For many companies, reasons to make the move to the U.S. side are obvious: they’re looking for the desirable “Made in the USA” stamp of approval, lower utility costs, or looking to fill a contract requirement. But there’s another, more specific issue that often gets overlooked: the costs of border crossing.
More and more Canadian companies are taking a closer look at these costs, looking at factors like how many U.S.-based suppliers they work with and what percentage of sales are going back into the U.S. market. Often, between the costs of moving goods over the border twice, fees associated with shipping, losses due to time delays, and the costs of customs paperwork, it’s actually more cost effective to open a manufacturing facility stateside.
Let’s take a look at a few real world examples to make the issue clearer. We recently worked with a company from Southern Ontario that purchases most of its raw materials from the U.S. west coast, then sends 30% of its sales back to the states. Though notable, this isn’t even a remarkably high ratio—another company we've talked with sources 98% of its raw materials from the US and has 60% US sales.
The costs associated with all this back and forth can easily eat up profits, or even lead to decreased shelf life for perishable products. A potential answer for similar manufacturers may be to consider a facility on our side of the border to share resources—and save time and money.