2023-08-31 04:47:48
Globalization is not dead. The intentions often expressed to repatriate industrial activity to free ourselves from countries like China have not yet clearly translated into reality in Canada, notes a study by Desjardins.
“What we are seeing is that there are signs of the relocation of production to Canada, but these signs are weak and limited to certain sectors, indicates the author of the study, Benoit Durocher, in a interview with The Press. The phenomenon is still very marginal and it is difficult to know how it will evolve. It might be temporary turbulence or a major transformation of commercial relations, according to him.
After decades of globalization, companies seem to be wondering regarding the benefits that remain to be drawn from it, according to him. They weigh the additional costs of repatriating their production, especially in wages, and its advantages, particularly in terms of the environment. “It’s an adjustment that can take years,” he says.
shy signs
The economist examined the recent evolution of Canada’s imports, more specifically the share of imports in everything produced in the country. “A decrease in this ratio is a signal that a greater proportion of production is done locally instead of coming from abroad,” explains Benoit Durocher.
He finds that the share of imports in total production increased until 2008 and that it has tended to stabilize since then. “It can be a sign of the desire to produce more locally,” he believes.
However, there is no clear trend of the decline in the ratio of imports to production, indicating that reshoring is not widespread.
In the manufacturing sector
The signs of reshoring are more evident if we focus on the manufacturing sector. “This sector has been showing a downward trend in its ratio of imports to production for years,” discovered Benoit Durocher. The situation varies according to the activities, and it is the manufacturing of computer and electronic products that seems to have been the most repatriated. Particularly since 2022. “It is not a surprise considering the shortage of electronic chips which appeared during the pandemic, which undoubtedly prompted several Canadian companies to find alternative sources of supply”, analyzes the economist.
Increase in investments
The willingness of companies to repatriate their production can also be detected in their investment intentions. According to a Statistics Canada survey, more and more companies are planning to expand their facilities in the coming months.
“The repatriation of part of the production carried out abroad usually requires significant local investments in order to develop new production capacities”, specifies the economist. The global economic slowdown has chilled Canadian businesses recently, but the trend in previous quarters showed signs of relocation.
Not so necessary
In fact, Canada does not need to make a great effort to repatriate its production since it is less vulnerable than many other industrialized countries. The vast majority of imports from Canada come from “friendly” countries, underlines Benoit Durocher.
Over 60% of Canada’s imports come from the United States, which is a stable and reliable source of supply. If we include the European Union, the United Kingdom, Mexico and Japan, with which Canada has good trade relations, this proportion rises to 79%.
The United States is not in the same situation. The country is more dependent on China, in particular, hence the Biden government’s major offensive to encourage American companies to repatriate the activities they have relocated in recent decades.
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