Spotlight on canadian manufacturing

Many companies in the canadian manufacturing sector are still making late payments, but nowhere near as many as in 2009, and the insolvency trend is downwards.
Analisis Credito y Caución
Madrid - 28-jan-2011

How has the manufacturing sector performed in the past six months?

During the global economic downturn, demand for Canadian manufactured products, both domestically and from abroad, declined dramatically. The manufacturing sectors GDP dropped from C$ 170 billion in 2008 to C$ 151 billion in 2009. By the end of Q3 of 2010, demand had returned a little and output/production had begun to increase. The manufacturing sectors GDP at the end of September 2010 was showing a trend back to an annualized level of C$ 161 billion. However, a comprehensive rebound seems to have been constrained by a slower than expected recovery in the USA. Companies in this sector contended with a hyper-competitive marketplace and this competitive challenge was compounded by an elevated Canadian dollar. As recently as March 2009, the C$ 1.00 was equal to US$ 0.79, but it has steadily appreciated in 2009. Since January this year, has stayed above US$ 0.95.

What is the current trend in payment delays and insolvencies?

Many companies in this sector are still making late payments, but nowhere near as many as in 2009, and the insolvency trend is downwards.

What should companies selling into the manufacturing sector pay particular attention to?

Companies who sell into manufacturing need to be aware of where their customers trade, i.e. what the end market is for their manufactured products. If their customers sell domestically, is their Canadian end market stable. Conversely, if they export their products, how have they managed the issues of foreign competition and exchange rate.

What is Crédito y Caucións short term outlook for the manufacturing sector?

The short term outlook for the manufacturing sector is fair. As the global -and US- economy rebounds, the demand for Canadian manufactured products will naturally improve. However, unless companies in this sector address market issues and compete more effectively, the sector will not achieve a positive outlook in the near to medium term.

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