Canadian, US Companies Embrace Lower Barriers
CANADA'S current tourism advertising campaign in the United States urges Americans to visit "The world next door." That's just what American and Canadian business people have been doing - visiting and expanding exports in each others' backyards.
Taking advantage of the 1989 Canada-US Free Trade Agreement (FTA), US exporters have boosted their sales in Canada in the first half of the year to $47.1 billion. That's up 8.9 percent over the same period a year ago. Canadian exports to the US were $54.8 billion, up 10.7 percent.
Canadian exports overall were up 8 percent in the first six months, a bright spot in an otherwise lackluster economic picture. US companies, hard pressed by domestic competition in the 1980s, are looking north to Canada's 27 million consumers.
"We're pretty excited about Canada now," says Jonathan Nash, a sales manager of ChildLife Inc., the nation's oldest manufacturer of wooden children's swing sets and climbing sets, in Holliston, Mass. "Deep down inside we always wanted to do something with Canada. But during the 1980s we were doing all we could to hang onto US market share. Since 1989, though, we've had some good success in Canada."
Like many private companies wary of competitors, Mr. Nash won't release sales figures, but says Canadian sales have gone from zero to a significant part of the firm's marketing plan, mainly because of the FTA's lowering of tariffs.
"We've seen the potential size of our market double almost overnight," Nash says of the FTA's impact. "NAFTA would eliminate that crucial final [tariff] barrier" that still ranges from 5 to 17 percent, he says.
John Driscoll is another American exporter discovering Canada. The entrepreneur has built a $25-million worldwide export business on a hand-held air-pollution-detection device he and his partners pioneered in 1973.
"The Canadian market is a difficult one for us anyway because of its huge geography," says Mr. Driscoll, president of HNU Systems Inc. in Newton, Mass. "We began exploring the UK and Canada around 1975. We knew if we didn't do something overseas, we were really going to lose out."
DRISCOLL says that even though Canada quickly came to represent 6 to 7 percent of the company's sales, Canadian sales languished as other markets grew. That changed in 1988. Partly because of the FTA, Driscoll set up a sales office in Toronto. Sales have blossomed, he says.
One of the most difficult aspects of doing business in Canada prior to the FTA, Driscoll says, was the unwillingness of Canadian authorities to allow an HNU repairman to bring tools into Canada to fix sophisticated equipment. The FTA has eliminated that problem.
Canadian companies, while a little wary of venturing into a hotly competitive market, also see a good sales potential in the US. Energized by competition with US companies, many are struggling and winning.
"Our exports are up about 25 percent in past two years," says J. L. MacMillan, president of PPG Canada Inc., a maker of windshields, coatings, and chemicals. "That progress is not limited to - but it does include - the US market. Canadian exports overall have actually increased in spite of the downturn."
Other Canadian exporters to the US are enthusiastic, but hardly sanguine, given the poor state of their domestic economy and the fact that further growth of Canadian exports (77 percent of Canada's total so far this year) depends on US economic trends.
"Our business is up, and our export sales to US have contributed to that," says Glenn Paton, vice president of finances at Hayes-Dana Inc.