Home grown goods

From the April 2020 print edition

I don’t know if you recognize the name Steve Bannon. He had his proverbial 15 minutes of fame because of the work he did on Donald Trump’s 2016 campaign. The primary reason why Bannon hitched his wagon to the Trump horse was because of Trump’s promise to bring manufacturing back to America. Bannon had for years talked about the “supply chain,” a term that all of you reading this column are very familiar with. Right now, it runs through China. However, in the wake of the coronavirus crisis – and it is an economic crisis as much as a medical one – we will be seeing a radically different supply chain in the near future.

I’m writing this column in late March. North America’s attention is appropriately focused on arresting the spread of the virus. My guess is that by the time you’re reading this column, we will have turned the corner on this pandemic in North America. Yet the world will never be the same. In the wake of 9/11, we looked at airplane travel differently. In the wake of COVID-19, globalization will be seen in an entire new light. The US will understand that national security is not only about who has the most atomic bombs and aircraft carriers; it’s equally about being economically self-sufficient.

North American vulnerability
Here’s where we found ourselves earlier this month. North America was vulnerable because of its inability to make necessary drugs and produce basic medical equipment. We had relied on China for that, believing that it would always be there for us. This was always a naïve belief, and we see this with 20/20 hindsight. Moreover, it is a fact, a non-racist fact, that the pandemic started in China before spreading out to the rest of the world. When things calm down a bit and the public really understand the culpability of Chinese authorities, there will be sufficient public outrage to spur public policy to make sure that North America is never this vulnerable again.

Bottom line: The North American supply chain is going to be brought back home, by hook or by crook. And it will happen sooner than you think, because I believe that the presidential candidate in 2020 who convinces the public that he’s the guy who can do it, wins the election hands-down. It will likely be a two-pronged approach: massive stimulus spending, a type of domestic Marshall Plan, coupled with tax breaks to multi-national corporations like the Apples and Johnson & Johnsons,
to convince them to bring hiring and value creation within the borders of North America.
And there has never been a better time to bring necessary industry back to North America because of fast-developing robotics. If we do it right, within 10 years manufacturing output in North America will have doubled, even while the number of people working in that sector will be slashed in half.

That, by the way, is the definition of productivity, and on the back of that productivity boom it is entirely possible that we will be moving to a higher standard of living and better quality of life. And we will truly be more secure because we will no longer rely on anyone else to provide us with the necessities of life.

You may have noticed that I have been using the terms “North America” and “we.” Canada’s political leadership should make it very clear to whomever is President that we are very happy integrating our country into a unified supply chain that links the US and Canada. There is no need to include Mexico, as we have no particular national interest in dealing with that nation that we don’t have with countries like Brazil or Ghana or Sri Lanka.

Into the future
Here’s what the supply chain should look like in 10 years. There should be a strategic plan in place to ensure that North America is completely self-sufficient in the basics of life. That includes food, energy and vital industries. We should be producing the steel we need on this continent. No need to import from anywhere else. We should be producing the pharmaceuticals we need within this continent. No need to import from anywhere else. We should be producing the smart phones we need within this continent. And this new regime should be protected with prohibitive tariffs that effectively make it impossible for any other country to upset the North American apple cart.

This will require tremendous social change. We will not be able to afford the luxury of prolonging the adolescences of our young with useless college and university degrees. It might mean pushing back retirement age – at least for the next few years, until robotics kicks in full force. But compared to what we’re living through right now, all of this seems like a small price to pay.

Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.