The massive upheaval in global trade caused when the COVID-19 pandemic first brought a wave of infections and closures around the world has simmered down and left winners and losers among Canadian exporters.
The Global Export Forecast newly released by Export Development Canada (EDC) reports that the country’s trade numbers are not as bad as expected, but it predicts a “slow and uneven road ahead” and substantial differentiation across export sectors. The report says there will be continued rocky times for aerospace, oil and gas, and travel and transportation services. But there’s good news for consumer goods, agri-food and forestry, as well chemicals and plastics, with companies in these industries even performing above pre-pandemic levels.
“It’s been better than feared,” says Stephen Tapp, EDC’s deputy chief economist. “We’ve been pleasantly surprised at how strong global trade has been, and in particular how well Canadian trade has held up in the last six months.”
This is a sharp contrast to earlier concerns that the global health crisis might break supply chains and threaten all commerce crossing borders, he says. Indeed, EDC’s biennial survey of exporting companies in June found that trade confidence among Canadian exporters hit an all-time low.
Mr. Tapp says things have rebounded “much quicker, stronger and more completely than we expected,” although he allows that a full recovery “is going to take a while.”
EDC’s new forecast has Canadian exports falling by 16 per cent in 2020, better than the 20-per-cent drop expected in June, but it sees exports rising by just 9 per cent in 2021, rather than the 19-per-cent increase predicted.
Meanwhile, some companies are making investments to scale up in new sectors and markets abroad, he says, seeing exporting as a “bright light” despite today’s uncertainty.
“Some exporters have never been busier,” he remarks. “It’s a crazy time not to expand…You have to look at life beyond the pandemic.”
Companies that export products in demand as a result of the pandemic, such as pharmaceuticals and health-related consumer goods, are especially looking to make significant inroads abroad.
For example, Montreal’s Medicom Inc., with a history of more than three decades manufacturing and distributing infection-control products, has ramped up its overseas operations to respond to the public-health crisis, says Guillaume Laverdure, the company’s president and chief operating officer.
Medicom, which was founded in 1988 to sell medical gloves in response to the AIDS-HIV pandemic, has vastly increased its sales of masks, gowns and gloves in 99 countries, and it has a physical presence in 15 countries. This includes production facilities that have opened or expanded in response to the pandemic in the United Kingdom, Singapore, France and the United States, Mr. Laverdure says. “You need to be local in order to be able to supply local markets.”
Having an international footprint allows the company to manage regulations, distribution issues, customs, suppliers and customers in individual markets, he says. Medicom’s staff of 1,100 before the pandemic has increased to 1,700 employees and continues to grow. It has entered into agreements with local authorities and is working on new products and technologies to ensure the company is “here for the long term,” Mr. Laverdure adds.
It’s a strategy in a sector that could enhance Canadian exports overall, says Daniel Workman, a Canadian who is lead analyst at WorldsTopExports.com, an educational site with research about the latest global export trends.
He notes for example that exports of pharmaceuticals have propelled Ireland to be one of the few top exporting countries to increase its overall sales of exported products in 2020. “By focusing more on medical products like masks and shields to protect against infection, as well as vaccines to counteract the global virus, Canada can rebuild its export portfolio with a focus on health-care products for the aging global population,” he says.
Mr. Workman notes that exporters have a number of resources available during the pandemic, such as EDC’s Business Credit Availability (BCAP) Program Guarantee, which offers loan guarantees, operating lines of credit and support with operational costs. EDC’s online COVID-19 Assistance Tool helps businesses navigate risks from the pandemic and explains how to get access to special financing.
A “powerful trend” for exporters is the dominance of e-commerce, with people confined to their homes and spending time on computers, Mr. Workman comments. “The question becomes how can businesses embellish their existing product lines into services-related offerings for sale to online customers around the globe?”
Business is booming for Off2Class, a Toronto educational software company that provides resources over the cloud for English-as-a-second-language instruction and administration. “COVID-19 has significantly expanded the need for our services,” says Kris Jagasia, co-founder and CEO of the six-year-old company, which has doubled its headcount to 14 staff since the pandemic began. It has online sales in 120 countries and major customers in the U.S. and Mexico., where demand has doubled among public and private schools as well as language institutions.
“A lot of the barriers to adaptation have definitely been removed due to COVID,” Mr. Jagasia says. “Teachers, educational institutions and curriculum decision-makers are into this technology.”
At the same time, it’s critical for Off2Class to stress that its materials have a “dual mode,” working in both online and physical settings, so its robust sales continue beyond the pandemic, he says. “There will still be a need for our product when there’s a vaccine and we’re back in the classroom.”
Digital competencies are the “biggest distinguisher” of exporter success, says Mr. Tapp of EDC. “It’s pretty obvious that companies that have online capabilities, or have been able to shift to online, have been able to mitigate sales losses much better than bricks-and-mortar or pen-and-paper companies.”
He points out that it’s also an opportune time for exporters to explore new markets such as Europe, where they can take advantage of the Canada-E.U. Comprehensive Economic and Trade Agreement, which recently marked its third anniversary, and aims to increase trade between Canada and the European trading bloc.