Canadian Trade—Handle With Care

LT.-COL. LEGGE: In one of his commercial essays Benjamin Franklin wrote, "No nation was ever ruined by trade." Judging by the effort that most countries devote to expanding their trade, Benjamin Franklin's dictum must be universally accepted as a way of avoiding ruination. Today Sir John Wedgwood, who is the leader of a firm with two hundred years' experience, and an unequalled reputation in trade, will speak to us on the intriguing subject, "Canadian Trade--Handle with Care!"

Sir John was educated at Winchester, Trinity College, Cambridge and in Europe. As a result, he is a linguist, a scholarship--mathematician, a financier and a raconteur. Besides his commercial activity he served during the War as a Military Intelligence Staff Officer in the Arctic and in Italy. In 1948 he rejoined the Territorial Army and became the Second in Command of the North Staffordshire Regiment. In addition, he is the President of many associations and organizations, including the United Commercial Travellers' Association. And this is not surprising because he has travelled our planet in the interests of his firm and as an expert mountaineer who has twice climbed the Matterhorn. He is addicted to other thrilling and hazardous occupations like under-water swimming and is a member of the British Cave Diving Group.

As a speaker, Sir John Wedgwood is much in demand and has appeared several times on the Brains Trust of the B.B.C.'s television program and has broadcast in Germany, Britain, Canada, New Zealand, Australia and the United States. In politics he was defeated as a Liberal candidate in the Labour landslide election of 1945. Later he followed the precedent set by Sir Winston Churchill and resigned from the Liberal Party to become the prospective Conservative candidate for the Leek division of Staffordshire. To add to his public duties, Sir John also serves as a Magistrate for the Town of Stone.

Our speaker has been with Wedgwoods since 1931 and was appointed the Deputy Chairman in 1955. To live and grow, and become a renowned name for two hundred years, any company must strive for perfection and suit its organization to the tempo of the times. Wedgwo0ds have done this. Sir John is their travelling ambassador and working commercial envoy who recently succeeded in the keenest 20th century competition in obtaining an order worth twenty thousand pounds from the Post Exchanges of the American Army. Anyone who can do that is an expert in foreign trade and is entitled to speak to The Empire Club of Canada on the sensitive subject--"Canadian Trade--Handle With Care!"

SIR JOHN WEDGWOOD: When recently I was gathering information about Canada I was astonished to learn for the first time that the birth rate here is around 28 per thousand persons per annum and the death rate only 8. This means that the natural rate of increase is approximately 2% yearly. To this must be added a further hundred thousand or so persons each year for the total of net immigration. This means that Canada's population rises percentage-wise by about 2.6% per annum--7.8% over the last three years. This increase is about as fast as that of China.

Furthermore I was surprised to discover that the rate of annual investment here is approximately 25% of the gross national product, as high as almost any other country in the world. I began to wonder how much more I did not know.

On every bookstall in Britain there are copies of Life, Time, News Week and Readers Digest, etc. Even those who do not care to read can learn plenty about the United States from the movies.

In many British cities there are Communist book shops, but not even in London is there a Canadian bookshop. In my researches I failed to find any booklet giving basic statistical facts. The same criticism can be made of the information which is available about our other Dominions and the Empire as a whole. Lack of knowledge of the Commonwealth in Britain is surprising.

Nevertheless, in spite of what I have said I believe that the blame for this ignorance lies more at our door than yours. Canada and the other Dominions may not distribute enough informative information. We in Britain are still more at fault in not giving more instruction in our schools in the geography, history and contemporary problems of the Commonwealth and Empire.

At school and at the University I was taught Latin, Greek, French, Calculus, Physics, Chemistry, theoretical Economics, Political Science and Comparative Religion. When I was at kindergarten I learned about the early development of Australia; at 10 I remember someone tried to teach me the names of the rivers in Asia. When I was 39 I got it quite clear for the first time that the Niagara Falls lie between Lakes Erie and Ontario. Four years later I found out for certain the names and locations of the capitals of the Australian states. Perhaps similar ignorance is to be found here. I suspect however, that the situation is not quite so bad.

