British Industry’s Bid for Canadian Trade
Britain’s Senior Trade Commissioner divulges plans of British industrialists who propose to build branch plants in Canada
FREDERICK WILLIAM FIELD
Senior British Trade Commissioner in Canada and Newfoundland
FOR eleven months I have been driving and tramping about the British Isles. Smokestacks were my traffic signs. I have visited about 700 industries and factories
of all sorts, sizes and conditions—a complete cross-section of Old Country productive activity—talked with executives across office desks, and delved into the minds and probed the ideas of at least 200 export managers; swapped suggestions with works superintendents and argued amiably with shipping clerks and mechanics.
It was the fourth time I had made this industrial tour, but never so extensively, and the changes I saw, even since the previous swing around the circle—changes in spirit, organization and outlook—well, there is no point in rhapsodizing; that is one product in which the Old Country doesn’t specialize. You want the facts. You want to know what British industry is going to do, or is doing, about Empire trade, and in particular its attitude to the Canadian market.
Britain Looking Toward Canada
'.....PHE active type of British producer is looking at Canada
aggressively. If ever there were a chance for him to seize a big share of the Canadian patronage that has been going to the United States and other foreign countries, he believes he has one now. He feels that if he loses the present opportunity of getting a position next to the rail in the race for trade—which is scheduled to start once the general revival sets in—it may never knock at his door again.
Whether it be a matter of establishing a branch plant in the Dominion or extending and tuning up his sales organization, he is laying his plans accordingly.
Old Country producers have got away from the idea that they can capitalize indefinitely on sentiment. This has to be said, however trite it sounds, and I may as well get the point out of the way. They know, or rather like to believe, that Canadians are keen to use British goods, but they also realize that only when all other trade factors are more or less equal does sentiment swing a deal.
That is the principle on which the British business man himself operates, and he doesn’t criticize the Canadian for being just as calculating, just as human.
It is that crucial equality in the Canadian market that British industry is out to achieve; equality in standards, price, delivery and service. It is a rough road. There is the peculiar, baffling geographical factor, entrenched preferences for particular labels, the tariff barrier, the very laudable urge of Canadians to support home industry, and the economic difficulty of supplying special types of articles to suit the relatively small Canadian demand.
Many British firms, with sufficient present and potential scope for their products within Canada who see a profitable export outlet from the Dominion under her trade treaties, have succeeded in breaking through all these barriers by locating branch factories—which become, in reality, Canadian industries employing Canadians. At this date there are more than fifty, and I am able to say that the number soon will be increased.
British Motor Cars Coining
TT IS of more than passing importance that one of the A leading British motor car concerns—Rootes, Limited, of London and Coventry—have completed a survey of the situation and are now taking the initial steps toward producing cars in the Dominion. Rootes are determined to put their cars and trucks on the streets of Canadian cities in competition with United States models. A number of other well-known Old Country firms also are looking over the field for strategical location, including John Macintosh and Sons, who make toffee, chewing gum and other confections, with an already large trade in this country; Crowther and Nicholson, of Huddersfield, Yorkshire, who are planning to produce a brand of woollen piece goods not now made here. Hollands, Limited, of Manchester, yam manufacturers; John Brown and Son, Glasgow, in the muslin and artificial silk trade; British Drug Houses. Limited; and D. and J. Tullís, Limited, Glasgow, makers of laundry equipment.
Past attempts by British manufacturers to gain a foothold in the Canadian motor car market - failed largely because of three factors—unsuitability of product, lack of facilities for repair parts and servicing, cost of transport and customs. These ineffectual experiments have shown that only intimate knowledge of market conditions, readiness to meet Canadian requirements to the last rivet, large expenditure on promotion, and the creation of an efficient and thorough organization, can achieve results.
It is just such a campaign as this that Rootes, Limited, have in mind.
Two brothers, W. E. and R. C. Roote, are at the head of the biggest motor car distributing concerns in the British Empire. Established thirty-six years ago by the father, William Roote, it has, since the war, acquired ownership of three important producing companies, the Humber, Hillman and Commer. The last named confines its business tc trucks. From headquarters in Piccadilly, Rootes, Limited, are carrying on sales activities in many countries of the world and in all climates. The two brothers are listed among the most enterprising young business men in the United Kingdom. *
Three hundred cars of a type suitable for the general Canadian trade are being built at Coventry for distribution throughout the Dominion, and at the same time preparations are under way for service and repair depots in the key cities. Establishment of an assembly plant on a site not yet announced is the next immediate step, and the final stage will be reached when Roote cars are turned out entirely within Canada.
