The COVID-19 battle reveals shortcomings in our global supply chains, creating questions that will spark hot debate now and in the months to come.
How much are we willing to pay to ensure that essential goods and services are available in our country during a crisis? What goods and services are essential? Should taxpayers fund larger stockpiles of essential items? How big should those stockpiles be? Should governments come up with strategies to ensure domestic manufacturing of essentials? And how would we pay to maintain domestic manufacturing capability that would most of the time be surplus to the needs of the market?
In some ways, farmers were asking these types of questions when faced with shortages in other situations.
A few years ago, extended cold weather and a larger than expected harvest exposed severe under capacity in the country’s rail system, causing carriers to scramble for engines and crews.
The BSE crisis of 2003 highlighted the large shortfall in Canada’s cattle slaughter capacity. In its wake, several new slaughter plants were proposed but few were built because the economics didn’t work once the crisis passed.
These types of the situations are now playing out on a much broader canvas and are being mixed in with the debate about globalism.
Even before this virus raised its ugly head, the rise of populism in many countries was pushing back against the trend since the Second World War in favour of globalism and free trade.
Arguments in favour of globalized trade include that it led to more affordable goods and services, improved corporate efficiency and profitability and a huge decline in poverty levels in developing countries, particularly in Asia. The expansion of global trade since 1990 contributed greatly to the halving of the number of people living in extreme poverty.
Arguments against it included the loss of jobs and manufacturing capacity in developed nations as multinational corporations moved operations to low wage, low regulation countries and growing inequality as worker competition kept wages down but investor and manager incomes rose on stronger profits.
The most obvious critic of globalism is United States President Donald Trump with his America First economic nationalism sloganeering, but Britain’s Boris Johnson, Brazil’s Jair Bolsonaro, Hungary’s Viktor Orban and others advance similar ideas.
Canada, until now, has mostly resisted this trend, but the exceptional pressures associated with the fight against the virus could cause a shift in attitudes.
Particularly shocking was news April 3 that the Trump administration had invoked the Defence Production Act to require 3M to stop shipping its critical U.S.-made N95 masks to Canada and Latin America to preserve all production for the home market.
We’ve also become aware that many other items critical in the fight against COVID, such as ventilators, testing kits and other protective wear for medical workers, are either not produced in Canada or are produced in numbers too small to meet the need.
Canada is not alone in this. No country was prepared for the sudden exceptional demands for specific products and the breakdown of supply chains.
The impacts go beyond medical items. Even early on when COVID-19 was limited to China, North American vehicle makers could not get parts they needed from factories in Wuhan and other parts of China.
Fortunately, I am not aware of Canadian grain and oilseed farmers suffering so far from a shortage of parts, seed or other goods necessary for spring seeding, but vegetable and fruit producers are concerned about the availability of temporary foreign workers.
Ottawa has committed to keeping the worker program going, although because the people coming in will need to isolate for 14 days there will be a planting delay in some operations.
However we can’t be sure of what is around the corner as the virus spreads.
For example, already John Deere has briefly suspended production at two production plants in the U.S. because each had a single COVID-19 case. The plants had to undergo a thorough disinfection before restarting.
CNH Industrial had to suspend operations at assembly operations in Europe for two weeks although component-manufacturing plants stayed open to ensure continuation of supply to manufacturing plants outside of Europe.
In the meat sector, Harmony Beef at Balzac, Alta., and Olymel’s pork plant at Yamachiche, Que., have had to temporarily close because of employees contracting the virus.
Once we emerge from this crisis, expect businesses and governments to look for ways to diversify their sources of supply and bring home production of critical items.
There will be more stockpiling. There will be more conversations about wage levels needed to attract Canadian workers to jobs that are seasonal or less desirable but are nevertheless important.
Overall, the watchword will be improved resiliency, which is invaluable in a crisis but comes at a cost when there are no problems.
But I hope that this crisis also reminds the world of the need to share information and resources, co-operate, co-ordinate and take collective action. When facing an enemy that threatens all of humanity no country will “win” by acting alone. And when we are each able to freely market that which we are best able to do, we produce the greatest good for all.
In times of crisis and challenges we should remember the words of Ben Franklin: We must all hang together, or most assuredly, we shall all hang apart.