Arlene Anderson, president and co-owner of Sam Bat, at a facility in Carleton Place, Ont., on May 8, 2021.James Park/The Globe and Mail
During the COVID-19 pandemic, some Canadian small businesses have found international export markets to be a lifeline.
Sam Bat, a well-known Carleton Place, Ont.-based maple baseball bat supplier, is one of them.
Last spring, Sam Bat’s co-owner Arlene Anderson said she wasn’t surprised when COVID-19 arrived in Canada because she had been obsessively tracking the outbreak since its start. But the pandemic hit her business hard. The first blow came from Major League Baseball (MLB), which provides a large customer base for the company. By mid-March, the league had cancelled games, suspended spring training camps and pushed back the start of the 2020 regular season.
“We had to lay off almost everyone because it was like a tsunami,” Ms. Anderson said. The company employed 15 people, which was cut to four that spring.
They didn’t fare better in Canada. “The Canadian market was previously about 20 per cent of our sales and that, last year, went down to pretty much zero,” she said. She doesn’t expect Canadian demand to rebound until the fall or next year.
“So, we had to make it up in other areas around the world.”
Taiwan, for instance, did not go into a full lockdown and maintained a market for Sam Bat in those early pandemic days. The American market also reopened quickly, starting with MLB’s return in July 2020. Currently, the company sends around 85 per cent of its products to the U.S. – up from 70 per cent pre-pandemic.
Sam Bat is not the only company to see a shift. As of December 2019, there were 1.2 million small businesses – enterprises with under 100 paid employees – in Canada, making up 97.9 per cent of employers in the country. There are 22,905 medium-sized businesses, which have under 500 staff.
Some of the finished maple wood baseball bats for sale on display at the store in the Sam Bat facility.James Park/The Globe and Mail
Few of them are exporters. While many small businesses support more trade between Canada and other countries, exporting is still not a common practice among most SMBs.
In September 2020, delivery service FedEx commissioned a poll surveying 1,500 business decision-makers in Canada, the U.S. and Mexico. It found that only 30 per cent of Canadian small and medium-sized enterprises are already importing and/or exporting goods.
Why the low rate? In a 2019 poll for FedEx, over half of the 500 small Canadian businesses surveyed said they don’t export because their customers are largely local. Business owners who do export reported that fees and tariffs are a big challenge.
Keeping up with trade regulations is also important.
The new Canadian-U.S.-Mexico (CUSMA) free trade agreement is the most recent and relevant change for Canadian enterprises. Still, Dennis Darby, chief executive officer of the Canadian Manufacturers & Exporters, said most small businesses haven’t seen a big impact from the new agreement.
In addition, many small businesses don’t have a strong online presence, which is necessary for those that want to enter international markets – though this is slowly changing as a result of the pandemic.
Corrine Pohlmann, a senior vice-president at the Canadian Federation of Independent Business, said around 20 per cent of small companies were selling online before COVID-19. Now, that figure is now closer to 40 per cent, and almost half of the small businesses that adopted e-commerce over the past year said they will continue post-pandemic.
While the pandemic has accelerated this uptake, Ms. Pohlmann attributed the reluctance to adopting a digital presence before to high costs and a sharp learning curve.
“To sell and market your business online requires a very different skill set than if you’re doing a brick-and-mortar store, which a lot of small business owners just don’t have,” she says.
But once businesses overcome those barriers, owners say exporting and targeting online sales opens up opportunities.
That’s the case for Michel Germain Parfums, Canada’s leading fragrance maker that is also based in Carleton Place.
Owner Michel Germain said he has long offered products exclusively through department stores Hudson’s Bay in Canada and Macy’s in the U.S. In the last decade, he also launched an online platform to connect with a younger clientele, but only started doing digital marketing such as Facebook advertising in 2019.
Mr. Germain said this new push has helped sustain his company through COVID-related store closures, with online sales more than tripling to now represent 40 per cent of the business.
“We were able to dial up our presence online and our sales have been through the roof,” he said. “But our in-store business was very challenged.”
Mr. Germain adds that in-store sales in the U.S. have also recently “picked up in a big way.” The company currently ships around 65 per cent of its products there.
Looking back, besides some delivery delays during the pandemic, Ms. Anderson and Mr. Germain say the main logistics challenge over the pandemic came from higher up in their supply chain. Due to a renovation boom, wood has become harder and more expensive to source for Ms. Anderson. Mr. Germain has seen a glass shortage, too.
This is also because of the global shortage in shipping containers, which makes it harder for small companies to import the materials needed to make their products. Mr. Darby attributed the shortage partly to the rising demand for goods during COVID-19 as people are spending less on services.
But with the U.S. receiving over 75 per cent of Canada’s total exports, many small businesses can rely on other shipping options, such as trucking, instead. Still, Mr. Darby emphasized the long-term need to invest more in Canada’s port and rail capacity.
Ultimately, Mr. Darby said there has been “a pretty good recovery” for small exporters and pointed to the ongoing economic rebound south of the border as a good sign. Some small businesses owners are similarly optimistic.
“To me, I see nothing but opportunities when I look down the road,” Mr. Germain says.