Vancouver's 'Buy Global' Practices Cost Local Jobs, Say Critics

Home town office supplier axed workers when city dropped it for int'l corporation.

By Adam Pez 6 Jun 2012 |

Adam Pez is completing a practicum at The Tyee.

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Vancouver city hall: Councillors 'don't realize what's going on in their own procurement department,' says LOCO BC's Amy Robinson.

Mills Basics, as its name implies, provides the basics. It's a company headquartered in Metro Vancouver, and for 21 years it has supplied the City of Vancouver with pencils, office chairs, staplers, paper-clips and other bureaucratic necessities. But last year the city pulled the company's contract, along with that of another local company -- Planet Clean -- in favour of internationally owned Grand & Toy.

"We were shocked by that, because we're cutting edge when it comes to electric bikes, electric trucks and closed-loop delivery," said Mills Basics CEO Brent Mills. "When we had our debrief, they said our price is too high, and in terms of sustainability, everyone has caught up to us."

Advocates for local businesses say local governments need to ensure more city contracts are filled by companies based regionally to ensure city sustainability. Doing such, they say, would generate more jobs and local tax dollars, and make local economies more resilient in the face of economic shocks, like the 2008 downturn.

But while some Canadian cities have started to forge ahead with local food procurement strategies, other things like office and cleaning supplies are being neglected, said Amy Robinson from LOCO BC, a consultancy firm for local businesses. Because of free trade agreements signed by the provincial and federal governments, cities are opting increasingly to contract out to multinational firms, and that's needlessly costing British Columbians jobs, she said.

Those agreements "make it increasingly complex for people to specifically require local companies. I would like to see (the city) at least acknowledge the social, economic and environmental benefit of buying from a local company," she said.

City hall hasn't 'landed' on local buying: Johnston

Vancouver is hardly an outlier on its procurement policies. Canadian cities consistently lag behind their American counterparts at giving local businesses a leg up in city contract competition, said Robinson.

But the City of Vancouver, in recent years, has tried to distinguish itself by pursuing a "sustainable" procurement policy that would weed out companies with bad environmental or social track records.

"We're not totally landed on where local will fit in with our sustainable procurement program with products," said Vancouver deputy manager Sadhu Aufochs Johnston.

The city's current procurement plan, approved in 2005, provides stipulations for ensuring goods are acquired transparently, and from reputable suppliers who don't employ child labour or produce faulty, toxic or environmentally-destructive products. But the plan makes no mention of a policy that would help enable local businesses to get more of the city contract pie.

The city is considering implementing local procurement policies for food, Johnston added.

"We see local as the greatest bang for our buck for money we might spend for that, versus computers where we probably go more towards low toxicity, energy efficiency. For carpet and janitorial supplies, low toxicity and recyclability. We are looking at the right opportunity based on the product," he said.

Food could offer one such "unique opportunity" to leverage city procurement dollars in a way that will promote local agriculture and business, he said. But even so, he added, NAFTA and other trade pacts raise "challenges" that the city will need to understand before moving forward.

When The Tyee asked what those challenges were, Johnston said he would have to ask a city lawyer.

Trade deals can stand in the way

Local business advocates and green groups have for a long time voiced concerns that free trade agreements could be hampering municipal ability to pursue local procurement policies.

Currently, the Northwest Partnership Trade Agreement -- formerly known as TILMA -- requires equal consideration to be given to suppliers from B.C., Alberta and Saskatchewan for goods greater than $10,000, and for services and construction of $100,000 or more. As part of the agreement, the pact sets up a dispute resolution panel whereby companies can seek damages if they sense a local government is discriminating against them.

In March 2011, Summerland Waste -- a local waste management company -- lost a District of Summerland waste contract to BFI Canada Inc. -- a multinational firm. The switch prompted the Council of Canadians -- an advocacy group for sustainable policies -- to voice concern that TILMA was creating a "chill effect" prompting municipalities to drop local suppliers for multinational ones.

And just last week, reported in the CBC, a NAFTA panel ruled in favour of Exxon Mobile and Murphy Oil in a Nova Scotian dispute over whether the provincial government could require oil companies to spend a portion of their R&D monies studying local issues.

"What's thrown in my face more often than not is what about NAFTA and TILMA and the AIT and so on and so forth -- those trade agreements and how (cities) get around them," said CUPE president Barry O'Neill.

O'Neill has spent the last year proposing B.C. businesses, institutions like hospitals and schools, and city governments purchase 10 per cent of their services and good procurements from local companies. That policy platform was featured in a previous Tyee article, and O'Neill said it was meant for more than just union members; private companies with non-unionized labour would benefit too.

"It may be surprising to some, but 16 of the largest cities in the United States, and 21 counties, have a program of procurement in their communities," he said, noting many places offer a "lift" between seven and 14 per cent on contracts given by schools, city governments and regional districts to local businesses.

The States "are kind of the free market capital of the world," he said, adding Canadian procurement laws are "silly." "Somebody may challenge us but that hasn't happened in the United States."

O'Neill said the benefits of a local procurement policy -- in terms of more jobs and locally-circulated revenue -- would be more than worth the potential litigation.

A spokesperson with CUPE pointed to a 2007 study contracted by the Grand Rapids wing of LocalWorks, a campaign organization set up to promote sustainable community policies. The study looked at how local procurement dollars flowed through Kent County, Michigan. It found a 10 per cent shift to local suppliers by county companies and local governments could net an extra US$137 million in economic output and create 1,600 more jobs. The county's population size is roughly equivalent to that of the City of Vancouver -- 600,000.

City drops local companies

Some Canadian cities have started to take up the challenge of pursuing local procurement strategies -- so far as food policy is concerned. Toronto City Hall approved a goal in 2010 requiring 50 per cent of its purchased food to be local, said Robinson. Johnston said Vancouver may be looking into implementing something similar.

But Robinson added, "Food is a simple supply chain; it's either local or it's not." In contrast, "Office and cleaning supplies, and other goods, must face direct competition from multinational firms. And they do so at a disadvantage the way the city currently assesses bids on contracts."

Mills says he is still trying to figure out how his company lost their City contract to Grand & Toy, a subsidiary of Office Max.

The "problem with our business is you can quote out 500 items, but you may have 5,000," he said. He added he was still trying to get specifics from the city on which items their competitor offered cheaper.

The lost city contract cost Mills Basics $600,000 in business, Mills said, adding he had to fire three of the company's 100 workers as a result.

"We have our purchasing department here. We have customer service here," said Mills, noting the company operates an eight-person call centre in the Metro Vancouver region. Normally, he said, those services would be centralized in a bigger company, and thus situated out of region.

Unlike Grand & Toy, he added, his company tries to purchase all its supplies from North American manufacturers.

Robinson said businesses such as Mills Basics need to be supported if the city is to achieve true economic and social sustainability.

"If you look at it purely on price, you're not looking at the trickle down effect," said Robinson. "If you save that two per cent on the bottom line of your contract, you're causing unemployment with local companies. They buy from local companies who also suffer if those local companies suffer."

She said Vancouver city councillors have expressed support for pursuing local procurement policies, even if that means taking on NAFTA and other free trade agreements that limit those options.

"But they don't realize what's going on in their own procurement department," she said.  [Tyee]

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