Remarks by: Jim Dinning
Chairperson of the Board
Grande Prairie - January 22, 2010 

Ladies and Gentlemen, I’m delighted to be back in the north and especially to be here at the invitation of my good friend and former colleague, Walter Paszkowski.

As I prepared for today, I realized that Grande Prairie is hosting the Arctic Winter Games starting in just six weeks. Typical Grande Prairie that you would fearlessly venture into such an ambitious project. And what better theme than:  ‘Dream. Achieve. Inspire’.

And I thought:  that’s the path you’re on in growing northern Alberta. Indeed, growing northern Canada.

So how do you take the dream for a prosperous North to real achievements that inspire others?

1. You have the Dream

That’s what Growing the North is all about.

While the recession stalled everyone’s progress, a number of signs say that the recovery is underway and momentum is on our side.

There are several good indicators.

For one, we’re seeing a rebound in business confidence among Canadian exporters. In a recent EDC poll of some 1,000 companies, nearly half expected their sales to improve over the next six months.  That’s up from just 11 per cent one year ago.

Canada-wide, EDC is predicting overall growth of about two per cent this year and six per cent for exports.  And on the employment side, the view is that Canada’s jobless rate – at 8.5 per cent in December -- has hit a plateau. For example, hiring in the depressed construction sector is up 30,000 since March.

As jobs and income grow, consumer spending will pick up.

Risks remain, of course. Global financial markets are still vulnerable. The US unemployment rate remains high. Default rates on loans may only peak in the first half of this year. That means wait and see for global financial institutions’ weathering this storm.

Then there is the matter of fiscal stimulus.  How long will governments around the world keep it up? The right timing is crucial and no one economy has the exact answer. China for one saw its production start to surge 16 per cent last fall and there are rumblings it may cut its nearly-$600 billion stimulus program too soon.

Most experts agree that governments are more likely to keep up their spending programs longer than necessary, rather than risk a “double-dip recession”. They also agree that world growth will pick up momentum as this year wears on.

Bottom line is that the growth will begin again if we prepare now.
And that’s what you’re doing here.

2. So, how do we go from Dream to Achieve, in the words of the Arctic Games motto?

First of all, what will achievement look like in the post-recession economy?
For Canada, a sustained revival in international trade and investment is a precondition for a full recovery from the recession.

Indeed, exports, imports and investment abroad represent more than 60 per cent of Canada’s GDP – more than most other countries.  That figure was closer to 75 per cent before the recession hit.

To put this in perspective, Canada’s exports sunk nearly 25 per cent in 2009 compared to 2008.  So we face a big uphill climb in the trade department.

Last summer, things started looking up.  Canadian merchandise exports started to increase at a small but steady monthly pace.

During this recession, Canada also climbed into the ranks of the world’s 10 most competitive economies, according to the World Economic Forum.  We moved up four notches between 2007 and 2009, from 13th place to ninth.  We overtook the United Kingdom, Korea, Hong Kong and the Netherlands. Only Singapore, now in 3rd place, progressed as much.

This ranking is based on a composite index comparing factors like infrastructure, education, technology, market efficiency and innovation.
Canada also kept its status as home to the world’s soundest banks for the second year in a row.

That’s all well and good.  But can we retain these positions as the recovery returns?

So my first piece of advice in achieving your dream of Growing the North is common sense.  Companies large and small need to go to where the customers are.  In this global economy those customers are in China, India and other markets in Asia and Latin America—markets which are leading the global recovery. Investors clearly agree that the next decade will belong to emerging economies.

This is not a new trend, only more powerful.  Looking back at the 15-years of trade prosperity--before the financial crisis hit in 2008--the most successful Canadian companies were increasing their investments abroad.  They were diversifying their markets to take advantage of low costs and booming growth in emerging markets. 

The shift was subtle.  A decade ago, in 2000, about 87 per cent of Canadian exports went to the United States. By 2008, that figure had fallen to 78 per cent. This happened even before the U.S. economy plunged.  Yes, we’re still highly linked to the U.S. market--we always will be--but Canadians need to diversify their markets and the potential rewards.   

