Export Awards Introduction text
Quebec SME exporters honored
Each year Export Development Canada sponsors a variety of events, activities, awards and other initiatives, in its bid to help boost the trade performances of local businesses. Arguably one of the most effective of those sponsorships recently bore fruit, when five Quebec Small and Medium Sized enterprises were singled out for their outstanding export performances by National Bank Financial Group and Desjardins Group.
Mector Inc., Alu-Rex Inc. and Distribution Laurent Leblanc Inc. won Gold, Silver and Bronze prizes respectively for their export performances as part of the 16th edition of National Bank Financial Group’s SME recognition program. For their part, Honco Steel Buildings and Sonaca NMF Canada were singled out to receive the Desjardins International Commerce Prize.
They say that one of the best ways to learn is to identify those who do something well, and to study from their experiences. We were more than happy to use the occasion to get key executives at all of the export award winners firms take on how they did so well during such tough times.
Sidebar: EDC’s relationship with Desjardins and National Bank Financial
Title: A win-win situation
Sub-title: EDC’s growing partnerships with major Canadian financial institutions benefits all involved.
EDC’s sponsorship of National Bank Financial Group and Desjardins Group’s recent export awards provides an excellent example of the growing relationships that these key players enjoy. “Financing exports is an inherently challenging activity. In many cases, it can be done more effectively when there are more heads contributing,” says Frank Trentadue, Relationship Manager, Canadian Financial Intermediaries Group at EDC. “As a result, we have been making significant efforts in recent years to broaden our relationships with major Canadian financial institutions, by providing services such as bonding guarantees, shared financing, insurance programs and risk sharing agreements.”
National Bank Financial Group and Desjardins Group have been key priorities for Trentadue. Each year his group engages in numerous efforts to build knowledge among financial institutions about partnering opportunities, through such initiatives as conducting information seminars for account managers, improving information exchanges, broadening access to common databases and organizing president-to-president meetings between the institutions.
By all accounts these efforts are paying off. For example National Bank was the first major Canadian financial institution to adopt EDC’s enhanced Export Guarantee Program. But EDC also gets more direct benefits admits Trentadue. “The banks are starting to realize that they cannot be experts in everything, so we find that we are getting increasing amounts of references,” says Trentadue. “It’s clearly a win-win situation for everyone.”
Riding the growth of the aluminum industry
Quebec’s abundant and cheap hydro-electric power resources make the province an ideal investment locale for manufacturers of aluminum, due to the large amount of energy required to produce the metal. Over the years, a slew of specialized suppliers has sprouted up to service this industry’s vast needs.
One such player is Mecfor, which develops and manufactures high performance mobile equipment, tailored for heavy duty usage in harsh industrial environments – particularly aluminum factories. “Aluminum plants are notoriously rough on transportation equipment,” explains Éloise Harvey, the company’s Vice President (Corporate Development). “Aside from the obvious wear done to them when they haul molten metal, aluminum factories are also filled with high magnetic fields and alumina powder (used in the manufacturing) that can cause substantial further havoc.”
Mecfor got its foothold in the aluminum industry in 1999 by designing several specialized pieces for Rio Tinto. However Mecfor smartly kept ownership of the new technology, and almost immediately set out to find new potential customers.
According to Harvey, Mecfor’s intension, from the start, was to diversify to other markets. “The aluminum industry has only a few major players,” said Harvey. “We knew that if we wanted to broaden our customer base, we would have to look outside of Canada.”
In 2003 Mecfor began selling to U.S. customers. “We quickly concluded that if we can sell there, we can sell anywhere,” said Harvey. Today the company’s equipment, which is made in its Chicoutimi facility, is currently in operation in all major global markets, with one big exception – China.
“I know, your probably wondering why we would shy away from one of the planet’s fastest growing economy,” says Harvey, almost apologetically. “But we do a lot of research before we enter a new market. One of our competitors told us that after they had exported there, their product was copied. We did not want that to happen to us. So we are holding off for now.”
But Harvey did not hold back in providing advice to other exporters, in particular not hesitating to admit out loud that she loves the travel, (a part of the job that seasoned exporters typically disparage so as not to upset the family and co-workers they often have to leave behind).
“One of the main reasons we continue export is because I love to visit new places,” said Harvey with a smile. “To sell overseas, you have to be interested in other people, their businesses and their needs.” Harvey also advises exporters to get targeted advice and services. Her favorite source? EDC. “Go, go, EDC!” she says with a laugh. “Seriously though, we would not get anywhere without them.”
Exports flowing out of the country
Homeowners have been using gutters to drain water from their properties for well over a 100 years. So you’d think that manufactures would have perfected them by now. Not so, says Luc Masson, general manager at Alu-Rex, a Charny Quebec-based producer and installer of gutters and accessories. “We are constantly coming up with new products and innovations,” says Masson. “As a result demand has been high. Both our sales and our exports are growing rapidly.”
Alu-Rex, which has 20 employees, has been in business since 2001. The company markets two main products: Gutter Clean System, which covers eves-troughs and thus eliminates clogging caused by accumulating leaves and other residue and Fixa-Tech, a fastening system that protects eves-troughs from damage caused by snow, ice, ladders leaning on the roof and other hazards. “Adding our protection systems to gutters may cost a little more than doing a conventional installation, but they add a lot of value,” says Masson.
Masson isn’t the only one who thinks so. Alu-Rex has also been particularly successful in the American market, where it inked a deal with Alcoa, which distributes its product under a private label brand name. Alu-Rex got especially good news earlier this summer when Alcoa introduced its products in the massive Lowe’s home renovation chain.
