“A low dollar encourages Canadian investors to keep their money at home and draws other international investors looking to get value for their money to the Canadian marketplace” (CATAAlliance)
According to CATAAlliance CEO, John Reid, “The impact of the declining loonie needs to be seen through the lenses of money, markets and people, all essential ingredients for building Canada’s competitive innovation nation.”
In commenting on money, Mr. Reid said, “Investing in Canada, including innovative start-ups and growth capital hungry firms is more and more attractive at today’s exchange rate. Canadian assets are effectively discounted when compared to their U.S. counterparts.”
He added, “Access to growth capital, a longstanding concern for Canadian tech, thus begins to disappear. A key concern then becomes ownership structure, how many companies remain with head offices in Canada as commercially successful flagships?”
There are always trade offs and the development cycle is long.
Regarding market opportunities, Reid said, “A low loonie enables Canadian firms to generate added revenues in the U.S. marketplace while enjoying lower overhead expense levels in Canada. Our dollar goes further with a boost to profit margins for Canadian tech firms.”
“And the fall in the loonie's value also has a positive effect on business for nearshoring businesses in Canada as well as in areas such as consultancy and logistical services on sale when adding in the U.S. dollar premium. They are seeing and will see an upswing in business.”
Lastly, regarding attracting and retaining key talent, there are challenges. Reid commented, “ Canada because of its historically favourable immigration policies, strong educational system and attractive community life, enjoys access to a pool of innovation talent. Keeping that key talent in Canada to support growth is challenged when the U.S. can clearly offer significantly higher pay and benefit packages, subsidized by the U.S. dollar. Today and going forward, the scramble for talent will intensify.”
CATAAlliance has identified the attraction, retention and training of talent has one of its key policy planks of the competitive innovation nation campaign, or moving Canada to 1st place for innovation and competitiveness.
Reid concluded, “It's a new age, and Canadians need to embrace it with new value creation processes. We need to learn from the oil crash low loonie era that we can't put all our eggs in one basket.”
The above was provided as commentary to IT World Canada.
The Canadian Advanced Technology Alliance (CATAAlliance) is Canada's One Voice for Innovation Lobby Group, crowdsourcing ideas and guidance from thousands of opt in members in moderated social networks in Canada and key global markets. (No Tech Firm Left Behind)