Thursday, September 20, 2007

The Parity Blues

For the first time in my memory, the Canadian dollar has hit parity with the U.S. dollar. Border crossing bargain hunters are celebrating, but I suspect they won't be for long.

I know I'm not.

I've been running an online crafts business since 1995 - almost as long as eBay - and the vast majority of my customers pay in U.S. dollars. When I first set up shop, I was getting an extra 35 cents on every dollar, which I worked into greatly discounted shipping rates to the U.S. At one point I remember getting 45% and feeling a little guilty about it.

Then the loonie started taking off. At first I simply absorbed it, but eventually I had to raise my U.S. shipping rates. Then I raised them again. Then I raised my base prices for the first time in a decade. Then I raised my shipping again.

I figure I've lost a couple of grand over the past two years on the exchange alone. More importantly, my sales have dropped for the first time ever this year. Significantly. This may be partly due to my price hikes, which were less than 5% overall, but I suspect that the real problem is that Americans have finally sensed the coming storm and have simply stopped buying non-essentials.

To those who are breaking out the champagne and scouting out car dealerships in Buffalo, let me remind you of a few cold, hard facts:
- Canada has a significant trade surplus. This means that we export far more than we import, especially to the U.S. Since a high dollar is bad for exporters, this makes it bad for the country as a whole.

- U.S. companies doing business in Canada are looking at our rapidly rising labour costs and other local expenses and are packing up and going home. This will include movie and television productions unless cities like Toronto start bending over backwards to keep them here.

- Local manufacturers and retailers are going to be drowned by cheap imports. You think Wal-Mart is a problem now? Just wait.

What can we do? In the larger scheme of things, probably not much, but as a country we can start by unhitching our wagon from the dying horse that is the U.S. economy and start looking far more towards Europe and Asia.

As individuals, I have two words for you:


Canadian companies, Canadian products, whenever you can. Screw Wal-Mart. Find out which stores are Canadian owned and shop there. Read labels. Buy local produce at the grocery store. It's good for the economy AND good for the environment.

That is all.

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