Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA).
The recent Doyletech Study entitled Northern Ontario Mining Supply and Services – recently released placed a significant amount of emphasis in the value of the sector and its ability to create wealth and employment in Northern Ontario.
I was impressed with results that demonstrate that the 500 plus mining supply companies throughout Northern Ontario generate over $5.6 billion in sales and employees over 23,000 at peak times.
Notwithstanding the value of this enormous financial and employment footprint was the recommendation that an enhanced International Market Entry Strategy needed to be added to the existing Infrastructure within the Companies.
The first-order objective would be to assist sector firms and organizations enter export markets, through a shared-costs public/private partnership program that aided relevant organizations.
As well, it would support optimum approaches in terms of partnerships, distributors, and product/service profiles.
The three ways to conduct foreign market entry is by trade, contractual agreement, or direct investment. Direct investment can be in the form of “Greenfield” foreign direct investment (FDI), whereby the supplier establishes a production facility in the foreign country, or it can be through “acquisition” FDI, or by joint venture. All of these require financing of some sort. This financing cost is what deters firms, especially the smaller ones, from attempting to export. As well, Northern Ontario represents a region that has a relatively lower average income than elsewhere in Ontario.
Accordingly, some form of public offset of financing for export marketing is desirable and legitimate on both small- and medium-sized enterprise (SME) grounds, as well as regional development grounds.
This study has clearly demonstrated that many Northern Ontario suppliers can benefit from being export-oriented. Each potential exporter could develop a International Market Entry Plan. It would form part of an annually updated business plan, and would not only describe the business opportunity but would assess the type of entry that seems appropriate.
The shared-costs program would work with firms’ Foreign Market Entry Plans. The administration of the Program would be based on applications from firms that followed their respective Plan.
There are more details for this program but it would be another step in maintaining the dynamic base of entrepreneurs and companies that now exist with many still dependent on local mining deposits as their prime clients.
SAMSSA will continue to pursue this recommendation over the next months with a follow-up survey to its members and appropriate government agencies.
A Copy of Executive Summary Study Available from destefan@isys.ca