May 2008

Supply Side

Conditions and trends for Canadian firms in global markets

By J. Baird

Each year, Canadian Manufacturers and Exporters (CME); surveys its member firms to determine what conditions and trends they are experiencing in competing in global markets.

The most recent report, covering 2007 and looking forward to 2008, reflects the experiences of 1,014 companies from across Canada, two-thirds of which employ less than 250 people and have annual sales of less than $25 million. Of the total, 89 per cent are manufacturers and 85 per cent are exporters. This article highlights some of the findings, which I expect may be of interest to CAMESE member firms and other Canadian suppliers to the mining industry. The complete 36-page document is available at

In his President’s Message, CME president Jayson Myers said, “In Canada, we tend to emphasize our differences. Every Canadian and every Canadian business is unique. I think that you will see through our survey that often we are unique in very similar ways.”

Following this logic, I expect that some of the conditions and trends in the mining supply sector are close to those reported by CME members, although given the buoyancy of the mining industry, there must be differences in market conditions between our sector and Canadian manufacturing in general. For example, while total manufacturing shipments and production volumes have remained flat over the last year, these must have risen for mining suppliers. Our sector is likely less dependent on the U.S. market than the broad manufacturing sector. Further, while the CME companies remain extremely cautious about future business prospects, these would appear to be brighter for mining suppliers.

The overriding conclusion of the survey is that intense international competition and the rapid appreciation of the Canadian dollar are coupled with concerns over rising commodity, energy and other business costs, plus the effects of a slowdown in the U.S. economy.

The four most pressing challenges indicated by respondents were, in order of priority: 1) keeping costs under control; 2) responding to dollar appreciation; 3) improving workforce productivity/flexibility; and 4) attracting and retaining skilled workers. I would suggest that mining suppliers would generate a similar list.

To a question on how they are responding to dollar appreciation, the top strategies are: 1) improving operating efficiency; 2) cutting costs; 3) improving supply chain efficiency; 4) investing in new technology; and 5) developing higher value products and services.

With respect to advising government on trade priorities, there was a fairly flat response to 11 suggested points. The top ones, quite predictably, were: 1) increase support for companies preparing to enter new markets; 2) connecting to international procurement opportunities; 3) bilateral reduction of trade barriers; 4) increased support for assessing partner capabilities; 5) increased support for market assessment; and 6) multilateral reduction of trade barriers.

The surveyed companies see the greatest potential for export growth in the United States, Western Europe, China and Mexico. While the mining supply sector may agree on China and Mexico, we would likely be quite disinterested in Western Europe. We would also add much of Latin America, Africa, Australia, Russia and its former republics, and also India as top priorities, reflecting the global nature of the growing mining industry. The nature of mining markets is that developing countries can be of even greater interest than developed countries.

Jon Baird
Jon Baird is the managing director of CAMESE.

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