‘‘Companies like McDonald’s, Apple and


Amazon look at the world


as one market’’


globalization or NAFTA.” Technological advances will


continue to eat away at manu- facturing jobs. The only ques- tions are how fast this will happen and what Canada will do. Professor Michael Manjuris, chair of global management studies at Ryerson University in Toronto, points to Germany as a way forward. “Germany has been successful in manufactur- ing post-Second World War because of its focus on quality and the ability to compete on a world-class level — not because it makes all its components there. Canada used to do that in a number of areas of manufacturing and won world recogni- tion. We need to return to government policies that encourage the growth of high-skill, high-value-add manufacturing.” He cites a focus on raw materials and particularly oil


exports as another reason Canada’s manufacturing sector has shrunk. “We have an educated workforce and manufacturing infrastructure but the government didn’t support the sector because it was benefiting from strong oil prices. That’s changed and the federal government sees the need to shiſt to more advanced types of manufacturing,” Manjuris says. “Comparative advantage and globalization will help.


Companies like McDonald’s, Apple and Amazon look at the world as one market. They want to move production to where they gain the most efficiency and pay the lowest costs and they want to sell to markets where they can generate the highest revenues and profits,” he says. “That globalized competition will raise our capabilities. If we continue to improve efficiency and quality and start to create more unique products that make it difficult for others to be competitive we’ll be fine.” Case in point: Apple’s iPhones. Hugely popular and expen-


sive, they are largely assembled in China with parts coming from suppliers in 28 countries. According to research company IHS Markit, it currently costs Apple US$295.44 to produce the


new iPhone 8 Plus with 64 giga- bytes of NAND flash memory. The bulk of that cost is in mate- rials (US$288.08), many of which simply aren’t available in the US. Only US$7.36 goes to basic manufacturing. President Trump would like production moved to the US, a move that the Nikkei Asian Review has reported will more than double the cost of the phone, which retails starting at US$799.


Winners and losers Let’s take a look at what hap- pens in a world without NAFTA. All those companies that have


tapped into global supply chains to maximize efficiency at minimum cost will lose. “It’s not just about going to a place where the cost is lowest. They have to be able to deliver a quality product,” says Hejazi. “Without NAFTA, all of a sudden all those efficiencies are lost. If Trump has his way and cars and cellphones are made in the US, the price goes up significantly, exports collapse and people lose their jobs. It’s completely the wrong strategy. The right strategy is to embrace globalization. That said, when you do that, there will be people who win and people who lose.” So, is globalized production a good thing? “It’s fantastic,”


says Wolf. “The problem with globalization has been that there have been huge gains but those gains have not been equitably distributed.” Freeland has said the key to everyone winning in a global-


ized world is to have both equitable domestic fiscal policies and free-trade agreements. You can’t have one without the other. “It is incumbent on the government to tax the people who benefit and help the people who lose with education and healthcare,” says Hejazi. “The wrong thing to do is to close yourself off to the world.”


MARY TERESA BITTI is a freelance writer based in Oakville, Ont. FEBRUARY/MARCH 2018 | CPA MAGAZINE | 33


Lane Oatey/BlueJean/Getty


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