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International border is good news and bad news for Sault Ste. Marie.

International border is good news and bad news for Sault Ste. Marie

Being a border city creates special problems and unique opportunities for Sault Ste. Marie businesses.

Just over the bridge is Sault Ste. Marie, Mich. That often means a competitor with different rules, taxes and currency is nearby.

"The fact that you're a border city means you're $1.50 away from cheap gas," said Sault, Ont. Mayor Joe Fratesi. Even with the exchange of money, he notes drivers can still pay half price for gas on the American side of the border.

The Canadian Sault also faces the disadvantage of higher alcohol prices. However, Fratesi is not worried by that discrepancy. "People will buy alcohol regardless of the price."

Groceries are also significantly cheaper in the United States. Poultry can sell for about 80 cents per pound in Michigan, but costs about $2.50 in Ontario.

For items such as furniture, the federal sales tax and duty is collected at the border, but not Ontario sales tax.

The provincial tax is supposed to be remitted by the buyer, noted Fratesi. "It's an honor system."

However, he said purchasers rarely pay the provincial tax and are usually not even aware that the tax has to be paid.

Fratesi said it's been estimated that $80 million per year is lost in provincial sales tax in the Sault.

Some city merchants believe the gap should be narrowed and that the provincial tax should be collected at the border. The idea has been raised in other border areas of Canada which have been losing business to the U.S. because of the rising value of the Canadian dollar.

"There's mixed feelings here," said Fratesi, explaining that some people would like to see the tax collected if the money was to stay in Sault Ste. Marie, but not if it was to go to Toronto.

Fratesi said there have been suggestions to the government that in areas such as Sault Ste. Marie there should be a tax-free zone to compensate for the differences.

While living next to the U.S has its costs and problems for business, there are undeniable advantages as well.

The city is only 4.5 hours from Detroit and eight hours from Chicago. The tourism and business opportunities are obvious.

Fratesi estimates there are about 25 million people within an eight-hour drive of Sault Ste. Marie.

The mayor does not look at Sault Ste. Marie, Mich. as a competitor for the tourism market or for other business sectors.

"The approach is, if we can't have it in the Sault, Ont., it will be a benefit to us in Sault, Mich. as opposed to nowhere near us," he explained.

The two cities even co-operate in the area of economic development.

"We do it in everything," said Fratesi, noting the two cities try to sell themselves as Sault Ste. Marie, a city so great it takes two countries to hold it.

"If they're healthy, we're healthy," he said.

The Canadian Sault also seeks to take advantage of tourist destinations in northern Michigan, such as Mackinaw Island which attracts about five million visitors per year.

The economic co-operation between the two Saults has even been semi-formalized.

Jim Rudack, president and chief executive officer of the Sault Ste. Marie Economic Development Corporation, was a founder three years ago of the Sault Ste. Marie International Co-ordinating Committee for Joint Relations and Growth.

Rudack said the committee was formed as a loosely based organization and it remains so.

It is made up of Rudack and his American counterpart, Jim Hendricks, executive director of the Economic Development Corporation of Sault Ste. Marie, Mich.

Members are added or subtracted depending on the issues of the day.

In its three years, the committee has met between 15 and 20 times, said Rudack. It has discussed such topics as free trade, customs and immigration.

"We were all learning together," said Rudack.

At a recent meeting, the closure of the Canadian canal and the future of the Algoma Central Railway were discussed.

Rudack believes the two Saults don't build enough on the positive aspects of the cities.

When he gives his sales pitch to potential investors, he said he often hears, "Fine, so where the hell is my market?"

In answer, he explains that Sault Ste. Marie is on a river at the end of a four-lane American interstate and the city is overnight from 30 million people.

"They want to hear the bottom line," he said. "We've got the bottom line."

Gayle Logan, general manager of the Sault Ste Marie Chamber of Commerce, is concerned about the extent of cross-border shopping.

She said the chamber is also concerned about bringing more people into Sault, Canada. "One thing visitors like to do is shop."

For example, she noted that the Sault has Market Mall and its 138 stores. "Everything you can possibly want is there."

The two Saults both have Sunday shopping. The Canadian Sault was one of the first communities in Ontario to allow it, noted Fratesi. "Sunday shopping is working fine here."

When it first began two years ago there was some concern about its impact, he said. "None of the negatives have materialized, but one questions whether the pluses have materialized."

Logan pointed out that each year 2.8 million people visit Mackinaw Island in Michigan. Of that number, one million visit the Sault Michigan locks and one-third of that million will cross into Sault, Ont.

PHOTO : As a border city, Sault Ste. Marie is just a drive over the international bridge from

PHOTO : Sault Ste. Marie, Michigan.
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Title Annotation:Focus on Sault Ste. Marie; Sault Ste. Marie, Ontario and Sault Ste. Marie, Michigan
Author:Bickford, Paul
Publication:Northern Ontario Business
Date:May 1, 1990
Previous Article:Investment interest high, action tough to generate.
Next Article:Railway to lose main customer if mine closes.

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