After several years and a few false starts, the United States is poised to be a land of opportunity for Canadian exporters once again.
“Our biggest trading partner has ideal proximity, a familiar business culture, a common language, integrated transportation networks, a free-trade agreement, and an environment that’s very comfortable for Canadian exporters, especially those just starting out,” says Stuart Bergman, EDC’s Assistant Chief Economist. “And right now all systems point to growth.”
Despite a brief pause early this year, due to excessively cold weather, retail sales in the U.S. are on a remarkable trajectory up. Consumers, having successfully deleveraged, are now in a position to begin spending again. At the same time consumer confidence, which fell below levels typically associated with recessionary periods, is rising, indicating a psychological optimism that the economy has finally turned the corner.
A great example of pent-up demand is in the U.S. housing market. Throughout the recession, Americans held off buying new homes. With U.S. population growth requiring 1.4 million new homes annually, there is pent-up demand for new home construction as well as all the goods and services that come with it, driving requirements for infrastructure, consumer products, appliances, vehicles and skilled labour, just to name a few.
Creating the perfect storm, Bergman adds that the softer loonie, currently hovering just above the 90 cent-mark, versus the American dollar, is another boon to exporters, making Canadian exports very competitively priced. Moreover, the loonie is expected to lag behind the American dollar for some time due to soft commodity pricing, which help drive the value of the loonie.
Which is not to say the Canadian companies shouldn’t continue to diversify. While the U.S. market holds promising opportunities for Canadian exporters, adds Bergman, the lessons learned from 2008-2009 cannot be forgotten. “Canadians have been diversifying into non-traditional and emerging markets, and this is the best strategy to protect against downturns and provide growth.”
Promoting Canadian capabilities to the U.S
To help Canadian companies reach their full potential in the U.S., EDC recently appointed Gary Brown as the new Chief Representative for the market. Brown is currently reaching out to the American banking community and Trade Commissioner Services as a first step in developing a comprehensive market strategy.
“We’re proactively looking for business and promoting Canadian capabilities to the U.S. market, and demonstrating to U.S. buyers that we can fulfill their needs through matchmaking, financial support, and our knowledge and connections,” says Brown. “We’re building a network and increasing awareness that EDC can bring them the products and services they need to meet demand.”
Canadians need to get busy
To take advantage of this growth south of the border, Brown advises Canadian companies to get busy. “We need to ensure we have everything ready to fulfill this new business. It’s time to look at whether you need to invest in infrastructure, equipment or training, and strategize how you’re going to ramp up capacity.”
“You can get that conversation started now, to understand what stage you’re at, what your goals should be, and how EDC and your bank can help,” says Brown. “We can introduce you to potential buyers and the associations we work with. We can help—just get in touch with us.”
Coming soon, Exportwise.ca will examine the opportunities in the various regions of the U.S. market