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| June 1, 2004 | Volume 3, Edition 24 |
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Outsourcing to China – Part Two
China represents two opportunities – the opportunity to increase revenue by accessing the most important emerging market in the world, and the opportunity to lower costs by accessing China’s inexpensive labour and staggering manufacturing capacity. This idea of using manufacturing in China as a beachhead for selling your products in China is not new. Other industries such as computers, automobiles and cell phone manufacturers have done this. In this article, I will provide information to help you determine if this is a good strategy for your company.
First, you need to determine if your product is at risk from offshore
producers. Some companies are more at risk than others; you are
at a greater risk if your product has:
If your company and its products are at risk from offshore producers, you need to decide if your firm has the capability to go global. For example, are your information systems and people able to deal with the complexities of global sourcing? Do you have the ability to deal with the financial requirements of foreign procurement? Next, you have to decide if China is a market for your product, a supplier, or both. If you decide that China will be a supplier, then you need to consider whether you will outsource components, the entire product, or set up a manufacturing facility in China. Realistically, most BC Wood members will look to China to outsource components. In this scenario, the Chinese manufacturer ships the parts to you for assembly into the finished product. You maintain control over the product and the distribution channels. This arrangement can also provide you with valuable knowledge about doing business in China and the Chinese market. If you have a unique product that is attractive to Chinese consumers and that cannot be easily "knocked off", you may want to consider China as a market. However, you may not have the resources to sell in China. That’s where BC Wood can help - our staff is experienced and extremely well connected. We know that BC companies need assistance to stay competitive in the global environment. In next month’s article, Mike Jahraus, BC Wood’s Program Director for Asia, will tell you about BC Wood’s new "China Direct" program. Source: China & the Middle-Market Manufacturer, A study in Globalization, Gleeson, Sklar, Sawyers Cupata LLP, 2003 
Canadian Building Products Add Value to Rental Apartments in Tokyo
Recently, I had the pleasure of touring the development site of a new high-end
rental apartment. While I have visited many single-family home developments
that used significant amounts of Canadian building products, finding them in
multi-family dwellings is much more rare. However, the developer and owner of
this particular apartment building saw using Canadian building products as a
strategic marketing decision.
While the development is located in one of Tokyo’s 23 wards, the young Japanese professionals they are trying to attract would consider its location inconvenient. It is located right in-between two train stations, but only one of the stations is surrounded by shops and restaurants. In the immediate vicinity of the apartment building there is only a single convenience store. When developing land in less desirable locations, most land owners opt for a low rent strategy to attract people who would otherwise not wish to live there. However, this strategy also means that the owner cannot be as discriminating when considering renters. Low rents can attract "problem" renters who may disturb other people or damage the unit. This land owner did not want to follow this route, so he and the developer decided that they had to make the development stand out in some other way. The first strategy they decided on was to tap into the pet craze that has been gripping Tokyo’s trendy urbanites. Young professional couples and single women are now often seen strolling trendy neighbourhoods with their Y500,000-Y600,000 ($6000-$7500) poodles. They obviously place great importance on their pets, which can be difficult when looking for an apartment, as Japanese apartment owners traditionally do not allow pets. That’s why this project was designed to be a pet owner’s paradise. Aside from the veterinarian clinic and pet shop/café that is being built into the complex, all of the units were designed specifically for pet owners. For example, all of the units are completely floored with maple flooring from Mirage. The maple hardwood flooring is perfect for owners of frisky dogs as it is resistant to scratches and can be easily touched up. With this kind of "dog proofing" in mind, the bottom half of all walls were covered with maple panelling from Sauder, the interior doors were solid maple from BC Door, and in the split level units, maple staircases from B-H Woodturning were used. Additionally, most of the units’ bathrooms were designed with two entrances, one from the main hallway and one directly leading to the front door. This was done so that dogs could easily be taken into the bathroom after walks to clean their feet. Being forward looking, the developer realized that this apartment might be a novelty at this time, but if it were successful, others in the neighbourhood would be sure to follow. Therefore, to ensure that the apartments had another competitive advantage, they decided to finish the building completely with North American products to create a high-end image. While the products listed above also contributed to this image, cabinets from Pacific Rim, mouldings from Sauder, and brick siding from Canada were also used. While such a high-end strategy is not new, what was surprising was the owner’s and developer’s opinion on the price of the Canadian products. As a rental apartment, they carefully calculated all of the building costs versus the rent they could expect to receive. From this analysis, they determined that the Canadian products offered them a better return on their investment. How is this possible? First of all, based on previous projects, they concluded that using inexpensive Chinese products would result in a lot of waste; so the low unit price was not a good indicator of true cost. Secondly, after researching the prices of the Canadian products, they realized they were not as high as they had assumed. As the developer told me, "Most Japanese just assume that Canadian products are expensive so they don’t even bother considering them." In the end, they were able to build very attractive apartments while keeping rents reasonable. Along with the pet friendly attribute of the units, this will guarantee that they will be able to maintain full occupancy for a long time to come, despite the lack of amenities nearby.
