Canadian economic resilience and industrial strategy

There is pressing need for Canada to develop a robust industrial strategy centered on public investment, strategic diversification of export markets, industrial investment, and the safeguarding of publicly funded intellectual property.

Canadian economic resilience and industrial strategy
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Introduction

An over-reliance on the US market, the erosion of domestic production capacity, and the vulnerability of critical supply chains has been identified as a critical threat to Canada's economic sustainability.

Current approaches, heavily reliant on American investment and free trade, are insufficient and have, in some instances, actively undermined Canadian economic resilience.

Investment in Canada's economy relies on a robust system of industrial research, smart regulations, and dealing with the cost realities from such a large geography. Economic resiliency of the current model has been tested by the collapse of American regulatory support for safety and the environment that help drive investment decisions.

A greater role for the Canadian state is needed in driving economic development, supporting domestic industries, and ensuring that the benefits of publicly financed innovation advance the Canadian economy. Leveraging public assets, strategic investment in infrastructure (especially inter-provincial and inter-territorial transport), and strong labour protections are key pillars of this strategy.

Key themes

The need for economic diversification

  • Diversification of exports will require different supports from the government, with export of raw materials requiring bulk export capacity, quality control, and support for connecting procurement with production.

Failures of current commercialization and investment models

  • Canada's commercialization of university research relies too heavily on American capital, leading to the export of and, in some cases, shutting down of productive Canadian publicly funded intellectual property.
  • And example is the purchase by American/foreign capital and then shut down of production involving biofuels and the chemical industry.
  • Current profit subsidies to the private sector attempting to drive innovation and productivity are ineffective. Much of the money goes to firms that were already going to invest or goes to American firms who are only interested in buying and exporting Canadian IP.

The role of public ownership and investment

  • There will be a more significant role for public ownership in key sectors to support interruption caused by tariffs, drive investment in sustainable directions, ensure control over strategic assets, and fill areas were private capital cannot support an end-to-end commercially viable production supply chain.
  • To diversify trade both internally and externally, Canada must look to state-owned and supported transport as part of the production system of our economy, including the movement of people.
  • Public ownership and development has been called for even by the private sector in midstream refining (mining and energy) to support the production of commercial viability end-products using Canadian-sourced feedstock.

Importance of infrastructure development and East-West trade

  • The main obstacle to moving goods East-West, according to Statistics Canada's recent study on inter-provincial trade, is the distance and not "regulatory barriers" to trade.
  • Planning travel across different modes of travel in Canada should be made easier through government investment in infrastructure and standardized data platforms for industry and people moving.

Supply chain resilience

  • Data collection and centralization information on capacity availability for firms to know logistics options for different types of products and where they can be moved would support domestic supply chains.
  • Industrial research supporting investment in expanding and securing supply chains will support Canadian commercial activity.
  • Increasing speed, diversity of options, resiliency to Canadian weather/climate change, safe, and low-cost options will only come from larger research and data sharing programs.
  • Montreal has developed a data hub and app that allows easier planning of travel across the city focused on multi-modal travel, including private car share proving such information can be collected and used effectively.

Labour and worker protections

  • Labour protections and unions are crucial for supply chain security and resiliency.
  • Wage floors and sectoral bargaining support for delivery and trucking sector can reduce wage suppression and casualization that only supports US company profit growth.
  • Workers' rights and unions are entirely missing from current Canadian government supply chain strategies.
  • Free and fair collective bargaining help support working conditions and wages needed attract high skilled labour to these sectors and keep money in Canada.

Energy independence and transition

  • Canada has the ability to be energy independent and should aspire to secure energy supply in the face of changing global energy markets.
  • From an energy standpoint, independence is now also currency in trade negotiations with the USA.
  • Energy independence will also mean the ability to support diversified exports of Canadian energy products.
  • East-West transport options for energy and energy products should be an investment priority.
  • Biofuels, use of diversified Canadian feedstock for the chemicals industry, planning the use of electricity generation in the production of energy products, and electrification of transport are only possible with a comprehensive energy strategy.
  • The government should review port capacity with a focus on an electrification, ammonia, and LNG fuel station development to help drive and be prepared for green transitions in marine shipping fuel demand.

Responding to threats to trade and subjugation

  • Threats of trade wars should be viewed as threats of subjugation and imperialism rather than simple negotiation tools for free trade deals with the USA.
  • Canadian sovereignty means building capacity to replace reliance on American imports and exports through finding new trade partners.
  • Relying on concepts of free trade and private markets will simply not drive diversified trade because without overcoming East-West and Rural-Remote-Urban distances, Canadian trade will remain focused on the closer American export markets.

Recommendations

  1. Invest in public industrial research and development, specifically through the National Research Council and ministry-level research programs.
  2. Develop and implement a comprehensive national industrial strategy with clear goals and targets involving labour, industry, academic, and government agencies.
  3. Strengthen labour protections and support sector bargaining in regions of low Collective Agreement coverage to ensure fair wages and working conditions.
  4. Support domestic industries through procurement policies, active export diversification programs, and infrastructure investment.
  5. Secure Canadian intellectual property by ensuring public ownership stakes in research and commercialization while fully supporting last mile product/service development without American VC financing.
  6. Prioritize East-West and Northern transport infrastructure development to facilitate internal trade and reduce reliance on North-South trade with the USA.
  7. Develop a purpose-driven foreign policy that supports Canadian industries and promotes sustainable economic development.