I have reason to know that the investigation by Rootes, Limited, of their chances of successful competition in Canada has been very thorough, both from engineering and marketing standpoints. For one thing, they have enlisted as aides and counsellors veteran Canadian motor car men, technical and commercial, who know every tum in the trade. Some of them probably will be found permanently attached to the Roote organization.
From discussions I had with executives at Coventry, I gathered that the general principles and methods followed there will be applied in the Canadian operations in so far as they are adaptable. Rootes’ engineers, I was told, had spent a considerable time in the United States studying processes and had also absorbed useful ideas at European motor car centres. The Coventry works, in consequence, embrace the best elements and phases of American and Continental production together with original Old Country ideas—which run, in the main, to ensuring quality—and they are one hundred per cent efficient, typical examples of the new order in British industry.
Since the average life of a motor car in Canada is about six and one-half years and there are more than one million licenses today, the replacement demand should ensure a domestic market for about 150,000 cars a year, without taking into account the probable increase in the number of owners. On top of this, exports run to about 100,000 annually. Rootes, Limited, believe they can corral a profitable share of this business.
In the wake of this concern, no doubt there will come a
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British Industry’s Bid for Canadian Trade
Continued from page 18
number of British automotive equipment people, if not other car-manufacturing firms. Indeed, the Associated Equipment Company of Southall, Middlesex, which makes motor buses, recently entered the Canadian producing field and has fulfilled large orders, one from the Montreal Tramways Company. The Triumph Motor Car Company of Coventry, as an alternative to a branch plant, is looking for a connection under which its low-priced cars may be built in Canada under exclusive license. On the equipment side, the firm of Job Wheway and Sons, Limited, of Walsall, is adjusting its future operations with a view to manufacturing in the Dominion. It specializes in motor car chains.
Since my return to Canada I have visited the plant of Barry and Staines Linoleum (Canada), Limited, at Famham, Quebec. This is the most recent example of Old Country interests setting up in business in Canada in a big way. The enterprise is a subsidiary of the holding company controlling Barry, Ostlere and Shepherd, Limited, Scotland, the Linoleum Manufacturing Company, Limited, Staines, England, and La Compagnie Rouennaise de Linoleum, Rouen, France. More than $2,000,000 have been spent on the construction and equipment of the Famham plant, and all the money came from overseas. On or about the first of October, the machinery should be turning out inlaid and other linoleums.
New Blood In Old Industries
'“PHESE examples which I have cited L give a fair indication of Old Country activity in relation to the Canadian market, and they give concrete expression to the “linked industry” policy that is gaining ground in Britain. This is being fostered especially by the Federation of British Industries, whose doctrine calls for co-operation with Canadian industry rather than competition. The recent Canadian tour of Sir James Lithgow, the retiring president, and Sir Arthur Duckworth, his successor, is expected to give impetus to the movement in the direction of branch factories producing lines not manufactured in the Dominion, or in categories where there is room for additional production.
I have returned to Canada with a variety of impressions, vivid ones. In my factoryto-factory canvass I saw the whole structure of British industry in process of revamping Vorn top to bottom. A new generation of executives and managers is taking the helm —young, active men, many of whom, since their war service, have been studying the businesses they are now taking over from their fathers. On' approaching these new men on the subject of Canadian trade, it is quite unnecessary to begin with a lesson in geography, as one frequently had to do in former days. Many of them know as much about British Columbia or the Maritime Provinces as any average Ontario producer. They are travelling cosmopolites, with a new slant on life and minds tuned to enquiry and experiment.
And one of the most telling effects of this infusion of new blood in old industries is the change it is bringing about in the relations between managers and workers. It is developing a closer community of spirit and interest.
The live group in British industry represents exactly what the term implies in the Canadian mind. Their workshops are the last word in organization and equipment; their sales staffs are constantly on their toes. On the other hand, there are still many concerns in the old land, examples of which are unnecessary, suffering from obstinate loyalty to time-worn, obsolete methods of production and marketing. Either they will pass away under the inexorable law of the survival of the fittest, or they will submit to some form of commercial adrenalin before it is quite too late.
