Make purchase quebec mandatory ?

Photo courtesy BOMBARDIER

Bertrand Schepper

Thursday, 31 August, 2017 09:53

UPDATE
Thursday, 31 August, 2017 10:02

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A report of the Journal de Montréal revealed the full extent of the problems at the assembly plant of Bombardier in La Pocatière. This plant which have been constructed since 1974, more than 6000 train wagons and metro might close its doors by 2020 if Bombardier is executing its transformation plan. For Bombardier to maintain the plant, it should be that it significantly increases its order book. Then, one out of every ten of the region’s working at the factory, it is clear that the success of Bombardier is a concern for the Bas-St-Laurent.

The Bombardier plant exemplifies well the problem of the manufacturing sector in Quebec and in Canada. Considered in the past as the backbone of the economy (p. 16), the sector is dwindling decade after decade (p. 18). In order to solve this problem, the government has embarked in numerous ” stimulus policies “, innovation support and strategic plan for the sector, but just to increase its exports, and this, even when the loonie is low.

Another trend is to do as the United States and establish provisions to facilitate the purchase of products assembled in the United States when the federal government participates in the financing.

How does it work? Dating back to the 1930s and has undergone a number of transformations, the “Buy American Act” adopted under Obama in 2009 ensures that the goods and the manufactured products purchased by the government come from and are assembled in the United States. There are exceptions of course, but you understand the principle.

There is a variation in the field of public transport, a sector for which the purchases are very important. For public transport, purchases of more than US $ 100,000 with a federal funding must have at least 60 % content from the Usa and the final assembly must be completely made in the country. It is also expected that this ratio rises to 70 % by 2020.

This policy allows the United States to maintain an industry in a key sector of their economy. Canada is part of the cost of this type of policy, even as its industries struggle to break through the market us.

Do we do the same thing here?

We may believe that Quebec adopts the same type of positions. Several large companies such as Bombardier Transportation, Prévost and NovaBus are one of the biggest employers in Quebec. Well, no… In fact, here, it is just the opposite. The AMT has increased its canadian content requirements from 25% to 15 % for the construction of 24 suburban trains, which resulted in the awarding of a contract to a chinese company. For its part, the Caisse de Dépôt du Québec (CDPQ) does not request any content to the REM. To read the latest news about Bombardier, you might think that it is a wise choice. However, it is not only a question of Bombardier, but of the sector as a whole quebec who loses the chance to develop useful technologies for the benefit of businesses based thousands of kilometres away.

It requires so little canadian content to buy products from abroad with public money, and we eventually subsidize the local company that has nothing provided. This is exactly what happened in the case of the purchase of the cars of the AMT. It is completely absurd.

The dogmatic of the invisible hand of the market consider that, in this situation, the thing to do would be to let the market speak and in the end encourage foreign companies and stop subsidizing local businesses. This would be produced at lower costs. I am not of this opinion. If, in the short term, this may seem like a good idea, in the long term, there is more to gain by promoting the local content. In addition to defending employment direct and indirect, which supports the local economy, such a measure ensures that public money is used for the creation of expertise among us. In addition, the transport needs to be less great and the energy used in Quebec were generally less polluting, the environmental footprint of projects in manufacturing is significantly lower. While Quebec repeated to achieve its goals of reducing greenhouse gases, here is a very concrete to do.

Obviously, the objective of such a measure is not to provide undue benefits to companies who are unable to manage, but to ensure that businesses that want to take advantage of public contracts will contribute to the economy of the State that funds it. In these conditions, and while we talk about investing in transit to Montreal, why not encourage the purchase of quebec content in public contracts ?