Why Now Is A Good Time To Import Components From Canada

According to the latest statistics from Statistic Canada automotive exports from Canada to the USA has grown 54.9% in the last 3 years. This can be attributed to the growing movement towards ‘build where you sell’ model coupled with the rising buying power of the USD[1]. Since the recession, the USD exchange has steadily climbed from par value (1 USD = 1 CAD) to now 1 USD = 1.253 CAD, which is near the 10-year high of 1.286. This represents a 25.3% increase in the buying power of the USD against the CDN.

exchange

Pros of Importing from Canada

If a USA manufacturer sourced their components from a domestic supplier when the exchange rate was at par, the manufacturer can now instantly reap a discount of 25.3% by importing the same goods from a Canadian supplier (assuming both USA and Canadian supplier prices are fixed). Additionally, statistics from the USA Bureau of Labor Statistics shows that the average hourly wage of a machinist in the USA is 23.74 CAD (19.03 USD[2]). Comparably, the same position pays 20.18 CAD[3] in Canada, which is 15% lower than the USA. With the NAFTA agreement from Canada and USA, manufacturers importing components wholly manufactured in Canada pay no duties, making the process a feasible option for volume/production components.

Cons of Importing from Canada

While there are financial benefits of importing from Canada as described above, USA manufacturers must incur additional transportation costs and brokerage/paperwork fees to import the components. Moreover, there are risks associated with dealing and communicating with a new supplier that likely will be further away.

If you are a manufacturer from the USA and looking to import machined components from Canada, please reach out to us. Will be happy to work with you to do a cost/benefit analysis. We are located in Canada’s manufacturing hub in Cambridge, Ontario, which is 1.5 hours from Buffalo, New York and 3 hours from Detroit, Michigan.

[1] http://www.td.com/document/PDF/economics/special/CanadianAutoManufacturing.pdf

[2] http://www.bls.gov/oes/current/oes514041.htm

[3] http://www.servicecanada.gc.ca/eng/qc/job_futures/statistics/7231.shtml

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