A report earlier this year from the U.S. Association of Equipment Manufacturers showed exports of American-made machinery dropping everywhere in the world in 2014, leading to an overall 13.2 per cent decline from the 2013 numbers.
By Patrick Flannery
Canada remained the world’s biggest importer of U.S. machinery to the tune of $6.6 billion (U.S. dollars) per year, more than double the amount shipped to all of South America, the next largest importing region. We also recorded the smallest decline at just 2.2 per cent. America’s global exports are worth a total of $17.26 billion, which means Canada buys more than a third of everything American machinery manufacturers ship abroad. We are not only their biggest customer, we are also the most loyal.
Sometimes I wonder if the Americans are really aware of the size of this relationship. Granted, we are still a drop in the bucket compared to their domestic market, but I think U.S. machinery manufacturers would notice if their slice of $6 billion dollars went away. When I go to trade events in the U.S. and ask booth staff how they go to market in Canada, I often get a blank stare followed by some statement like “I think our northern Ohio guy has Canada.” Their blissful unawareness that they have rolled the second largest country in the world containing over 30 million people into the partial territory of one state is kind of cute and kind of scary at the same time. My follow-up question to responses like these is to ask them what resources they have in California, which has roughly the same population. Inevitably, it is a lot more, though to be fair California also has a considerably bigger economy than Canada.
The impression of neglect deepened a bit in the aftermath of the Great Recession, when the forces of trade protection gained significant political ground south of the border. Several items hit the news where Canadian companies were shut out of U.S. government bids by resurrected Buy American policies. Again, a sense of innocent cluelessness seems to attend these efforts. I received more than one press release from American machinery manufacturers inviting me to “I Make America” events. I Make America is an initiative of the AEM that has the laudable goal of lobbying the U.S. government for manufacturing-friendly policies. But protection through tax law and other means from foreign imports is part of the program, as is messaging encouraging U.S. consumers (especially government buyers) to favour U.S.-made equipment. Inviting a Canadian magazine editor who counts Canadian machinery exporters among his readers to an event promoting America-first buying practices is a bit like inviting Bill Gates to an Apple conference…awkward! But all you can really do is take the traditional Canadian approach of considering it a compliment that the Americans feel so close to us that they don’t really consider us a separate country.
Our preference for American quality in manufactured products is still strong. China still carries the stigma of being a low-cost manufacturer that ships flimsy, unreliable products. Many rental people also reference their awareness of the difference in living conditions between American and Chinese workers, and consider it a point of pride to support companies that pay their employees a living wage. But many of the facts and assumptions around these attitudes are changing. Chinese manufacturers are not incapable of producing high-quality product. After all, China has a space program that can put men in orbit and bring them back. The truth about Chinese manufacturing is that its pricing is sharp. You get what you pay for, and not a cent more. So when machinery companies go to China for cheap production, they get cheap product.