CANADA PORTS - Canadian border companies maturing, expanding south of the border

By: | at 07:00 PM | Channel(s): International Trade  Ports & Terminals  

Hope to reduce border hassles, expensesBy Leo Quigley, AJOTThe Bellingham Whatcom Economic Development Council is having its busiest year ever with enquiries from outside Whatcom County and they’re nearly all from Canadian companies looking to expand south of the border.
Rob Pochert, the council’s executive director, attributes the growing interest by Canadian firms to several reasons: a need for small to mid-sized entrepreneurial companies to avoid border delays, a push to expand the firm’s presence in the US market (sometimes with a “Made in the US” label) and the need to improve customer service and reduce labor costs.
“The issue here is not Canadian companies relocating to the US,” Pochert said. “These are Canadian-based companies that are expanding into the US.”
In nearly every case, the corporate headquarters for the company will remain in Canada. However, firms are setting up US subsidiaries to gain easier access to US markets. Prochert said that by being on the US side of the Washington State-BC border, companies can reduce the problems and expense border hassles create. “In many cases Canadian companies are purchasing components from the US, shipping them to Canada and then shipping back. There seems to be some concern that, as border security gets tighter, they’re going to have more hassles coming across the border,” he told AJOT.
Canadian food processors and wood product manufacturers in particular are looking for facilities and warehousing in the US Pochert said. “Again, a lot of that has to do with border issues.”
Rough lumber is moving from BC into Washington State where it is made into finished wood products, primarily because of the problems caused by US softwood tariffs.
On the other hand, Canadian firms producing food products find themselves faced with USDA and the FDA regulations prohibiting, or limiting, certain ingredients, causing border delays.
Prochert said most of the companies that are accessing his services are already doing business in the US, but see a subsidiary in Whatcom County as providing cost savings and becoming a valuable part of their strategic plan.
Arran Stephens, President and CEO of Nature’s Path Foods, is one Canadian businessman who has discovered the advantages of expanding into the US. His firm has a facility in Delta, BC, located on the US-Canada border, a 175,000 sq. ft. storage and logistics facility in Richmond, BC, and a recently opened 140,000 sq. ft. production facility in Blaine, WA., making it the largest employer in that city other than the US government. The firm is now setting up a major distribution center in Chicago.
Stephens said the company is now looking at expanding the Blaine facility to add more warehouse space in order to improve logistics and reduce costs. At present, Nature’s Path ships product from Blaine to its Canadian distribution center before shipping it to the US Midwest or the East Coast.
“It’s going to make a lot more sense to have a central distribution point in Chicago,” he said. “We’re producing and shipping so many truckloads every day, and when you’re shipping cereal, which is light, you want to minimize your freight costs, especially at a time when you’re getting hit with 15% or 18% surcharges due to fuel costs.
“You do everything possible to minimize inefficiency.
“If you’re shipping LTL loads out of this part of the country, to Connecticut, Chicago or to Florida, those LTL loads are killing you. We figure we’ll save ourselves a half million dollars a year by establishing a Mid-West (Chicago) warehouse.”
Stephens said the US-Canada border has become a definite factor in the company’s decision making.
“In the old days you could just ship down and you wouldn’t have to give notice. Now you have to give 24-hours notice, and there are more shipments that are delayed at the border because of USDA and Customs searches.
“They tend to be much more

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American Journal of Transportation