goods from the U.S. arrive overnight, but shipping containers from China take weeks to land — long enough that products from factories that failed to reopen after the annual Lunar New Year shutdown may not even be missed yet. Goods shipped before the Jan. 25 holiday could reach North American destinations over the next two weeks.
Many businesses that rely on Chinese suppliers know to stock up before the holiday, so serious shortages in Canada may not emerge until later this month or next. On the other hand, recent disruptions in Canadian rail shipping may already have forced some facilities to dip into their reserves.
Even if a Chinese supplier was able to reopen, the Chinese trucking industry is not operating at regular capacity and may not be for weeks to come. Logistics operators have been hard-pressed to get official permission to ship out non-essential goods.
Fewer sailings, less trade
The Port of Vancouver — its normal cargo already disrupted by rail blockades and poor weather — reports 30 cancelled sailings of container vessels so far due to the reduced workforce and cargo-loading activities at Chinese ports. Total container volumes already were down about 13 per cent in January.
What was supposed to be in all those stacks of now-stalled shipping containers, heading for Canadian factories or stores? Canada’s top imports from China include electronics, machinery, furniture, toys and sporting goods and plastics.
The Port of Vancouver had a challenging start to 2020: first rail blockades, now a decline in shipping traffic from the global coronavirus outbreak. (Darryl Dyck/Canadian Press)
Early reports from the port of Los Angeles — another major gateway to the continent’s manufacturing sector and retail distribution networks — suggest a 25 per cent drop in volumes in February. But that doesn’t necessary spell immediate disaster.
“Inventories both on the wholesale and the manufacturing side, in Canada and the U.S., as a ratio to sales, are at near-record levels,” said Brett House, deputy chief economist at Scotiabank Economics. “There’s been a lot of stockpiling in Canada and the U.S. well before the coronavirus was identified, and that provides a bit of a cushion … you have a lot of inventory piles that you can draw down.
“Those inventory piles are not necessarily matched with what needs are at any given time, so it doesn’t mean that everything is seamless. But it does mean that an immediate drop in imports into our West Coast ports doesn’t translate immediately into supply chains being gummed up.”
Contingency planning
Business associations like the Canadian Manufacturers and Exporters told CBC News this week their members were already experiencing supply chain disruptions.
Production shutdowns and layoffs are a last resort, but alternative suppliers aren’t always available on short notice — which can force some facilities to slow down temporarily. Several groups said they were surveying their members and taking stock to figure out how serious things look.
Finance Minister Bill Morneau is building a bigger risk assessment provision into his 2020 federal budget, expected later this spring. (Cole Burston/The Canadian Press)
Approximately 10 per cent of Canadian imports of intermediate products — goods destined for Canadian plants to be made into something else — come from China. That seems like a low number — but don’t be too comforted by it.
“Our business is kind of funny. You’re building everything just in time and a very small part can stop a line,” said Flavio Volpe, president of the Automotive Parts Manufacturer’s Association. “You’re building a complete car in sequence, so every part has to be there.”
Shipping logistics dictate that larger, more complex automotive parts come from facilities that are geographically close to final assembly plants. Parts from China are usually electronics, or smaller commodity goods like clips, fasteners or seals.
“We’ve now tipped into our contingency planning — where can you re-source?” Volpe said.
NAFTA incentive
Usually there are other options within North America, or perhaps in other low-cost jurisdictions in Asia or Europe — suppliers that may look more appealing after the tariff cuts in Canada’s recent trade agreements. But Volpe said the cost of replacing some Chinese goods might be double.
“We always have Plan B and Plan C on the books. The reason that you operate on Plan A is it’s the most efficient one from a cost perspective,” said Volpe. “The coronavirus is not causing anyone to stop production yet, but it is making us incur additional costs. Costs we have to eat.”
For now, “it’s business as usual, except that business has increased costs and stress in it,” he said. But if it goes deeper or longer than currently anticipated, companies will re-evaluate.
Over the last 20 years or so, the rewards for incurring the risks of switching to offshore Chinese suppliers have been “very good” for commoditized goods, Volpe said. But “if a SUV plant was shut down because of some clips, there’d be a pretty quick correction in all that.”
Any rethinking in the automotive industry will coincide with the expected implementation of the revised North American trade agreement, which requires 75 per cent North American parts for tariff-free trade.
“You’re doubly incentivized,” Volpe said. “It doesn’t make sense to make clips in a factory in Ontario, but it might in Chihuahua (Mexico).”
TORONTO – Will Taylor Swift bring chaos or do we all need to calm down?
It’s a question many Torontonians are asking this week as the city braces for the massive fan base of one of the world’s biggest pop stars.
Hundreds of thousands of Swifties are expected to descend on downtown core for the singer’s six concerts which kick off Thursday at the Rogers Centre and run until Nov. 23.
And while their arrival will be a boon to tourism dollars, it could further clog the city’s already gridlocked streets.
Swift’s shows collide with other scheduled events at the nearby Scotiabank Arena, including a Toronto Raptors game on Friday and a Toronto Maple Leafs game on Saturday.
Some locals have already adjusted their plans to avoid the area.
Aahil Dayani says he and some friends intended to throw a birthday bash for one of their pals, until they realized it would overlap with the concerts.
“Ultimately, everybody agreed they just didn’t want to deal with that,” he said.
