Nfld. & Labrador

N.L. businesses feeling supply chain woes from COVID-19

Disruptions in international trade are making a mark across industries in the province, from construction to car sales.

Supply chains stalled as outbreaks continue globally

Car sales are rebounding in Newfoundland and Labrador, but some makes and models remain scarce due to supply chain issues. (Mark Cumby/CBC)

While there may only be two active cases of COVID-19 in Newfoundland and Labrador as of Tuesday, the virus continues to make its presence felt across the province as it disrupts supply chains for businesses in a range of industries, from construction to car sales.

"I think we're experiencing some of the same issues that other industries are seeing," Jonathan Hickman, vice-president of Hickman Automotive Group, which runs car dealerships across the province, said.

"The supply chains are slowly ramping up around the world, and that means it takes time for us to get product. As the factories went down and production started and stopped, the industry didn't stop selling vehicles but the supply chain definitely slowed down."

Data shows car sales in the province for April 2020 were a third of what they were for the same month in 2019.

Car sales have began to rebound in recent months as dealerships returned to operation under public health guidelines,  said Hickman, although some models are still in low supply due to the supply chain.

"What you have to remember is the manufacturers are always waiting on their suppliers to build the parts to send to the plants," he said. "So everything went to a stop and is slowly starting again."

Jonathan Hickman is the vice-president of Hickman Automotive Group, and says he hopes sales return to normal volumes in the fall. (Mark Cumby/CBC)

Still suffering

The province will continue to feel the effects of stalled supply chains and international trade as outbreaks around the world continue to impact market, said Richard Alexander, the executive director of the Newfoundland and Labrador Employer's Council.

"All those things are impacting supply chain, which in turn impacts negatively the economy of Newfoundland and Labrador," Alexander said.

"So we are still suffering from those effects and we're going to see that for a while unfortunately."

"Any company that is dealing with a product … whether it's lumber or aluminum or anything like that that is used in manufacturing of something that they rely on to do business, could be impacted, depending on where it's coming from."

Alexander said businesses in the province are trying different ways to work around the impacted supply chains, such as looking into regions of Europe for some products rather than some US states.

In order to keep things moving, Alexander said it's important for the province not to fall into a protectionist mindset — shielding industries from international competition.

"Global trade is important for [the] economy," he said. "It helps us grow and pay for all these things."

"We're seeing some protectionist behaviour come out of the United States. That's not good for the States, that's not good for our economy, it's not good for Newfoundland and Labrador."

Richard Alexander is the Executive Director of the Newfoundland and Labrador Employer's Council. He said it's important for the province to recognize the impact and importance of global trade for Newfoundland and Labrador. (Mark Cumby/CBC)

In terms of any smoothing out of the supply chain, Alexander said that could come as markets start to get a better handle on COVID-19. He said it's important to learn from past economic lessons, and for policymakers to recognize the importance of trade in the province.

"The big mistake they made in the Great Depression was putting up barriers, preventing supply and trade from going across borders," he said. "That made the Great Depression longer and more severe. So we've learned those lessons... and we need to assure we don't go down that road."

He urged caution, saying issues could arise if markets open too quickly, and then have to contract due to an outbreak.

"That's more damaging to an economy then if we opened at the appropriate speed."

For his part, Hickman estimated the supply chain for his business could return to normal by the fall, but that all depends on how the pandemic progresses.

"I think we're going to see the supply come back … [But] it's going take some time."

Read more from CBC Newfoundland and Labrador

With files from Andrew Hawthorn