March 2007 - The Logging and Sawmilling Journal
Export North—and south, east and west
From Chile to Russia, BC’s Export North is providing forest industry firms and related suppliers with realistic guidance on how they can best realize opportunities offered by foreign markets.
By Jim Stirling
Charles Scott has a small office in a downtown building in Prince George, British Columbia. One wall is dominated by a trio of intricate motifs from Shanghai. Behind a small table is a photo of a Russian church. A book about Chile sits on a shelf. Covering another wall is a desk that dates to the 1940s. It reaches almost to the ceiling and is busy with drawers and doors. A computer sits somewhat incongruously on the desk’s working surface. But through it Scott can tap into intelligence from Canadian consulates, trade experts and other contacts around the globe.
What this means is that when someone wants to market forestry-related products or services offshore, Scott can supply realistic guidance on how best to realize opportunities offered by foreign markets.
Scott is manager for Export North, a partnership of Initiatives Prince George, the Community Futures Development Corporation of Fraser-Fort George and Western Economic Diversification Canada. “My job is to help people find and access markets. And to help with capacity building: how do they get going; what do they need to know,” summarizes Scott.
It may sound deceptively simple. It is anything but. The market itself is one thing but it usually brings with it a daunting milieu of politics, bureaucracy and cultural differences. “One, we’re used to working within our own regulatory framework. Two, we are a rules based system rather than a relationship-based one. Three, we’ve been developing our skill sets for generations,” explains Scott. The developing world doesn’t operate that way. “When you pull all those three factors together, it becomes tricky,” he admits.
If a firm wants to go it alone, that’s fine, says Scott. “Our job is to help understand what a firm wants to do and if there’s a plug-in that’s in place that can help it achieve its goals,” he adds.
Export North can also help arrange qualified speakers to target a particular market or highlight an approach to market development. “There are people out there who know how to do this.”
Organizing and participating in trade missions and networking are other ways Export North helps interested firms learn more about potential offshore market opportunities. One example had a Russian delegation visiting Prince George, Calgary and Toronto, with a return Canadian trip to Russia.
Another way Export North offers exporting assistance is through cluster development, or the formation of consortia. “This can be where opportunities are broader and larger than one company can realistically develop,” defines Scott. A group of companies with interlocking skills and technologies can successfully take on such opportunities and projects.
In 2001, Scott says, forest firms in Chile approached BC to see if a platform could be created from which all resource sector development projects could be managed. The CNRG group grew from that request, representing a range of sizeable players who offer collective solutions to resource challenges. At least a half dozen of the group are drawn from the Prince George area.
Apart from doing work in Chile, the CNRG group has also secured projects in other parts of South and Central America, in southeast Asia, Russia and China.
Another example is the Northern BC Mill Consortium. The group currently includes: the College of New Caledonia; Woodpro Engineering Ltd; Wolf Tek Industries Inc; K2 Electric Ltd and CIF Construction Ltd. “From our perspective, the consortium approach makes a small company into a big company,” says Bruce Sutherland, a partner in Wolf Tek Industries, an industrial, supply and machining firm based in Prince George. “We can offer a one-stop shop of services.”
The idea is to have expertise within the consortium that can take a project from the forest/land base management stage through engineering and construction to the training of people needed to operate it successfully. “We’re completely diversified,” adds Sutherland.
Sutherland believes the group is making progress, although its members are all busy on an individual basis. “We’ve gone from smoke to a little bit of heat,” is how Sutherland characterizes it. “People know we’ve got the expertise here in Prince George.”
Sutherland concedes the consortium requires patience and money. “We’ve got a lot of work to do but it’s a serious entity,” he says. Scott is the go-to guy in Prince George. “Lots of times, Charles is the glue and the catalyst.”
So consortia can be useful vehicles forexploring offshore marketing potential because they share costs and spread risks. But collectively developing group leads in resource technology requires a focused approach, counsels Scott. “You have to establish a measure of trust. A crucial lesson for consortia is that you have to sustain, you have to stick with it and you have to focus and not be too scattered. If you choose to spread the tent wide, well, basically, it’s a bad idea, at least initially,” he recommends.
Offshore development is not the type of endeavour you start in January and expect to see dividends show up in April. Consortia members have to sustain their focus over the long term and buy into the vision, suggests Scott. That is why—along with the elements of mutual trust—it means the numbers of members in the consortium’s group should be smaller rather than larger. It’s not the kind of business model where you want 187 members, he adds. There are no shortages of export markets offering potential for forestry-related Canadian companies. Scott cites three possibilities. Chile continues to present markets for forestry-related equipment, as well as firms specializing in facets of land base management, says Scott. Russia is a market where a patient approach is beginning to pay off. Scott says a “new Russia” is emerging where the government is looking to create stability through housing and jobs. He credits the Canadian Mortgage and Housing Corporation which has been working diligently in Russia since 1997 helping develop a building code for and acceptance of Canadian-style platform frame construction methods. It’s led to a brisk business being developed (and paid for in US dollars) for dimension lumber producers and firms with technological know-how, adds Scott.
Then there’s China, everyone’s market darling. “China mirrors Japan in that customers will pay premium prices for premium products,” confirms Scott. But that comes with a rider of caution. “You have to be ready to respond to what the customer wants. You’ve got to have the plant in place and be ready to go.”
That in itself is something of a chicken and egg conundrum. The business model in BC doesn’t help us do that, says Scott. “You have to be able to produce consistent volumes, quality and profiles the customer wants consistently,” emphasizes Scott. “And to do that, you need access to the wood.”
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Monday, August 06, 2007