Detailed list of recommendations

Data collection and centralization on capacity availability

  • Standardize data platforms for industry and the movement of people.
  • Expanded data collection through Statistics Canada and ministerial data hubs.
  • Expand data availability on transport and related infrastructure for safety, security, and easier access.

Transport regulatory agencies support

  • Support for testing, approving, and regulating new transport technology will be necessary in the face of federal research cuts in the USA.
  • Canadian-based rail safety research program is needed.
  • Publicly campaign to upgrade all tank car rail cars operating in Canada to the minimum TC-117 standard.
  • Establish medium term emissions standards trucking and rail.

Inter-provincial passenger transport

  • Address current limits due to underfunding public passenger transport options.
  • Short-term public passenger rail solutions involve expanding production of made in Canada transport products supported through government procurement.
  • Prioritize infrastructure connecting all modes of passenger transport at central nodes.
  • Begin program to build new parallel freight and passenger rail lines.
  • Ensure trains, buses, marine, and aviation technology is tested in Canada at NRC facilities before operation and can be maintained and inspected in Canada.

Mining investment for Canadian needs

  • Prioritize Canadian production for Canadian needs/value added production.
  • Support export diversification through infrastructure mapping of capacity.
  • Federal support for refining capacity through Crown assets and research.

Social services expansion

  • Expand social services for economic transition.
  • There are known demographic, training, addiction, mental health, and community resilience issues that will undermine economic and social progress in Canada.

Manufacturing import substitution

  • Support companies in finding import substitutes.
  • Prioritize substitutes within Canada from firms that have lost commercially viable USA export markets.

Aerospace and defence procurement

  • Expand both aerospace and defence procurement to align with the European market.
  • Ensure continued capacity for aerospace production in Canada.
  • Separate domestic sovereignty and NATO defence funding and procurement strategies.
  • Begin examination of information sharing programs with the American security services.
  • Re-establish Canadian domestic semiconductor production for use in industrial production systems.

Canadian forest products

  • Promote and expand certification for responsible forest management in Canada.
  • Establish a federal program to support low emission and upgraded investment in forest product production.
  • Last-stage forest products commercialization without relying on American or private capital.

Biofuels production and supply

  • Direct regulatory support for biofuels production and supply.
  • Connect agriculture and waste management for biofuels.
  • Provide support for municipalities on biofuels production procurement and distribution infrastructure.

Electricity and East-West connections

  • Support East-West electricity connections between provinces and territories.
  • Consider electricity export vs. biofuels production.
  • Ensure nuclear energy has a fully Canadian supply chain.
  • Support commercialization of hydro and cold weather salt batteries development.
  • Rural and remote electrification project with Canadian generation and storage technology.

Heat pump production and efficiency standards

  • Federal support for heat pump production and efficiency standards.
  • Energy efficiency program information sharing.

Canadian electricity transformer production and export support

  • Canadian transformer production is world class and export diversification requires tooling for different voltages.

Charging station build-out

  • Build charging stations using Canadian utility-owned programs.
  • Support Canadian weather-tested charging stations and buses.
  • Support broad adoption of tested technology such as TTC bus charging station.

Coastguard training and shipbuilding

  • Implement coastguard training and recruitment.
  • Expand shipbuilding capacity for Coast Guard and northern patrol ships.

Marine communication support

  • Provide marine communication support through Telesat development.
  • Ferry procurement program for ship maintenance and building.

Telesat and telecom

  • Support Telesat deployment through defence procurement.
  • Build internet backbone infrastructure for northern and rural community commercial internet connectivity using utility-level infrastructure.
  • Expand commercial access to research internet (CANARIE-linked networks) for Northern communities.
  • Link northern rail and transport networks with telecom infrastructure.

Logistics

  • Ensure Canada Post's logistics infrastructure is sustainable for goods movement in Canada that is independent from foreign investment.
  • Electric vehicle procurement and charging infrastructure support for Canada Post to ensure Canadian capacity for logistics industry production.
  • Support wage floor and sector bargaining for delivery and trucking.
  • Invest in expanded bathroom access support for the logistics industry.

Public vaccine and drug production

  • Expand public vaccine production through NRC-style facilities.
  • Expand public and generaic drug production for the Canadian medical system.
  • Expand pharmacare to include Canadian-produced drugs.
  • Establish emergency drug supply and distribution logistics program.

Health products procurement support

  • Support centralized health products procurement program for hospitals.
  • Map Canadian health products and chemical inputs for local procurement.
  • Medical isotope mapping project.
  • Medical gases mapping procurement program.
  • Public dental care expansion.

Trade mission on AI and commercialization

  • Canada's university system produces many of the world-class AI and machine learning workers and experts in American firms.
  • Target European trade relations to leverage Canadian expertise in AI research and training.
  • Build a trade mission with government, union, academic, and municipal connections with French and German digital sectors.
  • Standardize AI and digital privacy regulations with European markets.
  • Seek out European-based capital investment in Canada's AI programs.