Nevertheless how few people in Canada or Britain know, for example, of some of the achievements of the people of Australia. Sydney has, I believe, the best arranged and best hung picture galleries in the world. The skill and efficiency of Australian doctors cannot be surpassed anywhere. Australia is the world's cheapest steel producer. In spite of her comparatively small population and remoteness from the world's major markets she is able to maintain a standard of life second only to that of the United States and Canada.

Too few people appreciate the achievements of New Zealand farmers. In spite of their remote location they pay about the highest agricultural wages in the world and sell their products remuneratively in markets ten thousand miles away or more.

Too little attention is paid to the success of the Government of India. Under the leadership of Mr. Nehru a heroic and largely successful experiment has been carried out in establishing genuine democracy among 350 million people speaking more than a score of different languages. If this experiment is successful it will be perhaps the greatest triumph in the history of world social progress.

Last, but not least, how often do we forget that six-sevenths of the population of the Empire are not white people.

Perhaps some of the dissatisfaction that may be felt from time to time with the people of my own country by the citizens of the Dominions would be mitigated if certain facts about Britain were more clearly emphasized.

Between 1815 and 1914 about 20 million emigrated from the British Isles. Of these 13 went to the United States and 4 to Canada. In these years in helping to populate North America, Britain lost about one quarter of her rising generation. Furthermore it should not be forgotten that emigrants are usually more enterprising and healthy than the average of their compatriots. This emigration, therefore, was a serious drain.

Then came World War I. Losses among the population of the United Kingdom amounted to nearly one million dead, virtually all from men born from 1875 to 1900. Inevitably these casualties were disproportionately highly concentrated among officers, senior N.C.O.'s, the potential leaders of the future. Sir Anthony Eden and Mr. MacMillan were lucky to survive. The difficulties in Britain between world wars must be to some extent attributed to lack of leaders consequent upon these losses. (When we are tempted to be rude about the French people, we should not forget that in the same world war their casualties were even greater than ours.) I do not wish to imply that the losses sustained by the Dominions were of no account. In the heroic assistance that they rendered they, too, suffered seriously.

In the difficult period between 1919 and 1939 largely from a desire to play fair by the foreign investor, a great effort was made by successive British Governments to revalue the pound sterling, and to maintain it at the prewar parity of $4.84. The full consequences of this policy were not so well appreciated then as they would be today. The first result was that British exports were appreciably over-priced. The second that throughout the whole of the period, as a result of continued deflation, unemployment averaged about 10%.

These conditions were not conducive to industrial progress and many trades lost ground relative to overseas competitors. Britain had led the world in industrial development in the 18th century. Nevertheless manufacturing and allied trades had not, in general, proved attractive as careers for young men with the best education. They preferred banking, insurance, other financial activities or the professions. Many of the most brilliant chose the civil service both at home and overseas.

My own father was an exception in that after gaining a double--first at Cambridge he went to work for the railways. Even he had not originally intended to make it a career, but rather at a late date to enter politics as a railway expert. His case represents the beginning of a change which had begun to be noticeable before the first world war, but which was not encouraged by the conditions that followed. The export industries in particular failed to offer facilities bright enough to attract a sufficient number of those with the highest qualifications. Scientific training made inadequate progress. Technology was regarded as inferior to pure science and too few scientists were employed by industry. All this accounts for the comparative stagnation of the inter-war years. It is not, perhaps, too well understood how great has been the change since 1945. This is partly because the full effects have not yet been felt.

The level of employment in Britain in the past 14 years has never been less than 971/2 % of those seeking employment, who now total 241/2 million. About 47% of the population is employed. This includes eight million women. This figure compares with only 41% of a smaller population before the war. It is a higher proportion than in either Canada or the United States. Men average 48 hours work per week. Proportionately fewer days have been lost by strikes than at any time during the past 100 years, less than in North America and in most European countries.

