Over the last couple of months I’ve been giving some thought to how the manufacturing business works, specifically in Canada. It’s been driven partly from things that I’ve been trying to buy, partly from wanting to try my hand at small scale production of something in the garage and also because it’s such an important sector of the economy that’s been struggling.
There’s an unintuitive mismatch of economic incentives for supply chains. Retailers often treat their suppliers as trade secrets, sharing information about where they buy products from can have several negative impacts. For one, if someone buys the same products they could become a direct competitor and start pushing down prices. Secondly, the supplier may have less product available for them if others start placing orders.
Up the supply chain the same things continue to happen. Suppliers are tightly held secrets. If you want something you should buy it through the downstream company.
In comparison, the chinese manufacturing industry has found a way to unlock these barriers to efficient commerce. It has become so much easier to find chinese suppliers that even for simple components like standard metric bolts I will order them all the way from Guangzhou instead of HomeDepot.
Canadian manufacturing seems to need incentives that align better with the whole sector, and the national economy at large. It’s a bigger challenge than seems feasible for me to have any impact on, but nevertheless the mental wheels are turning to see if there is something that could make Canada make again.