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Billionaire entrepreneur Jimmy Pattison is a perpetually sunny guy whose affable demeanour serves as cover for a hard-nosed, competitive nature. He likes nothing better than to see his managers squirm under the pressure of a fierce business challenge.

So there is a part of Mr. Pattison, the Vancouver collector of companies, that relishes seeing the Canadian dollar at par — despite the anguish felt in parts of his sprawling empire.

"A weak currency backs up your sins," says the chairman of Jim Pattison Group, which among its host of businesses owns manufacturing plants, supermarkets and forest operations. "With a stronger dollar, you have to be more creative."

In Mr. Pattison's view, pain is good because it makes you stronger. Companies that survive the dollar's rise will be better for it, he suggests. The implication is that Canadian companies hold their fate in their own hands — adapt or die.

"When you have a weak currency and you make money and do well, it doesn't make you as efficient a manager as if you are under pressure," says Mr. Pattison, who as a car dealer was once reputed to have fired his worst-performing salesman each month.

While Mr. Pattison's business instincts remain razor sharp at almost 79, the environment he operates in has transformed dramatically from the cloistered Canadian economy of 31 years ago, the last time the dollar was at par with its U.S. counterpart.

In those days, Mr. Pattison was a regional B.C. tycoon brimming with ambition — and Canada was a parochial place to do business. Manufacturing was protected by high tariff walls. The federal government controlled wages and prices. Foreigners could be prevented from buying Canadian companies. Even the rates that banks could charge for credit were capped by government regulators.

Officials were stumbling over themselves, ham-fistedly trying to guide the economy so that businesses could best deal with the global forces of exchange rates, oil and inflation.

Those structures have long since crumbled. As Canada faces parity again, free trade, a free — and fast — flow of capital, and minimalist monetary policy rule the day. Some of the economic context in this globalized world is far more supportive than 31 years ago: no deficits to speak of, few tariffs, lots of competition among lenders, low interest rates and dependably low inflation. But companies have also been stripped of the protection of a low Canadian dollar, which acted much like a tariff or a subsidy, insulating business from some harsh realities.

"Our feet are being held to the fire, and there's no protective tariff. It will be the survival of the most adaptable," says Joe Martin, a former management consultant who teaches Canadian business history at the University of Toronto.

Mr. Pattison argues that a strong dollar is a measure of a country's economic health, not a reason for hand-wringing. "A strong country needs a strong currency."

That doesn't mean he isn't hurting. In fact, he serves as a kind of microcosm for the Canadian economy. He controls export-driven forestry giant Canfor Corp., border-town entertainment sites, and manufacturing plants in Ontario and Quebec — sectors vulnerable to a high dollar.

But Mr. Pattison has come a long way from 1976, when he owned a collection of car dealerships, leasing operations and food companies, but did no exporting. Today, Pattison Group is active in 11 countries, with 21 of its 27 manufacturing plants south of the border.

That creates hedges against Mr. Pattison's dollar exposure. While the forest sector is damaged by the dollar at par, other subsidiaries can buy cheaper imports — such as California produce for his Overwaitea supermarket group in Western Canada.

In 1976, a different story

Mr. Pattison remembers that in 1976, parity was simply not the big deal it is today. It meant a few dollars in savings when he and the family travelled south on holidays.

His view is echoed by John Crow, who was involved in Canada's monetary policy back in 1976, and remained involved until the early 1990s. There were far more volatile forces at work then that consumed much of the Bank of Canada's attentions, Mr. Crow says.

"Certainly the bank was concerned about it and its effect on the economy," recalls Mr. Crow, who was chief of research at the central bank at the time, but moved through the ranks to become governor in 1987. "But I don't think the bank thought it was sustainable."

Parity was not a shock at the time. The Canadian dollar had been pegged at 92.5 cents (U.S.) for a number of years until 1970, when it moved to a free float. The currency was expected to appreciate, and it did, bouncing around parity for a few years despite attempts by Ottawa to talk it down.

But the strong Canadian dollar did not top the list of worries, Mr. Crow says. Rather, high inflation and an oil supply shock were churning economic conditions. Interest rates were rising, and provinces were borrowing cheaper, foreign money hand over fist. Parity was something that crept up on business, and was anticipated. Yet it also evaporated quickly, with the election of the Parti Québécois and the rising deficits of Canada's governments.

Economic conditions at the time were closely linked with government regulation, fiscal policy and politics, Mr. Crow recalls. "There was a lack of confidence in the markets."

Today, while free-marketers can certainly point to signs of protectionism and overregulation in Canada and elsewhere, businesses are largely left to their own devices. And so is the Canadian dollar.

The two sides of the coin

Wallace McCain is acutely aware of Canadian business's heightened exposure to the dollar. Recently, he met with people from the two Canadian food companies in which he is a major shareholder, McCain Foods Ltd. and Maple Leaf Foods Inc. In both cases, he heard troubling testimony of companies under pressure.

