July 2011 e-letter

Kerry Knudsen

Kerry Knudsen

Did you notice at the end of the last e-letter I mentioned free beer?

Canada is known world-wide for its beer. The Germans, of course, snort at the idea, but they also sold the name Budweiser to St. Louis.

OK. So we sold Molson’s to Coors. The Americans can buy anything.

Actually, though, they don’t. In the example of beer, they bought two of the best. They may not make the best cars, shoes, sound systems or cabinets, but they buy them. If they are not buying the cheapest, they are buying the best. They are not big on half-measures.

Interestingly, it is not common to see Americans shopping outside North America. Sure, you see them, but it is not common. For example, at the two pre-eminent trade shows for our industry in Europe, Interzum and Ligna, it is traditional that Canadians outnumber American attendees, yet the rule-of-thumb multipliers says there should be 10-times as many Americans. This year the tradition held, and Canadians dominated the North American presence in Germany.

The Americans right now are wringing their hands and wondering what the definition of a recession is. Their economy is advancing, but, after all, what if it doesn’t? Meanwhile, they are still buying what they want.

This is important for Canadian manufacturers. We have lost our 38 percent advantage on the currency exchange, but people that can afford to watch 250 billion hours of television a year also don’t compare prices when they want a brand. As it happens, the word Canada in the U.S. functions as a brand, and is synonymous with quality. This is because the Americans have never heard of Canada Post.

As you may know, we have been tracking imports of wood products into Canada for a while. For example, we reported before the Olympics that most of the cabinetry for Olympic Village was being imported from Germany. Now we have information that a huge volume of multi-family dwellings in Canada are being furnished with imported Italian cabinetry, and you can read the ads for Scavolini-brand cabinets in Canadian design magazines. I have to say, folks, if you don’t roll up your sleeves and wade into the fight, people are going to start talking about you. You may even make life difficult for Wood Industry, since we can hardly get past guten tag or buongiorno outside of English.

Which brings me to Canada Night. Wood Industry, in cooperation with the AWFS in Las Vegas next week and sponsors Stiles Machinery, Homag Canada, CNC Automation, Royce Ayr Cutting Tools, Thermwood, TimeSavers, Renner Wood Coatings, Giben, Doucet …. Is celebrating Canada Night in Las Vegas on Thursday, July 21 at 5:00 p.m. at the AWFS. There is, as promised, free beer and food. More importantly, this will be our chance to raise the flag on foreign soil and let the world know we are in business. Americans want and need Canadian cabinetry, Canadian store fixtures and architectural millwork and even Canadian-made wooden toys or playground equipment. The market is not standing still.

In addition, this low-key networking opportunity will give you the chance to meet with your peers from across Canada and compare notes. Nobody knows it all, and people like to share what they have learned.

Each Canadian that attends will receive a ticket along with his or her entry badge, so don’t throw it out, and pack your moose hat or Habs jersey. IDs will be checked at the door, since Americans are suckers for Canadian beer, anything free or just a chance to rub elbows with the elite. They, however, are not invited.

Speaking of shows, we are only three months out from Canada’s WMS trade show. It appears it will be an interesting show for several reasons. For one, as you know, a group of machinery suppliers was instrumental in killing last year’s Canadian show in Quebec. Many of that same group are holding out on the current show, which is, of course, their prerogative. However, the Americans seem to have taken note, and the Wood Machinery Manufacturers of America (WMMA) has reserved space for a pavilion at the show, plus it is offering booth space outside the pavilion for WMMA members at a good rate. The WMMA’s most recent promotion is headed: “Want to Show the Canadians What You are Made of?”
Americans can be SO aggressive.

However, they have a point. A few years ago, any machine sold in the U.S. for $100,000 would cost a Canadian $140,000, based solely on the currency exchange. Today, that penalty is gone, and you can buy an American-made machine effectively at par, whether you are shopping in Toronto or Las Vegas. That means the Americans are coming into the Canadian market with an effective discount of 40 percent over their offerings of two or three years ago, just when Canadians are gearing up and re-tooling for one of the best economic periods in memory, relative to recent history.

The newest numbers from Statistics Canada show May building permits up by over 20 percent, with gains in residential and nonresidential. We are seeing a very non-traditional boom in multi-family units. I am guessing this is because a great number of our new immigrants are more accustomed to multi-family dwellings than multi-generational Canadian families are. That said, each condo or townhouse needs cabinets, beds, stairs and millwork.

Things could be worse.

One thing is sure: everything has changed. If you don’t think you are “old school,” just be sure to make sure. The exchange is different, the demographics are different, the “old guard” suppliers are different. Even the rules surrounding trade shows have gone through convulsions and are being reformed.

In change, there is opportunity. If you miss the opportunity, there is still free beer. Thursday, July 21, AWFS, Las Vegas. Be there. I’ll buy you one.

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