If misery truly loves company, export-dependent Canadian farmers and manufacturers have lots to commiserate over—both have been absolutely hammered by the high loonie.
That’s certainly true at Standen’s Ltd. The maker of leaf springs, trailer axles and tillage equipment not only has to compete head-on with Chinese rivals in the brutally tough steel fabrication business—but does so from Calgary, a place where labour costs are notoriously high.
“We’re in a business where pennies can be very, very critical,” says Standen’s president Mel Svendsen. “But while it’s tough and our returns aren’t what we’d like, we compete globally.
“For example, we make springs here and ship them to China. No one believes it’s possible to do that—but we do.”
That’s partly because Standen’s produces high-quality products and delivers them—without fail—when their customers need them. For Standen’s customers (which include John Deere, Case New Holland and Saskatchewan’s Bourgault Industries), cheaper isn’t the sole factor if the quality is poor or if late deliveries cause production delays.
But that’s not the only reason and Svendsen says there are three things that anyone in a global business, including farmers, needs to practice these days. One is something most farmers do already, the second is something anyone with employees should be thinking about, and the third is one of those simple things we often let slide.
First: Keep your eye on the horizon. With 500 employees and annual sales in the hundred-million-dollar range, Standen’s is a big company but not big enough to have Harvard-trained economists on staff. So it falls to Svendsen and his senior managers to keep an eye on leading economic indicators such as currency trends or the Baltic Dry Index (a measure of global shipping activity). You need to know which way the wind is blowing.
“We watch corn prices because even though we don’t buy or sell corn, it affects our customers’ business,” says the 61-year-old. “Keeping a close watch on these things gives us a pretty good idea of what’s coming down the pike.”
The second thing falls under that often-ignored advice to ‘invest in your employees.’ Svendsen says he is “a believer in harnessing people’s brain power” and he backs that belief with real dollars on training programs—even those without an immediate payback.
For example, his company pioneered a course with a Calgary college called “operations management.” The program is intended to give shop floor supervisors a better shot at moving up into management, and includes training in financial analysis, quality control, and process management. The latter is about how to put lean manufacturing theory into practice and cut out waste. In fact, another company learning program has seen virtually every employee take courses on how lean manufacturing works.
While the payback is hard to measure, the cost is real. Standen’s pays for the courses and generally half of the learning is done on company time. The other half is on the employee’s time so he or she has, as Svendsen puts it, “some skin in the game.”
But is it worth it? After all, factories are full of guys who just punch the clock. Does it really make a difference?
Svendsen is certainly a believer and is determined to preserve the culture he encountered as a college student over 40 years ago when he spent his summers working for Stanton’s. His goal was return to the farm northwest of Edmonton after graduation, but Svendsen found manufacturing “far too exciting for a young guy to walk away from.” By age 21 he was already in management ranks and today is a co-owner.
It’s that excitement—about moving both yourself and the company ahead—that Svendson is after. He wants his workers, many of which are new Canadians, to embrace new processes when they’re introduced and to be actively suggesting ways the company can be more efficient and cut costs.
And that leads to Svendson’s final piece of advice.
“I tell my people that no matter what price you’re quoted, always ask, ‘Is that the best you can do?’” he says. “We’re having a hell of a time exporting because of our currency. The flip side is our dollar is worth more—not just when you go to the U.S. on vacation but also here in Canada when you buy anything that has an imported component to it.
“But if you don’t ask for it, you won’t get it.”
These are simple things—look at key economic indicators, invest in employees so they’re invested your business’s future, and demand the best possible price from suppliers. But simple things can make a difference and in a cut-throat global marketplace, they are things you need to grab onto.
For more info, see www.standens.com
(Glenn Cheater is editor of the Canadian Farm Manager, the newsletter of the Canadian Farm Business Management Council. The newsletter as well as archived columns from this series can be found in the News Desk section at www.farmcentre.com)
