CHALLENGE FROM THE AMERICAS.
S. J. RANDALL President, General Steel Wares Limited
Thursday, October 26, 1961
CHAIRMAN: The President, Dr. Z. S. Phimister.
DR. PHIMISTER: Our speaker today is Mr. S. J. Randall, President and Managing Director of General Steel Wares Limited, the largest indepent manufacturer of Canadian appliances and housewares in this country, with an annual sales volume of forty million dollars. Mr. Randall is also First Vice-President of the Canadian Manufacturers' Association.
The federal government is now urging Canadian manufacturers to find markets abroad. Mr. Randall plunged into the export markets two years ago, and this year it is calculated that he will do one million dollars worth of business in twenty foreign countries.
Our speaker was born in Toronto and received his schooling here. He began his business career at the age of twenty, when he joined the Easy Washing Machine Company as a junior clerk in 1928. He became President of this company and later merged with General Steel Wares in September 1958 to take the prominent position in his field which he occupies today. Mr. Randall speaks with an enviable background of experience and knowledge on the subject, "Challenge From the Americas". Gentlemen, Mr. S. J. Randall.
MR. RANDALL: Thank you, Chairman, for your kind remarks, and I do appreciate the opportunity of being invited to address your members. Before embarking on the topic "Challenge From the Americas," perhaps I should suggest to you that the prime purpose of merchandising is to find people who have a need for what you have to offer. A few months ago I was privileged to address the Canadian Netherlands Council on the subject "Prospecting for Needers." At that time I pointed out that our Company had become interested in the European market and the U.K. particularly after my visit there in March of 1960 to the Ideal Home Show.
We displayed all of our Company's major appliances including warm air heating and, while I could see a tremendous need for the use of our warm air heating appliances both in gas and oil, the domestic sale of automatic washing machines, in view of the lack of water pressures in the homes, and the space in which to house these larger type washers, made the sale of this appliance somewhat doubtful. In view of this I thought housing conditions, particularly in the crowded tenement sections, lent itself to automatic coin laundry stores, and our Company embarked on a program of first setting up these stores in England and then branching into other countries. At the moment, we have five stores opened in the U.K. and another thirteen or fourteen under construction by various independent owners who we hope will be in operation before the end of this year. I might also add that we have opened four stores in Holland, and there are another six under construction which will be opened by the first of the year. In both of these countries we were told that automatic coin laundry stores would not be acceptable, but we have proven once more that if people have a NEED, and we provide the services to look after that need, they will accept an innovation.
We have had to change our machines to suit the useres and also adapt the mechanics and electronics of these machines to these new countries. They have been most successful so far, and the income from these stores is beyond everything we anticipated. In warm air heating we are just getting under way with oil fired furnaces, and we hope to have our gas fired furances approved by the Gas Authorities in the next few weeks. Fortunately for us, both the oil and gas utilities are battling it out neck and neck to capture the consumers service so that, if we provide them with the ammunition, I am quite sure we will not only render a great service to the residents of the U.K., who certainly need heating above all other appliances and all other comforts, but we should be able to make a dollar in the process.
The reason I pointed out these two examples of merchandising in foreign markets is to make it abundantly clear that, if your product does not fit the market as it does in your own domestic area, perhaps you should see what other ways it can be adapted for use in other lands. Certainly if we had assumed the sale of automatic washing machines was not possible in the U.K. and returned home after our first visit, we would not be enjoying the volume of business which is now becoming considerable and, would have missed the opportunity to share in what we believe is going to become one of the greatest consumer markets anywhere in the world. That is the markets of the "Outer Seven" and the "Inner Six" which, one of these days as you well know, may be joined, and covers an area with a population of close to three hundred million people.
