Canadian Dollar hits US$0.69

[magnetite 38]

Doesn't look too bad really but with the lower Canadian Dollar also means that the Canadian Economy will boom in Ontario and Manufacturing and slightly away from Natural Resources which offers a much broader range of employment opportunities. Canada is just going through some short term adjustment but the lower dollar has significant benefits and salaries in Canada will go up as a result.

 

Depends on the province. Here in Alberta, it's heavily based around oil. So Edmonton and Calgary usually take a hit whenever this happens. The new government elected promised to make it less oil dependent though.

[Guest JustanotherPilot]

Reading posts from this topic I have learned that no matter how bad you think things are for yourself, someone, somewhere has it worse.

[Matthew Kane 1,343]

Depends on the province. Here in Alberta, it's heavily based around oil. So Edmonton and Calgary usually take a hit whenever this happens. The new government elected promised to make it less oil dependent though.

 

I am originally from Nova Scotia so all this means is my fellow Nova Scotians move back home or to Ontario. A few of my friends in Alberta are worried. We've seen these cycles over the decades when the 1970's was a boom for Alberta and has cooled, now it is cooling off once again. Resource based economies are like that. 

 

People will adapt and Manufacturing will prosper once again. I am currently looking at starting new production of Spraybooths and Industrial Kitchen Hoods in New Zealand because of the sharp rise in the US Dollar means I can produce these items in New Zealand and sell them for the same price here and Australia as buying and importing them from the USA. This works because people here will save on high shipping costs, I can deliver much faster and guarantee no damage on delivery. This was not possible a few years ago with the low US dollar but has now opened up these opportunities outside of the USA. It is now very easy to undercut them.

 

Canada has always been in the best position for this as not only can it undercut the US Market, it also targets the US market due to close proximity. This has been a very prosperous situation for Canada in the past. Selling off oil and other natural resources is bad for Canada. Better to diversify and Manufacturing is far better for Canada then Natural Resources, more jobs and larger supply chain. My advice to Albertans is take a page out of Ontario's books and kick start your Manufacturing sector, something you should have done decades ago...

 

USA will continue to export it's number one comodities being music, films, video games, crappy TV shows, and Apple Products etc etc etc. Everyone around the world buys those regardless of the economy, oh yea and Flight Sim will continue to sell regardless of all the grumblings. People will adapt and figure out how to continue to support their hobbies. Life is too short so get on with it.

[goates 576]

 

 

Canada has always been in the best position for this as not only can it undercut the US Market, it also targets the US market due to close proximity. This has been a very prosperous situation for Canada in the past. Selling off oil and other natural resources is bad for Canada. Better to diversify and Manufacturing is far better for Canada then Natural Resources, more jobs and larger supply chain. My advice to Albertans is take a page out of Ontario's books and kick start your Manufacturing sector, something you should have done decades ago...

 

Except that this time Ontario will be competing against Mexico. A good deal of the auto business has already moved there. Increasing automation and 3D printing will also mean fewer people are needed for what does come back too. So while some manufacturing will come back, it will take a while and may not return to the levels it was once at.

 

As far as Alberta getting into manufacturing, I don't see that happening any time soon. The entire supply chain would have to built up just to get started, and then there is still the issue of geographic location. Alberta isn't exactly close to any major customer base, which is a big part of the problem with oil already. People love to talk about refineries being the silver bullet to increase revenue from oil, except that one would still have to get all of the refined products to markets thousands of kilometres away (anyone notice how many pipelines are not being built recently?). So why would someone set up manufacturing here when there are already places like SE Asia, Mexico and Ontario with the infrastructure and supply chain in place? R&D for solar and geothermal power, other green/environmental technologies, tourism, software and other service based industries would be much better suited. Basically something more like Denver.

[Steve Cannell 4]

True, but I beg to differ on your analysis of the causes. To me, this is simply a consequence of an economy that relied too much on the resource sector. High oil prices kept the Loonie so high that manufactured goods were not competitive in the US and elsewhere. Another consequence: car manufacturers were able to produce more cost-effective in Mexico and moved away from Ontario.

