For the last 30 years, global supply chains have been a force for peace, poverty reduction in emerging markets, and consumer good affordability in developed markets.

But recent events have exposed the risks of their indiscriminate use.

In the last 12 months, most G-7 countries have had difficulty securing personal protective equipment for their health workers or the ingredients necessary to make even the most basic and widely used drugs. In the last couple of months, computer chip shortages have caused many car plants to shut or slow down.

On February 18, 2021, CNBC reported that US President Biden is preparing an executive order to look into some US supply chains and determine the risk they pose to the ability of the US to respond to emergencies or provide for its national security. The order will examine a variety of supply chains including medical supplies, rare-earth minerals, batteries and computer chips.

Other countries are similarly reviewing the matter and whether changes are required. In Canada, the federal government and several of its provincial counterparts, including Quebec, have recently invested in domestic manufacturing facilities or signed long-term supply agreements with local manufacturers.

While some solutions will be national, others will need to be regional. For example, Quebec has abundant supplies of many critical and strategic minerals and recently adopted a comprehensive plan to mine and process such minerals, including into batteries for electronic and automotive applications. Quebec hopes to become a trusted supplier of the US.

But there is a more fundamental reason why local manufacturing is essential. 

Robots and artificial intelligence (AI) are expected to play an ever-increasing role in our economies. While the introduction of robots and AI will have a productivity effect and free workers to do other things, including manufacture, install, operate, repair and recycle robots, most observers, including the International Labour Organization, a UN agency based in Geneva, expect robots and AI to have a greater displacement effect. Put simply: jobs will be lost to robots and AI. Moreover, it is expected that such job losses will affect workers with mid-level skills, as well as younger workers or workers reentering the workforce.

Local manufacturing is not only a way to ensure that the state is able to respond effectively to emergencies and protect itself, but it is also a way to preserve skills and foster innovation. Most importantly, a robust manufacturing sector can also preserve jobs and reduce the speed at which robots and AI will impact society, giving governments time to adopt and implement mitigation measures such as supplemental income schemes.