The COVID-19 pandemic has called into question some basic business theories that have long held sway in western economies.
One of them is the effectiveness of clusters, a theory advanced by Harvard’s Michael Porter 25 years ago. It argued that like-minded industries should be concentrated in one geographic area to create synergies.
But one thing we learned in recent days is that concentration has its downside too.
When the Ambassador Bridge was closed, it was a matter of only days before the auto industry was on the verge of shutdown as supply chains were interrupted.
Had the auto industry been spread out – not clustered in southern Ontario and Michigan – supplies would have found their way to plants on less congested or vulnerable routes.
Back in the 1980s, then-deputy premier, Eric Bertnsen, made a pitch for Toyota to ignore Ontario and set up a plant in Saskatchewan.
While he came close, it didn’t work back then but this may be a strategic time for a province like Saskatchewan to argue it’s time to start rethinking whether so much of Canada’s manufacturing should be in one place.
