Benefits of local procurement validated

14 June 2013

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15 June 2013 | Helen Gilbert

Purchasing goods from local suppliers can create nearly double the benefit to the local economy as buying from multinational chains, a Canadian study has revealed.

Researchers from the Columbia Institute think tank, business group LOCO BC and the ISIS Research Centre at the UBC Sauder School of Business analysed office supply companies in the Canadian province of British Columbia to determine whether there was an economic difference when buying locally or from the multinationals.

They discovered that Mills Basics, the local office supply company, re-circulated 33.1 per cent of its revenue directly to residents and businesses in British Columbia (BC), compared to between 16.6 and 18.7 per cent for their multinational counterparts.

This provided between 77 and 100 per cent greater benefit to the local economy and was shown to lead to almost twice as many jobs created in the BC economy per dollar of revenue, the findings showed.

The authors of the report said the increased impact occurred because local companies hire more local labour, give more money to local charities, distribute more of the profits from their operation locally, and buy more goods and services from local suppliers. 

“While OfficeMax and Staples, the multinational companies examined, do have sales, warehousing and delivery staff located in BC, Mills Basics also bases its management, customer service, purchasing, marketing and administration operations in the province,” the report stated. “Because Mills Basics is locally owned, its profits earned also remain in BC.”

Joanna Buczkowska, managing director at the Isis Research Centre, said: “When local purchasing dollars are re-circulated in the local economy they create good jobs and build local business. It is a very meaningful way of growing local economies while supporting our communities.”

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