Business

THE WINNERS AND LOSERS

JOHN SCHOFIELD July 1 1998
Business

THE WINNERS AND LOSERS

JOHN SCHOFIELD July 1 1998

THE WINNERS AND LOSERS

The city’s name seems to sum up the plight of the Canadian dollar: Great Falls. But business owners in and around the Montana community, a two-hour drive from the Alberta border, don’t appreciate the pun. The Canadian currency’s steady slide has hit them right in the wallet. At Dick’s RV Park, travellers from north of the border used to comprise three-quarters of the customers on many weekends. In the past four years, that has dropped to 25 per cent. The loonie’s weakness “has been a blow to the whole area,” says manager Jim Dick. “It just ain’t like it used to be.”

Business owners in U.S. border towns are not the only ones complaining. Canadian companies that import goods from the United States and “snowbirds” who winter there are also mourning the mori-

bund buck. Resort operators, such as those in Banff, Alta., have suffered from a drop in tourists from Asia, where the loonie has actually appreciated against the region’s plummeting currencies. But like the loonie itself, the story has two sides. The dollar’s downward drift has been a boon to Canadian exporters and businesses near the U.S. border.

The falling Canadian dollar also benefits exporters of oil, minerals and many other commodities. Since last year, demand for those raw materials has been weakening because of the economic turmoil in Asia. Prices have also dropped, but because they tend to be expressed in U.S. dollars the impact on Canadian commodity producers has not been as serious as some analysts expected. In fact, the low loonie creates a windfall for exporters such as the Winnipeg-based Canadian Wheat Board, which sells to more than 70 countries and denominates most deals in U.S. dollars. “It’s been good for us,” says Tracey Bryksa, a wheat-board spokeswoman, “because it brings in a higher return for our farmers.”

Manufacturers are having a tougher

time, in part because of the need to import parts and machinery. Companies such as Oakville, Ont.-based Ford Motor Co. of Canada Ltd. typically spend more U.S. dollars than they take in. For every one-cent drop in the loonie over the course of a year, Ford loses about $40 million in revenues, estimates spokesman Tony Fredo. Red-hot competition makes it difficult to pass that cost on to consumers, says Fredo, so savings have to be squeezed from other areas.

For Canadian merchants in border areas, the dollar’s slump has been good news. Michael Comuzzi, president of Lakehead Motors, a Chrysler dealer in Thunder Bay, Ont., says the number of Americans shopping for cars in the city has increased recently. Most automakers try to prevent Canadian dealers from selling new cars to Americans, in part to avoid upsetting U.S. dealers. But Americans can buy used cars, often at significant savings. For Americans as well as Canadians, even a sharp drop in the dollar can have a silver lining.

JOHN SCHOFIELD