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By James Careless
 

Despite the doom‑and‑gloom of mainstream financial news reporting, there are many North American hot spots that are keeping Canadian exporters busy making sales. Finding them is just a matter of knowing where to look

A case in point: The continued price pressure on oil and gas products doesn’t mean that Canadian exports have declined in this segment — they haven’t. In fact, Canada’s total crude oil exports were at an all-time high of 3.11 million barrels per day, according to the federal government’s National Energy Board (NEB). That is 12.8 per cent higher than January 2014, and 80 per cent higher than January 2010.

The regions that are proving to be hot spots for Canadian crude are the refinery-rich American midwest and, increasingly, the growing refinery base along the US Gulf Coast. The amount of crude shipped to this latter region “increased significantly in 2014, in part due to the commissioning of several pipeline projects such as TransCanada’s US Gulf Coast Extension and Enbridge’s Flanagan South and Seaway Twin,” states the NEB’s April 28, 2015 Market Snapshot report. “The US Gulf Coast is one of the largest and most complex refining centers in the world. It holds significant long-term potential as a market for western Canadian crude oil, particularly heavy grades.”

For non-oil producers, the western and southeastern United States are the markets that are delivering the best sales performance so far this year for Canadian exporters. “In the Western US — from California north to Washington state — the export categories that are strong include  motor vehicles, aerospace equipment, chemicals, finished foods and industrial machinery,” says Paul Ferley, assistant chief economist with RBC Economic Research. “In the southeast, the exports in demand from Canada are relatively broadly-based. The list includes some of the areas of strength evident in the western US such as finished foods, chemicals and industrial machinery, but also includes computer and electronic items, paper goods, chemical products and primary metal exports.”

Michigan is another North American hot spot for Canadian exporters. According to the  Michigan Economic Development Corporation (MEDC), Michigan imported $48.9 billion of products from Canada in 2013, compared to exports to Canada worth $25.9 billion in the same period.

Not surprisingly, transportation products from Canada dominated our 2013 exports to this state, to the tune of $31.5 billion. But Canadian oil and gas ($5.9 billion) and machinery ($3.2 billion) are also big sellers. According to Industry Canada, total 2014 Canadian export sales to Michigan topped $55.6 billion, making the Wolverine State (Michigan’s nickname) number one in terms of all trade sector/per-state Canadian sales. For the record, Industry Canada ranked Illinois at #2 ($52.3 billion), California as #3 ($32 billion), New York state at #4 ($25 billion) and Texas as #5 ($20.5 billion), based on 2014 Canadian total exports.

In contrast, Mexico is Canada’s fifth largest export market (behind the US, China, the UK and Japan), with only one per cent of Canada’s total $474.8 billion exports going there in 2014. (Source: www.worldstopexports.com/.) “This share has been little changed over the last ten years,” says RBC’s Paul Ferley. “Given that the US garnered nearly 77 per cent of this total — followed by China at 3.7 per cent, the UK at 2.9 per cent, and Japan at 2 per cent — there is room for substantial growth by Canada exporters in the Mexican market.”

“To date, Mexico has been a missed opportunity for our exporters,” says Todd Winterhalt, Export Development Canada’s VP of international business development. “This is a shame, because when you get into the Mexican market, you are in a position to reach the rest of Latin and South America, including growing economies such as Brazil.”

Mindful of this fact, CME, EDC and the governments of Canada and Mexico have been working hard to boost trade between these two NAFTA partners. Useful information about these efforts, plus EDC’s informative guidebook Doing Business in Mexico, can be found at the CME website (www.cme-mec.ca/english/cme-go-global/mexico.html).

Clearly, the North American market is delivering results for Canadian exporters, particularly in hot spot regions where Canada’s value proposition of goods and services trump both domestic and international competition. As the US economy continues to recover — and Canadian companies get a handle on selling to the Mexican market and its associated trade partners — the future looks bright for our exporters large and small.

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