Manufacturing hurdles
“It’s how youou handle the challenges.”
Over the next three weeks, Berg Water will arrive at trade shows in Toronto, London and Shanghai. President Tony Kenny will offer a taste to potential customers, telling them what can be offered from his operation in Newfoundland and Labrador.
He refers to the water as you might a fine wine. And that’s not surprising, given a 500-millilitre bottle has sold for $30 and, in Los Angeles, has been served in one restaurant by a water sommelier.
The iceberg water has sold in New Zealand and in Europe. It has been sent to distributors in China and the Middle East.
Today, Berg Water’s president is optimistic about future sales and growth, with more runs at the company’s small bottling plant in Mount Pearl.
That is despite all the obstacles commonly cited by provincial manufacturers.
“We’ve got challenges, but everyone’s going to have challenges and it’s how you handle the challenges,” he said.
When the Atlantic Provinces Economic Council (APEC), a Halifax-based think tank, released a brief “report card” on manufacturing in Atlantic Canada Thursday, it was no surprise this province was not central to the discussion, regardless of companies like Berg Water.
In New Brunswick, manufacturing represents 10 per cent of GDP, and even Prince Edward Island has a fair amount, at 8.4 per cent of all output. In Newfoundland and Labrador, manufacturing is 2.7 per cent of GDP, APEC notes, referring to the sector here as “much less important.”
The GDP-related numbers for this province can swing wildly, given they largely reflect changes in a relatively small number of operations — specifically in oil refined at Come By Chance, newsprint from Corner Brook and fish products.
But Kenny said anyone maintaining operations in manufacturing today is looking to their own businesses, rather than arguments over what general numbers or province-to-province comparisons might mean.
“There’s lots of manufacturing going on here. Maybe the story’s not told well,” he said. “For instance, I don’t say many people know who in the blazes we are.”
Berg Water has been in business for a decade. Kenny teamed with a local design and advertising company to develop the brand, pressing it ever since in costly travel to far-flung locales, particularly hot countries.
Freight remains the biggest cost, he said, amounting to roughly 25 cents on a bottle.
Kenny is not a blind optimist when it comes to costs. In a second business, involving window sales, he said the company decided to give up manufacturing in-province.
“We used to ship to different provinces, Atlantic provinces, but at the end of the day we couldn’t get enough staff, so we decided to get a joint venture with a company in Moncton,” he said, laying out the emergence of what is now Glacier Windows.
In recent years, labour has been repeatedly cited by business owners and managers as a top issue.
In an economic update in December, the provincial government noted wages and salaries in the manufacturing sector grew 11.1 per cent in the first nine months of 2014, when compared to 2013.
In comparison, it stated, the rise nationally in the same sector was just 1.3 per cent.
Kenny said Berg Water is a less labour-intensive operation than the window manufacturing operation, requiring eight people to operate the plant, making it easier to manage.
Carol Osmond, a senior adviser with Canadian Manufacturers and Exporters in Newfoundland and Labrador (CME-NL), said successful business managers will always think about ways to maximize their productivity and efficiency, regardless of the size of the operation.
Osmond noted manufacturers here currently finding success with import substitution — essentially piecing together locally what would cost more to ship in whole, as with making mattresses or cabinetry.
And she suggested the future of provincial manufacturing lies in products rooted in new technologies and innovations, as with those produced by companies such as SubC Imaging and Dynamic Air Shelters.
There is also a place for rare products that can be produced locally.
As for the challenges, “in recent months we have been holding roundtable sessions across the province with owners and executives of manufacturing firms to identify opportunities and challenges and to discuss potential solutions,” she said.
CME-NL is producing an “action plan” for manufacturing, to be released in the coming months.