EDC is a good barometer of this change.  Before the recession hit, EDC facilitated a record $22 billion in Canadian exports and investments in emerging markets in 2008. That was up almost a third compared to the previous year. 

These trends are good. However, in the same period, Canada was lagging behind the G-8 in its rate of global trade penetration. That’s a problem for a nation as trade-dependent as we are.

As well, Canadian direct investment abroad is too low in emerging markets.  That’s where much of the growth will occur in the next decade.  As global growth fell last year in every single industrialized market, China managed to grow about eight per cent, and India nearly six per cent.  Those figures will increase further this year.

I’d like to just touch on a few other examples of where business is going.  In China, again, industrial production continues to rise and asset investments started growing by a massive 33 per cent last fall. 

Even countries like Russia--a big disappointment in 2009 because of the drop in commodity prices--is turning the corner.  Its GDP grew in the last quarter of 2009.  And if you look at that country’s overall performance since 2000, Goldman Sachs says it was one of the decade’s biggest economic winners, with average economic growth of nearly five per cent.

Where do you figure are the 10 biggest companies in the world today?  According to Ernst & Young, the United States still holds four of those spots.  But so too does China.  Another one is in Australia.  And one is in another hot emerging market -- Brazil.

You may be wondering how a relatively small Northern region likes yours fits into such a big global picture. 

I’m reminded what Jacques Lamarre told me.  He’s the recently-retired leader of one of the world’s top engineering and construction firms.  He said that when he became CEO of SNC-Lavalin, many people didn’t see themselves as global players.  They thought they were strong regional players, but they would need a major outside partner for international projects.

Lamarre said:  what he’s most proud of is that he was able to work with this team to instill a strong sense of being the best in the world.  It shows. That company takes on some of the highest-value projects in the world. They’ve grown even through the recession. 

Just look at what you’ve got to offer.  Massive amounts of oil and gas, mineral, agricultural and forestry resources. Tourism opportunities. Much more than the resources, you have the experience of planning and managing and exploring and drilling and cultivating in less-than-tropical weather and geography. You have smart, hard-working people.  These are transferable traits, skills and competitive advantages. They fit anywhere in the world.

What a chance to promote your region and business opportunities to your circumpolar audience —from Russia, the U.S., and the Scandinavian countries [during the Arctic Games].   

You’ve only begun to tap your trade potential, while many other regions in the world are getting tapped out.

According to EDC’s Export Forecast, Canada’s oil & gas and mining sectors, more than any other, show promising export pick-up this year.  Growth rates could reach more than 10 per cent.  It’s modest compared to the boom years.  But coming off the huge declines in 2009, this is a respectable rebound.  

When it comes to trading with emerging markets, there are many options, depending on the size, status and business plans of a company.  You can export goods or services directly, or invest abroad in new or existing facilities or projects.  You can create joint ventures, distribution agreements or set up a small sales or service office abroad. 

For example, EDC is working with Grande Prairie-based Davco Solutions, which now sells its products in Russia.  This company designs and manufactures specialized equipment for the forestry, oil and gas, manufacturing and transportation industries.

The goal is to produce and market goods, components or services where it’s most cost-effective and productive to do so.  We call it “integrative trade.” Easier said than done of course. 

So how does this apply to a smaller business?

A recent UPS survey of small and mid-sized businesses in Canada found that 45 per cent strongly agreed that global trade is beneficial.  But only 30 per cent said they plan to export or are doing so already.  That in itself is not surprising -- we don’t always do what we know is good for us.

Clearly the will is there.  What we need is action.  Small and mid-sized companies need advice and support services so they can act on their sense that exports are their business too.  That means everything from market intelligence, legal advice and business loans, to insurance against non-paying customers in far-away markets.

In this day and age, you have to be able to offer your customers the option to “buy now, pay later,” whether you’re selling furniture at home or widgets abroad.  If you won’t do it, another company from another country will.
So here’s my second piece of advice.  Don’t go it alone.

