Sam Bat gets competitive edge from weak loonie
A Carleton Place company that produces wooden bats for Major League Baseball players says the weak Canadian dollar is giving it a competitive edge.
The majority of the 22,000 maple bats produced annually in the Sam Bat factory west of Ottawa are exported — as far as Australia, Japan, Italy and France — increasing the company's "bottom line quite dramatically" when the loonie is weak, said president Arlene Anderson.
“It increases our revenue on each bat sold and also it makes us far more competitive because our costs are lower than our competition, which is in the United States and elsewhere,” she said.
It's a welcome change for Anderson, who joined the company in 2007 when the loonie soared to a high of $1.10 U.S. when Sam Bat had been trying to increase its production, she said.
"That was extremely difficult," she said. "It made us less competitive and made manufacturing very difficult here."
The Canadian Federation of Independent Business said that a quarter of its more than 100,000 members across the country prefer a weak Canadian dollar because they export products.
Uncertainty of exchange rate 'a loss'
For Lee Valley, an Ottawa-based woodworking and gardening tools distributor that sells in both Canada and the U.S., the exchange rate itself matters less than how quickly it changes, said president Robin Lee.
“We really get it from all sides whenever there’s a currency fluctuation,” Lee said. “In parts of the business we gain, in parts of the business we lose, but, overall, the uncertainty is a loss.”
Setting prices for annual catalogues when the exchange rate could change after they have been printed and delivered is a challenge, he said.
"We are sacrificing margin to ensure that our price will stay competitive given a medium variation in the exchange rate," he said.
"So, we leave a lot of money on the table in times of uncertainty because you always want your pricing to be defensible."
Ted Mallett, chief economist for the Canadian Federation of Independent Business, said that business owners should plan for both a weak and a strong Canadian dollar.
"It always helps to do some scenario analysis. Put these costs into a spreadsheet and figure out, 'Okay, what if the dollar changes by five cents or 10 cents? What will it do to my entire cost structure?' And that way, at least, if you know what the risks are, then you'll be able to at least plan," he said.
