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Celebrating Canada Day, and Canada trade

Robert Spendlove Zions BankJuly 1 is Canada Day, the national day of our neighbor to the north. The holiday celebrates the enactment of the Constitution Act of 1867, which united three colonies into what we now know as Canada. Since Idaho and Canada share a 45-mile border, this is a good opportunity to celebrate our shared relationship.

Canada maintains a strong relationship with Idaho because of close geographic proximity, ease of doing business, a common business culture, a similar rule of law, and a receptive and friendly business environment. The Canadian and U.S. economies are closely interrelated, which is a benefit for both countries.

Idaho and Canada have a strong and vibrant trade relationship. Canada is Idaho’s largest trading partner, just as it is the United States’ largest partner. In 2015, Idaho exported more than $977 million worth of goods to Canada. This export activity has dropped in recent years, from a high of $1.7 billion in 2010. However, Idaho exports to Canada are still three times as high as the second-largest export country. In Idaho, more than 32,000 jobs depend on the cross-border trade with Canada.

The top exports from Idaho to Canada include Chemicals (27 percent); Minerals and Metals (26 percent); Agriculture (15 percent); Equipment and Machinery (11 percent); Forest Products (7 percent); Transportation (5 percent); and Other (10 percent).

On the other side, the top Idaho imports from Canada come from Agriculture (24 percent); Forest Products (18 percent); Chemicals (14 percent); Minerals and Metals (12 percent); Equipment and Machinery (10 percent); Transportation (5 percent); and Other (16 percent).

Idaho’s top goods exported to Canada include: fertilizers ($129 million); ores, slag and ash ($105 million); inorganic chemicals ($71 million); furniture and bedding ($60 million); and wood and semi-finished wood products ($42 million). Idaho’s top goods imported from Canada include: animal feed and food industry residues ($83 million); inorganic chemicals ($63 million); softwood lumber ($50 million); wood and semi-finished wood products ($47 million); and fertilizers ($43 million).

One example of this relationship is McCain Foods Limited, which is based in Florenceville, Canada. McCain Foods operates a large potato-processing plant in Burley. The Burley plant was originally built in the 1960s and is one of several McCain processing plants throughout the United States. McCain Foods is investing more than $100 million to expand the Idaho facility, which employs around 500 people and has annual sales of more than $125 million.  McCain is a major supplier of frozen potato and snack food products to national restaurant chains and grocery stores.

Another example is Formation Metals, Inc., a mineral exploration and mine development company headquartered in Vancouver, Canada. Formation Metals has been developing a cobalt mine near Salmon, Idaho. They have worked closely with federal, state, and local officials to design a mine and production facility that reduces environmental impacts. This investment helps with the growing rechargeable battery sector and is essential to the future of hybrid and electric vehicle technology.

Because of the close proximity, many tourists also come to visit Idaho from Canada. More than 700,000 Canadians visit Idaho each year, and they spend around $125 million. Tourism spending has the same positive impact on an economy as exports because it represents money coming into an economy from another geographical area. This becomes the basis for many other jobs, due to the multiplier effect that basic employment brings.

The trade relationship between Idaho and Canada is one that we should celebrate.  Exports support thousands of Idaho businesses and jobs. A total of 1,757 companies exported from Idaho locations in 2012. These were overwhelmingly small- and medium-sized businesses, with fewer than 500 employees. Hopefully, this strong trade relationship will continue long into the future and will continue to benefit the economies of Idaho and Canada.

Robert Spendlove is the economic and public policy officer for Zions Bank, a division of ZB, N.A., where he monitors and reports on economic indicators and public policy developments and publishes a monthly “Economic Snapshot” for the U.S. and Idaho at www.zionsbank.com/economy.

 

About Robert Spendlove