I’ll leave the legal and marketing tips to experts in those fields, and I’ll just talk about some of the basics of export credit and trade finance, from my experience with EDC.

Access to credit is what keeps trade flowing.  We all saw what happened to trade when the banks virtually stopped lending and loan rates skyrocketed.   Export and import financing has been called the lifeline for 90 per cent of international trade.

During the recession, in particular, EDC was just such a lifeline for many Canadian companies doing business both at home and abroad.

For those of you who don’t know EDC, it just celebrated 65 years of helping Canadian companies develop and capitalize on international trade.  How?  By providing loans and insurance tools that increase your working capital, protect you from payment defaults, guarantee your contract or performance bonds, and much more.  Generally speaking, EDC increases your credit and gives you peace of mind, so that you can focus on investing and growing your business abroad. 

During the recession, the Government of Canada gave EDC expanded powers to provide these services domestically too.  It also provided more capital to bolster EDC’s core business of encouraging global trade and investment.  EDC did so in partnership with financial institutions across Canada.  Nearly 5,000 deals were done in partnership with private-sector financial institutions in 2009, a record number in EDC’s history.

This cooperation helped reduce the credit crunch and recession in Canada.  No new institution had to be created, no complicated new processes. As a result, Canada fared better than those countries that did not have this infrastructure in place.

By the end of 2009, more than 2,100 new customers turned to EDC.  We served close to 8,500 customers in all.  These are record numbers, in spite of an economy where exporters were fast retreating.

Along with its financial services, EDC offers a wealth of economic, market and country expertise that’s there for the taking -- through the web or by consulting with our representatives across Canada and in 14 offices in the world’s fastest growing markets.  They work closely with Canada’s trade commissioners and with foreign financial institutions.  They help Canadian companies do business with some of the world’s major corporations, especially in the mining, oil and gas, infrastructure and IT sectors.

Let me give you an example of how EDC works with foreign companies to pull in Canadian business. I mentioned the top 10 companies in the world earlier.  One of them is Brazil’s national oil and gas company Petrobras.  Since 1994, EDC has provided that growing company with several loans to encourage the purchase of Canadian goods, services and technology. 
By 2000, about 10 Canadian companies were doing business with the oil giant. Today, this number is well over 60. Petrobras’ purchases from Canada have averaged some $85 million annually over the past three years. 
Many Alberta companies have been the beneficiaries.

Last October, EDC and International Trade Canada hosted a trade mission bringing Petrobras leaders and their key Brazilian suppliers to Halifax and Calgary.  They held matchmaking sessions with 225 Canadian companies to help drive more joint business in the future.

In just a few months, we have already seen one direct payoff.  Canalta Controls Ltd. of Red Deer, Alberta, a manufacturer of industrial control and measurement equipment, recently received an order from one of Petrobras’s suppliers in Brazil.

3. That brings me to the last call-to-action of the Arctic Games – Inspire. 
If you come away with only one message today, I hope you’re inspired to export… expand your exports or investments abroad…or encourage others to export. 

Just as our northern regions are among Canada’s fastest-growing frontiers, on a global scale those spots go to emerging markets. 

We may love the North for its wild expanses and relative tranquility, but it is a full-fledged member of Canada’s economy.  In that light, Growing the North is no different from Growing Canada.  And that must be done by helping Canada maintain and grow its place in the global economy. Canada is on the road to recovery--even more so than many other industrialized nations.  We’ve risen a few rungs in competiveness.  We have a top-ranked financial system.

And we have Northern resources and talents that have barely been tapped.
What we need is more of the Northern pioneering spirit. This latest crisis has indeed pushed many companies to tap into that spirit--to seek new markets and new partners to sustain or save their businesses. EDC is proud to be one of those partners. The spirit has to come from you.
Success begets success.

So as you watch the Olympics next month and as you’re here participating in the Arctic Games, just remember how inspiring a Canadian or local winner on the international stage can be—in business, as in sports.