A more intelligent export strategy

The government announced its new and anticipated export strategy this week and I wrote some thoughts about it in my Telegraph-Journal column this morning.  I awoke to an email criticizing my views and suggesting that I don’t understand the purpose of an export strategy.  My views, I was told, are more appropriately placed in a heading called ‘sector strategy’.

Semantics aside, I will summarize my position here.

It just seemed to me after reading the strategy that it was something you might have expected 25-30 years ago.   Almost all of the 10 action items are focused on those firms that need a hand from a government agency to figure out how to export.  The ten are:

1. Develop a Marketing and Communications Plan for Exports
2. Transition to an Account Manager Support Model
3. Deliver a Suite of Export Training
4. Provide Export Information and Advice
5. Connect Buyers with Sellers
6. Leveraging Transportation Infrastructure
7. Establish an Export Readiness Unit
8. Engage Major Exporters
9. Partner Collaboration
10. Rebuild Assistance Programs

 

Another way to look at it is to think about the ideal company that this approach would support (you may have to read the full document for the essence).   It looks to me like the ideal company is the same old target of economic development at least as long as I have been around – the small firm that is either pre-export, export ready or undertaking limited exports.    A larger firm with well developed markets and sales channels wouldn’t need the government to provide advice, training, etc. (engage major exporters is a notable exception here).

My point is that this looks like a strategy to find and support new exporters which is not an export strategy.  It might be one objective of a strategy.

If I had been asked, I would have started from the premise -who is exporting now and what firms/sectors have a well developed capacity to export.  For example:

National and international insurance firms in New Brunswick have been ramping up their ‘exports’ for years.  A number of them export 50% or more of their activity outside New Brunswick.

Most of the larger engineering firms – Hatch Mott MacDonald, Stantec, ADI, etc. are exporters.  They are sending New Brunswick based engineers to work on projects around the world.

New Brunswick’s call centres are almost entirely export-based – something like 97% of the activity is exported.

The majority of the larger IT firms are primarily exporters.

Not to mention the fact that a dozen primarily natural resources-based firms account for 85% or more of merchandise exports from NB.

 

I hope this makes my point.  The government needs to decide if they want to grow exports or develop and support small exporters.  Those are not the same thing.  There may be some overlap but they are not the same thing.  An LNG export terminal would generate $1billion in export sales.  A new fertilizer plant would generate $500 million in export sales.  One national computer support help desk would generate $25 million or more in export ‘sales’.    If we could see the insurance industry double its out of province work that would add tens of millions of dollars worth of ‘exports’.

Again, there certainly is a place for supporting small exporters but I really want government to get out of the mindset that its role in economic development is doling out cash and support to small businesses.    My export strategy would be summarized on one page (unlike my verbosity here):

David Campbell export strategy:

Go to the fishing and seafood industry and ask them if there is potential to grow exports.  If yes, how can we help?

Go to the forest products industry and ask them if there is potential to grow exports.  If yes, how can we help?

Go to the engineering industry and ask them if New Brunswick could be a base to service projects in Labrador, Western Canada and beyond.  If yes, how can we help?

Go to the transportation and logistics industry and ask them…..

Go to the finance and insurance sector and ask them….

Go to the NBITC and ask them…..

Go to the NBADA and ask them….

Go to the Alliance of Manufacturers and Exporters and ask them…..

And, work with local Chambers of Commerce, Conseil Economique, CFIB, etc. on a small business export strategy that may include the kinds of services in the current export strategy if there is demand and clearly definable value.

 

 

Finally, I worry about their ability to deliver on their objectives.  If I am reading this right, they are calling for a $2.4 billion increase in the value of total exports over five years.  That is an incredible – self-sufficiency like – objective – unless they have baked an outbound LNG terminal and one or more fertilizer plans (or an oil pipeline) into their plans.   Although that is very unlikely, given the are also calling for 15,000 new jobs as a result of these exports so they must be primarily value added.  An export LNG terminal would only add a few dozen jobs and a new fertilizer plant – even with supply chain – is only in the hundreds of jobs.

