MICHAEL JAMISON Missoulian WHITEFISH
Eric May has a handful of cold, hard cash Canadian currency collected at his downtown bar but he just can't bring himself to make the deposit. Because as soon as he takes that coin to the bank, it'll be transferred straight into U.S. dollars. A few months ago, that was no problem: Canadian dollars were worth as much as or more than domestic dollars. But in recent weeks, the value of Canadian currency has been in free fall, plummeting some 25 percent against U.S. currency. A Canadian dollar now buys only about 77 U.S. cents. "I'm just crossing my fingers that it rebounds soon," May said, "so I can start making some deposits." May owns the Bulldog Saloon, where they've always taken Canadian money at par, regardless of the exchange rate. Sometimes, that's to his advantage. Sometimes not. Actually, mostly not. It worked well back in 1976, which was the last time Canada's "loonie" named for the waterfowl on the country's dollar coin was matched in value with U.S. currency. Since then, the dollar generally has outpaced the loonie, with the disparity hitting its recent bottom in 2002, the year a loonie bought just 62 cents here in the States. During the worst of those years, Canadian tourist travel all but dried up in border towns such as Whitefish, as Montana's northern neighbors paid a stiff premium to shop and play here. The turnaround came, finally, in the last months of 2007, when a weakening dollar began slipping against a strengthening loonie. A domestic credit crisis pushed currency down at home, while high oil and energy prices bolstered Canada's export economy. The cur rencies hi t par i ty i n September 2007, the first time in 30 years, and soon a loonie bought $1.10 U. S. dollars. For most of 2008, the currencies hovered at or near the even mark. In those days, May had no trouble making his deposits. Throughout the Flathead, merchants welcomed the return of their Canadian customers. Loonies flew south to buy cars and condominiums, ski vacations and Wal-Mart specials. At Kalispell's Target store, management kept a Canadian calendar on the wall, timing their sales and promotions to coincide with Canadian holidays. "It was crazy," said Target manager Montana Danford. "They bought everything." But eventually the credit crisis went global and currencies around the globe began to fall. With nowhere safe, investors are again banking on the U.S. Treasury for stability, and the dollar has begun to strengthen against foreign currencies. At the same time, the value of Canada's big exports dropped the country is the world's second-largest exporter of natural gas and has the biggest known oil reserves outside the Middle East. When oil prices crashed from $140 per barrel to $65 per barrel, the loonie came down, too. On Oct. 10, Canada's currency saw its steepest one-day decline against the dollar, dropping nearly a nickel in 24 hours. For Canada, the good news is its exports now appear cheaper and more attractive to other countries. The bad news is most of those exports go to the United States, where no one's buying. And for the Flathead, it's all bad news because those Target shoppers traveling down from Canada have suddenly found themselves paying more for the same U.S. merchandise. So far, the impact's been somewhat hard to track here in the Flathead Valley, because this is the off-season too cold to golf, not cold enough to ski. "But we know the exchange rate is going to have an effect," said Dori Muehlhof, executive director of the Flathead Convention and Visitors Bureau. "The question is, what will businesses do about it?" "We're going to be holding meetings to answer that question," said Steve Dunfee. Dunfee is president of the Flathead Valley Golf Association, where Alberta license plates have filled the parking lots in recent months. He put out an "urgent alert" to his board last week, a memo saying he's "very, very concerned." "It's going to affect us dramatically," he said of the widening exchange rate. "It has to. The Canadian market is very, very important to all of us here in the Kalispell area." For a full year, Dunfee said, the flow of Canadian cash was a bright spot on an otherwise bleak economic horizon, "but it couldn't last forever. My advice is, get ready to hold on, because it could be a rough ride." Jan Metzmaker, at the Whitefish Convention and Visitors Bureau, already is strategizing, looking to redirect advertising money she spends to promote her town. She'll rein in ad spending up in Canada, and focus more on domestic markets, "because I'm sure we'll take a hit with this new exchange rate." Paul Alsippi, over at Grouse Mountain Lodge, likewise is watching carefully, noting that "our bookings are down about 25 percent, and after talking to other businesses around town, I think we're all playing from the same sheet of music." Some of the downturn surely is related to domestic economic woes, and some just as surely is a response by would-be Canadian visitors to a crashing loonie. "It's definitely had a big effect on us," Alsippi said, "make no mistake about that." Danford, at Kalispell's Target store, has rid his office of the Canadian calendar, and figures there will be no big presents coming from the north this Christmas season. "We're just pulling back and adjusting," he said. That's also what Donnie Clapp is doing at Whitefish Mountain Resort. After a big Canadian windfall last winter, Clapp said the ski resort was looking to spend some additional advertising money up around Calgary this year. "Now," he said, "we've decided not to. We don't know what's going to happen." And that great unknown, for people such as Metzmaker, is cause for optimism. "This economy is crazy," she said. "Look how fast the Canadian dollar crashed. One month, and everything changed. So who knows what it will look like two months from now? All we can do is hope." Hope, and delay those loonie deposits as long as possible. "Who knows?" May said. "Maybe it'll turn around tomorrow."