With approximately 70 per cent of his business’ contracts with companies that export metal products to the United States, Niagara-on-the-Lake resident Dean Sanders is facing some big decisions in light of US President Donald Trump’s tariffs on Canadian products.
The 25 per cent tax on imports to the US could mean layoffs of Sanders’ already small staff of five. Alternatively, his five-day-a-week operation could be cut down to two days. Most drastically, he could opt to sell the business he and his wife Lynn have worked so hard to develop over the past 16 years.
Sanders opened Budget Sheet Metal Laser Cutting at a facility on Cushman Road in St. Catharines in 2009. The South African native was the first to bring a laser machine into Niagara, and business was at first slow.
“Then I started making some parts and I was getting noticed for my good quality work,” he tells The Local. “I don’t advertise; word got out, though, that I believed in quality, and that was enough to get me more and more customers.”
In those early days, Sanders worked alone at Budget, doing everything himself. As sales increased, he was able to hire staff and acquire more equipment. He purchased a new machine last February and has expanded Budget’s facility twice. He even has an application ready to go for a third expansion, though those plans are now being put on hold.
Budget’s biggest customer is Cushman Rd. neighbour Bicknell Racing Products, who manufacture and distribute parts and chassis’ for stock cars throughout Canada and the US. Budget specializes in laser-cutting flat pieces of steel and applies its process to make chassis cabs for BRP’s stock cars.
Sanders has been making parts for BRP almost since he opened Budget.
“He walked over here one time when our crew was running machines until 10:00 or 11:00 p.m. every night,” says BRP’s Randy Williamson. “We figured out that he could take some of that load off us. Dean has been a godsend to us, and he’s made things nice and local for us.”
Like Sanders, Williamson is panicking a bit over the tariffs. As much as 80 per cent of what BRP sells goes to American dealers and racing teams. Williamson says the month-long push-back of the tariffs allowed them to move about $1.5 million worth of products across the border before today. But there’s no telling what tomorrow will bring.
“We got a bit ahead of the game,” says Williamson, “and for now, we’re going to take the hit as a company. I can’t promise you that if this keeps going on for another month or a month and a half, though, that I can continue doing that. And we have to look at the value of the dollar, too.”
Sanders also manufactures parts for Jordan Station-based dishwasher manufacturer Moyer Diebel and for St. Catharines-based Core Equipment, makers of trucks used to paint the lines on the side of roads. .
“They just opened a U.S. office about 2 years ago,” says Sanders. “We make parts for about 10 or 15 trucks a year for them that go to the States, so it's not looking good.”
For the past few months, Sanders has been in constant contact with his three biggest customers as they have all been bracing for the impact the tariffs will bring. As he says, “we’re all in the same boat, and it seems to be sinking.”
Asked if there is a chance he can find businesses within Canada that may help him offset some of that impact, he adds, “all manufacturers would all be trying to do the same thing. We have a niche market that we’ve built up over the years, and trying to replace it will be difficult.”
He also points out that costs to manufacture in Canada are already quite high.
“Our property taxes, our insurance,” says Sanders, “and we pay our staff really well, they have benefits, it’s not like in Mexico where workers are paid very little.”
With COVID just recently behind him, as well as an increase in interest rates, the tariffs feel like just the latest hit for small business owners such as Sanders.
“We’ve just now started to come out of those crises,” he laments, “and now we get the tariffs. It feels like pre-COVID all over again.”
Sanders holds out hope that the US and Canada can get back to the negotiation table and put an end to the impasse caused by the American government. But he’s not overly optimistic.
“I just can't believe that one person can have such a negative effect on millions of people,” an incredulous Sanders offers. “The whole thing is just so ridiculous. I think Donald is just doing this so he can lower the tax rate for his extremely rich buddies. It’s a slap in the face.”