October 16, 2007 09:00 ET

MGPS: Canadian Exporters Can Recover Margins Even With a Strong Dollar

TORONTO, ONTARIO--(Marketwire - Oct. 16, 2007) - The Canadian manufacturing sector has been hit hard by the strengthening of the Canadian dollar. American buying power has been weakened and revenues have dropped. Canadian exporters are feeling the squeeze as margins shrink.

However, it's not all bad news. Canadian importers are winning. The cost to import goods, including raw materials has dropped significantly, while pricing has remained stable. In short, margins are higher as the savings are not passed on to the Canadian consumer.

This also applies to Canadian businesses that purchase many of their goods and services from Canadian importers. The savings are not being passed on. The good news for the Canadian exporter feeling the squeeze is that some of their expenses can be reduced, which will help alleviate the strain. Many of these expenses are in non-core areas, those expenses that are not tied to revenue. They are typically sourced from Canadian suppliers - many of whom purchase their raw materials, or even finished goods, from outside Canada.

By having the right knowledge of expenses, Canadian companies currently feeling the squeeze can demand a discount from those companies that are currently benefiting from the strong dollar. The additional profit and cash flow can then be put to good use in other areas. For example, machinery and equipment upgrades are cheaper now, since most of this is sourced from the United States.

Better understanding of suppliers and expenses can lead to healthier margins and greater productivity.

About MGPS

MGPS is a management consulting firm with financial, operational and change management expertise. MGPS specializes in reducing non-core expenses. These expenses tend to be indirect, hidden and scattered throughout the organization. MGPS works with the client to identify hidden costs, to develop and implement efficient processes and to drive out unnecessary expenses. In addition, MGPS works with the client to ensure early adoption of any changes to the organization's expense management. The end result is increased cash flow and greater profitability.

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