H.A. Massey and Company manufactured farm equipment and tools in Ontario factories, before shipping them overseas. The U.S. is the one market it avoided.Jeff McIntosh/The Canadian Press
John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian.
The need to diversify Canadian trade continues. American tariffs on Canadian goods spotlight concentration risk: 75 per cent of this country’s exports go to the U.S. That risk’s sharp point cut through recent Statistics Canada data showing that “Canadian exports cratered in April and the trade deficit soared to a record high.”
The numbers are stark: April exports to the U.S. dropped by 15.7 per cent, and our trade deficit surpassed $7-billion. We are buying far more abroad than we are selling.
Betting on a renewed U.S. trade deal isn’t a sure win. Mounting U.S. national debt (US$36.2-trillion) that President Donald Trump’s One Big Beautiful Bill Act will exacerbate is causing bond markets to flash red. An American fiscal crisis will weaken U.S. demand for Canadian imports down the road.
During the Canadian federal election campaign, Prime Minister Mark Carney’s Liberals had proposals to help businesses “diversify away from the U.S.” and soften the ebbs in trade flows caused by American political and economic instability. Easy said, harder done.
What does success look like? A lot like a business case study that documents the rise of one of this country’s earliest industrial triumphs that put “Made in Canada” on the world’s manufacturing map.
In the lead-up to Canadian Confederation in 1867, the U.S. had abrogated a free-trade deal and imposed new tariffs. Canadian businesses and farmers were compelled to figure out how to manage increased costs while seeking new markets, both internal and external. One of those businesses was family-run H.A. Massey and Company, based in Newcastle, Ont.
The Masseys immigrated to Cobourg, Ont., from the U.S. in 1802 and took up farming as their chance at fortune. They soon realized that the farming tools their prosperity depended on – equipment used to clear land, prepare soil, plant crops and harvest them – were, as one family member told a reporter at the time, “the same as those used in the days of the Pharaohs.”
Thus began a quest to find, build and innovate new technologies that would transform farming from an arduous, subsistence exercise to one that generated prosperity and nation-building growth.
The Masseys tinkered with their own farm implements in their work shed and foundry. Yet they also long spent time and money exploring the innovations emerging across Lake Ontario in places such as New York state, where a much larger and wealthier market fostered technological successes and failures at a rapid pace.
The made-in-Canada tools that are helping make ‘buy Canadian’ more convenient
They bought farm implements and tools from the U.S., reverse engineered them and then licensed the best ones for use in Canada, which they would then produce, honing their manufacturing capacity in the process. At the same time, they learned to market and took advantage of new railway building in Canada to expand their customer base.
The company won critical acclaim for its harvesting equipment at home and soon found itself representing Canada at the 1867 International Exhibition in France. There, it walked away with two gold medals: one in marketing for its display and the other, importantly, in recognition of the superior performance of Massey harvesters.
From gold medals to foreign sales, Massey reapers and mowers found markets. Twenty were sold to buyers in Germany after the exhibition in France. Twenty years later, Massey equipment was being sold in Europe, Britain, Turkey, Russia, South America, Jamaica and most British colonies.
Massey farm machinery and tools were made in factories in Ontario and shipped overseas using steam-powered ships with corkscrew propellers that opened global markets. But the one market Massey avoided was the American one to the south.
What the Masseys had accomplished is what business schools today call the multiplier effect. Through market diversification, the company built economies of scale, mitigated the seasonality associated with selling only in Canada, widened its field of learning to global customers and suppliers, and refined its ability to win business in the face of strong competition that further supported research and development of their own products at home.
The take-away for diversifying away from the U.S.? Rather than compete against their American counterparts in the U.S., the Masseys made the critical decision to learn as much as they could from American enterprise and know-how, add their own innovations and expertise, and use the outcome to beat brash U.S. competitors at their own game on the global stage and in Canada itself. Only after that, in 1910, did they enter the U.S. market.
“Made in Canada” became a market differentiator in the 19th century. Today, it still can be.