‘Stunning loss’ of Canadian market share in U.S.: report
Posted on December 18, 2010 in Debates
Source: Globe & Mail — Authors: Barrie McKenna
TheGlobeandMail.com – news/technology – Economy Lab
Posted on Friday, December 17, 2010. Barrie Mckenna Ottawa
Truck traffic is way down at many of the key Canada-U.S. border crossings.
The assumption is that the flow would pick up as the U.S. economy recovered. And it has, to some degree.
But a new report by CIBC World Markets economist Krishen Rangasamy suggests a lot of that traffic may never come back.
Canada, Mr. Rangasamy says, has suffered a “stunning loss of market share” in the United States for exports of most goods, with the exception of a clutch of resources. He blames the high Canadian dollar and the shift towards a service economy and away from manufacturing. Services, while more sheltered from global competition, are also inherently less exportable, he pointed out.
U.S. exports bounced back strongly in the third quarter. But Canada didn’t get the benefit and its current account deficit was “shockingly large,” he said.
The numbers are devastating. Between 2001 and 2010, Canada’s share of U.S. imports has fallen to 9.1 per cent from 25.1 per cent in furniture, to 5.4 per cent from 10.1 per cent in electrical equipment, to 4.8 per cent from 10.3 per cent in beverages and tobacco products, to 2.2 per cent from 6.8 per cent in textiles, to 17 per cent from 30.3 per cent in printing, to 10.3 per cent to 18.1 per cent in fabricated metal, and to 19.9 per cent from 31.1 per cent in plastics and rubber.
It’s a similar story in wood, paper, livestock and forestry products.
The lost market share represents billions of dollars worth of exports that may never come back.
So who’s grabbing Canada’s market share? In manufacturing, it’s largely the Chinese. In 2009, China overtook Canada as the leading exporter to the U.S. Indeed, the Chinese are gradually squeezing Canadian companies out of key traditional markets in the U.S. – telecommunications equipment, electrical equipment, furniture, household goods and even shellfish, according to a recent report by Paris-based Euler Hermes Group, the world’s largest trade credit insurer.
CIBC predicts that Canada’s external trade balance is likely to stay “in the red” for several more years and the Canadian dollar will remain high.
This all puts intense pressure on Canadian manufacturers to become much more productive.
http://www.theglobeandmail.com/news/technology/video/skype-tips-for-holiday-cheer/article1842790/
Tags: economy, globalization, standard of living
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