Smitheford Pharmaceuticals in the Post-NAFTA Era

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Smitheford Pharmaceuticals was founded in 1878 by Robert Smitheford and had several advantages by owning manufacturing facilities in Canada before the North American Free Trade Agreement (NAFTA). Before NAFTA, the company did not have to worry about the quality of the exported and could export even the low-quality products. Concerning quality, the company only focused on meeting the quality as per the industry or company regulations, and this made their manufacturing easier and cheaper. The introduction of NAFTA came along with numerous rules and quality policies to be met.

The company enjoyed the existence of the Food and Drug Administration (FDA), which was less strict in business restrictions. The FDA was considered less strict than NAFTA because its regulations were not as comprehensive and did not have the same enforcement power. NAFTA was also a comprehensive agreement with detailed provisions affecting a wide range of industries. The FDA, on the other hand, was a regulatory agency with narrower jurisdiction that focused largely on food and pharmaceutical safety. As a result, NAFTA’s provisions were likely to be more stringent and better enforced than those of the FDA.

There were also few regulations regarding the transportation of pharmaceutical products by the firm. NAFTA introduced strict regulations concerning transportation. For example, it later required that all trucks crossing the border between the U.S., Mexico, and Canada be equipped with electronic logging devices (ELDs) by December 2017 (Harrison et al., 2018). Other transportation-related NAFTA regulations include requirements for cargo securement, size and weight limits for commercial vehicles, and hours of Service rules.

According to my judgment, there are several advantages to still having manufacturing facilities in Canada. First is lower costs; the Canadian dollar is currently weaker than the U.S. dollar, which makes Canadian-made products cheaper for U.S. consumers (Elvins, 2020). Additionally, labor costs in Canada are lower than in the U.S., and energy costs are also lower in Canada. Second is the skilled labor force – Canada has a well-educated and highly skilled labor force (Lo et al., 2019). Manufacturing companies can take advantage of this by locating their factories in Canada and tapping into this pool of talent.

Third is quality infrastructure; Canada has a well-developed infrastructure, including roads, bridges, railroads, and ports that can support the transportation of goods and materials. The country has a robust quality infrastructure, which helps ensure that products are manufactured to the highest standards (Barbosa et al., 2017). Fourth is that Canada is located close to major markets in the United States and Asia, which helps reduce shipping costs and time-to-market. Finally, Canada offers several incentives for manufacturers, including research and development tax credits, capital cost allowances, and grants for business expansion (Dai et al., 2020). These incentives make it more affordable for companies to maintain or expand their operations.

Moreover, road construction has been taking place because there are still many manufacturing facilities located in Canada. While this may be seen as a disadvantage by some, it is an advantage for several reasons. First of all, having these manufacturing facilities located in Canada means that jobs are still available (Lafuente et al., 2017). Similarly, having these factories here means that the products they produce can be shipped more easily and quickly to other parts of the world.

Furthermore, the job creation due to having manufacturing facilities still in Canada as an advantage is twofold. First, the jobs that are directly related to the manufacturing process itself, such as assembly line workers, engineers, and managers. Second, the jobs that are created as a result of the increased economic activity around the manufacturing sectors (Lafuente et al., 2017). Not only does it provide jobs directly, but it also creates a ripple effect throughout the economy as people spend their money on other goods and services. This aids in spurring economic growth and creates even more jobs. Additionally, it helps keep the country competitive globally by providing manufacturers with easy access to North America’s markets.

References

Barbosa, F., Woetzel, J., & Mischke, J. (2017). . McKinsey Global Institute. Web.

Dai, X., Verreynne, M. L., Wang, J. H., & He, Y. (2020). . R&D Management, 50(4), 510-521. Web.

Elvins, S. (2020). . Canadian Historical Review, 101(4), 497-521. Web.

Harrison, R., Matthews, R., Voorhis, C., & Mason, S. (2018). . Austin, USA: U.S. Department of Transportation. Web.

Lafuente, E., Vaillant, Y., & Vendrell-Herrero, F. (2017). . International Journal of Production Economics, 192, 19-28. Web.

Lo, L., Li, W., & Yu, W. (2019). . International Migration, 57(3), 317-333. Web.

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