BC Wood at Interbuild
Canada had the largest international presence at Interbuild with Mark Rufiange from Structurlam, Judson Beaumont from Straight Line Designs, Donald McInnes from Linwood Homes, and Dave Farley and Daryl Holmes representing the BC Wood section of the Canada Wood booth.
On the opening day of the show, the Canadian exhibitors were treated to a briefing by Chris Ashworth of Competitive Advantage. In addition to presenting past and present market conditions on the UK house building market, he relayed the importance of working with Royal Institute of British Architects (RIBA) to gain CPD providers network membership. The Canada Wood UK Office are taking steps to approve technical literature and presentations by RIBA and are planning on holding two seminars in October. One seminar will be based in Edinburgh and the other in London. The seminar topics include Wood Frame Construction and Building Science, Fire and Acoustics, Environment and Sustainability, Forest Certification and Specialty Appearance.If you would like to participate in Canada Wood days, please contact the BC Wood office. On Tuesday April 26th, the third day of Interbuild, the High Commission put on a show no one could forget. Shania Twain, Ontario wine, Canadian beer and canapés! It was great to get all the Canadian exhibitors together, and this provided an excellent networking opportunity.
GLEE is the next show on the BC Wood calendar. If anyone is interesting in finding out more about it and potentially exhibiting, please do not hesitate to contact me at helen.bicknell@canadawooduk.org.
BC Wood Member Spotlight: Hamill Creek Timberwrights Inc.
In 1990, Dwight Smith, President and Founder, started his business with two employees. He now employs over 38 people in their new 15,000 sq ft facility in Meadow Creek. With their sawmill in the same area, Hamill Creek now covers over 22 acres of land and has a fully heated, modern shop. Smith understands that one of the most critical components for growth and success is the investment in machinery and technology. By keeping up-to-date with changes in the industry and re-investing in facilities and equipment, Hamill Creek will be positioned to meet the increasing demand for their product; deliver in shorter timelines; push the edge of design in timber frame construction; and remain competitive in an ever-growing industry.
Although they Hamill Creek is an integral part of the Meadow Creek community, helping employ a large part of the community through the various sawmill and wood manufacturing facilities. At times when Hamill Creek has more work than they can handle themselves, they hire local craftsmen to help them with interior finishings. "We will definitely support local business when we can’t handle the demand ourselves, or when the client wants us to source products for them. There are local manufacturers that supply the wood finishing components that we are looking for" commented Dwight. This attitude helps grow business in the region and supports the local communities.
Accessing wood supply is not a problem for Hamill Creek, but is a concern for the future. "We buy our wood on the open market and anyone can bid on the wood, with the highest bidder winning. For the future, we need to know that we will be able to access wood in the long term and that wood will still be managed in 10-15 years." Hamill Creek has been a member of the BC Wood Specialties Group for over 8 years, and Smith was a previous member of the Board of Directors. "I think BC Wood is really good for the value-added wood industry and they offer their members a lot of support. Through the efforts of BC Wood, there is now a global attraction to BC-made wood products." Future plans for Hamill Creek include looking into other international markets for opportunities. "North America has been very good to us, but we need to be exposed in other areas where we haven’t been. Although this can be difficult, we are always up for a challenge."