I came back convinced that things are not nearly so bad industrially in Britain as
the cumulative effect of press reports, characteristic gloom of certain writers and public speakers, budget difficulties and unemployment figures, would lead one to believe. I came across factories, not one or two but many, working at full blast—some night and day—turning out a variety of articles in which, until recently, Germany and other Continental countries had a sharp market edge. Although the so-called key industries, especially the textile group, are fighting an uphill battle, the struggle is no harder than that endured by industry generally throughout the world. The bright spots, curiously, are the luxury trades. Sales of motor cars and artificial silks, for instance, have been brisk. Production in the aviation industry is at a high peak.
Of the major obstacles in the path of British trade in Canada, the tariff, of course, looms large. It is formidable. Officially, the British Government regards revision of the Canadian schedules up or down as a matter that is entirely for the people of this country to decide for themselves. British Government trade representatives have instructions that they must not debate the subject.
But I can say this much: In my travels about the United Kingdom I heard no word of bitterness or hostility. The British manufacturer who has his eyes on this market perhaps sighs and looks wistfully through the office window, but he admits quite frankly that he can’t blame Canada for wanting to protect her own industries. This is a very reasonable attitude to take, I think, and it is one I frequently heard expressed.
There is regret, of course, that duties were raised so high in certain cases as to render exports to Canada in the lines so affected virtually impossible, and it may be expected that those particular industries will make their own representations to Ottawa. There is belief that actual experience under the new tariff may lead to a revision in some way which will help British industry without necessarily hurting the Canadian producer.
It will be best to let a year elapse, and then we shall have a better view of the new tariff’s effects.
Adaptability of British Products
T ENCOUNTERED general satisfaction 4 that the preference in favor of British imports as against United States products was maintained. The British manufacturer seeks to emphasize that his major objective in the Canadian market is to divert orders from factories south of the border and from other foreign countries to the Old. Country. If the producers of the United Kingdom cannot fill any particular order adequately, he feels that the business should go to some other part of the Empire. He points to a succession of annual trade statements to show that there is far too wide a gap between imports into Canada from the United States and those from Great Britain.
In round figures, Canadians bought from Uncle Sam in the year ending March, 1931, goods to the value of $584.000,000. The total value of goods bought from British producers in the same year was $149,500,000. In the previous year, when trade was much brisker throughout the world, the relative figures were $847,000,000 as against $189,000,000. Canadian purchases from all Empire countries combined in the firstnamed period totalled $205,000,000, and in the year before, $252,500,000.
All the British manufacturer asks of Canada is that he be given a sporting chance to narrow the margin. It is in no carping spirit but just to show the facts, that the old countryman points to the bill Britain paid for Canadian goods and produce, including grain, for the year 1930-31. It was $220,500,000, or $71,000,000 more than what Canada paid for supplies from her.
In the course of my duties I visit many individual Canadian factory heads—so do my colleagues, the British Trade Commissioners at Toronto, Winnipeg and
Vancouver—and sometimes my appearance is construed as an intimation of direct competition from the Old Country. I am at first regarded as a scout seeking useful information. But cordial relations soon are established when I assure these managers that I am not especially interested in the products they are putting on the market.
What I am keenly concerned about though, I tell them, is where they buy their machinery, equipment and raw materials. Be it remembered that finished products of one industry may be the raw materials of another.
British industry wishes every Canadian factory the greatest possible measure of trade and prosperity, for it looks upon each Canadian manufacturer as a potential customer. It is seeking today to sell them the wherewithal of production, items in which the Old Country specializes, and which, to a large extent, are not made in Canada. It asks Canadian manufacturers to review the origins of the things they use, and revise their purchasing arrangements in such a way that the principle of Empire trade may be furthered. If a manufacturer finds he can obtain satisfaction on all essential points by buying in the Old Country without sacrificing allegiance to domestic industry, I believe the sentimental factor will have its effect and we shall be gainers all round.
This brings up the time-honored question of the adaptability of British products. For years British industry has allowed itself to be more or less slandered in the Canadian market, but now it has awakened to the need of curing popular misconceptions. It believes some evil spirit has been abroad in this country to induce people to cling to old shibboleths and legends. Many Canadians, while readily admitting the fact of quality in Old Country production, persist in the idea that the British manufacturer, through some bull-headed obstinacy, refuses to consider the requirements of his overseas customers; that his articles are old-fashioned, awkward and musty.
