Here’s a question. Which province can boast the largest share of Canadian farm equipment manufacturing?
Most of us would likely guess Ontario, the traditional heartland of industrial activity. If we did, though, we’d be flat wrong. With nearly $474 million in goods produced in 2009, Manitoba now leads the industry.
Ontario is actually in third place after dropping behind Saskatchewan, which on its own accounts for another $450 million in production.
Already, the combined output of Manitoba and Saskatchewan is roughly double the total value of farm machinery manufacturing in all of Eastern Canada.
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That’s a far cry from Ontario’s heyday, when it was once home to two major, full-line manufacturers and plants like Massey-Ferguson’s once-proud, state-of-the-art combine assembly plant in Brantford.
Now, the industry has evolved. Yes, there are major players MacDon and Versatile still operating long-established, large assembly plants in Winnipeg. But it’s the number of homegrown companies building implements in smaller towns and villages across the eastern Prairie that is reshaping the business.
Today, Manitoba alone is home to 240 whole-good agricultural manufacturers and another 60 component suppliers, says Manitoba Trade and Investment (MTI), a provincial government agency.
Ironically, with that many plants rolling so much equipment out their doors, manufacturers have found themselves in the same position as Canadian farmers. They are producing much more product than can be consumed domestically. So exports, including to markets beyond North America, are critical.
How these small companies — and even the large ones — have managed to successfully move into the unfamiliar territory of overseas markets to find more buyers is simple. They took a page from the Prairie farmers around them.
PASS THE PUCK
Manufactureres have been getting together to help each other market machinery, especially at foreign equipment shows. It isn’t what you’d expect from competitors, but when you talk to the people behind many of these companies, you realize many were and still are farmers, albeit now only on the weekends.
Maybe it’s a case of taking the boy out of the farm but not taking the farm out of the boy.
“It’s quite unique to this sector, the amount of co-operation that goes on and the synergy,” says Bill Teerhuis, trade specialist at MTI. “It’s one of the reasons we’ve been able to pull off some pretty substantial Canada (centred) operations.”
Specifically, Teerhuis is referring to several combined major displays of Prairie equipment that have been staged at some of the world’s premiere farm machinery shows.
“To be effective in the offshore markets — and it’s essential that we are — a more unified approach will have more impact,” Teerhuis says. “To do it (exhibit equipment) on their own, they will often be overlooked or missed as just one company in one booth. With a Canada stand they have more impact.
Besides, team play shows they understand their customers, Teerhuis adds. Those customers, he says, “really don’t recognize Manitoba or Saskatchewan as readily as they do the Canadian maple leaf. And Canada has a tremendous and very positive reputation in other countries for quality equipment.”
“Our reputation (as Canadian manufacturers) is high-quality, durable, well-made, leading-edge technology, and we need to maintain that,” says Don Henry chief operating officer for Morris Industries Ltd., a Prairie-based implement manufacturer with plants in both Saskatchewan and Manitoba. “I think Canadians also have a reputation for being ethical business people.” That can’t hurt either.
To capitalize on those strengths, industry players have opted for a team approach when presenting their wares at foreign machinery shows. With co-ordination by MTI and with its approximate equivalent next door, the Saskatchewan Trade and Export Partnership (STEP), manufacturers now band together and set up combined Canada pavilions at foreign shows to attract maximum attention from potential customers.
WAVING THE TEAM COLOURS
That also gives more manufacturers a realistic way to participate, at a realistic cost. “It can be something as simple as someone covering your booth for you while you’re at lunch,” says Gary McCrea, co-owner of Ag Shield Manufacturing in Benito, Man. “There are all kinds of little details I don’t have to worry about. You can be a one-man show.”
That means companies can leverage their marketing efforts much further than they could for the same budget if they stayed on their own.
Still, although Henry believes there is a cost saving, he sees the greatest value coming from the convenience offered through the team approach and preparatory legwork done by organizations like MTI. “It’s a time saver that allows us to focus on other items,” Henry says.
McCrea agrees, and he likewise points to the value of market research made available to the companies. “The problem is finding out who to contact (in foreign markets),” McCrea says.
“Sometimes it’s government officials in other countries,” adds Henry. “Both organizations (MTI and STEP) work their hardest to find people interested in talking to us and put us together to start discussions.”
Those introductions can kick-start a marketing effort, and the Canada pavilions also make staying in touch with established and potential customers an ocean away much easier.
Still, it takes energy and determination for machinery makers to win in export markets, just as it does for farmers.
Canadian customers might be close enough to stop by the factory to provide feedback, but foreign producers can’t. Keeping in touch with them, though, isn’t any less important. In fact, McCrea believes it is critical if Canada is to remain successful at selling into those markets.
“That’s why company principals do the shows,” McCrea says. “I’m there to talk.”
McCrea doesn’t want his company’s booth staffed only by sales people who focus on the number of machines sold. Instead, he wants to meet foreign farmers himself and to hear about the problems they face and to get feedback on machinery. That information can then be funnelled back to engineers for design modifications or it can be used to refine future marketing approaches, adding another level of value to this industry-government partnership.
GETTING ON THE BUS
When you ask how this co-operative effort came about, no one can say exactly how it evolved. Now, it just seems natural to everyone and most are quite happy to see things remain as they are. “When you go overseas, it’s even more important to be part of a group,” adds McCrea.
Every time MTI and STEP set up a Canada pavilion, the roster of players changes a bit. Each manufacturer is free to participate only in shows in countries where they are interested in pursuing markets, and the list of countries piquing the interest of Canadian manufacturers is fluid.
New market opportunities are showing up in developing countries, notes Henry. China and South America are examples of regions that are currently on Morris Industries’ radar. Developing viable markets in some of those areas, though, is still in the early stages. High import tariffs in South America are an example of the kind of barriers facing exporters who want to break into new markets. But companies need to work at overcoming challenges if they are to continue their growth and avoid the risks associated with being only a local supplier.
“By going global, you’re diversifying your risk from being a regional player,” says Henry. “If you only rely on one region of the world, you’re at the whim of the weather.” Regional crop failures mean empty pockets for farmers, so there’s no money to invest in new equipment. This translates directly into lower sales for any manufacturer selling into only one geographic area.
Companies marketing into several regions of the world are more sustainable. They can more easily maintain overall sales numbers, keep plants operating and retain workers.
But when governments face increasing pressure to reduce their operating budgets, it limits the ability of agencies like MTI to help companies target as many countries. Deciding where to channel resources now depends in large part on ensuring everyone gets the biggest bang for their buck, which can mean holding off on new and more speculative venues.
That’s a story that Canadian farmers recognize too. Deciding where to set up future Canada pavilions isn’t going to be easy, concedes Teerhuis. “That’s a tough one. We’re looking at choosing just a couple of markets.”CG
