Reshoring Canada group to advocate for less supply-chain reliance on risky countries

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Former Ontario economic development minister Sandra Pupatello and former federal industry minister Tony Clement are launching a new advocacy group to promote returning critical manufacturing to Canada and rebuilding supply chains so they don’t rely on increasingly risky countries such as China.

The venture, Reshoring Canada, aims to be a non-partisan repository and advocate of ideas to refashion supply chains to make them safer and more secure. It’s been in discussions with the U.S.-based Reshoring Initiative, led by retired U.S. industrialist Harry Moser. The term “reshoring” refers to the practice of moving businesses operating abroad back to their original country.

Reshoring Canada is partnering with Canadian Manufacturers & Exporters, the Ontario Mining Association and Canada’s Automotive Parts Manufacturers’ Association (APMA) to conduct research on the issue. The first order of business, Mr. Clement says, “will be to move from anecdotal evidence of risk to hard data.” The non-profit group is receiving office support from public-affairs firm Wellington Dupont.

Ms. Pupatello said the scramble for critical medical gear at the outset of the COVID-19 pandemic helped expose the risk in Canadian supply chains.

Auto-parts makers including Martinrea International last year switched to making medical ventilators and personal protective equipment to help Canada cope. “We can make anything here. It’s a good policy initiative to ensure that we can do that so we are prepared for the next pandemic or any other challenge that may appear,” Martinrea general counsel Kerri Pope said of efforts to make supply chains more secure.

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The federal government has been warned against deepening ties with China, which has transformed under President Xi Jinping from a potential partner into more of a strategic rival. In briefing notes released last year, the department of Global Affairs warned then-foreign affairs minister François-Philippe Champagne that things have changed. “While Canada has long framed its China policy through the lens of economic opportunity, it now needs to take account of Beijing’s long-term strategic challenge to Canada’s interests and values,” the briefing note says.

Mr. Clement said Canada’s increasing embrace of a green economy driven by new technology could be at risk if China remains the supplier for many of the critical minerals needed for innovation. “If Canada wants to be part of the green technologies of the future then we have to have control of the supply chain.”

Earlier this year, mining executives warned members of Parliament of China’s stranglehold on strategic minerals.

“For decades, China has held monopoly-like control over critical minerals production and distribution, rendering the rest of the world reliant on procurement and creating a level of risk that deters investors from entering these markets,” Pierre Gratton, president of the Mining Association of Canada, told the Commons standing committee on natural resources in February.

China has made veiled threats to restrict critical minerals as leverage in its trade war with the U.S., as it did against Japan. In 2010, Beijing limited rare-earth exports to Tokyo while the two countries were sparring over disputed islands.

Ms. Pupatello said the aim of Reshoring Canada is to advocate that supply chains for critical industries be refashioned so they cannot be easily disrupted by foreign countries or events. She cited the global shortage of semiconductor chips that forced automakers such as Ford and General Motors to curb production at factories in North America.

APMA president Flavio Volpe said it makes sense to do “an honest assessment of what we could or could not reshore to Canada.” He noted Canada spent 25 years following the signing of the North American free-trade agreement increasingly globalizing its supply chain. “If we honestly reflect: There probably are a few things we should and could look to do locally. It’s not always in our best interest to chase the lowest-cost labour.”

Ontario Mining Association president Chris Hodgson said Ontario alone has deposits of more than a dozen of the minerals that have been identified as critical and he said it would make sense to find ways to more broadly develop these resources.

“We know how important Canadian critical minerals are to the security, clean-tech and manufacturing sectors. Yet foreign-controlled supply chains can mean Canada would remain in the back seat. It is time to prioritize local supply chains more.”

Brian Storseth, a former Conservative MP and another founder of Reshoring Canada, said there are supply-chain risks in industries all over Canada, from oil and gas to mining to manufacturing and food.

Mr. Clement said it will also be important for Canada to ensure it isn’t hurt by the efforts of the new Biden administration to secure American supply chains for critical products including computer chips, electric-vehicle batteries, pharmaceuticals and critical minerals.

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