Mr. Chair and members, it wasn't until I started to piece together Cravo's exporting history that I understood all of the players who were part of the success with our expansion endeavour. It's a good story and I'm very pleased to have the opportunity today to share it with you.
So how does a small Canadian company go from exporting 2% outside of the U.S. in 2008 to 62% six years later?
First, I will give you some background. Cravo is a family-owned business that was started over 30 years ago. We engineer, manufacture, and sell retractable roof structures from our facility located in Brantford, Ontario. We have patents on processes and products and ship our structures in pieces that get assembled and installed on site. Our retractable roofs help growers to optimize growing conditions while protecting crops in minutes from extreme heat, cold, wind, hail, snow, and insects.
Initially our structures were used primarily in the horticultural market of ornamental plants and shrubs and the focus was the U.S. market. During those years we gathered research from our experiences with various crop responses to our houses as well as the return on investments.
Let me take you back to 2008. Cravo was working on getting a foothold in the U.S. amusement market and landed a $7 million water park project in Kansas City. We had worked with this customer before on projects in Texas but not one of this magnitude. The rug was pulled from under us as the financing for the project dried up due to the financial crisis in the U.S. at the time. Fortunately, we had EDC's single buyer insurance coverage and with EDC's assistance we were able to collect from the customer the amount owing to that point in the project. EDC also provides our currency exchange trader with a foreign exchange guarantee on our behalf, eliminating the need to margin.
The year 2009 proved to be pivotal for Cravo. Up until that point we were so highly dependent on the U.S. that 92% of our sales were derived from that marketplace. The 2008 financial crisis was a double whammy because not only did housing starts in the U.S. plummet, but the amusement market sector also came to a grinding halt. It became clear that we needed to diversity geographically and market sector-wise.
We had been researching and collecting data on growing food under our retractable roof. We had built a demonstration greenhouse in Mexico showing great results in trials of peppers and tomatoes, and attracting attention from local growers, but at that point no one was willing to take the risk of trying a different type of growing system.
However, we had a breakthrough in 2010. A large commercial grower purchased a 108-acre project financed by Northstar and backed by EDC over tomatoes in Mexico. Finally we had the break we were waiting for. It was clear now that our market expansion strategy would be to take Cravo retractable roof structures to warm and hot climates where fruits and vegetables were grown.
To reach our target market, we needed to start participating in international fruit and vegetable shows. So in February 2010, with the assistance of the Ontario Chamber of Commerce's export market access program, we attended our first international trade fair for plants in Germany. It proved to be a great source of international qualified leads and an indication of the strong interest from the global marketplace. Due to the change in market focus, projects we were now quoting changed from areas under greenhouses to fields. We needed to add capacity to our fabrication department and ensure unified quality when we were shipping products thousands of miles.
Therefore we took advantage of the FedDev SMART program grant and upgraded our drilling capacities for our steel, and in 2011 we went back to Germany to participate in two international trade fairs. Once again, export market access helped to defray 50% of the cost for these two events, including the translation of marketing material into other languages. We definitely were building awareness and sales from the contacts made at these shows. By the end of 2011 we had shipped projects into Switzerland, Germany, Poland, and Turkey.
During our information-gathering from the new contacts that we were connecting with, we learned that there was a demand for a variation of our existing structure product offering. The demand was for a structure that could be built over varying terrain and protect against rain, but still be cost effective. Using scientific research and experimental development—SR and ED—funds, we designed a product we call the X Frame and added it to our product offering.
Robin MacNab of the trade commissioner's office met with us to hear our story. At that time, he suggested a strategy for our efforts in the Middle East. He provided us with trade commissioner contacts in those markets where we were trying to gain a foothold.
We also met with a business advisory member from the Ontario government. He reinforced the importance of keeping in touch with potential customers via a newsletter, so in September of 2012 we launched our monthly newsletter, with subsequent Turkish and Spanish versions. Today we have a total of over 4,000 subscribers to the three versions.
In 2012 we continued our investment in production efficiency. Working with BDC, we obtained a flexible equipment loan to purchase equipment for our sewing and fabrication departments.
Our first large-scale X Frame project was sold into Mexico late in 2012 for growing tomatoes. If this trial project continues to produce the way it has, this customer is planning to replace their existing conventional greenhouses with Cravo structures.
It was quite an honour to be recognized by our peers for our exporting efforts when we received a gold Ontario business achievement award for market expansion from the Ontario Chamber of Commerce in October 2012.
When the SMART program resurfaced in 2013, we applied for and received financial support toward the purchase of a new custom sewing system to improve and maintain consistent quality of our roof coverings. Again BDC was there for us to provide the remaining financing.
At the end of 2014, we had five projects shipped to South Africa, eight to Australia, and seven into the Mexican market. In addition, over the past five years we have shipped projects to Nigeria, the U.K., Chile, Mongolia, the Philippines, and Brazil. Cravo's president was asked to speak about our production system at the global forum for innovations in agriculture in Abu Dhabi.
Given the market acceptance of both Cravo and our retractable roofs, the changing weather patterns, and the increased need for food in the world, we foresee very positive growth for our products in the future.
Thank you.