In March 2018, the Canadian Chemical Industry and its allies were poised to make a big splash when they unveiled the creation of a $500 million fund to fund the construction of two new industrial plants and a new facility for chemical chemicals production.
But with a glut of supply and the price of oil running out, the company was forced to postpone the project, and its future prospects looked dim.
What’s behind this crisis?
The Canadian Chemical Industries Association (CCIA), which represents more than 1,000 chemical companies, and the Canadian Association of Petroleum Producers (CAPP) have long argued that Canada’s current production model is unsustainable.
The industry has been unable to expand to meet new demand, and instead relies on importing chemicals from overseas, which can cost more than the production costs of its domestic operations.
“We’ve seen the industry’s growth decline and our costs have gone up,” said Michael Gagnon, president and CEO of the CCIA, in an interview with The Hill.
In 2016, the CCIAs first-ever annual survey found that over the past five years, the industry has lost almost a third of its business.
Its share of the global chemical industry is now just 4.7 percent, and Gagnons group expects that number to decline to 3.5 percent this year, as the price and demand for chemicals increase.
The CCIIs own report noted that “our growth and our competitiveness are directly linked to the level of supply.”
The report concluded that the current supply and demand “does not reflect the current and future needs of the industry.”
“This is a very real crisis for Canadian producers and consumers,” said Peter Roussel, a former deputy minister at the Department of National Defence, in a recent interview with the CBC.
“It’s really about the future of the Canadian economy, it’s about the economy, and it’s not about the cost of living, or anything else.
It’s about how do we have a future.”
Despite a number of positive signs from the Canadian industry, including increased demand for their products and increased investments in research and development, the report notes that “the supply chain is a complex business that requires sustained, sustained investments.”
The report also noted that Canada currently imports about one-third of its chemicals from the United States.
This is a significant increase from the two-thirds imports from the U.K. and France, which were the largest sources of chemicals to Canada during the last decade.
What are the potential solutions?
There are several ways the Canadian chemical industry could improve its supply chain.
For one, the government could allocate more resources to research and develop products, which would allow the country to keep up with the needs of its industry.
In April, Canada announced plans to establish a new industry office to work with its domestic and international competitors.
However, with the current lack of demand for the chemicals, the Canada’s existing plants will continue to struggle to keep pace.
According to Rouszel, the federal government should create a national strategy for the countrys chemical sector and ensure that the industry is protected and maintained.
It should also ensure that there are adequate supply chains for domestic and foreign companies, so that Canadian firms can keep up their investment in research, development and manufacturing, while simultaneously ensuring that all Canadians benefit.
Another option the Canadian government could take up is to create an incentive program for companies to hire foreign workers.
According to Gagn on The Hill, the current system in Canada “makes it very difficult for companies like us to recruit and retain foreign workers, especially for highly skilled and experienced workers.”
The problem is that while there are incentives to hire Canadian workers, the process is complicated and there are many requirements.
For example, the Federal Government has not set up a national training program, and there is no mechanism to determine whether a company has sufficient supply chains in place.
Gagn says that in order to recruit, retain and train the workers required, the “national workforce management framework” will need to be created.
A solution that would be both effective and beneficial would be to make it easier for companies that do have supply chains to hire and train Canadian workers.
Gagn also pointed out that Canada has a relatively high rate of unemployment, with unemployment among the highest in the world.
If there were a national program that incentivized companies to create more and more jobs, it could be beneficial to all Canadians.