As we all recover from the virus tragedy and restart our lives again, it is expected that a new trend will emerge. Buy Canadian.
If we have learned just one lesson from this pandemic it is that the global supply chain has inherent risks.
The meaning of the phrase, “Cost of Living” takes on new meaning as it now means the “Cost of ‘Living‘”!
The de-globalization of the world supply chain had started to change well in advance of the pandemic, but this supply chain pivot will be greatly accelerated post of the pandemic as countries, including Canada, realize that the costs and risks of trusting others to take care of your product needs is problematic under stressed circumstances.
With the advent of automation and robotics, many products no longer are manufactured at a distinct cost advantage offshore anymore. The low cost labour advantage once used as an competitive torch to lead the masses of manufacturing away to distance locations is now seriously eroded and no longer as compelling as it once was. Offshore economies are catching up as their citizens demand better quality of life and improved living standards. The costs of shipping a product back to a domestic market has already offset some of the labour pool advantages. Fuel for the ships, trains, and airplanes has handcuffed the low cost advantage. As has the time to get to the marketplace.
Quality control can be higher if the point of manufacture is closer to the point of consumption too. The buyer can interact with the producer much easier, more precisely, and in a timely manner.
Communications and buyer / seller interactions improve when the proximity of the two participants remains in the same time zone, or a time zone that is just one, two, or three hours offset compared to when manufacturing is 12 hours or more offset when it is on the other side of the globe.
Another advantage of domestic production is the language barrier that exists when dealing with manufacturers around the world. When you produce products at home, you can all speak the same language and this improves communication and the effectiveness of getting the right products delivered. You can meet face to face easier and body language can be used to better communicate and clarify issues. Even with video conferencing, this level of effective communications is much harder to deal with remotely.
All to often, products have been manufactured on the other side of the world, with manufacturer / buyer communications being sporadic and challenged during the production due to distance / time / language / understanding. Then, when the shipping container arrives and the product is seen for the first time from a mass production run, you suddenly realize it is not exactly as you envisioned and is no longer ideal. It may be outright wrong!
Sometimes it is absolutely defective and unworkable, just like we all saw with the millions and millions of face masks and other personal protection equipment (PPE) that recently arrived from China in April 2020 to aid Canada to fight the pandemic and all of these masks turned out to be defective.
These defective PPE evolved and compounded into a new crisis for Canada and aided in the spread of the coronavirus and the loss of lives here. The costs for the failed products were simply too high. Not just monetarily, but also with the deaths of thousands of our loved ones.
Post of the pandemic, I predict a surge in a trend to buy domestically – to Buy Canadian. Consumers will seek out products made here that they can trust. Smart marketers will promote products with the ‘Made in Canada’ label attached.
I envision government programs that insist that products must be substantially produced and processed within the country. These programs will define “substantial” as over 51% of the final processed product consists of commodities that were domestically produced.
This domestic production shift will take time to realize. Two factors will guide this shift. First, when the product is not produced or manufactured domestically in sufficient and reasonably available quantities of a satisfactory quality. Second, when the competitive bids reveal the cost of a domestic product is significantly higher than the foreign product.
Over time, it will be expected / demanded that both product quality and cost will be improved to change this situation and make domestic consumption more viable. If the majority of Canadians agree with the Buy Canadian First ideal, then the producer market will shift to make it happen.
In some cases, such as with pharmaceuticals, it may be more costly to Buy Canadian. But, the current situation of having 100% of important common drugs produced on the other side of the world is deemed to be far too risky, so multiple sources of supply will be sought out with a blended domestic / offshore policy.
China is known as the world’s factory for car parts, toys, and electronics, but it also churns out much of the penicillin, antibiotics, and pain medicines used across the globe, as well as surgical masks and medical devices.
“Chinese pharmaceutical companies have supplied more than 90 percent of U.S. antibiotics, vitamin C, ibuprofen, and hydrocortisone, as well as 70 percent of acetaminophen and 40 to 45 percent of heparin in recent years”, according to Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations.
Supporters of reducing reliance on China have used the coronavirus epidemic to highlight what they say is a longstanding vulnerability that could leave Canadians dangerously short of medicines in the event of a war, trade conflict, or pandemic.
While most current headlines about this rejuvenation centre on the conservative’s call for tariffs and efforts to rework existing trade agreements more favorably for domestic producers, there are a number of other factors driving the continuing strength of domestic manufacturing. It is hard now for all political parties not to fully embrace the Buy Canadian ethos.
The re-shoring movement is one that has been underway for years, and has ridden the rapid increase in labour and production costs in previously popular offshore production countries such as China. It is also been driven by concerns about potentially devastating supply chain disruptions after disasters like the Japanese tsunami in 2011 and the many years of supply chain disruption due to fierce cyclones in popular manufacturing locations such as Thailand, Vietnam, Malaysia, and India.
This trend is not limited just to Canada. The USA has been trumpeting this approach for several years now. We have seen it in the UK too, where this trend is driving Bexit, and even in China, where consumerism has been refocused on Chinese products during the past year accelerated by the USA-China trade wars.
The world supply chain is pivoting towards a new direction. Will this paradigm shift be life-changing, or just another popular trend that fades from memory over time. Only time can tell. But, the times are indicating that it is time to Buy Canadian.
————————–MJM ————————–
About the Author:
Michael Martin has more than 35 years of experience in systems design for applications that use broadband networks, optical fibre, wireless, and digital communications technologies.
He is a business and technology consultant. A recent contract was with Wirepas from Tampere, Finland as the Director of Business Development. Over the past 15 years with IBM, he has worked in the GBS Global Center of Competency for Energy and Utilities and the GTS Global Center of Excellence for Energy and Utilities. He is a founding partner and President of MICAN Communications and before that was President of Comlink Systems Limited and Ensat Broadcast Services, Inc., both divisions of Cygnal Technologies Corporation (CYN: TSX).
Martin currently serves on the Board of Directors for TeraGo Inc (TGO: TSX) and previously served on the Board of Directors for Avante Logixx Inc. (XX: TSX.V).
He has served as a Member, SCC ISO-IEC JTC 1/SC-41 – Internet of Things and related technologies, ISO – International Organization for Standardization, and as a member of the NIST SP 500-325 Fog Computing Conceptual Model, National Institute of Standards and Technology.
He served on the Board of Governors of the University of Ontario Institute of Technology (UOIT) [now OntarioTech University] and on the Board of Advisers of five different Colleges in Ontario. For 16 years he served on the Board of the Society of Motion Picture and Television Engineers (SMPTE), Toronto Section.
He holds three master’s degrees, in business (MBA), communication (MA), and education (MEd). As well, he has three undergraduate diplomas and five certifications in business, computer programming, internetworking, project management, media, photography, and communication technology. He has earned 15 badges in next generation MOOC continuous education in IoT, Cloud, AI and Cognitive systems, Blockchain, Agile, Big Data, Design Thinking, Security, and more.