(Reuters) – Canadian automation company Promation had counted on a weaker currency to help it win a new US contract, but a slower pace of vaccinations in Canada could erase that competitive advantage, President Darryl Spector said.
Pandemic travel restrictions make it more difficult for Promation’s engineers to travel across borders to maintain and repair factory equipment, a disadvantage when competing with an increasingly vaccinated US workforce.
“With a fully vaccinated US supply base, why buy in Canada if you don’t have access to the workforce to support it?” Said Spector.
To prevent the spread of the coronavirus, the US-Canadian border has been closed to crossings by virtually all necessary workers for nearly a year and a handful of other exceptions. In Canada, manufacturers are concerned that the slower roll-out of vaccinations could slow the relaxation of those restrictions.
US 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 target for September to have all Canadian adults vaccinated.
In the United States, some factory workers are already getting vaccinations, such as at auto plants in Detroit. In contrast, general production workers, such as those at Spector’s Ontario-based company, are not yet eligible in Canada.
The slowdown hampers Canadian businesses, they said, and could threaten Canada’s economic recovery in the coming months.
As the recovery accelerates, the Bank of Canada warned on Wednesday that the virus will continue to pose a risk to the economy until the population is widely vaccinated.
US health authorities have issued guidelines exempting asymptomatic vaccinated workers from strict COVID-19 protocols in the event of exposure, but Canada has not yet considered similar measures.
That puts Canadian companies at greater risk of lost work hours or closure for COVID-19 testing and contact tracking if an employee tests positive.
“People can’t work together so easily if they look over their shoulder in case someone has COVID,” said Spector, who recently sent eight workers home and paid 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 has asked provincial governments to prioritize factory workers for vaccination to curb the impact of outbreaks on plants.
On March 10, Canada had administered 7.20 COVID-19 vaccine doses per 100 people, compared to 29.67 in the United States, according to data from the University of Oxford.
Canada’s vaccination campaign has been hampered by its reliance on imports, but deliveries are expected to increase in the second quarter.
INVESTMENTS SUFFER
The uncertainty is holding back investment by Canadian companies, still 12% below the pre-pandemic level of capital intentions for 2021, according to Statistics Canada.
In comparison, according to Refinitiv’s IBES data, capital expenditures for S&P 500 companies are expected to increase 11.8% in 2021, after a 13.7% decline in 2020.
“Businesses … could choose to place their capital where they have a faster payback period,” said Trevin Stratton, chief economist at the Canadian Chamber of Commerce. “The timeline of vaccination certainly influences that.”
In Quebec and Ontario, the provinces hardest hit by COVID-19 and home to much of the Canadian manufacturing sector, the number of days lost increased 13.9% and 12.0% respectively in 2020. Companies there hope that higher vaccination coverage could help reverse that trend.
($ 1 = 1.2548 Canadian dollars)
Reporting by Allison Lampert in Montreal and Julie Gordon in Ottawa; additional reporting by Caroline Valetkevitch in New York; Adaptation by Denny Thomas and Cynthia Osterman