OEMs face the impact of inflation

Equipment manufacturers, who supply large industries and win large public contracts, have not been spared inflation after the pandemic situation that has rocked the business of many companies in Saguenay-Lac-Saint-Jean.

The professionals met Thursday in Saguenay to discuss their situation.

We’re going to have to stop this, this inflation. “It can’t hold up,” said Dennis Jumfy, Groupe LD’s president.

Gymnastics has become a common sport.

“The price of primary supplies has doubled and even tripled in certain areas compared to what it was before the pandemic,” explained Eric Cloutier, President of Alliage 02.

Thus, commodity inflation had many repercussions.

“In the past, we were asked to guarantee prices for a certain period. One year, two years, three years. Today, we cannot even guarantee them for a week,” Mr. Jhumvi noted.

So now delivery times are much longer before raw materials are received.

“Two years ago, when we had a project, we bought according to standard deadlines,” Eric Cloutier added. “The standard is no longer the same as the deadline. We have to plan in advance so that we can get the raw materials on time.”

At Canmec, Vice President of Corporate Services, Julie Roy, said the context is very specific. “The epidemic. There, we have a war in Ukraine that affects our raw materials. There are also environmental disasters like floods.”

Another issue, scarcity of labor

“Will we be able to put the product in our order book with our workforce currently? Yes, it is an issue we are obligated to address,” Ms. Roy emphasized.

Mr Cloutier admitted he had to turn around. In addition to understaffing, we are stuck with the pandemic. The employee is not expected to fall ill next week.

And even the war in Ukraine with refugees has increased the burden of migration, which makes it possible to recruit abroad.

“The workers we were supposed to have in December have been pushed back to June. It will probably be in the fall,” the Alliage 02 chief specified. Refugees come to flood the already inundated network.

Eric Cloutier and his company Jamec de Normandin also hired welders in West Africa. “Integration is going really well. People come to Quebec, but they have to stay in Quebec. That is the issue.”

However, there are solutions, such as investing in new technologies.

“Business operating costs have gone up exponentially over the past year. And Dennis Gumphy believes, if we don’t go through this process of automation, we won’t get there.

It is also advisable to add clauses to contracts.

“It’s really risky to bid on the price and after a month, it doubles,” said Jack Cote, Vice President of Business Development at Grimard. We will say that with the price of metals, our offer is valid for a few weeks, for a few days.

The committee also recommends that you be active in your applications.

“In terms of predictability, order as soon as possible. That’s important,” said Mr. Cloutier.

Mr. Cote, for his part, believes that some strategies need to be reconsidered. “We came a lot from abroad. In Europe. In Asia. Now we have to change. You can source locally. Transportation costs are staggering. It’s long. We have to go back a little bit to what we were doing so long ago.”

To renovate, Denis Jomphe argues it’s the DNA of his field. “We call it managing change. Being an entrepreneur means managing change.”

Creativity becomes the key word for the activity sector, Equipment Manufacturers, which employs thousands of people at Saguenay Lac-Saint-Jean.

“How can we do otherwise using less material? Diversify your supply chain. New suppliers. So you have to be creative,” Ms. Roy said.

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