Weak links in the sup­ply chain

The Compass - - EDITORIAL - Rus­sell Wanger­sky Rus­sell Wanger­sky is TC Media’s At­lantic re­gional colum­nist. He can be reached at rus­sell.wanger­sky@tc.tc — Twit­ter: @Wanger­sky.

When I was a kid in Hal­i­fax and the wind was just right, some morn­ings, I’d get a tang of the Dart­mouth oil re­fin­ery. Not all the time, just on warm, damp, grey days when the wind was back­ing away from its usual di­rec­tion.

When the wind was that way and the sky smelled like spilled oil, peo­ple in my neigh­bour­hood used to use the old line about pa­per mills: it may be a bad smell, but it’s the smell of money.

Money, be­cause peo­ple were work­ing. Money, be­cause it was the type of man­u­fac­tur­ing that helped not only oil work­ers, but in­dus­trial equip­ment sup­pli­ers, lo­cal trades­peo­ple and ser­vice in­dus­tries. That re­fin­ery, like many smaller re­finer­ies, wasn’t cost-ef­fec­tive and shut down in 2013, and Nova Sco­tians now de­pend on tank farms and the long-dis­tance de­liv­ery of ga­so­line by tankers. (In the process, it was es­ti­mated that 200 work­ers and 200 con­trac­tors lost jobs at the re­fin­ery, which was over 90 years old.)

It was part of a broader trend — be­tween the 1970s and 2012, the num­ber of re­finer­ies in the coun­try dropped from 40 to just 19.

I thought about that this week­end when news broke about the sud­den and se­ri­ous ga­so­line short­age in Nova Sco­tia. Scores of gas sta­tions across the province were left with­out fuel af­ter two tankers showed up with fuel that was un­suit­able for the Cana­dian mar­ket and another tanker was late; at least, that’s the most per­sua­sive of the sev­eral ver­sions of what caused the short­age.

Welcome to the per­ils of be­ing at the end of the sup­ply chain. When and if that chain breaks, there isn’t a safety net.

The bot­tom line? If you de­cide to stop mak­ing a prod­uct lo­cally, you run the risk that it might not make it to where you need it, when you need it. Shed lo­cal pro­duc­tion in favour of long trans­porta­tion routes, even if it’s cheaper, and you leave your­self at the mercy of those routes.

It’s a les­son that’s fa­mil­iar in New­found­land and Labrador. The is­land por­tion of the province used to be self-sus­tain­ing in root crops like potato and turnip. Cab­bage, also. But the pro­vin­cial gov­ern­ment closed down co-op­er­a­tive cold stor­age fa­cil­i­ties and su­per­mar­kets be­gan to im­port root crops from cheaper, dis­tant mar­kets.

The re­sult is that even the slight­est in­ter­rup­tions in the Gulf of St. Lawrence ferry and trans­port sys­tem is re­flected on gro­cery store shelves al­most im­me­di­ately with short­ages of pro- duce. Meats — pork and beef, be­cause the is­land still has a ma­jor chicken pro­ducer — fol­low quickly.

Some ar­gue that the province has only a few days’ worth of food sup­ply. While some peo­ple talk about food se­cu­rity, the sim­ple fact is that New­found­land doesn’t re­ally have any. Labrador is equally at the mercy of ship­ping routes, but with even shorter ship­ping sea­sons.

What’s es­pe­cially in­ter­est­ing about the Nova Sco­tia case, how­ever, is the fact that many peo­ple have no time for the of­fi­cial ex­pla­na­tions for the short­age. With gas prices fall­ing, con­sumers ques­tioned whether there’s a con­spir­acy to some­how avoid giv­ing them a break.

And that con­spir­acy fear demon­strates how quickly price is used as the sole de­ter­mi­nant of value.

Some­times, there are ac­tu­ally rea­sons for pay­ing more.

Cheaper isn’t al­ways bet­ter, es­pe­cially if it means long-dis­tance travel for goods.

If you make all of your de­ci­sions based on what’s cheap­est with­out re­gard for the hur­dles in­volved, you have to be ready for in­ter­rup­tions. You get what you pay for.

Gas whole­salers in Nova Sco­tia have been pretty blunt: it’s go­ing to hap­pen again. They are es­pe­cially con­cerned about the po­ten­tial for ship­ping in­ter­rup­tions dur­ing hur­ri­cane sea­son.

The only thing that’s more ex­pected than con­spir­acy the­o­ries? The idea that the gov­ern­ment should step in and im­me­di­ately fix things. Good luck with that. Gov­ern­ments ap­par­ently can’t even keep a potato cold stor­age fa­cil­ity open, let alone run a ga­so­line tank farm.

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