30/09/2020

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1 in 5 Canadian companies diversifying supply chains: HSBC

A new HSBC survey has found that one in five Canadian companies are diversifying their...

A new HSBC survey has found that one in five Canadian companies are diversifying their supply chains after the coronavirus pandemic exposed gaps and shortfalls across a range of industries.

According to a survey of 2,604 companies, including 200 Canadians ones, 29 per cent of businesses around the world are opting to diversify their supply chains to work with more suppliers. In Canada, that figure is slightly less, with just 22 per cent of businesses choosing to diversify their supply chains amid the coronavirus pandemic.

Dan Leslie, HSBC Canada’s deputy head of commercial banking, said in an interview that Canadian companies that saw supply chains struggle amid the pandemic should be assessing their international activity, and diversify their supply chains where possible.

“As we saw markets worldwide entering lockdowns, there were unforeseen gaps in supply chains of Canadian businesses,” Leslie said.

“Those gaps were quickly exposed and require new approaches to limit the potential for future disruptions.”

The COVID-19 pandemic led to global supply chain disruptions as companies grappled with lockdowns, stalled production and disappearing demand. In the early days of the pandemic, closures in China exposed significant gaps in the supply chains, including in the procurement of personal protective equipment (PPE). The issue prompted the Canadian government to introduce support programs to encourage manufacturing companies to retool their facilities and produce masks, ventilators, gowns and other PPE.

While the Canadian government was able to create a made-in-Canada solution to its PPE gap, Leslie said he expects businesses will focus on diversifying and having multiple suppliers in different geographies to ensure supply chains remain resilient.

“I think this has been disruptive from a trade perspective, but I think there will be an adaption of global supply chains,” Leslie said.

“I think it will be a change to globalization, versus an end of globalization.”

Still, according to the HSBC survey – which focused on how businesses are approaching the COVID-19 recovery – many Canadian companies (78 per cent) found that the pandemic brought them closer to their supply chain partners. Another 83 per cent of respondents found that found the pandemic brought them closer to their customers.

Of the 200 Canadians companies surveyed, 52 per cent were medium-sized businesses that make at least US$5 million in revenues, while the remaining 48 per cent were large businesses that make at least US$50 million in revenues. The Canadian businesses surveyed were across a range of industries, including services, retail, manufacturing, construction, mining, agriculture, and automotive.

The survey also found that 85 per cent of Canadian businesses said they were “at least somewhat prepared” for the challenges that COVID-19 brought. Nearly 40 per cent of companies have increased production to meet rising demand in recent months, while 65 per cent are currently pursuing new business opportunities.

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