US Projects for 2004-2005
You have to evolve with the times, and BC Wood is an association that adapts
to the demands of a global marketplace. What that means for BC Wood activities
in 2004-2005 is a move towards project-based activities.
Rather than having members sign up for individual tradeshows, which doesn’t give our members a competitive advantage, we have taken each market (the US, EU, Japan and China) and put together a series of packages. Within each project are packages that members can choose from, like ordering from a menu. For example, Alaska features tradeshows, market intelligence, networking receptions, promotional materials and site visits. The packages have been designed to provide members with much more than just exhibit space at a tradeshow. By committing to a package, participants will receive all the information and logistical support they need to dominate that particular market or niche opportunity. The US has been broken down by either a region or sector in which our members have a competitive advantage. The proposed projects include:
Alaska Project
Pacific Northwest Project
Boutique Hotels Project
Hybrid Timber Frame Project More information will be available shortly, in the meantime if you have any questions, suggestions or comments, please contact Dave Farley or Jennifer Rose.
If you have any questions, comments, or would like to contribute to BC Wood News On-line, please contact BC Wood |
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BC Wood 2004 Global Buyers’ Mission
The success of the recent Pacific Northwest Buyers’ Mission, held at Sun Peaks in March, proved that this format could generate new business for our members. It was clear that if we could deliver a broader based program (i.e. buyers from other countries and geographies within the US) that would appeal to a greater number of buyers and manufacturers, we could greatly increase revenue opportunities for BC’s manufacturers. The Global Buyers’ Mission will build on this success by bringing up to 90 qualified buyers from China, Japan, Korea, Europe and the United States. These buyers will be recruited by our in-market staff, with the assistance of Canada’s International Embassies and posts. BC Wood members will have the opportunity to display products in a tradeshow format, designed to maximize networking opportunities and connection with buyers. You will also have an opportunity to meet with our International Representatives and network with our Associate Members throughout the event. Program information and registration forms will be sent this week, inviting Members to participate. If you have any questions, please do not hesitate to contact the BC Wood office at 604.882.7100 or 1.877.422.9663.
CFLA Appoints New CEO
Jeffery’s appointment compliments the existing CFLA team of Brian Zak and Les Kiss. Key aspects of Jeffery’s role will include expanding the CFLA’s membership base and liaising with government, media, communities, and contractors to ensure the association is clearly communicating Coastal priorities. Click here to read the full press release.
Venture Kamloops Wood Forum #5
Venture Kamloops, in partnership with Forintek and COFI, invite you to attend their 5th Wood Industry Forum in Kamloops, BC on June 17, 2004.
Topics include:
For more information, please visit their website or download the registration form.
UBC Timber Building Technology Group Summer Seminar Series 2004
The UBC Centre for Advanced Wood Processing is offering a series of
seminars on timber framing and associated CAD/CAM design and
manufacturing operations. For more details and the registration form, please
download the PDF.
New BC Wood Associate Members
We are pleased to welcome the following Associate Members who have joined
us since the last issue of BC Wood News On-line. If you are interested in
learning about the benefits of becoming a BC Wood Associate Member, please
contact Randi Walker at 604.882.7100
or toll-free at 1.877.422.9663.
 Core Concept Artworks Design is a creative arts and communications group offering graphics, research consulting, presentation and media writing services. Our knowledge and experience in architectural design and wood materials applications for BC's residential construction industry can work for your business. Innovative communications: our unique skills and comprehensive strategies connect people, products and processes locally and internationally.
R.A. Hanna
 The Centre for Advanced Wood Processing (CAWP) at UBC is Canada's national centre for education, technology transfer and research in advanced wood products manufacturing. CAWP provides training and education programs for the industry, supports an undergraduate degree program in Wood Products Processing, and provides co-op students for industry placements.
Iain Macdonald
HI Communications HI Communications, centrally located in the Okanagan Valley, specializes in quality Japanese translations and interpretations. With prior experience in the wood industry dealing with the Japanese market, HI Communications provides accurate and precise translations and interpretations, with extensive knowledge of the industry and market to meet all our clients’ needs.
