Bridging the Border
Cross-border business is beneficial – on both sides
by Lauren Kramer

It’s like any neighborly friendship. Sometimes you’re close, and other times there’s a little tension. But whatever the feeling, and no matter what the political climate, Canada’s proximity to the United States makes the country an undeniable trading partner and ally. The friendship and amicable relationship that prevails for the most part is a natural consequence of the two countries’ similarities and geographical closeness.
Many companies benefit from this proximity, using the nearby border that separates Washington state from British Columbia as a convenient way to conduct international trade.
Take Mobile Services, for example, a Bellingham-based company that operates Mobile Exchange and Mobile Armored. Remember all the Canadians you saw last time you were at the mall? Ever wonder what happens to the Canadian currency they spend in the U.S.?
Mobile Exchange picks it up from clients in Whatcom and Skagit counties, purchasing it at the client’s store or office in exchange for U.S. dollars, and transporting that Canadian currency back to its country of origin.
“We’re the only armored car company on the West Coast that routinely crosses the border,” says Larry Vander Griend, operations manager. “A lot of banks in the area buy and sell their Canadian currency from us, and though our insurance prohibits us from discussing figures, we handle millions of dollars each week.”

Reams of paper
Eleven years ago, when Vander Griend started working at Mobile Services, there was only one form the company needed to submit when it crossed the international border. Since 9-11, paperwork has increased exponentially. “We have to declare at U.S. and Canada customs offices, both when we enter and leave Canada, and the paperwork has become several pages each time, so we’re having to spend more time on it than we used to,” he explains.
More time means more money. “We’re spending an hour more per trip on paperwork requirements these days, so we’ve had to adjust our rates to reflect that,” Vander Griend says. “It’s simply more expensive for us to cross the border than it used to be.”
“We help our clients by allowing them to bypass all that paperwork and taking it on ourselves,” he continues. “Once we buy your currency, we own it, so we do all the paperwork ourselves. It’s much more complex for our clients to do it themselves through the bank, and they won’t receive nearly as favorable as exchange rate as what we offer them.”

Safe cash
It’s not just the exchange rate that’s favorable, but also the convenience of having a company come to your door – a company that’s insured to handle your currency and has a level of security necessary to thwart the potential danger involved when large quantities of cash change hands.
The security aspect is precisely what prompted Mobile Exchange to establish Mobile Armored, an armored car company founded to facilitate the moving of currency. “We can’t operate as an armored car company in Canada, but we can transport our own money to and from Canada, which is our primary concern,” he explains. In Washington, Mobile Armored will move clients’ currency deposits to their banks, and deliver American change orders to their doors.
“Most of our clients find this saves them time and money over the more risky proposition of handling it themselves,” Vander Griend says. As for the Western Hemisphere Initiative, which requires that by January 1, 2008, Americans traveling to and from the Caribbean, Bermuda, Panama, Mexico and Canada will require a passport or other secure, accepted document to enter or re-enter the United States, Vander Griend is not fazed.
“It will mean very little for us,” he confesses. “Canadians in the Lower Mainland are quite used to travel, and many all ready possess passports – a much higher percentage than Whatcom or Skagit residents. Also, we have a level of working relationship and familiarity with customs due to the paperwork requirements we have with them, so we don’t expect this initiative to have much of an impact on us.”