“Something as simple as getting together and having dinner is now thrown out the window.”
Dayani says the group rescheduled the birthday party for after Swift leaves town. In the meantime, he plans to hunker down at his Toronto residence.
“Her coming into town has kind of changed up my social life,” he added.
“We’re pretty much just not doing anything.”
Max Sinclair, chief executive and founder of A.I. technology firm Ecomtent, has suggested his employees stay away from the company’s downtown offices on concert days, since he doesn’t see the point in forcing people to endure potential traffic jams.
“It’s going to be less productive for us, and it’s going to be just a pain for everyone, so it’s easier to avoid it,” he said.
“We’re a hybrid company, so we can be flexible. It just makes sense.”
Toronto Transit Commission spokesperson Stuart Green says the public agency has been preparing for over a year to ease the pressure of so many Swifties in one confined area.
Dozens of buses and streetcars have been added to the transit routes around the stadium, while the TTC has consulted with the city on how to handle potential emergency scenarios.
“There may be some who will say we’re over-preparing, and that’s fair,” Green said.
“But we know based on what’s happened in other places, better to be over-prepared than under-prepared.”
This report by The Canadian Press was first published Nov. 13, 2024.
REDWOOD CITY, Calif. – Electronic Arts has incorporated the Professional Women’s Hockey League into its NHL 25 video game.
The six teams starting their second seasons Nov. 30 will be represented in “play now,” “online versus,” “shootout” and “season” modes, plus a championship Walter Cup, in the updated game scheduled for release Dec. 5, the PWHL and EA Sports announced Wednesday.
Gamers can create a virtual PWHL player.
The league and video game company have agreed to a multi-year partnership, the PWHL stated.
“Our partnership with EA SPORTS opens new doors to elevate women’s hockey across all levels,” said PWHL operations senior vice-president Amy Scheer in a statement.
“Through this alliance, we’ll develop in-game and out-of-game experiences that strengthen the bond between our teams, players, and fans, bringing the PWHL closer to the global hockey community.”
NHL 22 featured playable women’s teams for the first time through an agreement with the International Ice Hockey Federation.
Toronto Sceptres forward Sarah Nurse became the first woman to appear on the video game’s cover in 2023 alongside Anaheim Ducks centre Trevor Zegras.
The Ottawa Charge, Montreal Victoire, Boston Fleet, Minnesota Frost and New York Sirens round out the PWHL. The league announced team names and logos in September, and unveiled jerseys earlier this month.
“It is so meaningful that young girls will be able to see themselves in the game,” said Frost forward Taylor Heise, who grew up playing EA’s NHL games.
“It is a big milestone for inclusivity within the hockey community and shows that women’s prominence in hockey only continues to grow.”
This report by The Canadian Press was first published Nov. 13, 2024.
Maple Leaf Foods Inc. continued to navigate weaker consumer demand in the third quarter as it looked ahead to the spinoff of its pork business in 2025.
“This environment has a particularly significant impact on a premium portfolio like ours and I want you to know that we are not sitting still waiting for the macro environment to recover on its own,” said CEO Curtis Frank on a call with analysts.
Frank said the company is working to adapt its strategies to consumer demand. As inflation has stabilized and interest rates decline, he said pressure on consumers is expected to ease.
Maple Leaf reported a third-quarter profit of $17.7 million compared with a loss of $4.3 million in the same quarter last year.
The company says the profit amounted to 14 cents per share for the quarter ended Sept. 30 compared with a loss of four cents per share a year earlier. Sales for the quarter totalled $1.26 billion, up from $1.24 billion a year ago.
“At a strategic level … we’re certainly seeing the transitory impacts of an inflation-stressed consumer environment play through our business,” Frank said.
“We are seeing more trade-down than we would like. And we are making more investments to grow our volume and protect our market share than we would like in the moment. But again, we believe that those impacts will prove to be transitory as they have been over the course of history.”
Financial results are improving in the segment as feed costs have stabilized, said Dennis Organ, president, pork complex.
Maple Leaf, which is working to spin off its pork business into a new, publicly traded company to be called Canada Packers Inc. and led by Organ, also said it has identified a way to implement the plan through a tax-free “butterfly reorganization.”
Frank said Wednesday that the new structure will see Maple Leaf retain slightly lower ownership than previously intended.
The company said it continues to expect to complete the transaction next year. However, the spinoff under the new structure is subject to an advance tax ruling from the Canada Revenue Agency and will take longer than first anticipated.
Maple Leaf announced the spinoff in July with a plan to become a more focused consumer packaged goods company, including its Maple Leaf and Schneiders brands.
“The prospect of executing the transaction as a tax-free spin-off is a positive development as we continue to advance our strategy to unlock value and unleash the potential of these two unique and distinct businesses,” Frank said in the news release.
He also said that Maple Leaf is set on delivering profitability for its plant protein business in mid-2025.
“This includes the recent completion of a procurement project aimed at leveraging our purchasing scale,” he said.
On an adjusted basis, Maple Leaf says it earned 18 cents per share in its latest quarter compared with an adjusted profit of 13 cents per share in the same quarter last year.
The results were largely in line with expectations, said RBC analyst Irene Nattel in a note.
Maple Leaf shares were down 4.5 per cent in midday trading on the Toronto Stock Exchange at $21.49.
This report by The Canadian Press was first published Nov. 13, 2024.
