Cavalier Tool & Manufacturing says it has "turned down several million dollars of work in 2022 that we could have taken if we had more people."
For Tim Galbraith, the skilled-labour shortage can be measured in the sum of lost contracts this year.
“I can say that we have turned down several million dollars of work in 2022 that we could have taken if we had more people,” said the general manager of Cavalier Tool and Manufacturing in Windsor, Ont.
Cavalier isn’t the only auto supplier grappling with a chronic shortage of workers that threatens to stifle the industry’s growth as it begins its shift toward electrification.
Mazza: “We have to … have further discussions on some of the things they [government] could do … to make more people available to us.”
At the recent annual conference of the Automotive Parts Manufacturers’ Association (APMA), worker scarcity was the dominant theme and among the primary issues raised during a closed-door roundtable with Deputy Prime Minister Chrystia Freeland.
“She was asking what some of the key challenges we’re facing and the labour shortage was mentioned by a number of companies,” said Martin Mazza, vice-president of external affairs at the Woodbridge Group, a Toronto-based supplier of automotive foam. “It’s not unique to us, it’s unique to our industry, and we’re having a struggle in some ways attracting people to our industry.
“There’s competition out there.”
Freeland, Mazza said, noted executives’ concerns, and the industry plans to continue lobbying Ottawa.
“I don’t think there’s a silver bullet,” he said, “but we have to … have further discussions on some of the things they [government] could do” in areas such as immigration “to make more people available to us.”
$13 BILLION LOST
Across Canada’s manufacturing sectors, the labour shortage has cost the economy almost $13 billion over the past year, according to a study by the Canadian Manufacturers and Exporters (CME).
The CME’s annual labour survey of 563 manufacturers in 17 industries found that almost two-thirds have lost or turned down contracts and suffered production delays because of a lack of workers.
The penalties and lost sales resulting from these problems totaled $7.2 billion, the organization said.
As well, 43 per cent of companies postponed or cancelled capital projects, resulting in an additional $5.4 billion in lost investment, said the CME.
APMA President Flavio Volpe said he’s not aware of specific figures for the parts industry but estimated that it is short 10,000 workers.
GROWING CONCERN
The pandemic has had lingering effects on the labour market in the industrial sector, the CME report said. For two consecutive years, more than 80 per cent of manufacturers said they are facing labour and skills shortages, up from 60 per cent in 2020 and 39 per cent in 2016.
The auto industry is pressing government to address a labour shortage that could become “catastrophic” as the sector builds out its electric-vehicle supply chain.
Electrification is “amplifying the problem,” said Jon Azzopardi, president of Laval International in Windsor, Ont.
The NextStar battery-cell plant “is going to suck up whatever labour we have available,” Azzopardi said. “It is going to create a catastrophic shortage.”
A joint venture between Stellantis and L.G. Energy Solution, the $5-billion plant is expected to hire at least 2,500 employee when it begins full production in 2025.
Solutions, Azzopardi said, must focus on replenishing the pool of skilled labour, especially at the lower end of the supply chain.
“It’s a three-pronged approach,” he said. “It’s getting your current workforce trained; it’s mobilizing your future workers — exposing students to manufacturing and making it a top career choice — and using immigration to supplement employment shortages.”
Meanwhile, a new report by the Canadian Manufacturers and Exporters (CME) is calling on government to “take concrete action now to fill more than 85,000 vacant positions across Canada’s manufacturing sector.”
Ottawa recently responded to one of industry’s key demands: Boosting immigration. Federal Immigration Minister Sean Fraser announced Nov. 1 plans to increase the number of newcomers to 500,000 in 2025. That’s up from 405,000 last year, and 465,000 expected to arrive next year.
The CME’s recommendations to ease labour shortages include:
“It is [a concern],” said Danies Lee, CEO of NextStar Energy Inc., the electric-vehicle battery-cell plant being built in Windsor.
The $5-billion facility — a joint venture between LG Energy Solution (LGES) and Stellantis — is expected to employ about 2,500 people once it’s up and running in 2025. It will require more than 500 engineers, 400 technicians and 1,550 hourly workers.
Hiring has yet to begin, but NextStar is developing training programs for technical employees, some of whom will undergo lengthy training at LGES’ battery hub in Poland, Lee said.
Skilled trades are in short supply across Canada, he noted. “That’s why I am trying to hire in advance to get them trained. We need more time to train those people.”
HIGHER WAGES, HIRE ABROAD
To retain and attract workers, companies are doing everything from raising wages and benefits and offering more flexible schedules to investing in automation and importing labour through such measures as the federal Temporary Foreign Workers Program.
“This is the first time our quality manuals [for workers] are in two languages,” English and Spanish, said Jonathon Azzopardi, president of Laval International, a tooling manufacturer near Windsor.
The plant — which supplies molds, fixtures, parts and designs to Tier 1 parts makers and automakers — employs about 100 workers, half of whom were not born in Canada, Azzopardi said. “Most of them are temporary foreign workers or landed immigrants.”
At KB Components Canada Inc., the Windsor-area company has invested “heavily in automation” and granted wage hikes, ranging from 10 per cent to 17 per cent to its 280 employees over the last year, said President David Ulrich. “We have to meet our customers’ demands, and it’s either through manpower or technology.”
While Azzopardi also has boosted wages and benefits as well as offered flexible schedules, higher compensation could erode the bottom line, especially for lower-tier companies, he said.
“People say, ‘Just pay more,’ ” he said. “The problem is the further away you are from the OEMs, the less profit is in the project.”
Stellantis, for example, “can afford to pay $36 an hour, ... but the guys at the bottom can’t,” Azzopardi said. At those suppliers, hourly wages generally range from $16 to $26 an hour, he said.
‘YEAR OF PEOPLE’ EVERY YEAR
Cavalier’s Galbraith is also taking a multifaceted approach toward mitigating the impact of the labour crunch, including expanding an engineering design centre in India.
“Five years ago, we opened our first office to augment our design needs that could not be met locally,” he said. “We now have three locations [employing 33 people] there that offer support to various areas of our company here in Canada.”
In addition, the company, which employs more than 200 people in the Windsor area, has made human resources its top priority.
“Every year, Cavalier picks a theme to dominate our strategy,” Galbraith said. “2021 was the ‘Year of People,’ where we hired HR specialists to guide us in employee retention and recruitment. During that year, it became evident that every year was going to have to focus on that aspect of the business.”
