High Loonie Winning Formula - London Free Press Article
Released April 18th, 2011
For Scott Shawyer, this is make-up time.
The president and owner of JMP Engineering is one of a growing number of manufacturers taking advantage of a climbing loonie, low interest rates and a stable recovery by investing in their businesses in an effort to recover from the recession faster.
"We have seen a big increase in spending from our customers in automation and with the dollar the way it is now, it goes much farther," said Shawyer, owner and president of the London-based engineering firm on Meadowbrook Dr.
"We have seen a lot of activity over the last six months."
That comes as no surprise to David Blyth, district vice-president of BMO Bank of Montreal for Southwestern Ontario.
A recent Leger Marketing survey done for BMO found 58% of industries are taking advantage of the strong loonie to buy and invest in their industry.
"It is about bettering productivity. We are starting to see a larger appetite for buying from the U.S. to improve efficiencies here," Blyth said.
"Canadian companies feel the economy has turned the corner. This is an opportunity to get productivity enhancements, to get added value and increase innovation."
JMP is one such company, Shawyer said. It specializes in automation and information systems for manufacturers, meaning it buys technology and equipment from Canadian and U.S. suppliers and retools them for a business's specific needs.
"A lot of our stuff is custom-made," he said. "We will buy robots, add brains to them and integrate it for customer use."
The high loonie has hurt manufacturers, pushing up the price of goods made here as most industries export to the U.S. But the economic climate means a business can borrow for less, then buy inexpensive equipment in the U.S. - that's the upside of a strong dollar.
Shawyer also pressures Canadian suppliers to match the U.S. prices - and they do, he added.
"We always negotiate to get U.S. pricing in Canada."
At JMP, business has climbed about 40% over the last six months. But in 2009-2010, sales dropped about 30% as few companies invested in new technology and industrial equipment.
JMP does about $25 million in sales a year, on average.
"It has been great for us," Shawyer said of the high dollar/low interest rate combination. "Customers are able to make investments and can do it in a cost-effective way."
This year, JMP will top pre-recession levels in sales. The business employs 120, with plans to add up to 40 staff.
JMP is interested in acquiring industries. It recently bought businesses in Toronto and Philadelphia and wants to add others in Dallas and Atlanta.