 

However, I am very optimistic for the future. The low exchange rate hits us flight simmers hard, but it also helps to boost Canadian exports and tourism. In a few years, Canada will have a nicely diversified economy again.

 

Natural resources are a nice thing to have, but their price and abundance is unpredictable and can ruin a country if it relies too much on it. 

 

Peter

You nailed it. High oil prices and our economy relied to much on it's production and export.

I'm optimistic too for the future as hopefully our Gov stimulates the economy and invests in infrastructure and technologies.

 

In the meantime FS purchases will likely halt.

I'll sell some used tech on ebay, taking advantage of the dollar and buy a spaceship for my new love, Star Citizen.   :smile:

[Matthew Kane 1,343]

Except that this time Ontario will be competing against Mexico. A good deal of the auto business has already moved there. Increasing automation and 3D printing will also mean fewer people are needed for what does come back too. So while some manufacturing will come back, it will take a while and may not return to the levels it was once at.

 

As far as Alberta getting into manufacturing, I don't see that happening any time soon. The entire supply chain would have to built up just to get started, and then there is still the issue of geographic location. Alberta isn't exactly close to any major customer base, which is a big part of the problem with oil already. People love to talk about refineries being the silver bullet to increase revenue from oil, except that one would still have to get all of the refined products to markets thousands of kilometres away (anyone notice how many pipelines are not being built recently?). So why would someone set up manufacturing here when there are already places like SE Asia, Mexico and Ontario with the infrastructure and supply chain in place? R&D for solar and geothermal power, other green/environmental technologies, tourism, software and other service based industries would be much better suited. Basically something more like Denver.

 

The reason why Ontario was historically a strong region for manufacturing was the steam ships on the great lakes, supply of Iron Ore and Coal in the region for raw goods, and the rail lines to ship finished goods, and those days are long over. Today majority of goods are shipped by truck and Alberta is 3 to 5 days away from majority of the USA. Tesla is currently building the largest battery factory in the world in Nevada due to low taxes, government support and lower regulations and they are no where near anything just like Alberta.

 

Autos are currently now built throughout USA and Mexico but still just Ontario for Canada. I used to work in engine factories on North American and they spread throughout due to state governments offering better incentives then Detroit and not everything has moved to Mexico. Canada hasn't adapted in the same way and remained Ontario Focused (and sometimes Quebec). This would be the same reason why Boeing's are now also assembled in South Carolina because the incentives made it cost effective, even though the fuselages need to be shipped all the way from Washington by rail or Dreamlifter....it was great State level incentives for them to do that. 

 

Alberta has just as much opportunity as Nevada or Mexico or South Carolina and is no further away then anywhere else in the supply chain, if the government offers incentive enough the companies will come. Amazing that Tesla choose Nevada which is in the middle of a desert, and they have zero experience in both Manufacturing or Batteries, and they are about to become the best in the world at it.

 

https://www.teslamotors.com/gigafactory

http://www.boeing.com/company/about-bca/south-carolina-production-facility.page

[goates 576]

Alberta has actually tried to get into manufacturing before (ignoring what is already exists in support of the oil industry), at least half heartedly. And despite having some of the lowest tax rates and minimum wage, though not anymore, in the country it never went anywhere. This is mostly due to the reasons I mentioned above, plus a big one I forgot, which is competition with the oil and gas industry in a relatively limited labour market. When oil and gas booms, wages go up way up and take a little while to drop when it goes bust. This pushes costs up significantly for companies, and also makes it hard to forecast. Which in turn just leads to manufacturers looking elsewhere for a more stable environment. The construction industry already struggles with this, but as people need houses to live in, and offices etc to work in, the construction costs just go up and things get built. On the other hand, if your company doesn't need to be here, why would you bother?

 

I still think the areas I highlighted previously are better ways forward as they can directly draw from what's here and don't need a lot of capital to kick start. Oil and gas demand worldwide hasn't gone away, and sooner or later prices will come back, and will push up costs again when it does.