‘Have to consider going south’: Manufacturing sector crossing the border according to survey

A new survey shows 4 in 10 Canadian manufacturing companies have already moved production south of the border or are thinking about it. Jeff Keele has more.

A new survey shows Canadian businesses may be looking at greener pastures in the United States.

Close to the US border in Crystal City, PhiBer Manufacturing makes farm equipment. CEO Derek Friesen said the trade war with the US has taken a toll.

“Market uncertainty has been one of our bigger ones, all the tariff rhetoric and not knowing what to do for prices, how they’re going to be impacting us. That’s definitely been a challenge,” said Friesen.

On top of that, he said red tape and regulations on this side of the border are hurting competitiveness. Because of these burdens, Friesen has contemplated a move.

“If this current climate with government and stuff like that continues, at some point we’ll have to consider going south.”

PhiBer is not alone.

A KPMG survey with 275 respondents shows 42 per cent of manufacturers say they have already moved production to the US or are considering it. Fifty-seven per cent have paused, reduced or cancelled capital projects, and 11 per cent say they plan to move their headquarters south within the next five years.

Anamika Gadia, with KPMG Canada, said companies are looking to shift some or all of their production to the US.

“There is, you know, the potential that these Canadian companies are going to start redeploying that capital investment into the US and certainly it’s a trend that we should continue to monitor,” said Gadia.

The survey said the top reasons for the potential moves are to avoid tariffs, trade uncertainty, and lower operating costs and taxes down south.

“Businesses are committed to Canada, but prolonged uncertainty is causing them to think about where they invest,” said Dennis Darby, the president of the Canadian Manufacturers and Exporters.

Darby said a good trade deal would be ideal, but in the meantime tariff relief measures should continue. He also said federal and provincial governments need to encourage manufactures to invest here.

“So anything the governments can do to help incentivize those investments so people are making those choices, you know, everything from making, you know, the regulatory processes easier.”

The survey found those manufacturers eyeing a move are looking for certainty of free trade, tariff relief, affordability in terms of cost of living and housing for employees, and access to cheaper energy.