Canadians elected Justin Trudeau as prime minister, putting a member of the Liberal Party in the country’s highest office for the first time in nearly 10 years.
Trudeau’s plans cut a sharp contrast to Conservative Prime Minister Stephen Harper’s austerity measures. Trudeau has vowed to run $19 billion in deficits over the next three years in an attempt to create jobs and stimulate economic growth. At least $3.2 billion of it is earmarked for infrastructure projects.
Local business leaders said that increased spending could create opportunities for Western New York’s economy and for local companies that do business with Canada.
American companies with established operations across the border may see more opportunities, according to Jay Amer, Empire State Development’s Canadian director. For companies that haven’t expanded to Canada but would like to enter the international market, the stimulus package makes the prospect more attractive.
When money is pumped into an economy, companies that sell goods and services can’t help but benefit from the extra spending, Amer said. “Any time there’s positive spending, any type of investment in Canada is an avenue for new opportunities,” he said.
Ben Rand agreed. He is president of Insyte Consulting, which coaches Western New York manufacturing companies. Rand said local infrastructure companies that stand a chance at winning Canadian contracts should pay close attention. Though foreign companies will likely be barred from making direct bids for government work, and Canadian companies will be given preference in every aspect of each project, there are other ways in, he said. There may be materials or services that cannot be sourced in Canada, which would open the door to imports.
Western New York’s proximity to Ontario and its established trade partnerships would make companies here attractive prospects. “I’d encourage American businesses to think in terms of who they might be able to partner with on the other side of the border so they could tackle some of those opportunities in tandem,” Rand said.
Maryann Stein, president and owner of Cross-Border Business Experts, based in Cheektowaga, also expects the Canadian government to direct its spending of taxpayer dollars toward Canadian companies. That is no different, she said, from a U.S. state selecting American contractors to make highway improvements.
Stein said she wouldn’t be surprised to see more Canadian contractors pop up as the infrastructure plan takes shape: “People see the opportunity and say, ‘This is the industry I need to be in.’ ”
On the campaign trail, Trudeau highlighted infrastructure spending as one way to bolster the economy while tackling traffic congestion.
Some Western New York contractors said they had not attempted to take on projects in Canada, citing differences in that country’s labor laws and regulations. But LPCiminelli has looked at opportunities in Canada before and will again, said Kevin C. Schuler, an LPCiminelli vice president. “It’s definitely on our radar.”
LPCiminelli would look at opportunities such as municipal buildings or hospitals, rather than roads or bridges, he said. The company already has some business relationships in Canada, he said, so it would be a matter of finding the right partner and the right project.
Trudeau has also committed to greener energy practices. Though Canada has one of the world’s largest solar panel producers in Guelph-based Canadian Solar, there are possibilities for collaboration with Western New York’s burgeoning solar industry, Rand said.
Experts are split on how much effect stimulus spending could have on the Canadian dollar, considering how closely the dollar correlates with the price of oil. But Elizabeth J. Mohr, a clinical assistant professor of finance at the University at Buffalo’s School of Management, said it can’t help but strengthen the loonie.
That would be a relief for Western New York retailers and other local industries that rely on Canadian customers, such as transportation, entertainment, travel and tourism.
The Canadian dollar sank to 74 cents U.S. in September, an 11-year low. The loonie peaked at $1.05 U.S. in 2011, effectively lowering American prices for Canadian shoppers and leading to a surge in local cross-border spending. That same year, Erie County collected $15 million more in sales tax revenue than it had expected, thanks in no small part to Canadian spending.
But as the Canadian dollar has continued to decline, so have cross-border trips from Canada. Bridge crossings have declined every month for the last 11 months, according to the latest data from Statistics Canada. Year over year, trips from Canada to the United States have tumbled by 20.7 percent. Both overnight and same-day trips have slowed.
The change in leadership could bolster consumer confidence, too, which would loosen spending. Trudeau took power in a landslide victory with high voter turnout. After the election, both the loonie and the Toronto Stock Exchange rallied.
“It all depends on people. If people think the economy is going to recover, it usually does,” Mohr said. “People’s perceptions are an economic force in and of themselves.”
Whether the dollar strengthens could affect how Canadian companies choose to enter the United States, according to Paul Pfeiffer, a spokesman for Buffalo Niagara Enterprise. Manufacturers, when they want to tap into the U.S. market, will expand their existing operations to an American beachhead. But when the Canadian dollar strengthens, they tend to make the leap over the border by acquiring an American company.
“When the Canadian dollar is strong,” Pfeiffer said, “Canadian companies, instead of looking to expand into the market … will look to buy their way into the market.”
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