Services exporter

Evans Consoles, which designs, manufactures and installs custom control centres for clients such as NASA, Boeing and Microsoft around the world, currently does a small amount of business in Europe.

The Calgary-based company estimates that although exports account for 95 per cent of its business, only 10 per cent of its sales are to the continent. That should soon change, however, when CETA comes into force. We talked to Evans’ Chief Technology Officer Matko Papic about the opportunities he foresees.

Currently, Europe isn’t a big part of your portfolio. How do you expect that to change with CETA?

Today, we leverage NAFTA and all of the provisions it has for our business in the U.S. This helps us in Europe as well since some of Evans’ American customers have operations in Europe. It’s yielded benefits over the years because it helps us be more competitive and have access to more opportunities.

Similarly, CETA will open up opportunities to approach the European market in ways that we couldn’t before. Some of the big changes are duties on manufactured products and being able to go after certain government contracts.

That’s a big part of our business. Defence, security, military, intelligence and other government-based opportunities are the types of areas we’re very much involved in.

Besides our manufactured product, including installation and delivery, we expect to be able to provide our European customers with more of our services business. This includes the up-front design of mission-critical facilities—planning, visual and operational design—but also detailed room design and construction services. If required, we can replace the ceiling, the cabling and data infrastructure, the flooring, walls—we’ll do very specific retrofits targeted at control rooms.

When you look at the business we do today in Europe, a lot of it is U.S. military work so the contract runs through NAFTA. But we’d certainly like to be more involved in local government opportunities, such as NATO, local infrastructure, transportation, 911 and air traffic-control centres across Europe.

With our type of business, new and developing infrastructures are always attractive. In Western Europe, you’re more dealing with retrofits and upgrades, while in Central and Eastern Europe, projects are more geared toward greenfield developments.

Is Central Europe part of your plan?

Yes, we are continuously evaluating how we can better position ourselves in Europe in the future. The EU is a large player, not just in the Schenghen zone, but in the surrounding countries as well.

It’s been some time since we have had a local sales presence in Europe, but it’s certainly something that we’re now looking at. Approximately 95 per cent of our business is export, 50 to 60 per cent of that is in the U.S. Europe, the Middle East, Africa and Asia make up the rest. Europe is less than 10 per cent. That’s where CETA has a potential benefit for us. The question on CETA will be whether it will influence and change some of the natural procurement tendencies within Europe.

German organizations like to buy German; the French like to buy French. Time will tell if CETA will help change this.

For the most part, the U.S. behaves like a single market, and while there is some fragmentation in procurement tendencies, access to government opportunities is fairly consistent and is facilitated through NAFTA in a positive way. Europe, on the other hand, is more fragmented.

What are you most eagerly anticipating from CETA?

For the most part, I believe that CETA will make us more competitive overall. A big benefit will be access to certain government contracts—being able to bid on certain opportunities we couldn’t in the past.

A lot of our business is specification-driven so intellectual property (IP), as well as testing and professional certifications play a very important role in our in our projects and with our customers. Being able to leverage Canadian certifications and IP into Europe will be beneficial.

What’s your best piece of advice for would-be exporters to Europe?

We position ourselves as a mini-multinational. Evans has done this for decades now. It starts with understanding which markets you can be competitive in.

We service and support a large number of our major customers, all of which are global companies, so we have to understand trade agreements very well.

If Canadian companies want to play internationally, understanding free-trade agreements is tremendously important because they offer great opportunities. We’ve certainly seen that with NAFTA. You have to be familiar with the agreement to make it work for you. Agreements like CETA go a long way to facilitate that.

Goods Exporter

Corporation Genacol Canada Inc. makes a line of natural health products that eases joint pain. Each year, it sells more than 1 million bottles of its seven products to 38 countries on five continents. We talked to Vice-President Frédérick Michaud about the opportunities he foresees as CETA comes into force.

For the past 10 years, all of Genacol’s European-bound products were manufactured in France and sold by a licensee to distributors across the continent. But in January, Genacol will end that agreement and take over its own European sales. The advent of CETA a few months earlier raises questions and opens up possibilities.

When it comes to Europe, where are you selling now?

We sell to France, Belgium, Luxembourg, Netherlands, Sweden, Norway, Denmark, Romania, Italy, Spain and Poland. Not all of those countries have high sales volumes, but there are some and we want to maximize the potential. I was recently in Sweden, Belgium and Romania and our distributors there are very excited about the change to our business model.

How will CETA change your business when it comes into force in September?

We are currently producing some product in France, but we have been thinking of moving production business back to Canada because the lab that we use in Vancouver produces the product more cheaply than they do in France—even accounting for the shipment costs we’d incur.

And if the tariffs that come with sending it from Canada to Europe are gone with CETA, that might be worth looking at even more seriously.

My focus, for now though, is to make the transition from the licensee back to us. We will have full control of our European territory in January. I plan to take a year to make sure everything is working on the distribution side and then I’ll take a closer look at what CETA can do for us.

CETA might be an opportunity to make us more competitive by reducing our production costs. But at this point, the system is working, even if the price is higher in France. I want to be careful about changing a system that works. CETA offers new options we need to evaluate.

So you don’t expect it will necessarily open up new sales markets for you.

Not necessarily because while the European Union has a lot of uniformity, in our industry, each country still has its own regulations. I don’t expect that will change so breaking into new markets will basically be the same for us.

What are you most eagerly anticipating from CETA?

The removal of tariffs. To my knowledge, that’s the main thing that will change for us.

What’s your best piece of advice for would-be exporters to Europe?

Don’t take for granted that because there’s a new free-trade agreement that it will solve everything.

The European Union is unified on a lot of things but not everything. Just because the agreement is signed, doesn’t mean everything has changed.