"Is it painful? Yes," Mr. McCain says. "At par, it is going to hurt, and if it goes any higher, it will be very painful."

This is a shocking reality for an entrepreneur who, like Mr. Pattison, was largely oblivious to the dollar's movements the last time it was at par. In 1976 he and his now-deceased brother Harrison were building the family French fry business out of rural New Brunswick.

The company was already operating in Australia, Europe and the United States, but these were not export markets. Although he recalls that more export-driven companies were in agony, McCain Foods was protected because its credo was local production for local consumption.

All that has changed. McCain Foods, now a diversified global frozen food supplier, exports considerable quantities to the United States. So does Maple Leaf Foods, which Mr. McCain acquired in the mid-1990s.

Part of the problem is the dollar's rise has been so fast the companies have not been able to adjust quickly enough, and their own budgeting does not reflect a dollar at par, he says.

Maple Leaf, led by Wallace's son, Michael, realized a year ago that it was not competitive at current exchange rates and began a wrenching move toward more value-added meat products. The company moved to consolidate production in more efficient factories.

Maple Leaf realized the dollar could move to parity, but it did not see the move happening so quickly, says Wallace McCain, company chairman. "I didn't think it could go to par. I thought it would stop at 90 cents."

If Mr. McCain's businesses are suffering, Eugene Melnyk, the pharmaceutical tycoon who owns the Ottawa Senators hockey team, is enjoying a windfall. He and other sports team owners are winners because major expenses — such as players' salaries — are denominated in U.S. dollars.

The loonie's runup gives Mr. Melnyk more flexibility as he tries to lock up new contracts for stars such as Dany Heatley, Wade Redden and Jason Spezza. "But for all you know, they may all want to be paid in Canadian dollars. That would be a new one," he likes to joke.

More seriously, he sees the dollar's rise as a godsend for the Senators, whose expenses for players and operations have gone up dramatically in recent years. He is paying $58-million U.S. annually in hockey club expenses, compared with $36.3-million in 2003-04, when he bought the team.

Without the dollar's rise, he suggests that the Senators might have had to consider a self-imposed salary cap that would have taken player costs down to $40-million. The difference could amount to two elite players, he says.

Yet he insists he operates from a lower revenue base than teams in larger centres. "It is still a small regional market that we have to live with. For us, it's still a struggle but on a more level playing field."

The realities of parity

The Canadian policy environment now is no doubt more conducive to businesses thriving in an era of parity. Their plans no longer have to factor in a cushion for unforeseen inflation. The flexibility of the Canadian economy has continued to astound analysts as the dollar has shot up from 62 cents in 2001.

Excess labour in the East has moved West. Toronto's financial services sector has embraced the oil sands. The improved terms of trade with high commodity prices have trickled down efficiently, raising disposable income across the country and fuelling a sustained consumption boom.

"It's so much easier to deal with parity when the whole boom and bust is not constantly hanging over you," says Bill Robson, who heads the C.D. Howe Institute.

But the global environment is far less benign. International competition is fierce. The U.S. market can no longer be taken for granted. Massive pools of cheap labour in emerging markets can replicate almost anything mass-manufactured here, for lower prices. Those same emerging markets, however, with their billions of people entering a new middle class, also ensure markets for Canada for years to come.

A Canadian dollar at par, in a sophisticated, fast-moving and hyper-competitive global economy, means that Canadian businesses must match those qualities. "We're not ready for it," says Perrin Beatty, who heads the Canadian Chamber of Commerce. "Can we handle it? Yes, we can, but we have to handle it with greater urgency."

The strong currency has indeed dealt exporters of manufactured goods a serious blow. But many of the manufacturers who built their business case on a weak Canadian dollar have fallen by the wayside, being replaced by a leaner, meaner manufacturing sector.

Linda Hasenfratz, president of auto parts giant Linamar Corp., represents the new face of manufacturing. She says a company can still thrive if it develops strategies to insulate against the currency risks. Linamar, based in Guelph, enjoys a natural hedge because a high percentage of its costs are in U.S. dollars.

Also, Linamar's global buying power — in terms of manufacturing capacity — is enhanced by the Canadian dollar's strength. It recently paid $65-million U.S. for a Mexican business, including inventory, that makes power transfer units. The purchase from Ford Motor Co. unit was denominated in U.S. dollars, making it much more affordable, she says.

The strong currency has handed Canadian companies the ticket to be global leaders, insists Mr. Martin at the University of Toronto.

Canadians are major exporters of capital, of which we now enjoy a surplus. Now that those dollars are worth more on a global scale, Canadian companies have the wherewithal to take over foreign operations and become world players, he said. He points to Mr. Pattison, along with companies such as Manulife, Alimentation Couche-Tard and Cirque du Soleil as prime examples of how Canadian companies can take on the U.S., and then the world.

"I think what you'll be seeing is a large amount of Canadian foreign investment. But I think we've got a long way to go to catch up with the Americans. Adaptation is the key."