Canadian Supply Chains and Trade

Transport Canada and the government regularly articulates collaboration, but fails to mention labour/workers—even though supply chains do not run without them.

Examples like the trucking deregulation pilot program that has been established to undermine labour regulations. Programs like this are just a reduction in regulatory oversight, oversight that exists to respond to specific provincial geographic realities in the trucking industry. Canada is very large and many different geographies. What works in Saskatchewan does not work in BC because the terrain is different.

The investments to meet trucking regulatory standards in BC (for safety) should not put mis-classified owner operators at a disadvantage to those based in Saskatchewan facing less stringent regulations.

These regulations on trucking that establish safety in response to local realities have thus been misclassified here as "barriers to trade".

If Canada is going to review federal regulations, then these regulations should be established to raise safety standards and worker protections. Many of these provincial regulations are the result of democratic consultations at the provincial level. They are not all there for "no reason" or simply to be a "barrier to trade".

Labour mobility is important, but reducing provincial capacity to establish and retain qualified labour for their own local projects will result in cannibalizing one province's prosperity for another.

A prosperous future built on the backs of deregulated labour markets will suppress workers wages, drive income inequality between provinces, and result in populist programs gaining support.

As with transport regulations, many have a basis in regulatory needs of the local communities and were established through democratic consultation across a wide array of stakeholders. Eliminating them through unspecific deregulation is just as likely to create barriers to investment as having them.

A model for sustained economic growth in Canada cannot be based on a simplistic program of transferring wealth from labour to capital via deregulation.

Any broad statements about deregulation resulting in increased foreign investment is very similar to the program that has got us into this current mess with the USA. In the end, it is a economic security risk.

Most conversations in government around supply chains are about the movement of goods. But, they tend to excludes the transport of energy in the form of oil, natural gas, chemical, biofules, and electricity.

Data on production inputs in Canada includes those inputs from the oil and chemical sectors because they are so important to the Canadian economy. So, it is very strange to not include them in discussions about supply chains.

This is a larger issue then just forgetting about a huge part of the economy, it is because instead of starting with the ends of the supply chain, they are starting in the middle. However, it makes no sense to talk about supply chains without talking about what those supply chains are connecting.

Most supply chains exist to facilitate the connection of production inputs to where products are assembled and then to where they are finally sold. Supply chains do not exist in and of themselves and investment in supply chain security should consider what we are supplying and where

The focus on workers as the problem when it comes to supply chain resiliency is an invention of the transport companies. The companies see this as an opportunity to get the government to change the rules on labour negotiations and remove workers' rights.

Labour disruptions have barely noticeable impacts on broader supply chain security, especially when compared to weather, policy-driven disruptions to locations of production, and geopolitics.

Further large impacts on supply chain resilience:

• Shifts and destabilization of shipping routes because of war, conflict, or accidents.
• Lack of alternative land transportation including rail for marine passage. Lack of redundancy in transport routes.
• Infrastructure investments such as bridges and roads not upgraded to deal with current threats (like larger boats hitting them).
• Delays in expansion of infrastructure projects including marine ports and airports.
• Changing and or loss of predictable weather patterns.
• Droughts and their effect on navigable inland waterways.
• Policy driven shifts in orientation to production in China and Russia shifting where imports come from.
• Global policy shifts such as Europe's new inputs tracking dealing with deforestation or changes to tariffs on steel and aluminum in products.
• Due diligence on human trafficking regulations.
• The move from just in time to buffering that requires warehousing of components/inputs.
• Supply chain actors reducing staff in a way that tests limits of safety and fault risks.
• Unregulated and under-tested automation carried out to replace workers instead of augmentation in safety processes in critical safety sections of our infrastructure.
• Loss of regulatory capacity of the state to find and track flaws and fraud in the manufacturing of mode of transport (aviation) resulting in decline in safety/reliability.

There is no evidence that the vast majority of labour disruptions caused any actual impact on anyone but shippers. Strikes are not a "breakdown" in the bargaining process, they are evidence of a functioning bargaining process.

There is a contradiction in calling for high-skilled labour but also putting artificial limits on the ability to freely negotiate wages and working conditions.

The draft misses the point of how supply chain resiliency is established and maintained. Workers are key to supply chain operation and resiliency, not a threat to it. Innovation and digital services will not offset the undermining of labour.

Productivity should not be the goal, efficient and safe movement of goods should be the goal.

A national program of trade is established between the buyers and sellers of those goods, sometimes that is the same company. Provinces do not trade in goods, firms trade in goods using the supply chain options available to them.

A supply chain strategy should not be only about increasing trade. A Canadian supply chain strategy should be about the safe, efficient, and resilient movement of goods from where they are to where they need to be.

The extraction of resources in Canada are commonly identified in several main categories:

• forestry
• oil and gas
• water
• minerals
• fertilizer
• land-grown food
• seafood and fish

These are the basic building blocks for production of pretty much everything we consume.

However, the abundance of these resources does not translate into a monopoly on their export or even their extraction and use.

Almost everywhere in the world also has these resources and most other places in the world have nicer climates to access them.

Canada is very large which means all that resource has far to travel to get anywhere.

The main obstacle to moving goods East-West, according to Statistics Canada's recent study on inter-provincial trade, is distance and not "regulatory barriers to trade".

Large distances (and the costs associated with that travel) along with finding Canadian suppliers and purchasers are a main obstacle to trade.

The movement of goods for smaller enterprises to ship things to refining, midstream,processing, and value added production and then back again is expensive because the distance is far, not because the regulations are hard to overcome.

The solution to most of our problems in Canada for expanding production using our resources is connecting firms across Canada. This means facilitating transport from where the resources are, but few workers are (because of the climate and distance from other things), to where production workers are, and then onto where the rest of the production can be finalized or exported.

Deregulation does not do this, but an industrial strategy will.