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By Fergal Smith
TORONTO, Sept 6 Smaller Canadian technology
companies making products like robotics, drones and high-tech
thermostats are proving to be some of the biggest winners as the
country's recently struggling non-commodity export sector shows
signs of revival.
Data released on Friday showed Canada's trade deficit in
July unexpectedly shrank on stronger non-energy exports, which
had struggled for months. The Bank of Canada sees the sector as
crucial to helping revive an economy hit by low oil prices.
Bank of Canada Governor Stephen Poloz has admitted to being
puzzled by disappointing export data, given a soft currency and
improving U.S. demand.
But executives with several export-oriented technology
companies said both factors are helping drive demand for their
products, and prospects for sales abroad are better than what
many people believe.
"Despite what you read, the economy is incredibly strong,"
said Stuart Lombard, founder and chief executive of Ecobee, a
maker of Wi-Fi-enabled thermostats that does 90 percent of its
business outside of Canada.
"We are growing our revenue at 100 percent year-over-year...
and I would say our outlook is only positive."
His optimism is shared by several makers of innovative
products aimed mainly at foreign buyers. They note Canada's weak
dollar has helped keep labor costs low and prices competitive.
"We are roughly doubling every year in sales," said Bryan
Webb, chief financial and operating officer and co-founder of
Clearpath Robotics, which develops self-driving vehicles for
industry. He estimates that 60 percent of his sales are to the
"We earn a lot more right now that the (Canadian) dollar is
low," he said. "We're able to innovate more, we're able to serve
more customers, we're able to expand faster because of that."
To be sure, high-tech exports remain a small part of the
picture, which includes commodities like oil, natural gas and
minerals, as well as non-resource exports like auto parts.
The environment is not perfect, Webb said, noting some
larger U.S. businesses are taking longer to make decisions than
in the past. But he believes the doldrums are ending and
business investment is poised for longer-term growth.
Executives said while it was at times a very tough slog to
find buyers following the 2008-2009 financial crisis and U.S.
economic slump, conditions are improving - just as the Bank of
Canada has been anticipating.
"It was a tough period, and it was an early period (of
business development) for us too, so it was hard for us to wait
those guys out," said Phillip Abrary, chief executive of Ostara,
which sells systems that recover phosphorus and nitrogen from
sewage to sell as fertilizer.
But the business is booming now as U.S. budgets recover and
green technology becomes a requirement forced by regulatory
change, said Abrary.
The executives said they still face challenges like barriers
to trade, financing, regulatory uncertainty, rising anti-trade
sentiment and finding qualified employees.
"Things like Brexit and the fall of the pound have hurt us a
little bit and pushed out some deals, or put price pressures on
some deals as a result," said David Kroetsch, chief executive of
Aeryon Labs, a drone maker that exports 80 percent of its
(Reporting by Fergal Smith; Additional reporting by Andrea
Hopkins in Ottawa, Alastair Sharp in Toronto and Allison Lampert
in Montreal; Editing by Jeffrey Hodgson and Dan Grebler)