Harue Iwashita
BC Economic Development Awards Winners
On May 7, 2004, the Economic Development Association of BC (EDABC) announced
the winners of the 2004 BMO Bank of Montreal Economic Development Awards at
their annual conference’s awards dinner. Mari Jane (MJ) Cousins, Executive
Director of Venture Kamloops, was named Economic Developer of the Year. Congratulations, MJ!
Click here to read the entire press release.
Front Line Leadership from Catalyst Training Service Inc. BC Wood Associate Member, Catalyst Training Service Inc., is holding a two day program on Front Line Leadership on June 17 and 24, 2004 in Burnaby, BC. Front Line Leadership enforces the principle that every level of supervisor is responsible for creating an environment in which people understand what is expected of them, can communicate effectively with each other, are involved in decision making, and take accountability for the work entrusted to them. For more information, download the registration form and the informational brochure.
To download the tentative 2004-2005, BC Wood trade event schedule, click here.
Carrefour International du Bois
PCBC
6th China International Building and Decoration Fair For more information on these tradeshows, visit the BC Wood website.
Consultants & Marketing Services
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The odds are pretty good that someone is either already making your product
in China or contemplating it. If you haven’t been impacted by the trend
towards globalization, you will be. Sounds ominous, right? Well, it doesn’t
have to be. By using outsourcing as a springboard to marketing your product
in China, it is possible to have your cake and eat it to.
BC Wood attended the Interbuild event last month, from April 25th to 29th,
at Birmingham’s National Exhibition Centre. The attendance reached 46,770
with a total area of 30,000 square metres. Although this was a smaller show
in relation to square metre compared to 2002, 2004 attracted a larger
attendance. A full newsletter will be coming out in three weeks which
will contain the statistics.
A large number of visitors were interested in log homes, but the main
highlight of the week was the interest the Structurlam booth received.
Structurlam manufacturers laminated beams and posts and throughout the
day, there would be three to four groups of people waiting to speak to
Mark Rufiange. The positive impact was the result of the trade showcase
stand that Structurlam built for the Canadian High Commission.
Interbuild was a great event for everyone that attended. Ten exhibitors
were placed in the Canada Wood booth and every one of them had an exciting
and rewarding week. It was a long show, but everyone involved deemed it a
thriving success. A big thank you to everyone who exhibited and helped with
ensuring that the organization was as seamless as possible.
In the last 12 years, Hamill Creek Timberwrights from Meadow Creek, BC has built
over 100 custom timber frame homes for clients all over North America, using
Douglas fir, larch, pine, spruce and cedar timber, cut at their own sawmill,
from locally harvested logs.
specialize in timber frame construction, Hamill Creek also
manufactures furniture, cabinets, stairs, railings, doors, windows and
flooring as well as supplies roof and wall enclosures, siding, and decking.
Design and quality also help keep Hamill Creek ahead of their competition.
Smith adds, "With our own design team of three, we provide complete design
services for our clients from small cottages to large homes, as well as large
commercial projects."
As they own and operate their own sawmill, Hamill Creek has more control over
the supply of lumber and can bid on the sales, cut the logs, bring them
into the sawmill, break them down, cut timbers, cut products for siding,
and clear wood for cabinets. Recent forest issues such as the pine beetle
epidemic have had somewhat of a positive effect on Hamill Creek’s business.
"If the beetle killed wood is harvested in time and got to the mill, it is
dead standing wood, which we actually prefer to use in our homes. The wood
is dry and the beetle killed wood enables us to stay ahead of our log supply,"
commented Smith.
From September 16th to 18th, in Penticton, BC Wood will host the biggest
event ever dedicated to the value-added wood industry – the 2004 Global Buyers’
Mission.
On May 13, 2004, the Coast Forest and Lumber Association (CFLA) announced
that Rick Jeffery had been appointed President and Chief Executive Officer of
the association, effective mid-June.
| June 1, 2004 | Volume 3, Edition 24 |
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| Copyright 2004. BC Wood, All Rights Reserved. | |
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