Natural disasters cost Canadian manufacturers billions of dollars in lost production

Canadian manufacturers experienced somewhere between $3 billion to $5 billion in lost production as a result of natural disasters such as Japan and Thailand in 2011, Jayson Myers, president and CEO of Canadian Manufacturers & Exporters, said during a webinar last week.

Japan’s Tohoku earthquake and the Thailand floods revealed immediate disruption to supply chains beyond the borders of those countries. Automotive, IT, electronics and aerospace were just a few of the sectors hard hit by the disruptions up and down the chains, Myers said.

He was taking part in Canada’s Building Blocks: Risks and Opportunities in the Canadian Manufacturing and Construction Industries, sponsored by Zurich.

“As companies have slimmed down their supply chains, as they globalize their supply chains, as they move into much fewer suppliers, it’s also necessary to look at the risks attached to that,” Meyers said.

“It’s certainly worthwhile for businesses to consider the geographic area of their suppliers and to disperse as widely as possible and have multiple suppliers where possible,” said Diane Cooper, national director of manufacturing, wholesale and real estate for Zurich Canada Commercial Markets.

Cooper noted that a supply chain risk assessment can “help quantify disruption exposures, calculate recovery costs and identify mitigation actions.”

It is important to remember that supply chain disruptions can result from factors beyond the weather: pandemics, economic downturns, regulatory changes and strikes represent just a few of these, Cooper said.

A webinar poll showed:

• 40% of participants reported natural disasters had not had a perceptible impact on the company’s supply chain;
• 26% reported a noticeable effect, but no action required;
• 29% reported a noticeable disruption requiring significant action;
• 6% reported a severe disruption to operations; and
• no companies reported halted operations.