The Top Trends in Canadian Business for 2016
2015 showed Canadian business owners and executives that uncertainty is the new ‘normal’ for operating a firm. With major shakeups in the Canadian economy, federal government, and international business factors, nothing can be taken for granted, and businesses must be willing to go beyond expectations to stay alive. Having reported major trends affecting business during 2015, the Globe and Mail published six factors that it believes will influence Canadian business conditions in the new year. Of these six factors, three have a significant effect on small businesses, and should be considered in-depth when planning your business’ strategy for the coming year.
A Divided Manufacturing Industry Searches for Innovation
Of all Canadian industries, manufacturing had an exceptional year in 2015. The Canadian dollar’s weakened value and rebounding strength of American industries has helped the industry’s outlook considerably. The challenge of manufacturing is that there are two vastly different groups operating here: energy and non-energy products. The energy manufacturing sector, which has been hit hard by declining oil prices, has witnessed plummeting demand and a grim overall outlook. Non-energy manufacturing, led by Canada’s automotive industry (that grew in value by 13% from October 2014-October 2015) has received support through both Canadian government funding and corporate investments.
2016 will continue to see the development of these trends, as well as technological advancements that will revolutionize the industry. An emphasis towards innovation will guide manufacturing in the future, with Canada’s most innovative companies becoming more influential around the world. Product and process improvements will assist manufacturers to address this trend and become more competitive on a global level.
Related Blog: Keeping a Competitive Future for Ontario’s Automotive Industry – Canada’s automotive industry is transitioning to find advantages in a global economy. The most promising future for the industry is not in assembly, but creating electric vehicles. Find out why Canada’s automotive future should be in EV development.
Canada’s Energy Industry Seeks New Competitive Edge
Canada’s energy industry outlook is unattractive, at best. Since the energy market downturn started in mid-2014, the value of oil has plummeted and investors have become extremely hesitant to fund new projects. Failure to reach an agreement on Keystone XL has stalled investment and construction for one of the industry’s most significant projects and generally shows a lack of confidence for a rebound in the near-future.
With more cutbacks planned for the energy industry, one can expect prices to remain low, industry employment (especially in Alberta) to fall, and the profitability of Canada’s energy producers to become severely reduced. Canadian businesses should seek new niches in the industry, including the production of green energy, to lead the country through this transition. In 2016, innovative and forward-thinking companies will become bright spots to an otherwise stagnant, depressed industry.
Related Blog: Canada Declining in Market Share for Global Cleantech Industry – Despite hosting some of the most innovative companies in the world, Canada is declining in clean technology exports. The Canadian energy industry should seek to develop leading technologies and export them globally for a sustained advantage that is less dependent on oil prices.
Diminished Loonie Cuts Retail Profits, Luxury Brands Harmed Least
Among the biggest retail headlines of 2015 was the announcement that Target would be closing all of its Canadian stores. Announced in January 2015, Target suspended its Canadian operations less than two years after opening their first Canadian stores. This defeat only highlights a larger problem for the industry, which is diminishing profits across almost all segments. Canadian retailers have been struggling to contend with higher import prices, which will continue to impact profitability once supply contracts expire and must be renegotiated.
Luxury brands will make the most progress in the 2016 retail market. Their heightened selling price and profit margins will allow the companies to continue growing despite less-than-stellar market conditions. Other retailers will be forced to implement strategies that shift price differences to the consumer. In addition to dropping profits, retailers may have to charge consumers an additional 10% or more for goods being imported from the United States and worldwide. This will continue retail’s shift towards e-commerce, since it’s cheaper than opening physical stores and is gaining popularity among consumers.
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