Marissa McTasney, founder of the women’s work-boot company Moxie Trades, says she needs to expand to the U.S. in order not to be vulnerable to the smaller retail arena in Canada.
Ten years ago, Marissa McTasney sold her first pair of pink work boots – the trademark product of her company Moxie Trades Ltd. – to a U.S. customer through her online store.
But she waited another five years to fully launch into the U.S. market to make sure she had the knowledge base, market strategy and inventory in place to tackle this new and potentially lucrative market.
Since then Ms. McTasney's U.S. base has grown to 30 per cent of her $2-million-a-year sales, including a recent partnership with industrial safety product supplier Illinois-based W.W. Grainger Inc.
America first
But with U.S. President Donald Trump's protectionist "America first" talk, which includes discussions of increased domestic manufacturing and heavy taxes on competing imports, Canadian business owners such as Ms. McTasney are feeling concerned about what lies ahead.
Many, however, have no option but to look at the much bigger market south of us.
"For me, it's quite significant and I've been looking to grow the U.S. business so that I'm not so vulnerable here in Canada," she says. "There are not a lot of large retailers in Canada, so I wanted to diversify."
U.S. exports
According to the World Bank, the United States accounts for more than 90 per cent of Canada's export footwear market and about 82 per cent of its clothing and textiles market, totalling more than $2.5-billion (U.S.).
"With the American made motto that's happening right now I do have some concerns, but it's very hard to make North American footwear at prices North Americans want to pay," adds Ms. McTasney.
The rebooted Made in the U.S.A. sentiment has some Canadian footwear and apparel companies – like Ms. McTasney's – worried about their products being dismissed in the U.S. market, but experts say this isn't the first time this motto has come up and it may be just a lot of hot air.
The U.S. President decreed in his inaugural address last January that his office would implement a strategy to "buy American and hire American," and while this concept has gained vigour since then, it's certainly not new, says Ian Lee, business strategy professor at Carleton University's Sprott School of Business.
"Trump did not create or invent this issue," he says. "This has been percolating and bubbling in the U.S. over the last 10 to 15 years. … It's been present in certain sectors and it came up in the recession of 2009."
Job losses
Dr. Lee adds that, specifically, the manufacturing sector has supported this shift to more domestically made products "because there's been a lot of job loses in that sector."
The United States lost five million manufacturing jobs between 2000 and 2014, according to the Economic Policy Institute.
Much of this downturn is due to manufacturing positions becoming obsolete by the introduction of technology and jobs going overseas where the cost of labour is cheaper.
Niche market
While this issue is not new, Dr. Lee says, Canadian apparel producers are in a unique position because they can still grab on to a niche market even within the U.S. – unlike steel or lumber, where buyers and sellers are competing simply on price, not on a unique product.
"I do think that Canadian companies can succeed in the manufacturing sector," explains Dr. Lee, but adding: not if they think they can compete on price with manufacturers in places such as Mexico or overseas.
In Canada, labour costs are simply too high to produce apparel and footwear without incurring higher overall prices, often passed on to the consumer.
Ms. McTasney manufactures her products in China and Cambodia.
Partnerships
There are several work boot companies in North America that make their boots domestically that Ms. McTasney has tried to partner with to get in on the American made movement, but she hasn't had any luck so far.
"I'm going to keep trying and exhaust these options, so I know I've done my due diligence."
But while there may be options to partner with American made safety boot companies, Mr. Kirke says, "There's no question that the cost will be substantially larger and higher and [you'd] have to convince people that it's worth it."
Dr. Lee, however, says there are ways Canadian apparel companies can compete in this market.
Canadian edge
"I think there is a market for high-end, high-quality, and expensive products made by Canadian firms sold into the U.S. market," he says.
"We're smaller than the state of California," he adds. "That doesn't mean that we can't compete, but it means we have to do what the Swedes have done and develop niches and come up with something unique at the higher end of the market.
Bob Kirke, executive director at the Canadian Apparel Federation, echoes Dr. Lee's recommendation for Canadian apparel and footwear producers to not lose sight of the unique place they have in the market.
For him, companies like Moxie Trades have already cornered their market by creating something distinct – like pink work boots – so going after the U.S. market with Made in the USA tactics is not necessarily beneficial to these companies.
"If a woman can buy a boot from another women entrepreneur and it's pink, there's plenty there to justify that expense," says Mr. Kirke. "My recommendation is just do more of what they're doing."