Prospecting for needers could well be the aim of all companies in foreign markets whether they be abroad or at home. Great economic changes are taking place today in Europe, and in these changes perhaps Canada will suffer in the shuffle if we don't prepare. It is obvious competition in these markets is not going to lessen as production is stepped up and the consumer market becomes saturated, such as it has in North America since World War II. When this happens, it is necessary, of course, to cut prices, build bigger and better mouse traps and sell a great deal harder in order to get your fair share of the market-and with competition breathing down your neck, morning, noon and night. Sometimes it's like a breath of fresh air to look at a foreign market. Even with its obstacles-and there are many-you can widen your scope of the market for your company's products.
Many years ago I took a course on modern business, and the statement that sold me on doing so was "Prepare Yourself for Opportunity." It seemed to me this was a good motto for most people to follow, and particularly for one, who had left school at an early age and lacked an academic background so necessary to grow with business opportunities.
In the matter of world trade, markets which are uncertain and always will be, I believe we should spread our risks of losing these markets by participating in as many as are left open to us. Certainly with trading blocks being formed around the world in Latin and South America, Europe, Russia and the Communist blocks, it is difficult to imagine what trading problems will arise over the next five or ten years. Accordingly, our company policy, and I must admit it stems particularly from my own feelings in the matter, is that we should endeavour to get a toe-hold wherever we can, and hang on as long as we can, until we find out which way the wind is blowing. With population explosions taking place all over the universe, and the merging nations merging almost daily like mushrooms in a hothouse, anyone interested in export is somewhat like the mosquito in the nudist colony. "He knows what he has to do but just doesn't know where to begin." I do believe, however, we in Canada should look to the Americas if we are fulfill a glorious destiny for Canada, promised by many of our prominent forecasters, and that is the theme of my talk "Challenge From the Americas."
I was privileged to attend the Inter-American Trade Industries Conference held in Chicago in July as spokesman for the Canadian Manufacturers' Association, along with Mr. Joe Jeffries, President of the Canadian Chamber of Commerce, who led their delegation. The theme of this conference was "World Peace Through World Trade." I believe this was an appropriate theme, particularly in view of the fact it seems unlikely any nation would embark on a shooting war in view of the terrible reprisals that could be exacted, not only on those who start, but those who finish a nuclear war. In view of this, it is also reasonable to assume you don't get too mad at a good customer, or at least not so mad that you wipe him out and thereby lose the opportunity of trading on a profitable basis. May I say that in visiting Chicago I was pleased and privileged to spend almost a week in the new Trade Building, called McCormick Place, on Lake Michigan. This building was originated by industrialists in Chicago. The Trade Show was sponsored by over thirty national governments to permit consumer tests on imports of products in an American department store setting. Certainly they lived up to this billing, and McCormick Place is undoubtedly one of the finest trading centres of its kind. It can handle over thirty thousand arrivals each hour, and exhibit and service areas total one million square feet. The exhibit area alone is three hundred thousand square feet, all on one floor, and the building is completely air conditioned. It was built at a cost of approximately thirty-five million dollars, to sell America.
Local manufacturers expressed somewhat mixed feelings with regard to the activities of McCormick Place. I talked to a number of industrialists from Chicago, and they felt it was bad enough to have to compete with imported goods, but worse if a thirty-five million dollar market place for industry was provided to beat their brains out. However, it does seem like a good idea to develop international trade and perhaps lower some of the restrictive walls on trade which have been built up, particularly in the United States, against all types of imports. Certainly Canada recognizes the difficulty of shipping to the United States, and I am sure we are not alone in this.
There were delegates to the Conference from all over the Americas, including industrialist, economists, bankers, government representatives and representatives of trade associations such as ourselves. The Trade Show itself was well set up, and the most active participants appeared to be the Japanese and Yugoslavs, the Poles and particularly the West Germans, who had a large display. The Volkswagen Company went out of its way to point out in no uncertain terms that they had purchased fifty million dollars worth of capital goods from the United States in 1960. In so doing they were indicating to the American Tradesman and the American public, that they were entitled to a share of the American consumer dollar in the automotive field. There were speakers from all countries, and they chose their words very carefully. But, with few exceptions, they regard the future with alarm for the plight of their people. In practically all instances their countries had a deficit trading balance with the United States and, like Canada, the sixty-four dollar question was how to solve the trading balance deficit which seemed to be the major problem if their domestic markets were to be maintained on a healthy basis.
