TORONTO - A large majority of Canadian plastics companies don't expect Quebec to separate from the rest of the country, but if it does, most believe the break would hurt their businesses. In a recent Plastics News fax poll of Canadian readers, most respondents also indicated that continued weakness of that country's currency relative to the U.S. dollar will help their businesses.
Although Canada's industries are tied closely to the U.S. economy, factors unique to the northern nation can help or hinder its firms' competitiveness. Continued weakness of the Canadian dollar and the threat that its French-speaking province Quebec may separate are two major differences between the partners in the North American Free Trade Agreement.
``If [Quebec separation] does happen, it will be harder for us to sell,'' said Jacques Nadeau, general manager of Plasti-Drain
Ltd., a plastic pipe producer based in St. Clet, Quebec. ``Price and quality are important, but it will be tougher to compete if it goes through,'' he said in a telephone interview.
Quebec's majority party, Parti Quebecois, promised it will hold a referendum on Quebec separation this year. Although polls show a majority of Quebec's population favors continued inclusion in Canada, as many as 40 percent of its people want the province to become a separate country. A vocal minority has pushed for decades to separate the province from Canada to preserve its distinct, French culture.
Nadeau was among the 82 percent of poll respondents who said they do not think Quebec separation is imminent. Noteworthy was that among companies based in Quebec, 87 percent do not expect the current government to separate.
Plastics News conducted a fax poll of 662 Canadian plastics firms the week of Feb. 13 to gauge their opinions on the Canadian dollar, Quebec separation and the impact of NAFTA. About 18 percent of the firms, for a total of 122, responded. They included 58 processors, 29 material suppliers, four original equipment manufacturers and 31 moldmakers and providers of other plastics services.
Survey results are consistent with a recent poll by the Conseil du patronat coalition of Quebec businesses, which found 84 percent of its members expect that Quebec independence would have a negative economic impact for at least five years.
Some plastics company officials said Canadian customers would prefer to buy from Canadian firms rather than a separated Quebec, which they would consider a foreign country.
``A few of our customers have said so,'' said Kevin Maggs, plant manager for Newdon Industries Ltd., an expanded polystyrene molder in Fergus, Ontario.
Several other companies based outside Quebec said they would expect to land more business from a separation-induced backlash.
While debate on separation rages inside and outside Quebec, the uncertainty of the province's eventual status adversely is affecting 37.7 percent of companies, including 43.4 percent of those based in Quebec. About 41 percent of suppliers and processors reported negative impact from the uncertainty.
Many respondents said the uncertainty makes Canada appear unstable, weakens the Canadian dollar, causes potential investors to defer decisions about Canada and Quebec and sometimes prevents U.S. customers from signing long-term supply contracts. But not all agreed.
``We're not affected yet,'' said Paul Henderson, marketing manager for Canplas Industries Ltd., a Barrie, Ontario, injection molder of plumbing fittings and other components. ``We have lived with this political uncertainty for years.''
Most Quebec respondents did not want their names to be used with comments on separation, to avoid possible backlash from political and business opponents. Some said uncertainty about the issue has created a bad investment climate in Quebec and that government spends too much time and energy debating the issue.
Uncertainty about Quebec, coupled with a federal budget deficit, have weakened the value of the country's currency for several months.
The weak Canadian dollar has had a generally positive impact on Canadian firms. It helps boost exports to the United States and elsewhere, although many firms complained it also boosts costs of imported machinery and materials.
``The Canadian dollar is great for exports,'' said Rolf Runser, president of mold maker K&K Tool Ltd. of St. Jean, Quebec.
Although the weak currency contributes to higher steel costs, metal cost is a small component of a mold's price, he said.
The impact of signing NAFTA with the United States and Mexico has not affected the business of 50 percent of respondents in the survey. Only 15.5 percent of processors said NAFTA has hurt business and 34.4 percent said it has helped them.
NAFTA is more beneficial for suppliers, with 62.1 percent saying it has been positive for their businesses. Survey respondents listed several other Canadian issues hurting their business, some of which are related to Quebec and the nation's weak dollar. Their complaints included high interest rates, the federal deficit, excessive government spending and regulations, government incentives for business, and high resin prices.
One thermoformer was upbeat about issues that drew complaints from other firms.
``When you know what a problem is, you can prepare for it,'' said Ed Baker, marketing manager for Chester Plastics (1975) Ltd. of Chester, Nova Scotia.
``I say, `Try to run a business in Sarajevo or Mexico - look how tough that is.' ''