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The Americans are our greatest trading partners, as we are theirs. So where are plastics-related trade relations going in 2004?
Currently, 92 per cent of Canadian plastics products land in the US. But industry is facing a number of challenges such as higher value for the Canadian dollar, reduced demand, excess capacity, intense downward pressure on prices, the integration of the North American market and increased global competition.
America drives Canadian manufacturing industry. In 2003, total plastics related trade with the US (imports and exports) at $1.8 billion far exceeded trade with all other countries combined. The US is Canada's leading trade partner for tool, die and mould production (TDM).
To date, most of Canada's TDM production is exported to the US automotive sector. Yet, an increasing share of the automotive market (68 per cent of Canadian TDM shipments) is dominated by newer, foreign-owned automotive manufacturers that tend to source tooling from their home (non North-American) countries. As the new domestics' share of automobile production increases, Canadian TDM firms may face a further decline in demand.
"Canada is the second largest exporter of moulds after Japan, but we have to maintain that position," says Paris Shammas, vice-president, business and economics, with the Canadian Plastics Industry Association (Mississauga, Ont.) "We're dependent on the US but that's not a bad thing when that trading partner has the worlds largest economy, a high standard of living and shares both a border and a language."
"If we want to trade with the US, they are the bosses, unless we start learning to trade with more of the world," says Ron Wingelaar, association consultant with the Canadian Association of Moldmakers, (Windsor, Ont.)
Canada's appreciating dollar, which rose over 20 per cent against the US dollar in 2003, affected everything from the price of raw materials to machinery, although labour is paid in Canadian dollars and our universal health care system is an advantage.
While it's true that no firm can control currency fluctuations, it can act to mitigate the effects. For example, some firms hedge through banks, others budget based on an 80-cent dollar. Experts suggest it's time the small and medium-sized firms learn how to use the foreign exchange markets or banks to hedge.
"It would be...