According to the latest statistics from Statistic Canada automotive exports from Canada to the USA has grown 54.9% in the last 3 years. This can be attributed to the growing movement towards ‘build where you sell’ model coupled with the rising buying power of the USD. Since the recession, the USD exchange has steadily climbed from par value (1 USD = 1 CAD) to now 1 USD = 1.253 CAD, which is near the 10-year high of 1.286. This represents a 25.3% increase in the buying power of the USD against the CDN.
Pros of Importing from Canada
If a USA manufacturer sourced their components from a domestic supplier when the exchange rate was at par, the manufacturer can now instantly reap a discount of 25.3% by importing the same goods from a Canadian supplier (assuming both USA and Canadian supplier prices are fixed). Additionally, statistics from the USA Bureau of Labor Statistics shows that the average hourly wage of a machinist in the USA is 23.74 CAD (19.03 USD). Comparably, the same position pays 20.18 CAD in Canada, which is 15% lower than the USA. With the NAFTA agreement from Canada and USA, manufacturers importing components wholly manufactured in Canada pay no duties, making the process a feasible option for volume/production components.
Cons of Importing from Canada
While there are financial benefits of importing from Canada as described above, USA manufacturers must incur additional transportation costs and brokerage/paperwork fees to import the components. Moreover, there are risks associated with dealing and communicating with a new supplier that likely will be further away.
If you are a manufacturer from the USA and looking to import machined components from Canada, please reach out to us. Will be happy to work with you to do a cost/benefit analysis. We are located in Canada’s manufacturing hub in Cambridge, Ontario, which is 1.5 hours from Buffalo, New York and 3 hours from Detroit, Michigan.