COVID-19 has created a new area of potential exports for Canadian companies making personal protective equipment (PPE) or other sanitizing products.
EnvisionSQ in Guelph, Ont. is already seeing interest from abroad for its unique germ-killing technology.
The best export opportunities are in innovative products developed through Canadian research that other countries can’t easily duplicate, says Amin Mawani, program director of the health-industry management program at York University’s Schulich School of Business in Toronto.
“Other countries can make the basic PPE stuff at lower cost. But there are opportunities in areas such as new products that Canadian companies are developing with universities,” he says.
EnvisionSQ in Guelph, Ont. has developed a nanotechnology-based, virus-killing spray for coating railings, handles and other high-touch services called GermStopSQ. Envision has been collaborating with the University of Guelph to develop the new spray.
“I can’t even keep up to answer all the calls I’ve been getting about exporting,” says Scott Shayko, chief executive officer of EnvisionSQ.
EnvisionSQ’s plan is to license and export its intellectual property. “We’re only 12 people. We won’t manufacture; we’ll maintain IP protection by distributing the coding for customers in other countries,” Mr. Shayko says.
With such high demand for GermStopSQ, the company is sifting through all the export opportunities. But Mr. Shayko said his team is being cautious, having looked at exporting an earlier version of its formula that focused on fighting harmful air pollution that lands on surfaces.
“We spent a lot of years looking at exporting to Asia and to Europe but found it can be difficult. We learned not to jump at the first opportunity, to be patient. You have to find the right partner, not someone who’s going to take advantage,” Mr. Shayko says.
Publicity from GermStopSQ has opened doors for EnvisionSQ to export and work with partners, and Mr. Shayko says he’s now pursuing several promising leads.
Indeed, COVID-19 has changed the export picture for Canadian companies, as demand for both basic PPE and sophisticated products soars.
Irene Yang, director of business development and innovation for BASF Canada, part of BASF, a giant multinational chemical firm based in Germany, says “demand has spiked for some of our ingredients.”
Since the pandemic was officially declared in March, demand has gone up for the company’s pharmaceuticals and for chemicals such as a thickener that’s used in hand sanitizers, Ms. Yang says.
On the downside, Canada’s exports have been sluggish during the pandemic, with factory workers being sent home and shifts cut to enforce physical-distancing measures.
But there has been some growth in the export of goods and materials related to coping with COVID-19, says Dennis Darby, chief executive officer of Canadian Manufacturers and Exporters, the lobby group representing about 2,500 of Canada’s leading manufacturers.
“There has been stronger growth in pharmaceuticals, cleaning products and medical measuring equipment compared with other merchandise,” he says.
Still, Canada’s importing of pharmaceutical and medicinal products and raw goods still outstrips exports by far.
“In July, there was a record of about $5.6-billion in imports and about $2.8-billion in exports,” Mr. Darby says. By comparison, in July 2019, Canada imported $1.9-billion in pharmaceutical and medicinal goods.
Monthly import figures for PPE for June were nearly three times as high as the same month a year ago. Still, exports of these goods were up by 2.1 per cent in June compared with June 2019, Mr. Darby says.
At the same time, Canadian companies, both large and small, have pivoted quickly during the COVID crisis to serve health and medical markets, for customers both at home and internationally.
“There are lots of examples of companies reallocating production to PPE – masks, face shields and the like,” says Schulich’s Dr. Mawani.
In Kingsville, Ont., near Windsor, Brian’s Custom Sports switched from making goalie pads for professional hockey players to medical gowns; GM Canada signed a deal with Ottawa to produce 10 million face masks at its Oshawa, Ont., plant over the next year.
Such switchovers are only partly for export, Dr. Mawani adds. PPE manufacturing is also being ramped up to prepare for future waves of COVID-19 and even future pandemics, he says.
“Companies and health authorities have learned not to be caught short; we can expect to see more stockpiling of these goods within Canada just in case,” Dr. Mawani explains.
He estimates that there are about 5,000 companies in Canada currently manufacturing PPE products. While that’s only a small percentage of Canada’s total of about 90,000 manufacturers, many were not making PPE before the pandemic yet shifted their production almost immediately.
Some Canadian companies are making relatively simple products such as masks. For example, in August, 3M in Brockville, Ont. reached a $70-million agreement with the federal and Ontario governments to produce as many as 100 million N95 face masks per year so that Canada won’t need to rely on imports.
Canada’s PPE needs are managed through an industry-supported website, RRP Canada, which stands for Rapid Response Platform, that matches suppliers with companies that need protective equipment.
For exports, additional opportunities are in the parts and equipment that go into other, higher-end products, Mr. Darby says. For example, firms that normally supply the auto industry are making and shipping ventilator parts.
Canada’s three largest auto parts suppliers – Magna International Inc., Linamar Corp. and Martinrea International – agreed in March to work on producing 10,000 ventilators that the Ontario government has ordered to cope with COVID-19.
To get materials to fill these large orders, Canadian firms can take advantage of existing well-established cross-border and international supply chains. However, COVID-19 is forcing many firms to rethink their supply chains, both for importing raw materials and parts and exporting goods.
Clear supply chains were in place under trade deals such as the U.S.-Mexico-Canada Agreement (USMCA), its predecessor NAFTA (North American free-trade agreement) and agreements with Europe and the Pacific Rim. But COVID-19 disrupted many of these supply chains as the U.S. and other countries moved to protect their own stock.
“Canada, like many countries, was caught off guard when the pandemic hit,” says Barry Cross, distinguished faculty fellow of operations strategy at the Smith School of Business at Queen’s University in Kingston.
With the ongoing pandemic tightening borders and general international trade tensions rising, he and Mr. Darby agree that it’s important for Canadian companies to look at bringing their supply chains closer to home.
One other lesson companies are learning in this crisis is that their size doesn’t necessarily make a difference to success as a COVID-era exporter, adds BASF’s Ms. Yang.
“When everything changes, you have to move seamlessly. What’s important is to be flexible,” she says.