Thanks, Randy.
You're not the only one to have trouble pronouncing that word. I've lived with that for over 30 years.
Good afternoon. Thank you for the invitation. I'm very sorry that I'm not able to attend in person. I regret not being able to make the trip. Ottawa is one of my favourite cities.
I'm a fishery biologist and president of Archipelago Marine Research. I'm also a shareholder in the company and I've worked here for most of my career.
Just before I start, I also want to support Glen's comments about trying to focus efforts on growth-oriented business and high-potential business. I think that makes a lot of sense. I like to think that we could fit into that category, but we'd have to have an independent assessment of that.
Our company was formed in the late seventies. We've been around for 38 years. It was formed by five marine biology graduates who basically wanted to strike out and do business on their own. I joined the company about seven years after that.
The company has a long history of steady growth. Our business is focused on delivery of marine environmental services, primarily from our Victoria head office, to both government and private sector clients. We are still a private company. We have four shareholders who all actively participate in the business.
Our two primary areas of business are marine environmental monitoring, assessment, and planning, and also commercial fishery monitoring, data analysis, and reporting. Archipelago currently achieves in the neighbourhood of $10 million of revenue annually, about 85% of which is associated with our commercial fishing customers.
Revenues are split between services at 90% and products at 10%. Our international sales vary considerably from year to year but are generally between 15% and 25% of sales and include both products and services.
We have between 170 and 200 staff, some of whom are seasonal. That's the equivalent of about 135 person years annually. The majority of staff are located in Victoria.
When we do international business, we do it primarily through contractors or short-term travel. In addition, we recently established a subsidiary in Canberra, Australia, to deliver electronic fishery monitoring services to commercial fisheries there on behalf of the Australian government.
The bulk of our international sales involve this new technology. Working with local industry back as early as 2000, Archipelago developed the technology. It involves a vessel-based industrial computing platform, along with sensors and a number of parallel software products that facilitate data collection, interpretation, and reporting from an active commercial fishing vessel.
We also leverage the new technology to deliver professional consulting services to the customers who are using the technology, so we help design monitoring programs and implement them and move them to an operational basis.
Archipelago has been marketing these EM products and related services internationally since 2007. Our customers include Australia and New Zealand in the southern hemisphere; Denmark, Scotland, England, Netherlands, Germany, and France in northern Europe; and the United States. We've also completed projects with NGOs and the fishing industry in some of these locations.
The primary motivation for customers to purchase these products is to improve the monitoring and associated data available from commercial fisheries in order to improve decision-making around science, management, and enforcement within these fisheries. The ultimate objective of all this, of course, is to increase resource health and improve the long-term sustainability of fisheries.
Another benefit can be accrued by the fishing industry if it is able to prove it is using sustainable fishing practices. Those in themselves benefit the long-term health of the resource, but seafood markets benefit since, increasingly, a higher value is put on sustainable seafood.
Archipelago, like DeeBee's, has chosen to self-fund the development and marketing of this new technology. Being a services-based business for decades, we've had relatively tight margins, and therefore we've had significant challenges in developing this new technology. It's been an ongoing struggle for us to develop and manufacture these products and to develop what's essentially a brand new market at the same time.
The challenge resides partly in our lack of expertise and knowledge in new areas of business—like Dionne, I'm not afraid to say what I don't know, and there's an awful lot to learn—but also in our limited financial resources.
I'd like to comment on some of the resources and programs that are available and have helped us along the way.
The first thing I would say is that our five-person R and D team represents a new cost to our business, with no direct offsetting revenue. The SR and ED tax credit program has been a considerable benefit to Archipelago's development in both the hardware and software products. Without this assistance we could not have made the progress we have.
Locally, VIATeC—the Victoria Advanced Technology Council—and the Acetech organization in Vancouver have played key roles in assisting me and others of my staff to acquire the expertise required to develop products and work to develop the resources for international business. These organizations have helped us to successfully develop products and also improve our business processes and expertise. This has been done through educational programs, mentorships, and facilitation of networking in our community. In my view these organizations are a key communication tool to get the word out to industry regarding government programs that assist with the development of international trade in Canada.
More recently we've begun to access the funding and technical support available through the IRAP program. As Archipelago has been experiencing a lag in sales recently, this program has been valuable to assist us to maintain our momentum with product development and innovation in functionality that we would otherwise not be able to continue. We're also currently applying for a term loan through our bank, with support from Export Development Canada under the export guarantee program. It looks as if this is going to be approved. I can say unequivocally that if this loan wasn't there to support the investment that we've made in establishing our Australian subsidiary, we would have some serious concerns moving forward.
Another challenge we face with international sales, and I think I heard this a bit from one of the other speakers, is nationalist protectionism. This has been evident in particular in the U.S., where we've lost some competitive tenders to what we feel are lesser-qualified competitors. Sometimes it's through legislated controls, such as small business set-aside in the U.S., but it can be dictated just by simple policy statements such as Buy America. In some locations we've come up against government-supported competition as well.
In summary, self-funding is likely our primary challenge for research and development, for international marketing and sales, and for establishing an international presence. Second is developing or acquiring new expertise in product development and international marketing and sales. Finally, it would be convincing governments, including our own, to adopt and fund the transition to a valuable new monitoring tool for fisheries.
Thank you.