According to Masson, unlike many other Canadian export contracts, Alu-Rex’s deal with Lowe’s has not been unduly affected by the loonie’s recent strength. “We have been very lucky because key inputs from our U.S. sales are sourced there too and are priced in U.S. dollars,” says Masson.
That said, exporting does have its challenges. “Not only are there always new improvements to gutters coming onto the market,” explains Masson. “But different countries have different standards. That means we have to tailor production specifically for each market.” Another major challenge that Alu-Rex needs to overcome is payment risk, which the company is particularly wary about when it enters new markets for the first time. “Fortunately EDC has helped us out,” says Masson. “For example we recently used their services for sales we made in France and Spain.”
However although Masson says that the recent financial crisis has not unduly affected Alu-Rex, he does admit that the slowing U.S. economy has forced the company to tail back its sales growth forecasts for 2010 there. “We’ll probably have to settle for just a 10 percent increase,” says Masson, with a shrug. “But we’ll make it all up in Europe, where we expect to push a lot harder.”
Distribution Laurent Leblanc
Riding the rails into foreign markets
Canada’s expansive geography has long made railways a major part of the country’s history. What is often less noted, is how much demand world class transportation systems here, has given suppliers a competitive advantages when they market these same products and services in other countries.
One such player is Distribution Laurent Leblanc Inc., which manufactures electromechanical components such as relays and breakers for use in railcars and distributes a full line of complementary resale components for locomotives made by companies such as General Electric and several others. “For the first seven years after rail equipment is sold, it is under warrantee,” explains Laurent Leblanc, the company’s president and founder. “So we primarily market parts to older carriers with legacy fleets.”
Almost 98 percent of Distribution Laurent Leblanc sales are exports, mostly to emerging or third world countries as varied as Pakistan, Bangladesh and Turkey. According Leblanc, the company has no set sales strategy, but tackles each jurisdiction based on conditions on the ground. “We have a flexible approach. In some counties we hire dedicated agents to represent us, in others we use agents that represent several companies.”
Most of Distribution Laurent Leblanc’s contracts are obtained through bidding on public tenders. But Leblanc cautions that relationships with key officials on the ground are crucial, for a variety of reasons ranging from their ability to provide better clarity on bid specifications, deadlines and to ease fulfillment if the bid is successful.
That said according to the veteran entrepreneur, exporting is no piece of cake. “Our biggest challenge is getting paid,” says Leblanc. “I have as much as $1.5 million in receivables on my books right now so I have to be careful. Even if you lock up a Letter of Credit from a client you still can’t be sure. Getting the cash through the system is still hard. That’s why we insure all of our sales through EDC.”
Leblanc also offered key advice to potential exporters, whom he encourages to get their feet wet early because of the considerable opportunities he sees out there. But Leblanc also offered words of caution. “There are a lot of tricks that exporters should be wary of,” said Leblanc. “Don’t dream. Clients will often tell you they want a price based on a sale of one thousand units of a particular item, so that you lower the unit cost. Then after you make your bid, they only order 100.”
Ironically, according to Leblanc, economic challenges will likely have little effect on his company. “Things look good for next year, we have a good order backlog,” said Lebanc. “Don’t forget, if the rail industry is not making big capital investments by buying new equipment they will need to keep their old equipment longer. That means they will be needing more parts, which of course is great news for us.”
Sonaca flies to new heights
The province of Quebec has one of the most concentrated clusters of aerospace companies in the world, many of which grew their businesses by supplying parts and services to Bombardier. One such company is Sonaca NMF Canada, a subsidiary of Belgium-based Sonaca S.A., which bought the Mirabel plant in 2003, in order to be closer to North American business and regional aircraft manufacturers.
“Our core business is developing, manufacturing, assembling and testing aerospace structures and their associated sub-systems,” says Philippe Hoste, the Canadian division’s CEO. “However this industry is tough. If you want to sell, you have to be the best, not just in-country, but around the world. So we have become active in developing new technologies that clients can incorporate into their designs.”
As with so many Quebec based aerospace industry suppliers, Sonaca’s biggest client is Bombardier, which at one time comprised 85% of the company’s sales. However during the past several years the company has made considerable efforts to expand its client base, particularly in foreign markets. These include a $20 million plant expansion.
The good news is that all indications are those efforts are paying off. During the past five years the Quebec division’s 200 employees have boosted annual sales of close to $40 million, of which close to two thirds is comprised of exports.
According to Hoste, Sonaca Canada’s marketing efforts are concentrated on the 10 or 12 large global manufacturers, which its staff meets at key industry events such as the Farnborough, Le Bourget and National Business Aircraft Association air shows. “Trade shows are extraordinarily effective for us,” says Hoste. “Because when everyone in the industry gets together, you can meet your clients face to face all at once.”
However while all of Sonaca’s clients are huge multinationals, Hoste nevertheless admits that he does insure all of his receivables with EDC. “They are a key partner for us,” says Hoste. “In fact we are negotiating a deal right now with them.”
That said, one big question that continues to hover over the entire aerospace industry relates to the effect that current economic and financial troubles will have. Hoste remains optimistic. “I am confident that over the next two to three years the market will bounce back,” says Hoste. “But right now, times are tough.”
In recent months Sonaca Canada has taken significant steps to address a key worry: that some highly skilled workers that it may potentially have to lay off would go elsewhere or leave the workforce. To help pre-empt the possibility, Sonaca has implemented a work share program that keeps a maximum number of workers on staff, while the company waits out the bad times
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Peter Diekmeyer Communications Inc.