Personal Study of Trade Factors
THE difficulty of meeting specialized demand in Canada is perhaps the most bothersome of all the snags in the way of greater British trade in this Dominion. Old Country producers know that the normal buying power in Canada is greater than in any other country of 9,000,000 people. But that buying power insists on particular types and styles, shapes and sizes and forms of utility, to which it has become accustomed, either through exigency, or, as is largely the case, American influence, and it shares preferences in a great number of items with the 12Q.000.000 people south of the border. Denied a competitive level in the United States, British factories cannot profitably serve the limited Canadian demand for such articles in line with exact requirements. It is not through arrogance or ignorance, but simple business calculation. They compromise in the best way they can, with an eye to the inevitable expansion of the Canadian market and the possibility of an evolution in taste and preferences in their favor.
But given the demand, your British factory is ready to turn out any specific article in any conceivable form—inside out or upside down, longways, crooked or sideways, heavy or light—as its customers may desire. I visited plants where they were producing the same article in from fifteen to twenty forms for from fifteen to twenty countries.
For example, in one factory where they make hay forks and other varieties of that implement. I was struck by the unusually long prongs of one species.
“The natives who work the sugar plantations abroad,” I was told, “are noted for indolence, and, as a rule, stick their forks only halfway into the ground.”
That is one instance anyway where British industry meets the challenge of adaptability.
If British industry has a good alibi on that score as far as the Canadian market is concerned, it is not prepared to make any excuses for its past deficiencies in salesmanship. In that respect it is revising it' methods completely. My interviews revealed an appreciation of serious weaknesses. In many cases export departments have been in the hands of juniors, lacking experience and imagination and ignorant of market conditions in this country. They are steadily being replaced by more mature men who are sent to Canada to make careful, personal study of the various trade factors. Representation in the Canadian field also has been found haphazard and the wrong men chosen. Agents now are sought who offer a combination of British, Canadian and American selling traits. The salesman who came apologetically, cap in hand and prating about John Bull, is passing out of the picture.
Immense advantage is being gained by prolonged tours of the Dominion by the higher executives of British concerns— eighty of them have surveyed the situation in the past few months—and they have been impressed, for one thing, by the cost of doing business over here, travelling expenses, office help and so on. In consequence, many firms in non-competitive lines are co-operating for mutual marketing, and offering more attractive commissions. Those who have been used to doing their Canadian business through New York have seen quickly that such procedure is sheer suicide.
British industry is learning, too, that, with certain exceptions, it has been all at sea in the matter of advertising. It has been a common belief, for one thing, that products, to gain the best advantage, must be publicized in American periodicals, magazines and newspapers. That is too expensive, considering the size of the Canadian market. And those who have used Canadian media have found they have erred in the manner of presentation. Others have thought it best to gain a foothold here for their products first, when in Canadian practice the processes are reversed or are simultaneous.
Preparing for Business Revival
ONE special field of industry in which great improvement has taken place in the Old Country within the last year, and which has significant relation to the Canadian market, is that of motion pictures. The Elstree studios of British International Pictures, Limited, which I visited, are now the largest and best equipped in Europe. On the technical side the industry has gained much from supervision by Hollywood directors and experts, and the productions within the last few months have been equal to the best offered by the big United States groups.
Wider distribution of British films in Canada is of deep importance to the welfare of the industry and of Empire interests in general.
One of the most striking impressions I brought back to Canada is that British industry is not marking time while the political leaders of the Empire strive to work out a pattern for commerce between its component parts; it is determined to be first away when the depression clouds begin to clear from the sky. All the official and unofficial trade and industrial organizations are bending their energies, reinforcing the individual effort. And all are working in close harmony and co-operation.
Between Canada and the Old Country there are three effective channels of commercial contact: Between the Governments themselves, which speak through Sir William Clark, the British High Commissioner here, and the Hon. G. Howard Ferguson, Canada’s chief representative in London; between the Department of Overseas Trade in London and the Department of Trade and Commerce at Ottawa and the various
official trade commissions of both countries; and between such organizations as the Canadian Manufacturers’ Association and the Federation of British Industries.
But in the last analysis, important as are the services rendered by these agencies, the results in the direction of improving trade between the Old Country and Canada, on one hand, and between them and the other parts of the Empire on the other, depend on the response and activities of the man-
ufacturer, producer and consumer.
If, for example, an entire cross-section of Empire productive effort—say 5,000 concerns of diverse interests and activities— should be brought into contact, each filling those of its needs which it cannot satisfy in the home market at some other source within the Empire, and using Empire transport and communication services in the transaction of such business, the resulting effect would be enormous.