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Two local views of the supply chain and human resource crisis COVID has created

Two local views of the supply chain and human resource crisis COVID has created

Hamilton businessmen Ron and Steve Foxcroft are able to view the supply chain crisis from two distinct angles. Fox 40, the manufacturer of sports whistles and other equipment is dependent on a steady supply of raw materials, But they also operate Fluke Transport, which gives them a first hand look at supply chain challenges from a carrier’s perspective.

In the spring of 2000, the pandemic brought much of the world’s manufacturing to a halt, The shutdown for most businesses only lasted a couple of months, but that interruption is still being felt in the form of materials shortages, low inventories and shipping bottlenecks. As a result, costs of basic materials have skyrocketed

Shortage of raw materials

Ron Foxcroft explained what it meant to Fox40. “We are so dependent on cardboard. We are in 130 countries and we’re in every major retailer like Wal Mart and they have specific specs for cardboard containers. The cardboard manufacturers were unable to deliver products for many reasons—mainly that the mills were shut down at the beginning of COVID and had never recovered. One major packaging company puts its customers on allocation for cardboard and paper. We are also dependent on paper for our packaging—and right now we’re getting about 28 percent of our requirements. The cardboard and paper manufacturers have never recovered from COVID—they can’t get labour; their mills were shut down for a minimum of two months. Plastic and resin are key to our business—once again the mills were shut down completely and they haven’t recovered because they haven’t got their labour force back up to pre-pandemic levels. In April 2020 our sales went down 65 percent.”

Fox40 is heavily reliant on raw materials like carboard and plastic resin

Then there’s the trucking side of the equation that has affected Fluke Transport. Trucking HR Canada recently released a labour market information update, providing a current snapshot of truck driver employment in Canada. The research update confirms that in the second quarter of 2021 there were 18,000 truck driver vacancies; along with 72% of employers reporting that the recruitment of truck drivers is a significant business challenge.

“Our labour shortages impact critical sectors of the Canadian economy, and as we have seen in other parts of the world, a strong trucking and logistics sector is needed to support supply chain stability.” says Angela Splinter, CEO, Trucking HR Canada. “Failure to better address the acute shortage of truck drivers has the potential to stifle and delay the country’s economic recovery”.

For Fluke, says Ron Foxcroft, “the lack of cardboard affects our trucking too because we are trucking bottled water, Nestles Food, Campbell’s food. Not too many manufacturing plans have returned to pre-pandemic labour force levels. Carriers also have not returned to pre-pandemic levels because they can’t get equipment and they can’t get drivers. You can’t buy a used truck, you can’t buy a new truck, you can’t get parts to fix trucks—it’s not one thing—it’s many things that accumulate. You can’t get service for trucks because the people who service trucks can’t get labour.”

Stiff competition for drivers

Steve Foxcroft

Steve agrees, saying COVID has created a crisis in HR.  Even when we get drivers, can we pay them enough to keep them? They are being poached by other companies. We have to bend over backwards to even get people to fill customer service jobs. What they are demanding when they come in is what you are paying a 10-year employee. Even before pandemic, shippers would go down the road and get a better price from a price cutter. But now most of these rate-cutters have failed—they’re out of business because they can’t get drivers and they can’t get insurance and they are also not safety compliant because they avoid the scales. They know how to avoid the scales-they’re running unsafe equipment and that allows them to rate cut. But that’s changed.”

CERB has proved to be a boon to business but it had also disincentivized some workers, said Ron. “We appreciate CERB—it really did help people survive—we appreciate all the government subsidies, but there is one thing that needs to be changed—when somebody is on CERB —when they are offered an opportunity to come back to work, they should have to come back.”

Steve says the shortages are so acute that the trucking industry has had to become a 24/7 operation and that creates its own set of HR problems trying to get people to work shifts in what is already a tight labour market. “The only good thing,” says Steve is there is a lot less traffic at 2 in the morning. But it also means we have to have dispatchers that can be on duty weekends and nights.”

Fluke success came from avoiding empty trucking miles

Still Ron is optimistic about the future of both companies. Of the transport business he says, “I bought Fluke in 1982—and 90 percent of the trucking companies that were around when I bought Fluke are gone. The reason was too many empty miles where the truck is running empty. Canada runs from east to west and there is a lot of empty miles in there.”

“The one thing Fluke has always been is a local carrier. 10 percent of our fleet goes anywhere from NL to down in the states, but 90 percent of our fleet is local GTA. We go along the Windsor-to-Montreal corridor with an emphasis on the GTA. Most of our drivers are home every night. We’ve ben around for 101 years and if we can concentrate on the zero-to-200 miles sector, we will be around for another hundred years.”

Ron credits Fluke’s survival to remaining concentrated in the GTA and 401 corridor
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