Your Being A Bad Canadian Dollar…

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I intended on commenting on the US Dollar’s (USD) acquiescence to the Canadian Dollar (CAD) last Thursday when I received an email from Yahoo!, but I have been too busy to do so. As a result of a the half point drop in interest rates by the US Federal Reserve on Thursday we found for parts of the day (first time in 31 years) the CAD to be worth more than the USD. The reason I bring this up is that I wrote a paper 2 years ago on the projected value of the CAD for an international finance and economics course. The inspiration that made me choose the topic of this paper came when the VP of the Canadian Central Bank came to lecture our class on monetary policy and the future of the CAD. The findings in my paper paralleled most economist’s predictions about the CAD and how it was projected to make significant gains on the USD (It was roughly at around $1.25 CAD/USD the day of the lecture). From what I remember, I concluded that the CAD would surpass the USD and possibly by about $0.10 ($0.90 CAD/USD) based on the economic indicators of the time. I am not current enough in my knowledge on recent indicators to give estimates on the what is in store for the CAD (and I would have to brush up on a lot of theory…lol). I still think that the CAD will remain strong at least for a while purely based on what I have been reading recently about the international markets. This is especially rings true when we look at the Chinese currency peg to the USD and the huge amounts of USD China needs to achieve this and how global trade has shifted to demand increasing amounts of commodities from our resource rich nation.

This high dollar does pose a major threat to to all our domestic export oriented firms (although import oriented firms will be rejoicing). We have been blessed for a long period of time here in Canada with a trade surplus which has aided out economic growth and has sustained us in harsher economic times. The economy over the last 30 years has been subsidized by a less valuable CAD, and this has had a definite effect on our economy and the competitiveness of our firms. With a rise in the CAD we are starting to rely increasingly more and more on outsourcing to remain competitive and this will only increase. There is some positive in all of this that we must not forget. The extortion of corporations and the immoral and selfish behavior towards society by unions will hopefully loose ground as an increasing number of union jobs are relocated to countries with a competitive advantage in the labor market.

All jokes aside though, this actually really sucks for me. As the CAD increase, the value of Silverback Apparel sales in the US will diminish as long as I am living here in Canada and eventually converting profits back into CAD. I guess that means I might have to price everything in CAD if our dollar starts doing any better. Anyways I am expecting an early November launch of my first products (October 31th seem unlikely but I’m shooting for the Christmas shopping boom) online and in retail shortly thereafter. Keep up to date with my progress at the Silverback Apparel website.

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The Problem With Outsourcing

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Plain and simple: the problem with outsourcing is that you don’t always get what you are asking for. I have been dealing with a manufacture in Costa Rica for the past 2 months and they have been great. They are very professional and have been really easy to work with, even saving me thousands in development costs. There is one outstanding issue that has retarded the launch of my product for about a month and a half now, which is the fabric. I chose to use a full package manufacture (they do everything from A to Z) which is something that I suggest for any new entrepreneur. The only resounding problem with this specific manufacture thus far has been that it seems to have trouble giving me the exact fabric that I am asking for. I have provided them on three separate occasions with fabric samples of the type of fabric I would like to use in the production of my first line of clothing. They have promised me every time that they would easily be able to replicate the fabric and everytime the results they have sent me were not even close.

The last sample I sent them two weeks ago was significantly closer to one of the previous production samples they had sent me so that it would be easier for them to replicate. As a result the sample fabric I received back today was even further off the mark that the previous attempts at fabric replication have been. What I have noticed is that they keep sending me what ever is closest in their fabric catalog and don’t even try to replicate the fabrics that I ask for. These kind of manufactures are specifically tailored to replicate any type of fabric, and as I saw on my tour of the factory, they have all the required equipment to do so. The second to last sample they sent me was suppose to contain a blend of 90% polyester and 10% cotton with a weave that would make the fabric resemble cotton but have the wicking properties of polyester. After I ran a couple tests on the sample they sent me, I noticed that the fabric retained water just like you would expect in 100% cotton. I decided to put it to the ultimate test: a flame. Sure enough it did not melt like it should have if it were 90% poly, but it rather disintegrated which is characteristic of 100% cotton. This lie was very troublesome and I am getting increasingly weary of the company I have been dealing with. Even though they had won an immense amount of loyalty through their other services, their failure to provide me with what they promised has nearly crushed their loyalty advantage. They obviously have a significant weakness in the production of fabric and this needs to be rectified if they plan on competing in this global market. Here is a marketing and customer relations rule that every company will want to follow: Never promise your customers something you cannot deliver on, because one lie will erase countless favors in the past. Thus it is better to be honest and lose a customer for one contract, than to lie and to lose him for life.

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