Although Canada has a strong and number one ranked banking system, that doesn’t mean that Canada’s economy is immune to the influence of the U.S financial system meltdown and the United States going down the road towards recession.
With many Canadian businesses either medium or large having most of their business coming from American consumers and companies alike, this economic turmoil that the U.S is going through is currently impacting Canadian business in a big way, and will continue to impact Canadian businesses for the next year or so.
Ten’s of thousands of people in the United States has already lost their jobs and homes and that will continue. Currently the unemployment rate in the U.S is at its highest for the last 14 years. What this means is that there will be less consumers out there spending money, because simply put the U.S consumers have less than before, and most have high debt. Also American companies will also be cutting back, reducing their cost. This translates into less demand overall for products produced by Canadian companies and abroad.
Speaking from my own experience, the corportation that I work for has already begun cut backs (restructuring). Yesterday, the division I work for, which receives 80% of its business from the United States started to cut back on staff. Basically, one vice-president, and four middle management staff, and one marketing personel was let go or laid off, which translated into roughly half a million dollars in cost cuts for the company, and this is only the beginning. We were told that our other divisions will be going through cuts and consolidation as well.
Whether you are American, Canadian or somewhere in Asia, do not expect business to pick-up any time soon. I have noticed that our product orders have gone down significantly this quarter, and if it doesn’t improve by Dec.31 there will be more lay offs. This is just the nature of economics at play, and there isn’t much you can do about it as an individual except have some savings in case you get laid off. That’s it.
I expect Canadian unemployment may rise in the next few months as well. Nortel, one of Canada’s tech company just recently cut 1300 jobs. You just have to read the headlines to see what is about to unfold in the next 6-12 months.
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