Eagle Vision Quarterly Newsletter

December 2010

Richard L. Simms,
President, Black Eagle Executive Search

 There was a fascinating article in the Globe and Mail on December 6, 2010 entitled “U.S. Manufacturers ‘booming’ with exports to China” by Martin Mittelstadt.

 Mittelstadt presents the following observations from Benjamin Tal, chief economist of CIBC World Markets:


He believes manufacturers in the United States are undergoing a stealth renaissance that has gone unnoticed by most investors.

               In a remarkable turnaround, the sector is prospering by winning orders from emerging markets, its supposed nemesis….One of the fastest growing U.S. export categories consists of selling toys to China – a market the Chinese are supposed to dominate. U.S. sales in this niche are surging, rising from $14 million (U.S.) in 2008 to $240-million in the first nine months of this year, a staggering 17-fold increase.

               Economically more important sectors, such as transportation and farm equipment, are also enjoying brisk rises in exports.

               Mr. Tal contends that manufacturers south of the border are in the early stage of a long-run burst of prosperity that will also benefit Canadian companies that have U.S. operations or that provide supplies to the U.S. market.

               Merchandise exports from the U.S. have risen at an annual rate of more than 10% during the first three quarters of this year. Even more remarkable, sales to emerging markets like China have surged a staggering 45% since the beginning of 2009, more than twice the pace observed in sales to developed countries.

               U.S. companies have been able to win export orders because they’ve cut costs, introduced innovative products and increased productivity at a faster clip than any other advanced country over the past decade, lagging only South Korea and Taiwan.”


In parallel with the U.S. surge in exports to China, there are continuing strong export sales of resources by both Canada and Australia to China which is a major driving force in economic growth for both countries.


Recent reports that Christmas sales in Canada and the U.S. indicating 4% and 5.5% increases respectively over last  year, is also good news for these recovering economies. This is somewhat offset by a drop in U.S. house prices in October 2010 by 1.3%, a drop in consumer confidence in December, as well as a rise in the U.S. unemployment rate for the first time since July 2010 to 9.8%. In Canada, a December 3rd Statistics Canada report indicated that “the unemployment rate in Canada fell to 7.6%, its lowest level since January 2009”. However, to quote from that report:


"Manufacturing employment fell by 29,000 in November, bringing employment in this industry to 1.73 million, or 47,000 (-2.6%) below its level of 12 months earlier. With this decline, manufacturing's share of total employment continued its long-term downward trend, reaching 10% in November, the lowest since comparable data became available in 1976. This was down from 15% in the early 2000s and 19% in 1976."


This trend in Canada is worrisome although lost jobs in manufacturing have more than been offset by increases in Service sector jobs. Canada has not experienced the U.S. productivity gains as noted above, and this situation has been exacerbated by the Canadian $ hovering around parity with the U.S. $. This subject will be discussed in a future Eagle Vision newsletter.


All the best for a successful 2011 from Black Eagle Executive Search!










































Contact Black Eagle

Telephone: (416) 458-9969
Email: info@blackeagle.ca