One of a number of issues that was raised during this year’s Green Business / PricewaterhouseCoopers Executive Roundtable was the Buy American Act and whether it is affecting Canadian companies hoping to do business in the U.S. Despite the amount of negative press that has surrounded that Act, by and large participants at the roundtable were not overly concerned. The challenge for companies entering the U.S. market is how to operate within the U.S. system.

“The reality in the U.S. right now, whether it’s implicit or explicit, is that U.S. companies buy American,” says Albert Behr, President and CEO of Behr and Associates. “But never confuse where you are going to develop a vibrant industry with where you are going to sell a product. At a company I used to work for, our customers thought we were an American company. The box on the product said San Jose, but of 700 employees, 500 were sitting in offices in Toronto.

“We have to recognize that we are probably going to have to open U.S. offices, and we have to think carefully about how a company is going to be structured,” Behr continues. “You are going to have to hire Americans because Americans buy from Americans. No matter how close we feel we are to the U.S., there is a definite line at the border.”

Philip Ling, VP of Technology for Powersmiths, has a similar understanding of the U.S. market.

“We have 95 per cent of our business in the U.S., and we’ve grown from zero to 45 people here in Canada, but all of our sales and distribution staff are U.S. reps,” says Ling. “There is a very American face to our company. But, for instance, I had a call recently from California regarding a transformer project and was asked where the product was being manufactured. The client hasn’t said that they’re going to buy American, but it’s implied. So we know the answer has to be, ‘depending on your design requirements, it can be built in the U.S.’

John Gocek, COO of Sofame, notes that his company hasn’t had too much of a challenge selling into the U.S. as yet, even though it has its manufacturing base in Quebec.

“We’re as competitive as we need to be to sell into the U.S.,” he notes. “Quebec is pretty competitive in terms of cost. As for the U.S. stimulus bill, I’m not even sure U.S. companies can really accomplish the thresholds required, considering many components are manufactured overseas.”

However, Gocek isn’t complacent about the issue of the Buy American Act. He is seeing signs of that challenge with particular projects.

“The Buy American Act states that if a project is in the construction industry and the cost is more than $25,000, you can buy in Mexico and Canada because of NAFTA,” he explains. “However for some, NAFTA seems to have gone right out the window because on one or two occasions, we have simply been left out of bidding processes. We have been told we can’t bid. These individuals don’t even know what the Act says, which is a serious concern.”

What was made abundantly clear from the experiences of these roundtable attendees and others is that having some sort of presence in the U.S. as a business gives companies a definite edge in that marketplace. Whether it’s a sales force or manufacturing, that local contact can open doors.

Robert Colman is the Editor of Green Business.

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