by PAUL RAYNER

For some, the recent surging of the Canadian dollar is a bad sign.

For those who like cross border shopping, are involved in imports, or have an unusual attachment to national pride, recent developments of the loonie versus the US greenback are positive developments. The Canadian dollar has closed the gap with the American buck over a period of many months. Most recently, it has hovered at par or even slipping into a more-than position for a period. This can be damaging for many Canadian businesses, including those locally.

This is true for Western Archrib of Boissevain. Manufacturers of many lumber products such as crossarms, structural lumber and glulam, they have developed a large export base for their work south of the border. According to vice president Al Pearen, the situation with the dollar can have a negative effect.

“We have seen the dollar come up,” Pearen said, “and it definitely has an impact. It has increased 15% in the past few months. Obviously, it has good and bad points. For anyone buying in the US, it can be positive, but if you sell you are at a disadvantage. For us, it certainly makes it a little more difficult to compete in the US.”

To put it simply, when the Canadian dollar is lower than its US counterpart, it makes Canadian products cheaper for export. Customers pay less for the north of the 49th product than they do for their own. When the gap is closed, or it turns the other way, that competitive advantage disappears.

The situation is difficult, as unlike other spikes or declines, the reasoning for the disappearing money gap is more twofold than normal. The Canadian economy is fairly robust at this point, particularly in the resource sector. The US economy is struggling for various reasons, in part due to the combination of American government decisions to combine high debt loads, particularly through the war, and tax breaks, which cut revenues. Pearen said the housing sector south of the border is in particularly bad shape, which has its ripple effects.

He said normally their strongest markets in the United States are in the Upper Midwest, states like North and South Dakota, Minnesota, Michigan and Ohio, although they also have done projects as far as Texas and New York. One of the interesting parts of a dollar fluctuation is the impact of moves in between bidding for a job and getting it.

“You are always working in US funds, to be successful in that market you work in US funds. If the dollar moves much in between the time you bid and get the job, it can have an effect on the bottom line either way.”

However, Western Archrib can and has made moves to help their situation. At its zenith, their export to the US was as high as 75% of their output. Now, it has been dropped to about 45%.

“The dollar was creeping up for some time,” Pearen explained. “We have been working on this for some time. Our export percentages have been dropping. No one was predicting it to happen this fast. Economists were predicting a 90 cent dollar at year-end three weeks ago, and I don’t know what they’re predicting now. But we had been working on this.”

He said they have bulked up their Canadian work in response to the developing situation. Western Archrib in Boissevain was always serving Manitoba and Eastern Canada. They have also been working with the office in Edmonton to start shipping product out west, particularly to the hot spots of Alberta and BC.

“We have a good work file right now, and we are stronger in the Canadian market. Fortunately for us, there is a lot more work in Canada.”

As well, he said they were fortunate to be in the specialty manufacturing side of the coin. The commodity part, i.e. supplying the lumber, is taking a bigger hit.

“I’m glad we’re where we are right now,” Pearen stated. “We are stronger domestically and not on the commodity side, where the mills in Canada have to sell cheaper. We will not be scrambling looking for work.”

Another Boissevain business effected by currency shifts is Glover Equine Products Ltd. Manufacturing an array of horse related products like blankets, coolers, halters and accessory bags, they traditionally sell about 30% of their product to the US, participating in specialty market shows in both Canada and the US. According to Barb Glover, the changes have not yet had an impact.

“We haven’t felt it yet,” Glover said, “I imagine for anyone who sells a lot to the States, it will be a problem if it stays up too long. I’m not sure what to think right now. It depends how long it lasts.”

She said they might start to see it when they go down to a market in Denver this January. They sell to the US from both markets and through their Internet site.

One area where Glover’s could see a benefit is from inputs. Many items like hardware or fabrics come from the US, so they are cheaper when the dollar is higher. Whether it balances with the negatives is a question difficult to answer.

It has been 30 years since the Canadian dollar reached this sort of high. Pearen said Western Archrib (or Drings’ as it was known at the time) was not heavily in the US market then. When they entered it, the difference was about 10% before the Canadian dollar did its nosedive. For Glover, this is completely brand new.

“We didn’t start the business until 1982,” she explained, “I liked the other side a lot more. Not only for us, but it kept Canadians shopping at home.”

Like Western Archrib, Glover feels a possible answer is through a more national focus.

“I think we can dig deeper into the Canadian market. There is probably more potential in Canada now and less in the States.”

As for the dollar situation itself, Pearen is wary of any move from government.

“The high dollar effects a lot of people,” Pearen explained. “It hurts manufacturing, tourism and retail to some degree through people shopping across the border. If the effect is too big, it’s going to hurt people. But I think everyone has to remember the pluses and minuses of a high Canadian dollar. Imports should be cheaper, although we haven’t seen that yet. The market will sort itself out if left alone, sometimes the worst thing you can do is to try to change things.”

As for Western Archrib itself, Pearen says they will survive.

“We’ll be here. The position is definitely causing a shift in marketing emphasis, but we’ll still be here.”