REGINA, Sask. — Local industries hard hit by the trade dispute between the United States and Canada are welcoming federal financial support but want to see a return to normalcy as quickly as possible.
Degelman Industries chief executive officer Blair Flavel made that sentiment known to reporters Tuesday at his plant located north of Regina.
“Our goal is no tariffs, get back to free trade, CUSMA working well like it did… I encourage both governments to get back to the bargaining table and get a deal that's going to work out. Our focus, of course, is on our customers and on our employees….
“And I understand. I've been in negotiations too, and it gets sometimes heated. Letting calm heads prevail and getting back to the table would be my hope.”
Degelman Industries was the host of the major federal announcement Tuesday by Secretary of State for Rural Development Buckley Belanger of $5.3 million in support to six Saskatchewan enterprises from PrairiesCan under the Regional Tariff Response Initiative.
The support is being targeted to industries most impacted by the trade dispute, including the manufacturing sector. Degelman Industries is receiving $1 million from that program, which, according to the government, will go to strengthen its manufacturing capacity and optimize productivity to enhance competitiveness.
As for what impact the trade dispute has had on its own business, Flavel said the company is still trying to “evaluate what the tariffs are going to do.”
He said Degelman does a hefty amount of cross-border business with the U.S. market — 45 to 50 per cent, with a similar amount in Canada and five per cent internationally.
The uncertainty is a big issue for the company, he said.
“It's difficult. You know, especially you don't know when it's going to change. It can change weekly or monthly. What we do, we've got some long lead time items that our procurement team orders in, and do they have a 10 per cent tariff? Do they have a 50 per cent tariff? We have to plan our pricing, and our customers need to make those decisions.
“Once we take an order, we don't want to go back to a customer and say, ‘hey, your price went up.’ So it's difficult. And customers not knowing what's coming around the bend is, hey, maybe we can wait. So the uncertainty is the biggest obstacle, I think.”
Seedmaster looking to pivot to international markets
Another recipient of PrairiesCan funding is Seedmaster Manufacturing Ltd. It is getting $596,347, which the government states will go to accelerate its export sales of agricultural equipment to international markets. The funding is being welcomed as the company, too, is being impacted by the current trade dispute.
“We've had better years,” admitted Seedmaster chief executive officer Allan Wiens to reporters about the impact of the tariff situation.
His sentiments were similar to those of the Degelman CEO about how the trade dispute has impacted customer sentiment.
“This is not one for the record books, that's for sure. I mean, it causes uncertainty. Our customer base is, you know — anytime there's trade talks or negotiations like this, there's uncertainty in our market and our customers are feeling that.”
Wiens said the tariffs “hit us on the supply chain side of things.” He estimates about 30 per cent of their product is from the U.S. and will be subject to tariff retaliation.
“So we pull a significant amount of our supply through the U.S. And so we will be impacted by it… yeah, I've had better nights of sleep. Let's put it that way.”
He said replacing that supply from the U.S. will not be a simple “immediate snap of a finger and find it elsewhere.”
“You've got to do your due diligence. And there's so many moving pieces and moving parts. You wake up one day and something's completely different than it was the day before. So it's… hard to think about what the strategy should be because it changes every two days, it seems. We'll source electronic equipment from the U.S. We'll source specific electronic hardware for our products. We'll do some tire sourcing from the U.S. as well. Most of our steel comes from Canada, which is good because that's a majority part of our product, but kind of smaller electronic pieces come from the U.S.”
As for his reaction to Canada having walked away from the negotiations, Wiens said, “I don't know what option we have.”
“I mean, I think that, you know, when I think about it, a bad deal is as impactful as no deal at all. So I think if I understand it properly, the deal was not favourable for us. So I'd rather not have one.”
To navigate the trade turbulence, Wiens said his company is looking to venture into the Australian market.
“Yeah, it's a very similar market for us. So we look at ways that we can expand as, you know, as simply as possible. So it doesn't require a major redesign of our equipment.”
They had dabbled in the Australian market before, but Wiens indicated it is now “one of those ‘we're either going to get serious about it or we're not’” situations.
They have previously shipped product over there, but he said you need “a more significant presence to actually make it stick.” Wiens said they are going to be working specifically with an importer who will represent them in Australia.
“They're a local importer. So they're able to kind of establish dealer agreements, dealer relationships. We find that, you know, we all speak the same language, but Australians like to deal with Australians. So we've worked with a group that can give us that advantage.”
As for this current trade standoff, its end could not come fast enough for Seedmaster or Degelman Industries. When asked if he was looking forward to that day coming, Degelman’s Flavel told reporters, “Oh, boy, am I ever. You come out, we'll pop a bottle of champagne.
“You know, everybody's looking forward to it being over. We want free trade. We're not scared of free trade. We'll be competitive. If somebody can ship something up to Canada and beat us in quality, price, then they're better than us. But we want to compete on a fair scale, and we'd like the tariffs all to be gone and get back to free trade, both sides of the border.”
