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Winnipeg Free Press - PRINT EDITION

Going global all about strategy, timing

By: Martin Cash

Posted: 11/24/2011 1:00 AM | Comments: 0 (including replies)

WAYNE GLOWACKI / WINNIPEG FREE PRESS Enlarge Image

Hemant Shah with a Cubex drill to be shipped to Saudi Arabia. Collaborating has paid off for Cubex.

A prominent local economist recently remarked on how ongoing uncertainties in the global financial sector will mean going back to the drawing board with their economic models.

If the issues are deep enough to stymie economists who live and breathe this stuff, imagine the challenges for small and medium-sized companies who are trying to wade into emerging export markets.

At a trade summit organized by the Canadian Manufacturers and Exporters this week, CME vice-president Ron Koslowsky talked about the challenges for small and medium-sized companies entering growing and complex markets.

He said it's not enough that they practise lean manufacturing, or invest in technology or have the right human resource strategy along with a trade capacity. They need to have the full packag, and that will look different for every firm.

Cubex Ltd. is a case in point. The Winnipeg company owned by Kitch and Bill Wilson has been making sophisticated underground drilling equipment for the mining industry since the early '80s.

Chris Ross, chief financial officer, said everything was right in its world when Canadian customers like Vale, Rio Tinto and Agnico-Eagle said they wanted a Cubex drill.

"But in some of the markets (around the world) these guys are dealing in, it became an issue about how do we support those drills," Ross said.

That issue was resolved last year when Cubex signed a service and distribution deal with Sandvik, the Swedish equipment manufacturer.

With about 130 employees at its Winnipeg head office and another 50 or so across the country, Cubex is a fraction of the size of Sandvik with its 47,000 employees and $12.6 billion in sales.

The two companies had been competitors until the deal was struck. But by a stroke of good fortune it so happens the kind of drill Cubex makes falls between the gaps of Sandvik's broad product offering.

The alliance gives Sandvik a more complete portfolio and it gives Cubex access to global markets it did not have, through Sandvik's vast network.

The small Winnipeg firm is now doing business in about 29 countries, including Saudi Arabia where it recently closed a deal on three rigs worth a total of about $5 million to a large copper mine in development owned by Barrick Gold.

Hemant Shah, Cubex's western Asia sales director, said, "Before the Sandvik deal the aftermarket was a problem for us. Now it's working out very well."

Ross said the Sandvik tie-in gives allows Cubex to reach the global market,

"We can now sell into those markets and the customer has comfort in knowing the support for the drill and investment is right there with them," he said.

It might not make immediate sense that the secret to success would be teaming up with a large competitor.

But Colin Robertson, a former senior Canadian trade diplomat, said it's not such an unusual approach. "There are professional courtesies among competitors," he said at this week's trade summit.

Robertson said it's important companies know what their "ask" is, know their product and also know the market they're selling into.

Cubex may have an advantage in that its specialized equipment firmly differentiates itself.

"There are plenty of examples in Winnipeg of companies like Cubex, Winpak and Buhler punching their way into the global market," Ross said.

Even companies like Winpak, the Winnipeg plastic film manufacturer with more than a half-billion dollars in sales, needed plenty of time to break into international markets.

Ian Garcia started to develop the Latin America market for Winpak 15 years ago. By 2005 annual sales had grown modestly to $5 million. But in the last five years there has been real success, bumping up sales to more than $30 million.

"It doesn't happen overnight," Garcia said. "You need time to learn the market. You have to be committed to being there for the long term."

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition November 24, 2011 B6

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