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It’s time to think outside the traditional  wood box in marketing Canadian lumber 

By Tony Kryzanowski

My
travels often take me  through independently  owned sawmills, flooring  plants, and secondary wood product  manufacturing facilities. Sometimes, the  variety of products and production methods  are nothing short of astounding. However,  probably the most frustrating aspect  of some of these visits is just how little  effort is put toward product promotion to  expand markets and increase income.

 “People know who we are mainly  through word of mouth. So we really  don’t promote ourselves all that much.”  I hear that explanation a lot. It leaves  me wondering just how many outstanding  wood products and manufacturing  techniques have died with the inventor or  innovator.

The reason why so many seem reluctant  to market their products more  openly—or to a larger audience—is quite  simple and understandable. Ask these  individuals about their raw material and  production techniques and they can talk  your ears off. But ask them how they  market their products and it’s as though  you’ve asked them a question in a foreign  language. That’s because they are “production  guys.” Writer Garrison Keillor described  these personality types as people  “who change their own oil and get their  deer every year.”

Thinking outside the box can be difficult  for some people, but you have to  wonder sometimes why these people  don’t focus more on marketing, especially  with so much assistance available to safely  take their wood product businesses into  uncharted territory.

A good example of that is the accounts  receivable insurance program offered to  small business by Export Development  Canada (EDC) to guard against non-payment  when exporting to certain markets.  EDC is a federal Crown corporation that  provides financing and risk management  services to Canadian exporters and investors  in up to 200 markets worldwide. Its  accounts receivables insurance will pay up  to 90 per cent of a client’s losses if their  buyers don’t pay. EDC even offers political  risk insurance where shipments or payments  could be disrupted by war, insurrection,  or other political disturbances.

Insurance offered by EDC has other  advantages, especially for companies  wanting to finance, for example, a plant  expansion to accommodate higher volume  demand from an international client.  According to EDC, insurance is often used  by Canadian companies to acquire working  capital from banks because the bank is confident that the exporter will collect  payment from either the buyer or EDC.

EDC functions much like a private sector  insurer, underwriting business across  a broad array of risks. This allows the  corporation to support exporters without  cost to Canadian taxpayers. It reinvests  profits back into the business. It seems to  function a lot like crop insurance. Farmers  buy this type of insurance to guard against  the financial loss that can occur as a result  of a disastrous weather event.  The main factors that go into calculating  insurance premiums are:

• volume insured;
 • the credit risk of the buyers; 
• the number of customers seeking insurance from a particular sector;
• EDC’s prior experience in the particular  industry and segment; 
• the terms of the sale; 
• the credit practices of the client; and 
• the number of years that the client has  been an EDC customer.

In 2007, EDC’s services and deal  structuring capabilities helped to facilitate  $78 billion in transactions for nearly 7,000  Canadian companies. Approximately  84 per cent of customers were small to  medium-sized businesses. Yet the level of  participation by wood product manufacturers  is still very low.

Why aren’t Canadian wood product  manufacturers taking greater advantage  of these types of programs? According to  the EDC, Canadian manufacturers are  still very focused on the low hanging fruit,  that being the American market. Because  buyers in the US represent a lower risk,  insurance against non-payment is often  not required.

Given the current state of the North  American forest industry, maybe it’s time  to start marketing our wood products  more globally. For example, a huge market  has been identified for basic disaster  or poverty relief housing in countries like  Indonesia, Pakistan, India, China and  continental Africa. These would consist of  modest wood-based housing units similar  in wood volume to a garage package,  but constructed in prefabricated modules  in Canada and shipped for assembly  overseas.

So there is help and a security safety  net against non-payment available for  those with great products interested  in testing new markets. Hopefully, the  sub-prime mortgage crisis in the United  States is teaching us about the dangers of  depending too much on one market.  But—and this can be a big one— there  has to be willingness to change and for  that, I close with the immortal words of  that grand old sage, Red Green, and the  Possum Lodge prayer, “I’m a man, but I  can change, if I have to . . . I guess.”