SMEs in Alberta, Ontario turn to Global Trade to Weather Economic Storm

Mississagua, May 05, 2009

Study shows surge in trade among economic powerhouse provinces

Small- and medium-sized enterprises (SMEs) in Canada’s traditional economic powerhouse provinces have turned to global trade as a means of coping with the global economic downturn, says a recent UPS study.

The UPS Business MonitorSM Canada conducted by TNS Canadian Facts shows global trade activity among SMEs in Ontario and Alberta has increased dramatically between 2007 and 2008.

Since 2007, sourcing goods from outside of Canada among Ontario SMEs has increased from 30 to 40 per cent. Meanwhile, Alberta — where SMEs had the lowest level of global trade in Canada in 2007 — saw an increase in sourcing from abroad from six per cent in 2007, to 39 per cent in 2008 and an increase from eight to 23 per cent in selling abroad over the same period.

“Entrepreneurs in Ontario and Alberta have clearly seen the benefits of conducting overseas trade and are using it to their advantage during these difficult economic times,” said UPS Canada President Mike Tierney. “But global trade isn’t just a remedy to use during tough times; rather it is a consistent method of building business to diversify growth opportunities and limit exposure to downturns.”

The surge in global trade may be fuelling optimism among Ontario SMEs where only six per cent of respondents predicted a decline in business despite the faltering economy, while almost half (47 per cent) predict growth in their near future. Optimism in Alberta is similarly high with only nine per cent of SMEs predicting a worsening of their economic position and 49 per cent predicting an improvement. However, Alberta’s numbers have changed significantly since 2007 when zero SMEs foresaw a worsening of their economic position and 79 per cent predicted an improvement.

The future predictions are a far cry from those of SMEs in the country’s new “promised land” of the Prairies, where only one per cent of SMEs polled predicted their economic position would worsen (down from 10 per cent in 2007), while those who predicted their economic position would improve increased to 59 per cent (up from 54 per cent in 2007).

“Clearly, there is optimism among SMEs throughout Canada in both prosperous and economically challenged regions,” said Tierney. “That’s very encouraging, and UPS’s mission is to help foster even greater confidence among SMEs by offering them the technological tools and logistical infrastructure they need to branch out into different parts of the world and explore new opportunities so that they are less impacted by global recession.”

Despite the nationwide impact of the recession, the percentage of SMEs predicting a drop in their workforce has risen only among SMEs in Alberta, Quebec and British Columbia.

SMEs in Quebec remain leery of global trade with 10 per cent citing it as being detrimental and 58 per cent (the highest in Canada) preferring to maintain trade restrictions.

Despite the recent economic decline in Alberta fuelled by the drop in the energy sector, the Rocky Mountain province remains the top choice for SMEs in Canada to establish a new location for their business outside of their home province, followed by B.C. and the Prairies.

The UPS Business MonitorSM Canadasurvey was conducted by TNS Canadian Facts between November 12 and December 3, 2008, and surveyed a total of 505 SMEs across the country. The entire study has a margin of error +/- 4.4 per cent.