There’s no quick trade-diversification fix as relations with U.S. become less stable

CALGARY — From Chinese bank notes to Israeli high-tech, Chad Wasilenkoff has tried to break into markets around the world to diversify the Vancouver-based business he founded.

Paper products maker Fortress Global Enterprises is primarily focused on selling dissolved wood pulp from its Quebec mill, and company chairman Wasilenkoff is constantly on the lookout for new opportunities to stay competitive in an increasingly globalized economy.

More Canadian companies are looking to follow the route toward diversification as the increasingly tense trade relations with the United States, including its hardline approach to NAFTA talks, tariffs on steel and aluminum, and threatened tariffs on the auto industry, has emphasized the need to compete globally.

An Export Development Canada survey of 1,000 exporters, conducted before the tariff war took hold but released last week, suggested 64 per cent plan to export to new countries, up from the below 50 per cent the proportion has generally hovered at for the past five years.

But experts say the road to diversification can be slow and rocky, and the benefits of an integrated North American market means domestic industries have been slower than others to break into growth regions such as Asia and Africa.

Companies such as Fortress that do venture out meet a wide variety of challenges, including running up against tariffs, stiff competition and failed ventures.

But Wasilenkoff believes that’s just part of the challenge in developing new markets.

“The ease and accessibility and the logistics that are going on in the world, it’s just too easy for someone to make the product better, cheaper and more efficiently somewhere else.”

The shift to new markets is not easy, especially given the extent to which Canadian companies supply chains are integrated with the U.S., according to Daniel Schwanen, vice-president of research at the C.D. Howe Institute.

“It’s not something you can turn on a dime, unfortunately,” he said.

“If we were serious about diversification, we would have started a long time ago, it’s not something you can do tomorrow.”

The current trade uncertainty isn’t helping long-term planning and efforts to diversify, said Mairead Lavery, senior vice-president of business development at Export Development Canada.

“There’s an investment hesitation that’s going on,” she said.

Companies are wondering if the trade uncertainty will last, and if they need to make significant shifts in planning due to the “enraged trade rhetoric,” Lavery said.

Pushing into new markets is also a challenge because many companies don’t have the management capacity, and are running a full tilt with the humming economy, she said.

EDC estimates there are about 120,000 Canadian exporters, with 20,000 more ready to export. But about 100,000 of those are smaller operations with revenue of about a million dollars, leaving few resources to devote to capacity building or market expansion.

“They’re starting to learn that they’re going to have to deal, and grow their business in an uncertain world that doesn’t just include the U.S.,” Lavery said.