Blog

If NAFTA collapses, will the outcome mean the end of Canadian Manufacturing?

Canada, USA and Mexico have a long history of business relationships and cross border interactions that in many cases have been reciprocal and been advantageous to some and not so much for others. In a general sense, this is no different than working within a smaller geographical area exchanging in business relationships that are based upon the same value principles, supply and demand, and the economic drivers that facilitate those relationships.

For as long as I can remember the value perspective, the quality, the delivery, the service and the capabilities of a supplier or the products we produce and offer to market must meet the expectations of the customer meeting their  value objectives.

Sure trade tariffs, duties and the hassles associated with those transactions are considered but once a process is established those inconveniences quickly disappear as a simple administrative process. The challenges of currency exchange rates themselves can have a bigger impact on cross border business relationships. Poorly timed marketing can certainly present a barrier to developing business and properly timed can be an advantage. Duties or tariffs are generally stable, known and predictable where as currency values are constantly changing and sometimes challenge the boundaries of profitability.

For companies the decisions of the Government (both Federal and Provincial and State) have a larger impact on our ability to compete and sell into the markets both domestic and out of country. Energy rates have certainly been in the news and to no surprise of any business in the Province of Ontario, the uncompetitive energy rates clearly a result of provincial policy and mismanagement that has proven a huge burden in being competitive versus the same operation in a State like New York, or the Province of Quebec, for example. New policies on wages and benefits are impacting many of us both directly and indirectly. US policy makers seem more receptive to being open for business presently while Canadian policy makers seem more intent to be social peacemakers and let business swim the tide alone while chucking a few weights on our backs for good measure.

The fears of retaliation put forth by our policy makers with our traditional partners combined with the news frenzy and fear mongering of media noting only outside business challenges, new tariffs, and duties simply exacerbate the hype that leaves the market cautious and puts barriers up where they are not needed or beneficial. Reciprocal business relationships exist for us on all sides of the border as we also purchase materials from outside of Canada as the value of those products and services warrant those decisions. In the end we all win.

Business challenges exist both internally and externally and to blame or fear the outcome of NAFTA negotiations alone is a poor management decision. As a Canadian manufacturer we have certainly experienced potential customer responses from within Canada that simply won’t entertain doing business with another Canadian company based upon their perception of cost. Often we see them call on us later on to solve their problems associated with their decision to seek low cost over value. We also have customers from the USA for example that certainly see the value and are regular and repeat customers.

Companies that invest, modernize, automate and re invent will benefit long term. International Metal Parts, a division of Precise Castings Inc. is in itself re inventing where we came from and where we can go as a company .

NAFTA, in its present form, modified, or non- existent is a business factor we will just have to deal with but by itself, whatever happens, manufacturing will continue.