As the Canadian dollar drops lower by the day, and demand for Canadian products remains strong, many manufacturers have growth on their minds. But judging by results of the Manufacturers' Outlook 2016 survey, most are failing to leverage one of the most potentially lucrative growth opportunities in their arsenal—foreign expansion.
The survey, which is published by PLANT magazine and sponsored by Grant Thornton LLP, reveals 75% of respondents are not currently planning to enter into foreign markets (outside of the US). Whether you chalk it up to Canadian risk-aversion, a traditionally conservative approach to growth or simply a case of being too comfortable with the status quo, one thing is certain—these manufacturers are missing a real chance to get ahead.
If you're still on the fence about expanding your product offerings to a new and unfamiliar market, here are four reasons that may convince you:
1. The world ain't what it used to be. In a NAFTA economy, the US was a Canadian manufacturer's oyster—and there were a limited number of competitors around to challenge that position. With the NAFTA days over, and the Trans-Pacific Partnership (TPP) on the horizon, Canadian manufacturers can't afford to assume that their US trade partnerships will remain intact. While finding ways to preserve some of these arrangements undoubtedly makes sense, it's also critical to explore and exploit new opportunities the TPP and other new trade arrangements are bringing to the table.
2. Canadian is in demand. In many—if not most—parts of the world, the phrase "Made in Canada" is synonymous with "good quality". And since cheap, mass produced, poor-quality goods seem to have had their day in the spotlight, many consumers are willing to pay a good price for quality products, particularly in the large global emerging markets.
3. You don't have to do it alone. Sure, entering a new market can be a little intimidating. Fortunately, there are plenty of services available to help you determine and execute your expansion goals—you just have to take advantage of them, which seems to be something most survey respondents are hesitant to do. Of those surveyed, very few are using the services of banks and consultants (39%), Export Development Canada (24%), Business Development Bank (24%) or services offered by provincial governments (23%).
4. Price only gets you so far. In Manufacturers' Outlook 2016, the majority of respondents—53%—said pressures on pricing will be their top challenge in 2016. The thing is, while you can control some input costs and production effectiveness, for the most part, selling price is out of your control because it's largely dictated by the market. Expansion—and finding new markets in which you can be a leader and, therefore, dictate your price—is a proactive approach to business, allowing you to be on the offensive, rather than the defensive.
With the world changing at an unprecedented pace, companies that fail to embrace change—and get ahead of it—risk getting left behind. Entering into foreign markets is more than just a good growth idea; it is a good growth strategy, given today's economic climate.
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