Buy in Canada Public Sector Procurement and Jobs

I went trawling through the detailed trade by commodity data on the Industry Canada (Strategis) web site the other day in search of examples of potential job creation from raising the Canadian content of public sector procurement (as called for, not just by the labour movement but also, recently, by the Canadian Manufacturers and Exporters.)

As a very rough rule of thumb based on total manufacturing shipments (not value added) divided by total employment, $300,000 of shipments is associated with every direct manufacturing job. Lowering the value of imports by $1 Million would thus create about 3 new direct manufacturing jobs.

There has recently been an active campaign in favour of greater domestic content in public transit vehicle purchases, with the City of Toronto decision to buy buses from a plant in Thunder Bay leading the way. Ontario is now hiking preferences for Canadian bidders on public transit contracts, which are likely to increase quite rapidly as transit expands in response to risign gasoline and carbon prices.

In 2007, we imported $694 Million of “buses and other public transport passenger vehicles.” (HS Code 8702) Displacing these imports through domestic production would thus create about 2,000 new jobs.

Canada is also a significant exporter of such vehicles, but the once positive trade balance went into deficit in 2007, to the tune of $81 Million.

Investment in wind power is just getting off the ground, but imports of turbines (electric generating sets – wind powered HS 850231) are already running at almost $200 Million per year, and there is currently no Canadian production capacity of any significance. Some proponents of wind power development are now promoting the possibility of domestic procurement and green job creation, likely by providing a guarantted public power market to one of the established European producders willing to build a plant here.

There seems to be a lot of potential for job creation through enhanced Canadian procurement by the (predominantly public) health care system. In 2007, we imported $399.9 Million of radiation equipment alone (HS 9022 – Apparatus Based on the Use of Radiation for Medical, Surgical, Dental or Veeterinary Purposes), and ran a trade deficit of $205 Million in this area. No doubt there are large opportunities elsewhere in the large and fast-growing medical equipment market.

We also import massive quantities of pharmaceutical products (HS 30) – $10.5 Billion worth in 2007, producing a pharmaceutical trade deficit of $4.0 Billion. We seem to have settled for quite a small share of pharma production for all of the public support given to big pharma in terms of patent protection and incentives to locagte research and development in Canada.

These are just a few examples. What we need is a detailed mapping of the public sector market for goods, the import content of public sector procurement, and how imports might be replaced by job-creating Canadian production.

One comment

  • Do you mean decision (without bidding) to buy Subway cars from Thunder Bay or the upcoming purchase of streetcars with will likely go to Thunder Bay (with bidding, but with terms manipulated to give Bombardier the advantage.)?

    I don’t think they make buses in Thunder Bay.

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