Again I would suggest that perhaps the reason for their trading deficits was that they were never taken seriously as an industrial nation, similar to our position in Canada for so many years. For too many years the U.S.A. considered we were wheat farmers and fishermen, and it ignored our growing manufacturing industry. Just so long as any country as large as the United States ignores the fact its neighbours on this continent are also interested in building up their secondary industry, there will be a dificit in trading balances and a very unhealthy economic pattern in the future for all these countries.
We are all aware that Canada's inbalance of trade, particularly with the United States, is one of the largest in the world. We have been going in the hole at the rate of one billion dollars annually. While I regard myself as an exporter and have proven it the hard way, I have little sympathy for those who criticise the steps we have had to take to solve our present economic dilemma. There is a great deal of criticism about the reduction in the premium on the dollar. I believe this has been a saviour insofar as our Canadian economy is concerned. We should not be too concerned now with the dollar being discounted, in view of the long run the premium has had. This definitely reduced the effectiveness of our tariff barriers, particularly on imports from the United States.
We have also witnessed the fight put up in the Senate with regard to the "Class or Kind" legislation. In my estimation this is a very sad state of affairs for this country, when the Senate, dominated by the opposition, kills legislation that is so essential to amend tariff iniquities that have too long retarded manufacturing opportunities in Canada because of obsolescence.
Perhaps no country in the world has been as generous with its domestic market as has Canada. Our foreign exporters have taken full advantage of the weaknesses in our tariff structure to exploit this market for all it is worth. We do not believe we should build up fences to prevent international trade, but certainly we should operate on an equal basis with that imposed on Canadian imports with all other countries. At the moment this is not the case.
After presenting our addresses in Chicago, Mr. Jeffries and myself were accosted by many of the various delgates from Latin and South American countries. They wanted to compare their country's problems with Canada's and find out how we solved ours and still maintained, what to them, is a very healthy economy. Most of them felt Canada presented the type of economy they should be planning for and wanted to know what we could do to help work out their future, in our mutual interest. Of course they were also somewhat mystified as to why Canada had not joined the organization of American States, and what would have to be done to get us to take a greater interest in the Americas. We, of course, were not representing the Canadian government. We have our own opinions as to why Canada has not taken this step, but were not in any position to discuss this with any degree of intelligence. On the other hand, it is a matter which is uppermost in the minds of most of the people we talked to from the Americas, and perhaps our government, one of these days, will have to take a second look.
After listening very carefully to the various speakers, and judging for ourselves the problems of the Americas, we certainly can feel very sympathetic towards the United States for the tremendous challenge they have accepted as outlined by President Kennedy in his "Alliance For Progress" program at Bogota during the latter part of July. Perhaps one of the greatest problems to overcome in the Americas is the instability of government, whether it be democratic or disguised democratic governments under dictatorship. Countries that certainly should be understood by us, such as Mexico, Paraguay, Argentina, Dominican Republic, Brazil, Venezuela and Cuba, make one hesitate to jump in with both feet and take on any commitments under present day circumstances. Most of these countries we have recognized in the past and some now are still almost governed as a policed state. Certainly Cuba, Dominican Republic and Paraguay give every evidence of being nothing else but. Brazil, since our meeting in July, as you are well aware, changed its form of government, and great apprehension is felt by industrialists in that country for the future of Brazil.
It is obvious President Kennedy's program of pumping five hundred million dollars into a co-operative program of social progress for Latin America is only a drop in the bucket to what is going to be required to eliminate what has been referred to, in his speech, as social injustice, poverty, illiteracy, squalor and disease in Latin America. There are proposals now before the administration for a total of one billion two hundred and fifty million dollars. You can readily see that five hundred million is not going to go too far. President Kennedy described this as a region of vital importance to the United States and the area with the fastest population growth anywhere in the world. If it means that much to the United States, I am quite sure Canadians should also be more aware of their stake in the Americas.
