Spending by Americans boosts jobs up in Canada

People getting hired to make the products US consumers are buying on this Labor Day, they just aren't American workers. They're across the border.

Employers Canada, the largest US trading partner, added 326,000 jobs in the first seven months of this year. More than a third were at manufacturers, which send about 65 percent of their goods to other countries. At the same time, the US lost 122,000 jobs, as factories eliminated 311,000 positions and embraced labor-saving technology such as computers to stretch production and control costs.

That focus on boosting productivity, or the amount produced per worker hour, is keeping a lid on hiring at US companies. In Canada, job-creation gets a boost two ways from the country's weak currency, as US corporations take advantage of the exchange rate to add workers at their plants north of the border and Canadian companies prefer to hire to cope with rising demand, rather than buying equipment priced in US dollars.

"We've got all the ingredients that make this an absolutely amazing sell in the US, and that's what we're doing," said Elaine Minacs, chief executive of Toronto-based call-center operator Minacs Worldwide Inc. Minacs Worldwide employs 4,000, and most of the Canadian workers provide customer relations services for US companies, she said.

The Canadian dollar fell to a record low US$0.6175 against its US counterpart on Jan. 21, capping a 25 percent slide since 1990. It had rebounded to US$0.6416 on Friday.

"The low Canadian dollar means it's cheaper for Canadian firms to hire labor rather than invest in machinery and equipment," said Doug Porter, a senior economist at BMO Nesbitt Burns Inc in Toronto.

American productivity grew at an 8.6 percent annual pace in the first quarter, more than double the rate in Canada, where government figures show productivity has lagged the US by almost a full percentage point a year since 1995.

Job in Canada is also outpacing that of the US, because the economy is growing faster, economists say. Figures last week showed the Canadian economy expanded at a 4.3 percent annual pace in the second quarter, compared with a 1.1 percent growth rate in the US.

The story isn't the same for Mexico, the No. 2 US trading partner, and the third party to the 1994 North American Free Trade Agreement. Hundreds of export assembly plants, called maquiladoras, sprung up on the US-Mexico border after Nafta took effect. And while Mexico sends 85 percent of its exports to the US, accounting for a quarter of its US$620 billion economy, the export industry hasn't thrived.

The number of Mexican maquiladora factories shrunk to 3,236 in June from a peak of 3,763 in June 2001, according to the national statistics agency. The number of employees has fallen by a fifth to about 1.09 million workers from 1.35 in October 2000.

In Canada, exports to the US account for a third of the economy. And a 2.5 percent rate of increase in US consumer spending so far this year has helped push up shipments to Canada's southern neighbor by 5.8 percent.

Muttluks Inc, a Toronto-based maker of fleece dog-boots, is adding more than 40 workers to fill rising orders from dog owners who want protect their pets' paws.