Buying office supplies from local distributors would provide the biggest bang for the government’s buck for a local economy.
A report released earlier this year by the Columbia Institute, LOCO BC and UBC’s Sauder School of Business compared the local economic impacts of office supply purchases between Vancouver-based Mills Basics, Illinois-based OfficeMax Grand & Toy (NYSE:OMX) and Massachusetts-headquartered Staples Inc. (Nasdaq:SPLS).
It suggested that the B.C. economy would see a 77% to 100% increase in activity associated with office supply procurement if governments, school districts and other institutional buyers bought from a B.C.-based company instead of their international competitors.
Specifically, the study found that Mills Basics recirculated a third of its revenue in the local economy directly to residents and businesses in B.C. compared with 18.7% of OfficeMax’s local revenue and 16.6% of Staples’ revenue.
The bulk of the local economic boost comes from a higher proportion of a supplier’s own wages and services being procured locally. A hypothetical $1 million procurement contract, for example, would generate an additional 3.6 local jobs compared with 1.8 to two jobs from the multinational firms.
The local firm also provides five times more of its revenue to local charities than the other chains.
One U.S. study found that a local Arizona-based office supply firm recirculated 22.6% of its revenue in the state compared with 12.9% of revenue of a national competitor.
Local procurement is a major expense for B.C. governments and school districts. According to Statistics Canada, local government in B.C. spent more than $9.5 billion on goods and services in 2009. The paper argues that local purchasing doesn’t just create local jobs and wealth, but can also be more effective than other economic development initiatives because of its longer-term benefits. It noted that U.S. firms tend to have local purchasing preferences to increase local procurement, whereas Canadians tend to emphasize values-based preferences like buying from sustainable or ethical sources. •
