Target, Ford, and More! The Dynamic and Robust Canadian-U.S. Economic Relationship

By Keith Edmund White, Editor-in-Chief

The Canada-U.S. economic relationship continues to be one of the world’s most important and dynamic, as shown by a series of articles published over the last two weeks. 

Whether looking at Ford production moves, the evolving Canada-U.S. trading relationship, or the impact of the 2012 U.S. election on the Canadian economy, the Canada-U.S. economic relationship continues to play a major role not only in the global economy, but in daily lives of Americans and Canadians alike.

The 2013 Big Picture Economic Prediction:  Canada Will Benefit from America’s ‘Resurgent’ Economy

While America may finally surpass Canada in economic growth in 2013, this U.S. resurgence may be just the buffer Canada needs as its housing market cools, reports John the Financial Post’s John Shmuel.

Shmuel reports on the Economic Club of Canada’s Economic Outlook 2013 forum, an event that brought together six economists who shared and discussed their 2013 predictions for the Canadian and American economies.

From the January 11 Financial Post report:

Canada’s economy has certainly been losing steam during the past few months. Growth in October was just 0.1%, after a flat September and a decline of 0.1% in August.

The economists agreed that while Canada may lag the U.S. in economic growth, it will certainly benefit from a resurgent U.S., especially when it came to exports. The U.S. continues to be the largest destination for Canadian exports, accounting for almost 80% of goods shipped outside of the border.

“For Canada, it’s not a bad export environment,” [RBC Financial Markets Chief Economist Craig] Wright said. “So we are seeing export prospects improving and we continue to think they will pick up.”

Naturally, Canada’s housing sector was a much discussed topic at the forum. Craig Wright…said Canada’s housing market was “cooling” rather than “collapsing.”

Brooke Smith, writing on the same event for Benefits Canada, reports that 2013 will be a “year of transition” for the global economy: 

Summing it all up, Craig Alexander, chief economist with TD Bank Financial Group, said that 2013 is a year of transition.

The pendulum will swing back, he said, to a stronger global economy, but this will be over the course of the year.

“Emerging markets will be the lion’s share of global economic growth.” The advanced world is still fragile, he continued, but the strongest areas will be North America—particularly the U.S.

The main takeway? Whatever the swings in Canada’s exports to the United States, both nations’ economies remain deeply connected.

The Canada-U.S. Auto Relationship: While GM Moves Camaro Production from Oshawa to Lansing, Chrysler and Ford Plan Canadian Expansions

The Canadian-U.S. auto partnership, dating back to the 1965 Auto Pact, is one of the most concrete aspects of Canada and America’s economic cooperation. But while the 1965 Auto Pact liberalized and integrated the Canadian-U.S. auto industry, this binational auto relationship remains dynamic and ever-evolving.

As reported by Scott Deveau at the Financial Post, General Motors of Canada has announced plans to move Camaro production jobs from Oshawa to Lansing. 

The reason?  GM Motors Canada Kevin Williams cited Canada’s continuing status as “the highest-cost producer for General Motors anywhere…and [Canadaian] labour costs are among the highest” when discussing the Camaro production move.  

But while GM may be moving jobs out, Chrysler and Ford appear on route to create Canadian jobs.  From Deveau’s January 16^th report:

Still, Chrysler has shown interest in bringing more work to Canada, or at least extending the life of its plants here.

Sergio Marchionne, Chrysler Group LLC’s chief executive, told reporters the automaker’s Windsor plant, which is running on three shifts, five days a week, 24 hours a day, “should” be in line to build the new Dodge and Chrysler minivans when they are announced.

At the same time, Dianne Craig, Ford Motor Co. of Canada CEO, said she is still pushing ahead with a proposal to bring a new global platform to Ford’s plant in Oakville, Ont.

Whatever the movements of the Big Three, the resurgence of GM, Chrysler and Ford--with their deep production connections on both sides of the Canadian-U.S. border--shows the durability and value of Canada and America’s economic cooperation.

Target’s Canadian Arrival & Walmart’s Canadian Expansion

After 50 years, Target is entering the global marketplace.  Target's first international target?  Canada.  From Thomas Lee at the StarTribune:

But Target's international ambition has less to do with bragging rights than basic survival. Not only is Target running out of room to grow, but recession-worn American consumers haven't been as eager to open their wallets, much to the benefit of low-priced competitors like Wal-Mart and Amazon.