Of course as my cranky friend pointed out this morning, nothing in the export strategy precludes anything I have said here.  But there is no direct indication in the plan.  No mention of the engineering industry’s export potential.  No mention of the insurance industry’s potential, etc.

I wish them well.  They are bang on to focus on the export economy.  I’m just not sure they will ever break out of the support for small business mindset.

 

 

 

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7 Responses to A more intelligent export strategy

  1. Don Dennison says:

    David, I agree. I have talked over the years with Business New Brunswick types whose job it was to encourage more NB companies to export. It seemed to me that their frustrations were naturally explained. How would you, a bureaucrat, convince a business person to do something outside his realm ? Instead support the development of stronger companies and they’ll figure things out for themselves. And one way of supporting them is through proactive purchasing. I heard just last week about NB companies losing NB Power contracts for a little as $100 differentials. What happened to the “NB First” election platform ?

  2. mikel says:

    I think you are overrating what these ‘strategies’ are supposed to accomplish. Does ANYBODY here think that its within the governments power to actually increase exports and exporters? Hypothetically, what if you go to all the exporters and they say “I don’t need the headache, I’m doing fine now”. When then? Kidnap their wives or husbands and make increased exports the ransom?

    1. Develop a Marketing and Communications Plan for Exports
    What company out there doesn’t know how to market their product? So they’ll go to the people behind “Be….in this place” for their marketing and communications needs?

    2. Transition to an Account Manager Support Model
    They never had account managers before?

    3. Deliver a Suite of Export Training
    Because heaven knows that when you need export training…you go to the government! What exactly has the government EVER exported?

    4. Provide Export Information and Advice
    See above. If you want health advice, do you ask a doctor, or a bureaucrat?

    5. Connect Buyers with Sellers
    This is actually pretty important and something the government COULD do. That contest they have at least is a beginning. If the government would do what the universities don’t, namely, have more conferences, etc., then something may happen. A big company here in Waterloo got started years ago when the university had such a conference with angel investors. Hardly any professors showed up, but investors did, so they asked the guy who set it up if HE had any ideas, and that idea became a company funded by several hedge funds, the Forbes, and now is publicly traded.

    Gogii sells all their games through bigfish games, an operation out of Seattle I believe. Can you even imagine the scenario of walking into the NB government and saying “I have these video games, can you connect me to buyers out there?”. Can you imagine the Sussex Co Op, who make Mrs. Dunsters Doughnuts going into the NB government to get THEIR help in exporting groceries?

    How about Covered Bridge chips, who are in specialty food shops here, I may eat my words, but who at the government is the expert in specialty foods across canada? And did somebody from the government call up Vincenzo’s and say “yes, there’s a potato chip maker here who would like to sell chips in your store”. The response, most likely, would be “and the reason they aren’t calling me is…?”

    6-10 of their ‘strategy’ seem to be “well, what other generic terms can we throw in there”, so I think you are being too kind in saying “this looks like a policy from twenty years ago”. In fact, I can virtually guarantee you that twenty years ago the government came out with an ‘export strategy’ that looked REMARKABLY similar to this-and probably had the same effect. It looks pretty much the same as EVERY government export strategy.

    PS I hope that email you got didn’t come from the government, because I see nothing in your remarks that are sector specific. You mention the obvious, that NB has some engineering firms and most exports are natural resources. I suspect they wanted you to call it ‘sector strategy’ because then nobody would read it.

  3. mikel says:

    PS I’d just like to add something more constructive. New Brunswick is probably the WORST province for marketing itself. There’s a reason that canadians have all heard of PEI, Newfoundland and Nova Scotia, but New Brunswick is probably tied with Manitoba for “province I know nothing about”. At least Manitoba had that brief fling with animation back in the eighties.

