Thank you, Mr. Chair and honourable committee members, for letting me speak here today. My name is John Kalbfleisch. I'm chief operating officer for Alpha Technologies Limited.
Alpha Technologies is a private company. We're 40 years old. We're based in Burnaby, B.C. We provide world-leading power solutions to some key industries—telecommunications, traffic, security, smart metering, and industrial. We sell our products in Canada, the U.S., and globally. We have about 500 employees, and our revenues in 2014 were in excess of $180 million. Last year about 25% of our sales were in Canada. The rest were in the U.S. and globally. About 70% of our sales were in the U.S. and about 5% globally.
We have experience selling goods in many different countries—in Mexico, Latin America, South America, Asia, Europe, and the Middle East. We are putting a significant focus on increasing our sales efforts in the U.S., Mexico, Latin America, and South America over the next three to five years.
In terms of trade policies that can better assist small and medium-sized enterprises to export more goods and services, Alpha would recommend the following.
I think the federal government needs to ensure that taxes paid by manufacturers and exporters allow them to be competitive on the global stage. We personally compete with very large corporations that aren't based in North America in some instances. They have access to low labour cost regions in terms of where they produce their goods, so we need to have a global supply chain to compete with them. We have to leverage low labour cost regions for some of our key components. We also do some integration and manufacturing in Canada. In some cases we may require a manufacturer in the country in which we need to export into.
As well, Canada needs to ensure that the subsidies, R and D tax credits, and tax breaks allow Canadian manufacturers to have cost structures that are competitive.
I think more effort needs be made to coordinate marketing; support activities across the federal and provincial governments and their agencies, so that our limited tax dollars are focused on creating one strong Canada brand; and making support for exporters easy to access and understand. I think the EDC has a great website. I really think their commercial campaign is adding value. We've used the EDC in our export activities, and they've helped us make some connections in foreign countries. We've also used the trade commissioner's office as well. They've been very helpful in making Alpha make connections to key customers.
I would also point out a country you could look at. I've travelled to Turkey a number of times in the past 12 months. There is an excellent website, called invest.gov.tr, that outlines all the information a foreign company would want in order to invest in Turkey. They also have a very slick brochure, a red brochure with a power button picture on the front, which was in the Turkish Airlines seat when I flew to Turkey. It gave a pretty compelling overview of the benefits of investing in Turkey and what the market's like.
I think another key thing the government might want to look at is establishing a mentorship program in Canada, where companies that are interested in exporting can be paired up with an existing Canadian enterprise that is successful at exporting. The experienced company can help guide the new enterprise through some dos and don'ts of being successful and building sales abroad.
For manufacturers, you need global supply chains so that you can have a competitive cost structure, and you also need to think about your global go-to-market strategy. Do you want to have local sales reps? Do you want to hire your own sales reps who are in-country? Do you want to use distributors? Do you want to have your own sales entity? Do you want to have a JV? These are all important decisions to think about when trying to enter a new market.
I wanted to emphasize that it is a lot of hard work to enter a new market. You have to be very determined. You have to be willing to get on a plane a lot to go and meet your end customers. Building strong relationships is key in many geographies, so it's important that you have a local presence. Your customers typically want somebody local who speaks their language, and who they can talk to if there are any problems.
We'd like to commend the government on their negotiation of the Korean and European free trade agreements. We're very supportive of the federal government negotiating global free trade agreements that will give Canadian corporations access to foreign markets on a level playing field relative to our competitors or domestic companies that are in the foreign market.
I think another thing that we need to address more collectively is the Canadian psyche. We're very risk-averse when it comes to global expansion. Unfortunately, Canadians don't want to conquer the world. We often see the U.S. market that has 300 million people, and if we do well in the U.S. we often stop there. Once we move outside an English-speaking market and we get to other countries where English isn't the first language, or the culture and customs are different from what we're used to, it can be quite daunting.
Access to financing is critical for Canadian companies who want to export. I think the EDC offers a lot of great things. The ability to ensure receivables is key to reduce risk for Canadian corporations. The ability to get financing for working capital is also important.
In a lot of countries the payment terms may be longer than what companies are used to getting in Canada. In southern Europe, for example, you could get payment terms of 180 days. In Asia, in some instances, you may have customers that will pay you in a year. Obviously the ability to finance your working capital is key. You often may need capital if you want to do a joint venture internationally or set up a foreign sales entity.
The other key thing for us is elimination of red tape. In particular we need access to the best and brightest people globally in terms of recruiting employees who will work for Canadian entities. We find that it can be quite challenging if we want to recruit a foreign worker who may have skills and expertise that is not available in Canada and get them to join our team in Canada. Right now we find the process cumbersome, time-consuming, and expensive.
Collectively I think we need to look at our education system and offer more courses on international business. We need to encourage more business study abroad and work internships abroad so that Canadians have a better understanding of what it takes to do business internationally.
We need a strong transportation infrastructure across Canada to allow the free movement of goods into international markets. I know for us here on the west coast the Vancouver port strike and slowdown has affected our ability to import and export goods.
Finally, I think we need government policies that promote innovation and productivity improvement in business. In order to compete on a global scale, you need to be quite innovative. You also need to have very competitive cost structures. A lot of times I think manufacturers and exporters need training on how to drive and improve productivity, how to be more innovative.
This is the end of my brief. Thank you for your time.
