Exporters are better at managing risk

Exporters are better at managing risk

Companies that export are more innovative, productive, profitable and risk averse. This, the fourth in a four-part series, talks about exporting and managing risk. (See also: 1st part – Innovation2nd part – Productivity3rd part – Profitability)

Creative Juiices has a niche operation — it offers bottling, labelling and mixing services to small- and medium-sized beverage companies that don’t have their own facilities. It’s been successful since its founding in 2011, but what’s really shored up its achievements is exporting.

After it secured some small U.S. companies as customers, its base of operations was secure, its risk-level minimized, and it was free to explore other markets across the U.S. and in Canada.

Today, the company is the bottler for a popular Canadian Caesar product and also an American maker of malt-based cooler. It also bottles for several small cider houses and craft soda companies.

“The majority of our business is export today,” said Terry Weishar, Director of Operations for Creative Juiices. “Our main projects that got our company going were all exports to the U.S. There are very few co-packaging companies that offer what we do. We cater to the small- to medium-sized brand owners. I’ve been in a number of plants in the U.S. and Canada and a lot of the co-manufacturing facilities are quite large, with high capacity. Our capacity is much lower and we can offer our services to start-up companies with smaller batches, and we can maintain production for them throughout as the brand grows.”

According to Todd Evans, Director of Corporate Research at Export Development Canada (EDC), resiliency is really an extension of the other benefits of exporting: “A company that is more innovative, more productive and more profitable just in an of itself is a company that’s more able to withstand downturns in cycles.”

Bill Currie, Vice Chair and Americas Managing Director at Deloitte, concurs.

“Companies that export, live longer,” Currie said. “It de-risks you. You can’t say that no one’s ever failed at it, but your chances of success improve.”

Evans said companies that have thoughtful export strategies helps give them that reduction to exposure to international risk. “If you’re not focussing on one product in one market, you tend to be more balanced,” he said. “If you’re a multi-product company in many markets, you’re much more diverse. That makes the company more resilient and more robust. The very nature of having that international footprint really does give them adaptability and flexibility.”

Canada, he said, is a very small domestic market and companies that expand beyond its borders can take advantage of scaled economies.

“If the company is doing a lot of product and research development, they need that international market to amortize those investments and activity over a larger sales base,” Evans said. “Exposure to scale is a big thing in terms of reducing risk.”

An Industry Canada study had the same general findings. It states that “[international] diversification can help businesses better withstand economic shocks across regions, which can support firm survivability and help make Canadian businesses more competitive globally.”

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