    Each year I go to the Royal Agricultural Winter fair and meet TONS of people from New Brunswick. I go to the booths that feature Prince Edward Island produce, go to the Nova Scotia tourism booth and the Newfoundland cultural exhibit. NEVER in my fifteen years of going there have I seen a single thing from New Brunswick. And next to the calgary stampede, that is probably the biggest agricultural fair in the country. The LEAST the government could do is make it so that when a company says they are calling from New Brunswick, people on the other end don’t assume they are talking about New Jersey.

  4. richard says:

    ” If yes, how can we help?”

    What is there about that phrase that Mikel does not understand?

  5. mikel says:

    “if yes how can we help” isn’t ‘an alternative’ since number eight of the government’s export strategy is “engage major exporters”. What do you think ‘engage’ means? As usual Mr. Campbell’s criticisms are spot on, but his own strategy just repeats one of theirs, and frankly, is a non issue. Do you REALLY think that major exporters don’t know where the government is and how to ask for help if they want it? Do you REALLY think that a major exporter will benefit from the ‘expertise’ of a government bureaucrat? There is really nothing left to debate if you seriously think that.

    Even a cursory glance at seafood shows the government is bending over backwards for them. Environmental laws are practically non-existent, heck, it took the FEDS to investigate environmental laws, and the feds are hardly friends of the environment. It was so bad lobsters were dying all around St.Stephen. I think we all know that when an industry goes to the government with demands it gets them.

    Perhaps some said “we’d like an account manager model because every time we call we get somebody else”. That’s fine, but its hardly part of a ‘strategy’, its simply a common sense service request. The networking aspect I mentioned is a non starter as well. Everytime there is a ‘trade mission’ we always hear about the success stories (although never about how they pan out), so it goes without saying that if you want to increase exports, have more trade missions with the government and exporters travelling together. I don’t think we’ve even seen ONE since Alward took over, and you don’t need to ASK exporters “hey, if you take you on a junket to see other markets would you be interested”. But such a thing isn’t even MENTIONED in their entire study, so you can chalk it up to my own ‘alternative export strategy’.

    What ANY company wants from government is a cheque. In case you haven’t noticed, most governments are doing far worse with their own organization than most businesses are, so thinking THEY are the place to go for ‘advice’ or, well, ANYTHING but a cheque makes no sense. In our paper the other day was the announcement that 100 million is being spent in order to make this region a “Quantum Seattle”. Most of the money is coming from the local billionaires I think, but no doubt the government will write a cheque as well. None of the local quantum mechanics went to the government to learn how export anything, they just told them to write them a cheque.

  6. Tony says:

    @mikel
    “PS I’d just like to add something more constructive. New Brunswick is probably the WORST province for marketing itself. There’s a reason that canadians have all heard of PEI, Newfoundland and Nova Scotia, but New Brunswick is probably tied with Manitoba for “province I know nothing about”. At least Manitoba had that brief fling with animation back in the eighties.”

    >>> Wouldn’t point 1 (Develop a Marketing and Communications Plan for Exports) address precisely address that?

    As per your question “What company out there doesn’t know how to market their product?” Oh, there are thousands of companies out there that don’t. In fact, I always say that Canadian companies have grown spoiled and complacent because they have for years had the world’s largest market next door. If you want to sell to the US, all you need to do is make sure that you have all the appropriate certifications, a good-looking catalog, and somebody to look after the orders (of course, there is more to it than that, but I want to illustrate my point). If you want to sell to other markets (e.g. Asia, Latin America), it’s a completely different game. And there is more. In rapidly growing Asian economies, the role of government in opening doors (and keeping them open) is central.

  7. Joel Richardson says:

    Hi David,

    I am available at your convenience to walk you through the provincial export strategy. I would be pleased to share with you the supporting rationale and guidance we recieved from both industry and leading authorities on export trade to help formulate the three goals, target markets, exporting company segments, and ten actions. Hopefully this may help clarify a few of the points you have raised.

    Best regards,

    Joel Richardson
    Executive Director, Export Development
    NB Department of Economic Development

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