Because most of Screenflex’s product is imported from the U.S., we constantly monitor the Canadian dollar / U.S. dollar exchange rate. And, like just about everyone else in Canada, we have been keeping a very close eye on things as the Canadian dollar approached, and then exceeded, parity.
It is of course good news for Canadian importers and their customers that the Canadian dollar has been gaining. But it seems that there always has to be bad news as well, and in our case it is the fact that the U.S. manufacturers have been increasing their prices steadily. The ink manufacturers have had 8 plasticiser price increases in 9 months and there is nothing they can do about it because one very large international conglomerate has the virtual monopoly on plasticiser production. Fortunately, we have mostly been able to offset those price increases for the past two years or so against the improving Canadian dollar.
Something else to keep in mind with regard to this U.S. dollar issue is that while Canadian businesses are paying less for items sourced in the U.S., all their other expenses are still paid in Canada in Canadian dollars. Transport, wages, insurance, rent, utilities, travel, and most other costs of doing business in Canada continue to rise.
But, in spite of all that, we are reducing prices on most U.S.-sourced products in recognition of the recent strength of the Canadian dollar. We have to be cautious though as manufacturers’ prices continue to rise and the Canadian dollar is volatile, recently rising and then falling up to 3 cents a day. For now, prices on most products will be lowered from 2% to 10%. One exception will be Kiwo products because the manufacturer’s recent increases have exceeded the Canadian dollar’s gains.
We do not know for how long the Canadian dollar will maintain its strength against the U.S. dollar. Some economists have suggested that the Canadian dollar will slip back below par in about 6 months. In addition, we expect the U.S. manufacturers to continue to increase their prices in order to recover increased costs for imported raw materials as their dollar declines against other major currencies. And we expect to continue receiving increases from domestic suppliers, especially those dependent on oil prices, such as the transport industry.
Screenflex will be watching the exchange rates carefully and will continue to price as fairly as we have done for the past 20 years.