…

Target has been able to hold its ground by focusing on savvy marketing and exclusive partnerships with prominent designers. But even that magic seems to be fading, as a recent collaboration with Neiman Marcus flopped. Target's website also is a work in progress: key items were out of stock during the critical holiday shopping season.

So Target needs Canada. In addition to steady economic growth, the country has weathered the global financial crisis better than most nations. Target's potential in Canada is the reason investors have largely ignored its recent holiday struggles.

Naturally, Walmart is moving fast to consolidate the Canadian market. From the Canadian Press:

Walmart will spend $450 million this year to open several new stores and expand its distribution network in Canada amid what is becoming an increasingly competitive retail landscape in this country.

The U.S.-based discount retailer says it plans on completing at least 37 additional supercentre projects by the end of next January, bringing the total number of Canadian locations to 388.
…

Although the company refused to go into specifics, it says some of the supercentres slated to open will be in Maritimes, where Walmart isn't currently operating supercentres. The expansion will also create 7,000 jobs -- half of which will be retail positions.
…

Walmart first came to Canada in the early 1990s, and since then has been expanding year after year.

Last year was one of its most aggressive for the discount chain, with the opening of 73 new Canadian locations amid announced spending plans of more than $750 million.

Meh or Wow?  What the 2012 Election Means to the Canada

While all agree on the economic impact Canada and the United States have on one another, is this relationship impacted by who sits in the White House? 

The Fraser Institute and Edmonton Journal come to two different conclusions regarding the binational impact of America’s 2012 elections. 

The Financial Post offers a concise and thought-provoking summary of the Fraser Institute’s The U.S. Election 2012:  Implications for Canada, a collection of essays from Canadian analysts that explore the impact of the United State’s 2012 elections on Canada.  The ebook is edited by Professor Alexander Moens and Jason Clemons. 

Highlights include the impact of U.S. monetary policy on the Canadian economy, the possible effects of a fully implemented Affordable Care Act on the Canadian healthcare system, and the risk posed by possible political gridlock over U.S. debt-reduction to Canada’s economic welfare.

But the Edmonton Sun, in a November 7^th article, suggests the reelection of Barack Obama and the continuation of Democratic and Republican majorities in the House and Senate, respectively, will not have a significant impact on Canadians. 

The article, by Aaron Taylor, summarizes a political science roundtable hosted by the University of Alberta:

With the American election over, the University of Alberta hosted a panel featuring political science teachers to discuss what U.S. President Barack Obama’s re-election means to Canadians.

The short answer was not a lot.

“It is very rare for a Canadian issue to hit the president’s desk,” said Utah native and associate professor in the university’s faculty of political science Greg Anderson.

“Most of the things out of the United States that affect Canada don’t involve the president.”

Read the Fraser Institute’s ebook below or through the Fraser Institute.

 

Canadian-U.S. Economic Cooperation & BTB: A History of Success, Continued Commitment

The economic relationship between Canada and the United States has been one of the most successful of the 20th century. But this past success can only continue if both nations continue to skillfully manage their shared border and deep economic ties.

Fortunately, The Beyond the Border Action Plan (BTB) shows both nations political commitment to ensure a robust cross-border relationship into the 21st century.

BTB, a three-year joint initiative of the Canadian and U.S. governments to foster cross-border trade and security, after only a year has brought numerous economic and security deliverables to both nations. These include:

• enhanced benefits to trusted travelers on both side of the border
• the creation of a operation model for a truck cargo inspection pilot program
• improving U.S. and Canadian cyber-security efforts by engaging with the Asia-Pacific Economic Cooperation Telecommunications and Information Working Group, Organization of American States, and other multinational organizations
• enhanced Shiprider Programs and the scheduled deployment of joint Canadian and U.S. law enforcement teams in Michigian/Ontario and Washington State/British Columbia

But BTB's success has been slow, and we'll see how much attention Canada-U.S. relations get in the United States in President Obama's second term.

From Alisa Gramann's The Western Front article that includes an interview with Don Alper, director of Western Washington University's Center for Canadian-American Studies and Border Policy Research Institute:

The Beyond the Border Initiative has shown slow success in completing its goals, according to a progress report released by the Canadian government on Dec. 14.

The initiative was developed just over a year ago to ease border crossing between Canada and the United States for law-abiding citizens, said Don Alper, director of Western’s Canadian-American Studies and Border Policy Research Institute.
“It’s not dramatic in terms of anything earth shaking,” Alper said.