Bill Robson: Reshoring is a Poor Long-term Strategy for Sustainable Growth

On November 22, 2022, as part of the Ontario Chamber of Commerce’s Ontario Economic Summit, The Hub’s executive director Rudyard Griffiths moderated a “Munk-style” debate involving Globe and Mail columnist Andrew Coyne, C.D. Howe Institute president and CEO Bill Robson, former Ontario Cabinet minister Sandra Pupatello, and The Hub’s own editor-at-large Sean Speer. The debate’s resolution read: Be It Resolved: Ontario Needs Reshoring as Part of Its Growth Agenda. Pupatello and Speer argued in favour of the motion. Coyne and Robson against it.

Thanks to the organizers for inviting us here to debate this very important question. Our worthy opponents, Sandra and Sean, make a very valiant case in favour of reshoring as part of Ontario’s growth agenda.

Notwithstanding, Andrew and I have our doubts, and we think that you should have your doubts also. It’s not because we’re against growth—an agenda that makes Ontario a place of choice to work, invest, and innovate is a very good thing. And we’re not indifferent to how the things we buy get made and how they get to us or not, as Sandra was just referring to.

We’re all thinking about that. And we’re thinking about it a lot more than we used to do personally and in our businesses. So, in addition to price and quality, smart business leaders and managers are thinking more than ever now about reliability, their suppliers, possibly their suppliers’ suppliers as well, about transportation, after-sales service, ESG, and many other factors. That’s just good judgement. That’s giving your customers the same quality, price, and reliability that you’re looking for from your own suppliers.

So, it’s not about that. It’s not about whether we want growth or whether we want secure supply chains. We do and we should. If reshoring and Ontario’s growth agenda means anything, it means policy. It’s about government’s using subsidies or procurement or other discriminatory measures to try and make sure that production that wouldn’t otherwise occur in Ontario does, and conversely, some production that would otherwise happen in Ontario doesn’t, because the two do run together. Andrew and I say no, there are lots of things that belong on Ontario’s growth agenda, but just not those.

I’m going to anticipate Andrew, my debating partner, a little bit by just saying how good trade is for us. As consumers, we do not grow all our own food, we do not make our own clothing, we do not build our houses, and we do not do our surgery. We exchange with each other the gains from trade that give us better food, more food, clothing, and better shelter than we otherwise would have. Those same gains apply, whether we’re talking about individuals or families or neighbourhoods when you go up to cities and provinces and countries. That’s why Canada went for free trade, with the United States first and then Mexico, in NAFTA. Then with the EU, and now with the Trans-Pacific Partnership. Show of hands, should we have freer trade here in Canada? I think most people think we should.

Here’s another key point, though. It’s not just true for consumers—it’s true for producers as well. We know some auto parts cross the border eight times before they go into the finished vehicle. Imports and exports go together in cars and transportation equipment, as Andrew Thompson referenced earlier, but it’s true everywhere. It’s true in food, it’s true in services, and countless industries that exist in Ontario now. Also in countless industries that could exist in the future, and they go together for the economy as a whole. We are not going to be self-sufficient in everything for long periods of time. Temporary, yes, but not permanently.

A growth agenda for Ontario should include access to customers and access to inputs, not discrimination that protectionists can game, not subsidies that will dry out when the money runs out, but conditions that will produce sustainably profitable businesses and not white elephants. Making Ontario a top place to work and invest and innovate means making it a place where producers can access what they want. Whether it’s materials, intermediate products, energy competitively priced, IP services, finance talent, etc. And whether it’s from Ontario, which is great, but if it isn’t, Quebec, Manitoba, New York State, or India—it’s all good.

So much else belongs in Ontario’s growth agenda, competitive taxes, infrastructure, education—it’s a long list that is all good. Let’s just leave subsidies and discriminatory procurement off the list. Ontario does not need that kind of reshoring in its growth agenda.