Canada consul to see area

February 15th, 2016

News Coverage:

February 14, 2016

Canada consul to see area

Downplays his country's recession on Indiana business

SHERRY SLATER | The Journal Gazette

Canada’s top business representative to Indiana is downplaying concerns about weakness in the Canadian economy.

Consul General Douglas George, who is stationed in Detroit, said Hoosiers shouldn’t worry about a Canadian recession even though Canada buys more Indiana-made products than the next six countries combined. 

The dramatic drop in the price of oil has driven down the value of the Canadian dollar, George said last week during a phone interview with The Journal Gazette. Overall, the Canadian economy is still growing – just more slowly than the U.S. economy, he said.

George referred to what he described as the Great Lakes economy, which represents goods and services moving across the U.S.-Canadian border at Detroit and Windsor, Ontario. He sees it as a joint economy that remains relatively healthy. Two experts on Indiana’s economy agreed.

Today through Friday marks “Canada Week in Indiana.” George’s itinerary includes making a presentation to Fort Wayne business leaders, hosting a legislative reception in Indianapolis, visiting Purdue and Notre Dame, and meeting with state and regional economic development officials.

One-third of Indiana’s total exports go to Canada. For comparison, the state sells more to its northern neighbor each year than the entire United States sells to France, George said.

Michael Hicks, director of Ball State University’s Center for Business and Economic Research, expects Canada will pull out of recession this year.

“Canada has overall a fairly robust economy,” he said. “The downturn they’re experiencing right now is not terribly deep because it’s almost wholly related to petroleum prices.”

The bigger threat to Hoosier manufacturers is economic weakness in U.S. states that depend heavily on petroleum production and refining, including the Dakotas, Texas, Oklahoma and Kansas, Hicks said. Residents in those states aren’t buying many new Silverado or Sierra pickup trucks, which roll off the production line at General Motors’ Allen County assembly plant.

Even though Canada is Indiana’s largest foreign trade partner, it accounts for only a portion of the state’s customer base, he said.

“They’ve been in recession for many months now,” Hicks said of Canada, “and the Hoosier economy has barely noticed it.”

Ye Hu, an international trade specialist with the U.S. Department of Commerce, agreed with Hicks about the minor effect of Canada’s recession on Indiana. Hu said one reason is demand from Mexico for Hoosier-made products has been increasing, which offsets weakened demand from Canada.

Canadian major exports to the U.S. include oil and natural gas, energy sources that will all get cheaper, George said. Hoosier manufacturers should benefit, enjoying savings that could offset any sales decline to Canadian customers. 

Hicks says lower energy prices should help local employers.

“One of the things that has really put the hurt on Hoosier manufacturers is energy costs,” he said.

George, who started in the position on May 1, 2014, was formerly Canada’s ambassador to Kuwait. The Detroit job opportunity was attractive because George has international trade expertise, an undergraduate zoology degree with background related to the Great Lakes and knowledge of bridges. His father was chairman of the Blue Water Bridge Commission. The Blue Water Bridge connects Highway 402 in Ontario with I-69 and I-94 in Michigan.

George is responsible for making sure the Detroit-Windsor border operates efficiently, allowing trade to move smoothly while maintaining both countries’ security.

“We want the U.S. and Indiana’s economies to be strong because it benefits us,” he said. “And you want our economy to be strong because it benefits you.”  

At a glance

Canada is Indiana’s top export destination, based on dollar value of sales. The state’s top 10 customers and the amount of Hoosier goods they bought in 2013 were:

1. Canada, $11.8 billion

2. Mexico, $4.0 billion

3. Germany, $1.9 billion

4. Japan, $1.8 billion

5. France, $1.4 billion

6. China, $1.3 billion

7. Netherlands, $1.2 billion

8. U.K., $1.0 billion

9. Brazil, $1.0 billion

10. South Korea, $874 million

Source: Indiana University Kelley School of Business