A More Competitive North America Won’t Happen by Accident
STORY INLINE POST
A year ago, I was asked what the most important aspects of business are that will effectively contribute to a post-pandemic economic recovery in North America. My answer? Communication, collaboration, and transparency across our borders. In the past 12 months, demand for these attributes has increased substantially. Nearshoring, clean energy transformation, the USMCA, supply chain resilience and workforce development — the most critical areas that can increase our strategic competitiveness as a trade bloc — require us to cooperate to find innovative solutions and best practices that can be implemented in all three countries.
In any newspaper or industry publication you read today, the word “nearshoring” is likely to appear multiple times, more so already this year than any other in recent history. It has been hailed as the miraculous solution to the economic downturn and supply chain uncertainty. While no doubt moving overseas operations to continental locations allows companies to have greater visibility and improved theoretical “control” of their manufacturing and logistics, many of these automation solutions are not pre-packaged in Mexico. There are indeed decades, nearly a century, of cross-border collaboration experience in Mexico in some sectors, including automotive, which Ford began in 1925. Others will be starting from scratch. Success is dependent on many factors, the least of which will certainly not be the ability of expat or relocating management teams to communicate with host governments, local business leaders, and implementation teams. In today’s New York Times podcast, Why ‘Made in China’ is Becoming ‘Made in Mexico, Peter S. Goodman, global economic correspondent, mentions that the “gap between bosses in China and on the ground” when it comes to understanding local workforce culture will continue to be a growing risk.
The rest of the articles in that publication you’re reading, whether industry magazine or business journal, will almost certainly contain articles on renewable energy transformation or the transition to electric vehicles. To meet projections, the mining of critical minerals and mining production, in general, must increase exponentially. According to The Center for Strategic & International Studies (CSIS), “The World Bank projects the need for a 500 percent increase in graphite, cobalt, and lithium production by 2050. In 2022, one estimate claimed that approximately 700 million metric tons of copper would be needed over the next 22 years to reach sustainable economic growth targets—roughly the equivalent to what has been mined over the past 5,000 years of human history. Still other projections find that more than 300 new mines extracting critical minerals will be needed by the year 2030 to prevent a crippling supply shortage.”
Each of the three North American countries have announced strategic plans and specific binational and multinational agreements to meet the growing demands of energy transformation while at the same time reviewing sustainable development goals (SDGs). The documentation on the execution of said strategy agreements exists in varying degrees of specificity and little information exists at the implementation level today. The increased activity and focus on mining operations and their supply chains will create a greater impact on the communities in which mines operate. Canada’s Critical Mineral Strategy places considerable emphasis on inclusivity in workforce development and representation of indigenous populations (honoring them by name), women, and LBTGQ+ community members. All voices and perspectives will be required to find sustainable solutions that treat humans and the land equitably while processing the necessary quantity of essential minerals.
If we consider the fact that, in some cities and towns across the continent, we rarely speak to or haven’t met our neighbors, how can we expect to build the numerous well-performing multicultural teams required to handle these complex operations without a concerted effort on and agreed KPIs to improve communications skills? It stretches my conceivability and as a company and evangelist for intercultural strategy across the planet, you would be hard-pressed to find a bigger optimist on this subject.
To underscore the potential escalation of lack of communication, we can look to a high-profile case in point. The US has argued that President Andrés Manuel López Obrador’s energy policies have affected its companies’ investments and violated several provisions of USMCA. Tec de Monterrey Prof. Ruiz Cabañas, who is also a former Mexican ambassador notes, “Therefore, it is not surprising (they) requested official consultations (on July 20, 2022) under the treaty’s dispute settlement mechanism.” On July 21, one day after this statement issued by the US, Canada also expressed concern over “policies that are inconsistent with Mexico’s obligations under USMCA.” Even though the dispute could cost Mexico an estimated “$30 billion in retaliatory tariffs on Mexican goods imposed by the US and Canada,” the subject was not discussed at the North American Leaders’ Summit (NALS) that took place in January in Mexico City.
Guillermo Garcia Sanchez, from the Texas A&M University School of Law, continues: “The active engagement of the governments marks the first time that foreign powers have retaliated against Mexico’s energy policies since 1938, when Mexico expropriated foreign oil and gas companies. It also marks the beginning of a regional trade conflict – in the midst of a global pandemic, the Russian-Ukraine conflict, unsettled energy markets, and global inflation that has reached its highest levels since the 1970s.” The options for the Mexican government are to respect the USMCA or remain steadfast in its energy policy, which would effectively eliminate foreign investment in the energy market. It would be detrimental to North American energy supply should this dispute be taken to a panel for the decision on how to interpret the USMCA, but in the meantime, there isn’t much else for the international business community to do besides their best at “business as usual” when very little is “usual.”
For the rest of us, who have been operating in uncertainty for years before the pandemic that brought operations and business worldwide to a screeching halt, we have a choice. We can continue our policy of “ignore thy neighbor,” or we can seek avenues of communication and understanding across our borders and within our communities. Through the numerous binational, global, and multinational business associations that exist for the sole purpose of bringing us together in the expectation that familiarity breeds innovation and expands business, we can act accordingly by making the effort to understand one another on a deeper level. We can avoid superficiality in a genuine attempt to relate to another’s perspective. Start with curiosity to find one common point of connection and go from there. Be a diplomat. Welcome another into your circle. None of this is difficult but merely a matter of adjusting to behavior beyond automated networking chats and elevator pitches that are monologues. There is great value in human connection waiting to be uncovered in your next conversation. Be an explorer. You will be rewarded for your efforts. "Every human is like all other humans, some other humans, and no other human.” — Clyde Kluckhon