String bikinis in Bellingham?
Another company engaged in innovative cross-border business is International Market Access (IMA), where President Jim Pettinger and his staff of 12 assist Canadian companies in establishing an American business presence. “We have 130 clients, mostly Canadian, and we operate a warehouse, so we can store their products or material for them,” he says.
IMA helps Canadian companies with all aspects of their logistics and marketing support, including assistance with trade shows, processing orders and the handling of incoming goods. Located close to Bellingham International Airport, the 15,000-square-foot warehouse contains everything from string bikinis to excavators, electronic products, fish food and model airplanes.
What’s more, the company is the only operator of a general purpose foreign-grade zone in Whatcom County. That means that when goods come into IMA’s warehouse, they’re not yet in the customs area.
“We’ve noticed that Canadian companies are working with imported goods these days, as opposed to Canadian-made products,” Pettinger says. “In the last decade, since the Canadian dollar has become so strong, we’re dealing with more importers and distributors, with goods coming to us from Asia. Traditionally, in Canada, most manufacturing was done from central Canada.”
Pettinger has also noticed an increase in the maturity of the companies he’s working with. “I think that’s having a positive effect on Whatcom County, which is a stepping stone to reaching the U.S. market,” he says.
The 9-11 acts of terrorism were a double-edged sword for IMA. On one hand, complexities at the border crossings had a negative impact on business. “But the whole attitude of companies was, the border is not going to close. So it helped our business in the long term, because we were helping our clients with the new border issues,” he says. “In addition, Canadian companies were more interested in having a foothold in the U.S. at that time, rather than shipping them further out of Canada.”
As those companies obtain a stronger foothold in the US, they no longer require the services of IMA. Such was the case with Xantrex Technologies, a Canadian company that manufactures and sells power supplies. “They started with 4,000 square feet, and through increasing sales and acquisitions in the U.S., they’re now worth over $100 million,” says Pettinger. “They’ve graduated from us now, and have a big facility in Arlington. But luckily we do have more new clients than we lose old ones, and the replacement clients tend to be more mature.”

Legal counsel
A lot of Canadian companies are interested in doing business in the U.S. Just ask Greg Boos, an immigration attorney at Chang & Boos in Bellingham, who started moving Canadian companies into the U.S. in 1988. “The most common mistakes I witness are of companies that don’t do enough planning in terms of the structure of the relationship between their U.S. and Canadian companies,” he says. “Also, there’s often a failure to engage in good cross-border tax planning, and a failure to know the parameters of visa options available.”
The number of Canadian companies wanting to do business in the U.S. has been fairly consistent in the last 18 years, according to Boos. Typically, he meets with a company to discuss their options and then implements their goals, a process that can take five years or more, “though most of the years are well after the time they open their operations in the U.S.,” he says.
“The reason for that length of time is once a company starts growing, it may need to bring in more people from the head office in Canada. Some may decide they want green cards, and that process is long and protracted. Usually we can get them a non-immigrant visa, which can be obtained much faster. It’s a bit like playing pool. You try to take one shot, and then there’s a long-term option. We want to make sure they leave their options open, in case they want to exercise them.”
Not every company uses legal counsel when they aspire to do business in the U.S. “When they don’t, I usually catch them a few years down the line, after they’ve realized that their short-term options were coming to a close,” says Boos. “It’s absolutely essential for long-term success to use legal counsel. And in the long term, it’s a small expense to ensure you have your key personnel available to you in the U.S.”

More green pastures
It’s not just Canadian companies that are interested in cross-border business. Cheryl Schell, commercial specialist for the U.S. Consulate General, helps American companies promote their products and services in Canada.
That’s not a difficult endeavor, as long as they’re not looking to reside or establish their business in Canada, she says. “We help American businesses looking to find distribution channels for their products in Canada, and a strategic alliance. There aren’t a lot of hurdles they need to jump through – it’s like doing business with the guy next door. It’s just that there are differences in our business nuances and some regulations, and American companies have to understand that.”
American businesses became more interested in venturing into Canada when the B.C. government changed hands a few years ago. “When the new government came in and opened the doors for business, things started to happen,” Schell says. “Some of the American businesses that would normally have looked at further away international markets didn’t want to travel as far, and looked closer to Canada instead.”
The announcement of the 2010 Olympics in Vancouver was another catalyst, increasing the number of American companies looking to partner with Canadian companies for the games, from venue construction to security, engineering, architecture and venue furnishings.
“Businesses in Washington state have lately had a better look at B.C. than they’ve had in the past,” says Schell. “They realize there’s a market here, and that choosing to do business in Canada is a great first step for them, and an easy one. This is where they need to test how to do their exporting before they take it to the next step.”
The impending passport requirement changes won’t be a deterrent to cross-border business, Schell predicts. That’s because American companies doing business in Canada are all ready travel savvy, and don’t have an issue with documents on either side of the border.
American businesses interested in export market initiatives in Canada can contact the U.S. Commercial Service at www.buyusa.got/canada or by calling 604.685.3382.