NS Government Should Begin Sourcing Critical Supplies Locally

Mathew Georghiou Follow Me

Posted this 2020-05-12 3:36 PM ADT (updated 2020-07-20 4:07 PM ADT)

As this pandemic has shown, our region is too dependent on critical supplies and equipment that can only be sourced outside of Nova Scotia and Canada.

The same can be said for most regions around the world.

This includes personal protective equipment (PPE), like masks, gowns, and ventilators, or medical supplies like cotton swabs and medicine. Perhaps even food.

As this pandemic has proven, relying on the global supply chain is risky.

The Government of Nova Scotia should make an immediate effort to encourage companies to establish manufacturing facilities for critical equipment and supplies in Nova Scotia.

This will create jobs in Nova Scotia and make us safer in an uncertain future.

Here’s how it can be done:

Identify the most critical supplies and equipment needed to prepare for future challenges that can disrupt global supply chains, just as this pandemic has done.
Identify how much of this equipment and how many of these supplies are used in Nova Scotia each year. Calculate how much of this money is spent outside of Nova Scotia.
Use that money to guarantee sales to companies that are already in or willing to set up in Nova Scotia. But, with one condition — the Government of Nova Scotia gets the first option to purchase the products. Products not purchased by Nova Scotia can be exported to bring new money and more jobs into Nova Scotia. (We may also need some good lawyers to work around any free-trade agreement challenges).

It is likely that the cost of some products will be higher when manufactured here rather than overseas. But that’s ok because reasonable thresholds for price and quality can be set. And, buying products made here is an investment in our own people, not to mention that much of the money is returned in taxes.

Realistically, we won’t be able to manufacture everything we need, but the more we do, the safer we will be. All while creating economic activity in our own province. It’s a win-win.

I think most business people would agree that the Government of Nova Scotia (of all political parties) has historically done a poor job of sourcing products locally to help Nova Scotia companies. Here’s a once-in-a-lifetime chance to change that and help Nova Scotians today and in the future.

Perhaps even take it further, beyond just critical supplies.

Source as much as possible from Nova Scotia businesses starting right now. The most valuable incentive and support you can give a business is not a grant or subsidy — it’s a sale.

Posted by Mathew Georghiou
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Joe Ward Follow Me 2020-05-12 4:08 PM ADT Reply 1 0 For the government, buying local is often a discount even when the price tag seems significantly higher. As you said: "And, buying products made here is an investment in our own people, not to mention that much of the money is returned in taxes." They'll get an immediate "rebate" in the form of payroll taxes submitted to the province, plus annual corporate income tax paid, and increasing property taxes for municipal units that the province otherwise has to fund or support, along with increased economic spending from the spinoff. Over multiple cycles of spending, it continues flowing back to the government.
Mike Johnson Follow Me 2020-05-13 10:25 AM ADT Reply 2 0 I agree but first you'd have re-tool the government procurement process and re-train purchasing agents to appreciate Price vs Value. NS has medically been known for buying the cheapest supply item as long as it meets the (very) basic criteria. This means that you often get the worst, vs 'best of breed'. And if it results in more cost down the road, there is little or no measurement of that. Plus, individual hospital & government purchasing was so bad that they often added another layer of 'for profit' or private purchasing with the resulting additional administration & overhead. The end result was very inefficient & costly overall, but resulted in much of the medical supplies coming to the Province at single digit profit margins. It is highly unlikely that any local company could compete at those levels so you'd have professionally re-evaluate the whole Price vs Value Equation.....and government would not know how to do that! Joe Ward Follow Me 2020-05-13 11:15 AM ADT Reply 1 0 Tim Houston has dipped his toes into these waters with his position on healthcare, suggesting that the healthcare budget was sufficient, but the spend essentially wasn't smart enough. He compared the cost of upgrading someone's home to accommodate their long-term healthcare needs versus the cost of keeping them in a healthcare facility. These types of analyses could run the full gamut of healthcare delivery, which is complex itself. However, the additional layer of return to government and the spinoff of local investment is an additional layer of complexity, but quite important. The government always references such things when they subsidize big business, though more as a rule of thumb than an analysis. While the public often reacts poorly to such decisions, if we broke down the numbers, many of these deals end up making sense. Sometimes we simply poorly negotiate and give away more than we have to, to achieve the same effect. Mathew Georghiou My Post Follow Me 2020-05-13 11:33 AM ADT Reply 0 0 Mike, you are right that the mindset has to change. And while changing mindset throughout government is not easy, it's really not necessary to get it done because political leaders can choose to make things happen from the top if and when they really want to. That's how these hundred-million dollar subsidies, loans, and bailouts happen. When the right people decide they want it done, it gets done.

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Joe Ward Follow Me 2020-05-12 4:08 PM ADT

Reply 1 0

For the government, buying local is often a discount even when the price tag seems significantly higher. As you said: "And, buying products made here is an investment in our own people, not to mention that much of the money is returned in taxes." They'll get an immediate "rebate" in the form of payroll taxes submitted to the province, plus annual corporate income tax paid, and increasing property taxes for municipal units that the province otherwise has to fund or support, along with increased economic spending from the spinoff. Over multiple cycles of spending, it continues flowing back to the government.

Mike Johnson Follow Me 2020-05-13 10:25 AM ADT

Reply 2 0

I agree but first you'd have re-tool the government procurement process and re-train purchasing agents to appreciate Price vs Value. NS has medically been known for buying the cheapest supply item as long as it meets the (very) basic criteria. This means that you often get the worst, vs 'best of breed'. And if it results in more cost down the road, there is little or no measurement of that. Plus, individual hospital & government purchasing was so bad that they often added another layer of 'for profit' or private purchasing with the resulting additional administration & overhead. The end result was very inefficient & costly overall, but resulted in much of the medical supplies coming to the Province at single digit profit margins. It is highly unlikely that any local company could compete at those levels so you'd have professionally re-evaluate the whole Price vs Value Equation.....and government would not know how to do that!

Joe Ward Follow Me 2020-05-13 11:15 AM ADT

Reply 1 0

Tim Houston has dipped his toes into these waters with his position on healthcare, suggesting that the healthcare budget was sufficient, but the spend essentially wasn't smart enough. He compared the cost of upgrading someone's home to accommodate their long-term healthcare needs versus the cost of keeping them in a healthcare facility. These types of analyses could run the full gamut of healthcare delivery, which is complex itself. However, the additional layer of return to government and the spinoff of local investment is an additional layer of complexity, but quite important. The government always references such things when they subsidize big business, though more as a rule of thumb than an analysis. While the public often reacts poorly to such decisions, if we broke down the numbers, many of these deals end up making sense. Sometimes we simply poorly negotiate and give away more than we have to, to achieve the same effect.

Mathew Georghiou My Post Follow Me 2020-05-13 11:33 AM ADT

Reply 0 0

Mike, you are right that the mindset has to change. And while changing mindset throughout government is not easy, it's really not necessary to get it done because political leaders can choose to make things happen from the top if and when they really want to. That's how these hundred-million dollar subsidies, loans, and bailouts happen. When the right people decide they want it done, it gets done.

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NS Government Should Begin Sourcing Critical Supplies Locally

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