Manufacturing companies in Nova Scotia have mixed feelings over the low-flying loonie, which is helping boost exports, but also increasing the cost of parts and services from the United States.
Bluedrop Performance Learning Inc. is a company that builds realistic helicopter cockpits and develops computer simulations to train the next generation of Canadian military personnel who will operate the fleet of new maritime choppers and Arctic patrol vessels.
A total of 110 people work out of its Halifax office. Bluedrop's sales are about $20 million a year and exports — about 10 per cent of its current business — are growing.
The company sold a cockpit and simulation room to the government of Colombia for police use. The lower Canadian dollar is also helping Bluedrop beat the competition and pick up new customers, such as Boeing.
Canadian labour costs attractive to U.S.
"Our workforce is primarily Canadian — about 200 people — so our cost of labour compared to U.S. companies is lower," said Carl Daniels, the vice president of business development for Bluedrop.
"Our labour costs makes us attractive to the American companies we work with."
The loonie has hovered around 71 cents US this week. While the lower Canadian dollar represents an opportunity for Bluedrop to grow the export side of the business, there's also a downside.
Specialized components for the computer-tracking system and many parts used in the simulators are made only in the United States and must be imported. They're costing Bluedrop an extra 30 per cent today, and while Daniels said the currency change is currently "revenue neutral," that could change if the 70-cent dollar is here to stay.
"Right now it's OK, but long term it will hurt us slightly and we will have to compensate by taking less profit or increasing the prices for our products," said Daniels.
Bluedrop is headquartered in St. John's, N.L. Some of its offshore customers have been affected by falling oil prices, which are also contributing to the drop in the value of the loonie.
'Weak Canadian dollar, I say yahoo!'
GeoSpectrum Technologies Inc. employs 44 people in Dartmouth. The company builds underwater acoustic devices for the offshore industry and Royal Canadian Navy.
Close to 70 per cent of its sales are exports. The gap between the American and Canadian dollar will help grow that market in 2016.
"A weak Canadian dollar, I say yahoo!" said Paul Yeatman, president of GeoSpectrum.
"We become much more competitive and I see sales go up. The other aspect is why is the Canadian dollar weak? The Canadian dollar is weak because energy prices are down and where we sell into the energy sector, that's a concern.
"But the dollar itself is good news for us and we are actually seeing growth in sales to both defence and environmental customers."