(Reuters) – Canadian automation firm Promation has been working on a weaker currency to get a new U.S. contract, but a slower pace of vaccinations in Canada could wipe out the competitive advantage, President Darryl Spector said.
Pandemic travel restrictions make it more difficult for Promation’s technicians to travel across the border to offer and repair equipment for construction services, a disadvantage when competing against an increasingly vaccinated U.S. workforce.
“With a fully vaccinated US inventory base, why buy in Canada if you do not have access to labor to maintain it?” Said Spector.
To prevent the spread of the coronavirus, the U.S.-Canadian border was closed for nearly a year for crossings by all essential workers and a handful of other exceptions. In Canada, manufacturers fear that slower vaccination could delay the easing of restrictions.
U.S. President Joe Biden told states on Thursday that by May 1, all adults are eligible for a coronavirus vaccine. Canadian Prime Minister Justin Trudeau set a target in September to get all Canadian adults vaccinated.
In the United States, some manufacturing workers already receive vaccinations, such as in automobiles in the Detroit area. By contrast, general manufacturing workers, such as those at Spector’s firm in Ontario, are not yet eligible in Canada.
The backlog is hurting Canadian businesses, and they could threaten Canada’s economic recovery in the coming months.
While the recovery has picked up pace, the Bank of Canada warned on Wednesday that the virus would pose a risk to the economy until the population is vaccinated widely.
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.
This puts Canadian businesses at greater risk for lost work hours or shutting down for COVID-19 tests and contact tracing if an employee tests positive.
“People can not work together as easily if they look over their shoulder when someone has COVID,” says Spector, who recently sent eight workers home and covered the cost of their test results when an employee’s wife tested positive.
Matt Poirier, director of trade policy for Canadian manufacturers and exporters, said his association had asked provincial governments to prioritize factory workers for vaccination to limit the impact of outbreaks on plants.
On March 10, according to Oxford University data, Canada administered 7.20 COVID-19 vaccine doses per 100 people, compared to 29.67 in the United States.
Canada’s vaccination campaign is hampered by import dependence, but delivery is expected to rise in the second quarter.
INVESTMENT LY
The uncertainty is holding back investment by Canadian companies, with 2021’s capital targets still 12% below pre-pandemic levels, according to Statistics Canada.
In comparison, capital expenditure for S&P 500 companies is forecast to increase by 11.8% in 2021 after falling by 13.7% in 2020, according to IBES data from Refinitiv.
“Businesses … may choose to put their capital where they will get faster returns on their investment,” said Trevin Stratton, chief economist at the Chamber of Commerce in Canada. “The vaccination timeline has an effect on this.”
In Quebec and Ontario, the provinces hardest hit by COVID-19 and home to much of Canada’s manufacturing sector, working days rose by 13.9% and 12.0% in 2020, respectively. Businesses there are hoping that higher vaccination rates could help reverse the trend.
($ 1 = $ 1.2548)
Reporting by Allison Lampert in Montreal and Julie Gordon in Ottawa; additional reporting by Caroline Valetkevitch in New York; Edited by Denny Thomas and Cynthia Osterman