Dropping oil price, lower loonie not all bad for Canadian businesses

Watch above: The markets may be shaken by the dropping price of oil, but one of the Royal Bank believes it might not be that bad and could add up to an economic benefit. Reid Fiest reports.

You could say Toronto’s Mellow Walk Footwear has a bit of a kick in its step. The Canadian shoe manufacturer is one business that is benefiting from the low price of oil.

Robert Violi, the company’s chief financial officer, said the resulting lower value of the loonie means Mellow Walk’s products are now more affordable to buyers outside Canada.

READ MORE: Cheap oil could help Canadian economy: RBC

“They’re finding our product pricing to be a little better and as a result we’re seeing an increasing volume,” he said.

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The company employs 50 to 60 people in its Toronto factory and plans to add to its workforce this year.

It’s promising news that Ontario Premier Kathleen Wynne is banking on, saying her province is ready to pick up some of the economic slack from oil losses in the rest of Canada.

The Royal Bank of Canada, in a report released Monday, said that’s not unrealistic.

Paul Ferley, the bank’s assistant chief economist, said manufacturers could do $7 billion more in exports this year because of the low loonie and Canadians will save at least $9 billion at the pumps.

“Dollar amounts are there,” said Ferley. “It’s just sort of an issue [of] whether firms and households will take advantage of some of positive benefits of low oil prices.”

READ MORE: The loonie is diving again — and is expected to fall further

But, not all parts of Canada will see benefits.

The report notes Newfoundland & Labrador, Saskatchewan and Alberta will all see significant hits to their budgets.

Energy analyst Michael Ervin, of MJ Ervin & Associates, said those losses will still affect the entire country and he isn’t sure the gap can be made up by other provinces.

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“Jobs will be lost, likely to the fact that there is reduced revenues provincially, but [on the] federal level as well, combined with the fact many companies outside western Canada provide services to the oil industry,” said Ervin.

Alberta’s premier Jim Prentice also isn’t seeing the good news.

“What we are going to see is lower business investment… in parts of the country and we’re going to see lower corporate income profits,” said Prentice.

But while some parts of the country stumble, Mellow Walk says its more like a walk in the park.

“It certainly has been a positive for our business,” said Violi.

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