Staff and council are looking at the City of Nanaimo’s procurement policies during the tariff tiff between Canada and the United States.
As the trade war landscape changes almost daily, the people who manage Nanaimo’s procurement of supplies are working to soften the impacts of tariffs on costs and are also trying to buy from Canadian suppliers whenever possible.
“Management is taking proactive steps to mitigate the impact, as much as possible, on the city’s supply chain,” said Wendy Fulla, the city's director of finance, when she presented a report on how the city is responding to retaliatory trade tariffs between Canada and the U.S. at a finance meeting Wednesday, March 19.
She said an analysis of 1,038 vendors shows the city only directly procures from 13 U.S. vendors.
Coun. Janice Perrino, asked if the city was expecting higher costs for materials needed for projects, and Jane Rushton, city manager of supply chain management, said decisions will need to be made as projects get underway. There could be hurdles to overcome, such as possible delays for supplies coming north of the Canada-U.S. border.
“Progress versus cost versus quality is something that you have to look at on a continuous basis as you’re going through a construction project,” Rushton said.
Perrino also wondered if the city was stocking up on some supplies in anticipation of projects as a way to get around tariffs or preparing to pre-order more materials than the city may already be doing.
“I think that’s the ‘hoarding question,’ isn’t it?” said Nanaimo Mayor Leonard Krog.
“I prefer the word ‘stockpile,” Rushton said.
Dale Lindsay, the city's chief administrative officer, said the city tries to procure materials at fixed prices whenever possible.
“How will this impact capital projects, significant projects, moving forward? The short answer is, we don’t know,” he said. “Obviously we’re concerned. I think, even writing a report like this, it’s difficult because the news changes every 12 hours on where we are going to be with tariffs, so I think it’s fair to say at this point, any kind of escalation of the trade war has the potential to negatively impact the costs of delivering projects and that’s something we’re going to have to keep a close eye on.”
Coun. Paul Manly asked where the city was buying steel pipe from and Bill Sims, general manager of engineering and public works, said most steel piping comes from the U.S. or from overseas.
“Quite frankly our preference, to date, has been steel from the U.S. because we can be assured of quality…" he said. "I think you can surmise that anything that is made of steel is going to be impacted.”
Manly noted the City of Toronto changed its procurement polices to award competitive contracts for goods and services under $350,000 and construction contracts under $8.8 million exclusively to Canadian suppliers and asked if that was not a violation of the Canada-U.S.-Mexico Agreement.
Rushton explained that existing trade agreements are still valid, but there is latitude within trade agreements that allow governments to deal exclusively with Canadian suppliers below funding thresholds that are set regionally across Canada. Ontario is operating within its free trade agreement thresholds for that region, so isn’t in violation. Nanaimo operates under the more stringent trade investment mobility agreement between B.C., Alberta and Saskatchewan.
Coun. Ben Geselbracht asked if the city was, within trade agreement thresholds, still prioritizing suppliers offering “best cost value” over local providers and if that could help offset market share lost to tariffs.
“I think the conversation is still ‘best value,' but best value sometimes is local … because it takes less time, less manpower, so you are getting best value,” Rushton said. “When I did the analysis it was interesting to see that 21 per cent of our current contracts are based in the Nanaimo city limits. That, to me, is a significant number. I think being on the Island helps because there’s a cost every time we cross that body of water. I think we’re doing quite well in terms of what we’re contracting for.”
She said the city's decisions around purchases and contracts are often based on established relationships.
“If you’re getting a good-value relationship you just like to continue because you don’t have to reinvent the wheel,” she said.
