All the stories of repatriating supply chains and strengthening the industrial autonomy of countries remain much ado about nothing. At least for the moment.
Until a few years ago, governments, companies and experts were all for globalization, the proliferation of free trade agreements and the splitting of production into long planetary chains – to take advantage of the expertise in engineering and marketing, there low labor costs, elsewhere still an abundance of raw materials -, recalled last week Stéphane Paquin, professor at the National School of Public Administration ( ENAP), during a two-day conference in Montreal on the strategic issue of the relocation of value chains.
Then came a series of disasters (the Fukushima nuclear accident, Donald Trump’s trade wars, the COVID-19 pandemic or even Russia’s invasion of Ukraine) which revealed the fragility of these long chains. of supply and the vulnerability of our economies as soon as the first comes to a standstill.
It was then that more and more governments and experts started talking about the repatriation (or relocation) of production capacities (reshoring in English), the geographical rapprochement of value chains (nearshoring) or searching for suppliers in friendly countries (friendshoring).
What relocation?
The Federal Department of International Trade has been interested in the issue for several years now, but no matter how hard it searches, it has not yet found “widespread change” behind the few “anecdotes” sometimes cited, explained its economist in chef, Marie-France Paquet.
Aside from a gradual increase in their inventories, Canadian and American companies are even going in the opposite direction. Indeed, the foreign share of their production is not decreasing, but increasing slightly: their suppliers are further and further away and they come more and more from countries with which they were not used to dealing affair. “It’s probably because the advantages that led them to use these modes of production are still present,” said the economist.
Quebec manufacturing companies that would like to repatriate part of their production would encounter many obstacles, reported Hubert Rioux, researcher at the Institute for Research in Contemporary Economy (IREC). One thinks of the significantly lower costs of imported inputs, of course, but also, ironically, the absence or lack of knowledge of local suppliers, the cost and availability of labor in Quebec, the expertise local lost or limited, to unsuitable distribution networks or to the risk of losing access to growing foreign markets.
The role of governments
Sarah Guillou, from the French Observatory of Economic Conditions at Sciences Po, in Paris, is not kind to these elected officials who are calling for the repatriation of supply chains and their disconnection from economic reality. “Autonomy of production, as claimed by certain governments to flatter public opinion in the name of economic sovereignty, is a political hoax. »
Hubert Rioux quite agrees. “With an open economy like Quebec’s, there can’t and shouldn’t be any question of de-globalization. Which does not mean that we could not seek, in the manufacturing sector, to reduce its dependence on imports by “2 or 4%”, especially when the number of our foreign suppliers or the products in question are rare.
To do this, the role of the state will be crucial, noted Geneviève Dufour, professor of international economic law at the University of Sherbrooke. Purchases of goods and services by the various levels of government alone account for just under 14% of gross domestic product in Canada.
Imagine if their calls for tenders not only took into account the rule of the lowest bidder, but also valued the local economic benefits or the low environmental footprint.