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Exporting picture looks blurred - Graham Clayton (3/02)

Last year I participated on the northwestern Ontario regional committee of the Ontario Global Traders Awards program.

Last year I participated on the northwestern Ontario regional committee of the Ontario Global Traders Awards program. This program, as you probably know, is heavily oriented towards the recognition and honouring of small- to medium-sized enterprises for their achievements in export market development. The program is run by the Ontario International Corp. with support from an impressive array of corporations, associations and trade-related federal agencies.

The reason that I mention this is that it drove home the point, once again, that here in Northern Ontario we still seem to have a relatively low level of firm involvement in exporting. While we were able to identify a very deserving slate of regional firms for the various awards, it was selected from a surprisingly short list of prospects (well short of 50 in our region). When one looked at the successes realized by the nominees, the demonstration of what can be achieved through exporting, the seemingly low level of export involvement was all the more perplexing.

Ontario is by far the most export-active of all of the provinces. By the province’s own account, more than 1.6 million Ontario jobs are based on provincial exports, and these exports account for more than 50 per cent of Ontario gross domestic product. So where does the north fit into all of this?

We know that a huge chunk of our forestry and mining sector output is destined for sale abroad, but what else is going on, and who is doing it? Are we achieving close to our export potential? If so, fine. If not, why not?

My business colleague Jack Mallon, who until recently chaired the advisory committee for our two international business (IB) diploma programs at Confederation College, has asked me repeatedly over the years why so many of our IB graduates head to southern Ontario or out west for jobs. My answer has always been in part because they cannot find international jobs with local or regional firms.

Getting accurate data on the number of active exporters operating in Northern Ontario is difficult. There are a number of databases put together by one party or another with numbers ranging as high as 900- plus firms, but the confidence one can have in these figures varies.

The Worldwide Information Network export database currently lists 477 Northern Ontario firms as export-active or export-interested. Unfortunately some of the firm entries in this database are quite dated.

This leaves us without a really solid current figure for the actual number of northern exporters.

One of my local federal friends “guestimates” (an informed guestimation) that there are probably about 550 firms that are trade-active in Northern Ontario, most of which are located in the northeast. This number could well be in the ballpark, but what does it imply?

According to contacts at Statistics Canada, there were 37,579 businesses operating in Northern Ontario last summer. Note, the geographic definition of Northern Ontario used to generate this number did not include Bracebridge, the Muskokas, etc., but rather started at Parry Sound, moved east to the boundary of Algonquin Park, and then north and east around the park and over to Mattawa.

If we express the 550 firm "guestimate" as a percentage of the StatCan total, it works out to 1.5 per cent of Northern Ontario firms being export-active. This does not seem like a lot, but we need to look at figures for other regions and for Canada as a whole to get some perspective.

According to data listed on Strategis there are 1,042,204 employer businesses (defined as businesses that maintain a payroll for one or more persons) currently operating in Canada. On top of this there are also 982,304 indeterminate businesses. This latter group consists of registered business entities of one fashion or another (including many self-employed individuals) that do not maintain a payroll.

If this sounds confusing, it is.

About four or five years ago some federal reports dealing with exporting cited a figure of 70,000-plus firms being involved in exporting nationally. More recent reports employ numbers of about 30,000 firms, but typically exclude a whole bunch of firms, including those with export volumes of less than $30,000 per year.

Going back to our regional “guestimate” figure of 1.5 per cent of Northern Ontario firms being export active, it would appear that our regional firms export involvement is about 40 per cent of the national average, or less.

So where does this leave us? Basically, still wondering whether we are underachieving, overachieving, or essentially on target given our circumstances.

Written by Graham Clayton, economist/director, Institute for Global Entrepreneurship and Electronic Commerce, Confederation College.