Canadian Manufacturers Adjusting to Higher Canadian Dollar
Wednesday, March 17th, 2010
Although this isn't the first time the Canadian dollar has surged in value over the last several years, it looks like this time around it will be a sustainable event and Canadian manufacturers are taking that into consideration in their operations and strategies.
To battle losing their former competitive edge which was largely based on lower prices because of the weaker Canadian dollar, now Canadian manufacturers will have to focus on cutting costs and increasing production in order to compete.
Productivity has increased in the Canadian manufacturing sector, and that is good news for the country, which will have to have that continue in order to maintain their competitive edge.
They will work on that first before considering cutting costs, in the sense of letting workers go. But there are other operational costs in any business that can be cut, and as they deal with that as productivity continues to increase, that should put them on equal footing with their foreign rivals, which should keep them on solid footing in the years ahead.
While the government has no real value to the market, one thing they can do to help is to eliminate the tariffs on manufacturing equipment, which should help strengthen the Canadian manufacturing industry.
One final factor in regard to the Canadian government is to eliminate the cost of doing business, which of course refers to the over-taxation of businesses. Taking all these things into account should keep Canada competitive in the manufacturing sector, no matter which way the Canadian dollar decides to go.
It seems the loonie won't fall back to previous levels any time in the near future, as it is supported at this time above its former value. That means Canadian companies will have to be vigilant and mindful of needing to continue improving production and lowering costs to generate significant revenue and profits.
Article by Gary B
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: canada business , canadian dollar , canadian manufacturing , manufacturing
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