Supply chain crisis makes NWT projects costlier and later
Getting things built in the Northwest Territories is becoming tougher as the global supply chain struggles to deliver and a fresh Covid-19 variant surges.
Lockdowns have slowed the flow of raw materials and finished goods since the pandemic began, leading to bottlenecks and rising costs for many industries.
Darren Campbell, a spokesperson for the NWT’s Department of Infrastructure, said the territory and its contractors “continue to face challenges” because they can’t get the materials they need.
“Rising costs and schedule uncertainties are likely to continue to complicate delivery of GNWT infrastructure projects,” Campbell said, days after the territory passed its biggest-ever capital budget.
According to Campbell, the NWT government is already managing 151 ongoing infrastructure projects, valued at $368 million. The capital budget passed last week, which sets out anticipated spending, was worth a little over $500 million.
Campbell said the territory has seen increased costs for materials like wood and steel, reduced labour capacity and restrictions for workers, and greater competition for skilled workers across Canada.
One project delayed by the pandemic is the installation of a fibre-optic cable to bring high-speed internet to residents in Whatì.
The Tłı̨chǫ Government said delivery of the fibre-optic cable was delayed due to labour issues at factories and extreme demand for fibre connections throughout North America. As a result, completion of the project has been pushed back until October 2022.
Jonathan Vandal, the office administrator at Whatì’s hotel, said the fibre line will “make a huge difference” in the community, improving streaming services and online meetings.
“The amount of work we can do is dictated by the internet speed,” he said. “With the entire community being on a DSL connection, there are many fluctuations in the speed and it can become very difficult to actually get anything done.”
Lewis Black is the chief executive of Almonty Industries, a Toronto-headquartered tungsten mining company that operates in Spain, Portugal, and South Korea. Tungsten is used in technologies like semiconductors and batteries and in the manufacturing of cars and planes.
“There was no way that it should have been possible to close down the global economy, but they did it,” Black said of the pandemic’s impact on the supply chain.
“I think we’ve seen that if you can do something that shouldn’t be possible, the consequences are entirely unpredictable.”
Black said unforeseen impacts include semiconductor shortages hampering the auto industry, the shortage of plastic resins affecting the production of plastics, and urea shortages threatening transportation in South Korea.
Meanwhile, a backlog at shipping ports is affecting the delivery of those goods that have overcome manufacturing difficulties.
While these are global issues, Black said there has been a lack of global coordination in response.
“Governments generally don’t talk to each other,” he said. “I think the great unknown is, what exactly are governments going to do?”
In its 2021 budget, the Canadian government pledged $1.9 billion over four years to a fund that improves the flow of goods in Canada.
Transport minister Omar Alghabra said on Monday he will host a national supply chain summit in early 2022 with the aim of streamlining Canada’s supply chain.