Technical Corner

June 11, 2025

Background

ORFA members continue to share that manufacturers and suppliers of recreational equipment and services are failing to meet purchase agreements that were launched at times 18 or 24 months ago. There is no doubt that the tariffs have disrupted global supply chains but it is at times hard to understand why steel sourced in Ontario may be difficult to obtain. What we do know is that steel producers rely on cross-border supply chains to source raw materials and at times finished products. The recent tariffs raised the cost of sourcing materials creating bottlenecks, affecting production timelines and leading to inefficiencies in the industry thus creating production challenges.

The ORFA and Marmak formed an asset management partnership more than 8-years ago to assist members in better understanding the need and benefits of capital forecasting through proactive data collection that results in calculated equipment replacement projections. [More]  The historical practice of the industry to "run to failure" has shifted to more proactive facility capital asset management investments. However, the system will only work if manufacturers can keep pace with these efforts. It is reasonable to expect service providers to keep high priced equipment on a shelf in anticipation of a sale.  However, when a contractual relationship is struck for goods and services months in advance and a supplier fails to deliver, it will become more important to understand what are the options for breach of contract.

Contractual agreements set clear expectations for all parties involved. When one party fails to meet their obligations, the resulting legal and financial consequences can be significant. Understanding what constitutes a failure to perform a contract is key for anyone engaged in such agreements. Every contract will be different, so it is critical to carefully read the terms and conditions in respect to failure to meet the terms and conditions of the purchase. Non-performance occurs when a party does not fulfill their contractual obligations, either entirely or partially. This includes a failure to deliver goods, provide services, or meet deadlines specified in the agreement. Failure to perform a contract alters the rights and obligations of the parties. The aggrieved party can seek judicial enforcement of the contract or claim damages. Compensatory damages aim to restore the non-breaching party to the position they would have been in if the contract had been fulfilled, requiring documentation of financial losses. An anticipatory breach occurs when one party clearly indicates they will not fulfill their contractual obligations before performance is due. This allows the non-breaching party to take immediate action, such as treating the contract as terminated and seeking damages. It has been observed that some purchasers build in a daily penalty for contractual failure. Including a set fee that reduces the original contractual amount or results in a service credit. Contractual relationships are discussed in length in the ORFA Legal Awareness II - Managing in a Recreation Environment course. 

Supply chain management will continue to impact all businesses well into the future and today's facility manager needs to become a "critical operational forecaster". What this means is that no longer should it be expected to be able to source key items quickly so, it will be essential to know what pieces in the building will result in being unable to open the doors due to safety concerns. In addition, continually scanning others in the industry to understand their challenges will raise awareness on how best to position operations moving forward. An example is that finding a 100amp fuse only a short while ago was extremely difficult. This is a reminder to facility managers to have and maintain a facility fuse inventory (be a "critical operational forecaster"). In addition, it is important that a facility manager know the exact loss of revenue impact for each day the building cannot provide service. Being unable to source a part is not only an inconvenience but also a significant impact to budget revenue projections and something that needs to be shared with the internal financial controllers. Consider the impact of losing 16-hours of ice rental @ $250.00 = $4,000.00 over several days.

With challenge comes change. It is noted that some ORFA members have ventured outside of their traditional equipment selection choices to field test other suppliers products and services which in turn requires ORFA to consider, if and how, other suppliers products form part of our educational and training efforts. The ORFA continues to raise awareness to the fact that the practice by some manufacturers and suppliers to use the industry as an uncompensated research and development lab in advancing innovation and technology needs to be more transparent and approached differently. Members need to consider being first on any new untested initiative, product, or service that comes with significant purchase cost reduction. Such opportunities must be a win-win for both parties.

The true impact of the changing business landscape will not be known for months or years to come. The only confirmed outcome is the fact that these changes will be permanent while being in a state of flux for some time. To be successful, facility managers must monitor the industry to determine how they need to perform. The ORFA will continue to try and provide an overwatch while sharing member challenges and successes in real time. Together, we have been "Building Community Since 1947."