The success of an Ontario wood products business cluster shows the value of much-needed outreach

By Tony Kryzanowski

When was the last time you took the owner and senior managers of your biggest competitor out to lunch?

For most businesses, the answer is never—but an Ontario wood products manufacturing group has shown that this type of outreach is sometimes worth the effort.

The Bluewater Wood Alliance (BWA) non-profit group recently changed its name to the Wood Manufacturing Cluster of Ontario (WMCO), and the reasons for making this change are obvious.

The group was formed starting with seven members about 15 years ago in the Bluewater region of Ontario, west of Toronto in the vicinity of Hanover and Walkerton. Started largely because all original members were struggling due to an economic downturn, the group has since extended its boundaries to all of southwestern Ontario. It now has 120 members representing the entire wood industry supply chain.

Granted, this organization has a decided advantage by operating in a highly-urbanized area in close proximity to Toronto. But if wood products manufacturing businesses located in other areas of Canada considered following their example, some measure of success is almost guaranteed—even if a business cluster amounts to three members meeting once a month at the local restaurant buffet to discuss the state of the industry, equipment advances and opportunities to collaborate.

For clarification, meeting to discuss common challenges, technology and possible strategic alliances is not illegal. Colluding on bids is, and WMCO knows that, stating, “the overarching goal of the cluster is to work together within the constraints of antitrust laws to make all member companies more globally competitive”.

WMCO says that it is unique, operating as the only wood manufacturing cluster in Canada and one of the few clusters of any industry in North America. That in itself is rather astounding and perhaps a wakeup call concerning the apparent disconnect that currently exists along the wood products manufacturing supply chain, especially among small to medium-size businesses.

Is it any wonder then that so many wood product manufacturing businesses in this size range fail in tough times? One obvious advantage of belonging to a cluster is that in lean times, even a small job here and there can help companies survive. Having stronger lines of communication and business connections represents a bit of an insurance policy, as the seven founding members of WMCO have discovered.

When the old BWA went searching for a cluster model to follow, they found one in Europe and even the training to set it up. Two original members of the organization attended the Cluster Academy in Linz, Austria in January 2011. Sometimes the Europeans are a good model to follow because in terms of business development, they are often decades ahead of North America with the experience of what works—and also importantly, what doesn’t work. Obviously the concept of business clusters has served them well.

After incorporation, BWA began holding quarterly networking events for wood products manufacturers and suppliers to discuss new technologies and forge strong business relationships. By November 2012, it had 25 members and hired a cluster manager. The group ramped up the frequency and variety of events to include plant tours, lean manufacturing and other training programs, export development projects, and roundtable sessions on topical issues.

It’s obvious why companies would find this type of organization attractive. The old cliché that time is money is particularly true of small to medium-sized businesses where there often aren’t enough hours in the day for all that owners and managers need to accomplish. But at the same time, they realize that there are opportunities for the business to grow if only they could acquire the type of practical information they need to make informed business decisions. That’s where a well-designed cluster really delivers value.

In 2016, BWA had 80 members and decided to expand the official cluster region to include all of southwestern Ontario. Its board of directors was expanded from seven to 12, comprising 10 manufacturing members and two supplier members. It should be noted that many of the cluster’s members are smaller-scale and niche custom sawmilling operations.

The cluster’s expanded turf encompasses the vast majority of Ontario’s wood products economy. WMCO says that according to the Conference Board of Canada and Wood Manufacturing Council, the approximately 2,000 wood products companies active in Ontario in 2016 combined for $6.6 billion in revenues and employed about 30,000 workers for a total payroll of $1.2 billion.

WMCO is looking to grow its membership through industry outreach efforts and programs, including conducting educational sessions at the 2021 Woodworking Machinery Supply Conference & Expo, November 4-6 in Mississauga.

Suffice to say that WMCO has come a long way since seven struggling businesses set aside their egos and made a few phone calls. There are many instances in Canada where Mom and Pop and larger custom sawmilling enterprises could really benefit from belonging to a cluster—in both good times and bad.