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2003 was Canada’s “annus horribilis”. The economy was hit by a number of negative shocks including: the SARS crisis, a ban on Canadian beef exports, a hurricane in Atlantic Canada, devastating forest fires in British Columbia, and a summertime power outage in Ontario. And more specifically to our industry, a dramatic rise in the cost of steel.

Another factor that emerged in 2003 that pressured our 2004 growth lower was the sharp appreciation of the Canadian dollar. The Canadian dollar traded at over 85 cents US in November 2004. This is a ten-year high and represents a near 37% gain over the 62 cent dollar from January 2002. This is the sharpest increase in the dollar in modern history. We are now in an environment where we must considerably improve our productivity to remain competitive.

Prior to 2002, we experienced an increase in foreign steel being used on North American projects.This led to a huge surplus of ‘cheap steel’ in the US market. The result of declining prices wounded the steel mills.President Bush recognized this and in March 2002 imposed his tariffs on steel imports.

The years 2003 and 2004 can best be described as the years of the Dragon. The entry of China into the WTO, the Beijing Olympics, and the Asian Games, have all led to massive infrastructure development in China. It can be argued that the subsequent worldwide recovery of steel prices was directly the result of Chinese imports. The demand for steel in China was so great, steel prices rose dramatically and many domestic fabricators and builders were forced to pay premium prices for steel…often far beyond what was budgeted. These increased prices created enormous pressure for cost-cutting measures in all aspects of the job. Profitability for fabricators and detailers became an anomaly and many steel fabricators and detailers were forced to close down.

Studies did show that with the rise in the Canadian dollar, exports fell in 2003. Although exports still slowed somewhat again first quarter 2004, they recovered again in the first half of 2004, with an increase of more than 10% within 6 months. This is what we (Dowco) have experienced as well. We have found that during the second half of 2004, things have been slowly and systematically improving (keep fingers crossed, and knock on wood).

Economists insist that 2005 growth in the US economy will be at a solid pace and that Canada will match this growth. In total the GDP growth for 2005 is expected to fairly close to its 2004 rate, rising 3.5%.

The good news is that history always repeats. So let’s now plan for those 7 or 8 years of growth and, hopefully, profitability that lie ahead. Put on your track shoes and get in the starting blocks.