Perhaps to better understand the reason behind this new awareness of our many neighbours to the South, may I quote the following? "On March 13th, 1961, President Kennedy enunciated a call for an Alliance for Progress with our neighbours from Latin America. The following day he asked Congress to appropriate five hundred million dollars for a co-operated program for social progress for Latin America. This request to Congress was for the purpose of putting into effect the five hundred million dollar program recommended by President Eisenhower and authorised by congress in December of 1960. More specifically, it was a call to the American people to translate into action the Historic act of Bogota, adopted by nineteen American States in September, 1960-an act which called for a bold new venture to bring long-overdue and desperately needed social progress to the people of Latin America.
Now what is this new program for social progress? May I, at the risk of boring you, quote some statistics which I believe you will find as interesting and as challenging as I have found them? The per capita gross national product of just some of the countries in the Americas, compared to that of the United States, are as follows:
United States $2,700
Latin America 280
Is it any wonder, after reading these figures, the masses lack the essentials of day-today necessities, let alone have consumer buying power? In the matters of life expectancy:
United States 70 years
Brazil 45 years
Latin America 46 years
Guatemala 57 years
Argentina 59 years
Haiti 33 years
Colombia 46 years
Bolivia 50 years
Doctors per one hundred thousand people is a very interesting analysis:
United States 135
Latin America 54
Even before these people can become consumers, the grim reaper takes over. If they had money, it would be an undertaker's paradise.
It is very difficult to sell people if they don't read or write. Illiteracy in these countries as compared to the United States-the figures are as follows:
United States 2%
Latin America 43%
How can we educate people to a higher standard of living if they can neither read nor write? It is illiteracy that assists the "isms" to make such a terrific headway? Already our Communist friends have found this out and are using it to great advantage. (And you know what the definition of a Communist is: it's a guy who has nothing and wants to share it with everybody.)
I had an industrial friend visit me from Mexico a few weeks ago. He told me the Communists had stopped handing out literature. They were now passing out, to the peasant people, shoes, pants and shirts and other articles of clothing. This they could understand, even though they couldn't read or write. Perhaps we should take a leaf out of the Communist book and follow suit. If you cannot read or write, but you can see, feel and believe, literature from any source in these areas is as useless as an anchor to a drowing man. Better we follow the Communist pattern if we can't conceive a better one. In these areas, also, Russia has given or promised two hundred and fifty million dollars to Cuba; one hundred and four million in credits to Argentina; three and a half million to Brazil; offered credits of one hundred and fifty million dollars to Bolivia; and the Czechs have offered long term credits to Ecuador. They are in there not only with their propaganda but also with their money. Now what is the population growth in the Americas, and why shouldn't we take a look at this market instead of worrying too much about the markets over seas that are going to be very competitive, as I mentioned earlier?
The population growth estimated from 1960 to 1970 is as follows: Latin America 29% (They now have a population of 204 million, and this will reach 263 million in 1970, or an increase in 10 years of 59 million people right here on our own Continent.); United States (The population growth is estimated at 13%, or 181 million today to 205 million in 1970, an increase of 24 million.); Western Euope, excluding Greece and Turkey (The estimated population growth will be 6% in ten years, or 307 million today to 341 million in 1970, or an increase of 24 million.); The United Soviet Republic (The population growth will be 19% in the same period, or from 214 million to 254 million, or an increase of 40 million.). But in the area in which we can do business there will be 107 million more can-' sumers in the markets available to us, excluding Russia over the next ten years. From these figures it is obvious that, if President Kennedy's "Alliance for Progress" program is concentrated in all countries on the development and improvement of living standards for the youth of tomorrow, we will have a greater mass market for consumer goods than could ever exist in crowded Europe.
