Business

Winnipeg Free Press - PRINT EDITION

Companies turn toward overseas markets

By: Staff Writer

Posted: 10/19/2012 1:00 AM | Comments: 0

CANADIAN manufacturers are feeling optimistic about their futures as they foresee a sales shift over the next three years toward Europe and developing countries such as China, India and Brazil, a study released Thursday by their industry's main association reports.

Sales within their home provinces, to the rest of Canada and to the United States will remain the dominant markets for Canadian goods, but most companies expect to expand their reach to other markets, the analysis found.

"Companies expect globalization pressures will propel a shift in where they do business," says a survey of 649 Canadian companies, released by the Canadian Manufacturers and Exporters association.

Asked where their customer base is located today, 89 per cent of the respondents said it was in their home province. In three years, however, the number is expected to fall 17 points to 72 per cent. Similarly, 84 per cent of respondents said their supply base was in their home province. In three years, that's expected to drop to 68 per cent.

In Manitoba, 91 per cent of respondents said their customer base today is in Manitoba, but only 79 per cent of them said they expect that to be the case three years from now. Like their other Canadian counterparts, they expect to have more customers in foreign markets such as Mexico, Europe, China, India and Brazil.

The study indicates Canadian and Manitoba companies also expect more of their supplier base will be outside Canada, with low-cost China, India and Eastern Europe growing.

The United States was identified as their biggest foreign customer and supplier base at the moment, although its importance is expected to decline slightly from current levels.

"This will begin to transition in the coming years, as the U.S. market is expected to remain weak and companies ramp up their search for new offshore customers," said the survey released Thursday.

Small companies said developing new markets is key, while those with more than 500 employees identified supply-chain management and logistics, cost and availability of raw materials and regulations as large challenges. Inter-provincial trade barriers was the least common concern.

Despite political promises to facilitate an improvement to cross-border trade, 34 per cent of Canadian companies said Canada-U.S. border regulations and security have worsened, compared to eight per cent, which claimed an improvement.

Respondents in most provinces said the most pressing challenge facing Canadian companies is increased competition in their primary markets, followed by the strength of the Canadian dollar, attracting/retaining labour and global economic conditions.

In Manitoba, the top three challenges cited were increased competition (64 per cent), attracting or retaining workers (63 per cent) and the strength of the Canadian dollar. (42 per cent).

-- The Canadian Press,

with files by Murray McNeill

Republished from the Winnipeg Free Press print edition October 19, 2012 B4

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