Another Word About the Canadian Dollar

Today I was reading a report on the Canadian economy. But more specific, a report on job growth in Canada. The recent rise of the Canadian dollar has made many changes to the Canadian economy, one of these changes affects business. With the Canadian dollar trading at par with the U.S. dollar or greenback, U.S. companies are now finding it more costly to manufacture goods in Canada. When the Canadian dollar was trading roughly at 75 % of the U.S. dollar, the exchange rate made manufacturing goods in Canada much more appealling because the actual cost was about 75 % of the numbers due to the exchange rate. Now that the Canadian dollar is close to or at par with the U.S. dollar, costs simply are rising.

With a growing economy, job growth is definitely a key ingredient for sustaining long term economic growth. The fact that manufacturing jobs have been cut in most provinces should not discourage Canadians from investing in Canadian business'. It is imparitive for sustained growth that Canadians continue to purchase Canadian made goods and services. The recent out cry for lower prices got national attention and the Retail Council of Canada took notice. Some prices have come down along with a 1% cut in the G.S.T. (Goods and Services Tax, for those who are not familiar with this tax) has made goods and services a little easier to afford. But what does this all mean for our economy?

Simply put, a larger amout of disposable income will inevitably increase the amount of larger purchases. The tax on a new home will now be 1% cheaper than last year, every Canadian will now save a whole 1 cent on every dollar spent. This really doesn't sound like a lot, but when you put 1000 pennies together you do get $10. Granted this small decrease doesn't look like much, but don't worry it all adds up, eventually. But back to the report on job growth.

With American business finding it cheaper to do business in the U.S. it is important that Canadian manufacturers realize that there is more room for diversity in those sectors. Not only do Canadians need to adopt a policy of 'Buy Canandian' but we need to realize that the departure of U.S. corporations from our manufacturing sector creates room for Canadian business. It is possible that the Canadian economy can benefit from sustained economic growth, we just need people with ideas as well as investment capital to create more growth. The Canadian government will give out grants for those willing to start a new business. If you have an idea, it would be worth the time it takes to look into attaining a grant from the government to get started. What do you think?

Image source: my camera phone

News Story: Loonie slumps on feeble jobs report

Parity Prices?

There has been a lot of complaints by consumers in Canada recently. C.B.C aired a special on Canadian consumers demanding a lower price. The special was called "Dollar for Dollar" and it included opinions from Canadian consumers. This is a good thing, because Canadians are finally starting to realize that the consumer can affect the price. Even the Retail Council of Canada has taken note. The Retail Council of Canada has issued a letter to Canadian suppliers to reduce prices.

Now of course there are other factors to consider when looking at the price of goods, it's not just the retailers that set prices. Manufacturers also set prices for their products. Also, Canadian manufacturers have higher operating costs than their counterparts in the U.S. which will affect the price of Canadian made products. Another thing to consider when looking at high prices, is competition.

Granted that the Canadian market is smaller than the U.S. market, but there are fewer and fewer competing companies. In addition to that, there are many barriers preventing more competition in the Canadian market. As well here in Canada, we have higher safety standards than some other countries and have to pay to make sure that a product is safe for sale on the Canadian market. Along with higher taxes, all these factors will be included in the price of a product on the Canadian market.

It isn't likely that we will see parity pricing here in Canada, but if more and more consumers start to stand up for themselves, we can effectively drive the price down. Canadian retailers do not want to see business go south of the border and are working to reduce prices. The Retail Council of Canada have a link on their website to a petition of sorts that will allow you to let the suppliers know that you want lower prices. This is a good thing and will help the Canadian consumer stand up for themselves and demand lower prices!