Fidelism, Communism or socialism in the Americas will gain much of its strength from the land reform programs instituted by Castro in Cuba, if immediate action is not taken under President Kennedy's program. This is the torch by which the masses will be led along the lines of any kind of an "ism," including Americanism or North Americanism, if the "Alliance For Progress" campaign is now wholeheartedly supported and successful. Castro's magic is free land-this is what many believe to be the key to converting the masses from apathy to revolution-and I don't mean a bloody revolution, but a great social and political change. Millions of these people are living in mud and tin huts and in mountain caves, despite the fact there are millions of acres of land available for development. Here is some of the estimated acreage available for useful production: Guatemala (only two tenths of one percent of the number of farms account for 40% of the privately owned acreage); Chile (only one percent of the farm operators control 43% of the land and yet poverty is unlimited; the estimated area available for agriculture is staggering); Argentina (119 million acres are available for the people); Bolivia (124 million); Brazil, excluding the Amazon Basin (494 million acres); Colombia (44 million); Ecuador (20 million); Mexico (54 million); Peru (37 million); Venezuela (25 million).
Certainly you don't have to take away from the rich in order to give to the poor; if the poor are given the tools, they too can develop the land which is available. Even an agricultural program to feed the hungry millions in these countries, without industrial production such as we know must come, could create millions of new consumers. If these people could get enough of the daily necessities of life, they would become consumers almost overnight. It is obvious the Agrarian reform program instituted by Fidel Castro, and now undergoing considerable analysis by all governments in South America, is going to have a lasting effect on the futures of these people.
Now, in conclusion, may I make these observations for what they are worth. While we may advise or criticise the United States in her efforts, or lack of effort in some instances, we Canadians should realize, that whatever happens on this Continent to the United States does not affect the United Kingdom, France or other Commonwealth countries particularly, but does affect the future o f Canada. Whether we like it or not, we are part of the Americas and one day must stand up and be counted. We have a fertile field in the Americas to sell Americanism and Canadianism -or North Americanism, if you want to put it that way. I don't believe the great consumer markets of tomorrow lie in Europe entirely-there are others much closer to home, and if we make our influence felt now we can look for unlimited trading opportunities in the future.
We must choose carefully the countries we can help and, like the United States, Canada must endeavour to help educate these people industrially and socially, by action and not words or donations of money. We cannot use the Canadian or American taxpayers' money to support or create a police state-such as Cuba, Dominica or what they have had in the Argentine under Peron, in Venezuela and Paraguay under General Straussers. To do this we must send trade delegations to find out how we can help create consumers in providing means by which these nations can become industrially self-sufficient-developing tomorrow's consumer in these countries, as we would develop a new product for our own domestic market. We need to send technicians, engineers and consultants and men of industry with vision-men who can case the joint, if you want to use the vernacular of the underworld, to illustrate and develop products in those markets that fit those markets.
If we are to maintain our way of life in Canada, and show others it is a better way of life for them, then we must do so by creating consumers by creating jobs. Their exports to us in the future would be nothing to absorb, if we developed through industry, the vast domestic markets that are available in the Americas. The success of any country is a. healthy dynamic domestic market. Just as Canada cannot live on wheat and pulp wood, these Southern neighbours cannot live on coffee, sugar, soya beans, oil and basketweaving. What we have done in Canada industrially over the past few decades can certainly be duplicated in the countries of our neighbours to the South, who I know would welcome Canada-as our type of BIGNEss does not scare them-it inspires them. They feel that our industrial achievement can be attained by them. As I suggested earlier, it was my privilege to speak, a few months ago, to the Canadian Netherlands Council, and the topic of that address was "Prospecting for Needers." I have not changed my opinion even one little bit with the small measure of success our company has enjoyed in Europe. I am more than ever convinced that greater and more fertile fields for Canadian Trade and Commerce lie in the Americas.
President Kennedy has said this can be the "Magic Moment" for all the Americas if the "Alliance For Progress" program is successful. Canada is at the cross-roads in International Trade. Competition will be even more difficult to meet from highly industrialized countries in the future. Perhaps if we also accept the "Challenge From The Americas", this could be the magic moment for Canada to share in what someday will be the largest consumer market in the world.
THANKS OF THE MEETING were expressed by Mr. Arthur Inwood.