The immediate post-war crisis can be said to have finished by 1948. Between 1948 and 1957 supplies of goods and services increased 30%; industrial output about 40%. The proportion invested of the gross national product has risen substantially to about 171/2% in 1957. This figure will further increase and compare with 10% before the war.

Industrial productivity per man year has risen since 1946 by more than 2% each year. The output of steel, chemicals and allied industries has doubled; that of the engineering industry is up by about 50%. After adjusting for price increases exports have doubled since 1938.

The number of university students is greatly increased and remarkable progress has been made in technological education. More than 50,000 scientists and engineers are now employed in industrial research and development.

In nearly all official statements on economic progress, information is given about employment and productivity, about mechanization and technological advances. Rather less is said about improved quality and design. Virtually no reference, whatever, is made to time of delivery, publicity and salesmanship.

Yet the sellers' market is past. For most manufacturers the problems of actual selling are as urgent and as difficult as those of increasing output. I would guess that more than half the brain effort of our own Company is devoted to marketing questions. Unfortunately, in this sphere progress cannot be properly measured in material terms.

In the past many British companies, making excellent products, have in their methods of selling lacked knowledge, imagination, energy, efficiency and faith. There are several reasons for this. Traditionally Britain had a long lead in world industry and for many years enjoyed almost a monopoly. Her products sold themselves. It has taken too long for some of our industrialists to find out that conditions have changed. The British have been conservative in their marketing methods and attitude towards design.

There has been a national prejudice against anything which was thought too much as high pressure salesmanship or vulgarity. Until quite recently there was a social prejudice against selling and salesmen.

I am inclined to think also that in the past the influence of finance has been too powerful. Some people do not like to see too much money tied up in stock or spent on advertising or in other directions which do not appear to yield immediate material results.

Fortunately most of these ideas are now forgotten. There are good grounds for believing that the improvements which have already taken place will continue. This is especially true in Canada. There are good reasons for this. Canada is the most rapidly expanding market in the world. The average rate of increase is about 4%-5%. The Canadian dollar is the strongest and most desirable of all currencies--except, I understand, that of Venezuela.

The solvency and reliability of Canadian importers is beyond question. Already British exports to Canada have increased by 50% since 1952. They reached a record in 1957 of $546 million. There was a decline last year to $5261/2 million. This was due to a general reduction in Canadian imports. The British share of the actual total increased from 9.3% to 10.1%. It is likely that this share will rise still further in the coming years--and this for two reasons.

Firstly Canada sells more to Britain than Britain to Canada. The Canadian figures for 1957 and 1958 were $7371/2 million and $776 million. There was, therefore, a visible balance in Canada's favour of $190 odd million in 1957; $250 million in 1958.

Secondly, although British exports to Canada are substantial, they are only about one-seventh of those of the United States. They account for some 70% of all that Canada buys overseas. Furthermore, Canada has a very unfavourable visible trade balance with the U.S.

From all these figures it is clear that it cannot possibly be argued that imports from Britain are harmful to Canadian industry as a whole.

Pottery--tableware and ornamental ware--is one of the products which British manufacturers have proved much more successful than their foreign competitors. In 1958 imports totalled about $141/2 million. Of this 78% came from Britain. This is a very high proportion. In 1953, however, the figure was nearly 87%

The British industry has been criticized for losing ground in recent years to competitors. One important fact however should not be overlooked. For the past few years conditions for the sale of goods in the shops to United States visitors have been less favourable than they used to be. The reasons for this are well known and apply particularly to pottery.

I understand that it is estimated that at least half of the pottery imported to Canada from Britain is resold through shops to American visitors at prices including local taxation, three and four times as high as those paid by the importer. This must be a useful factor in rectifying the unfavourable Canadian-United States trade balance. In so far as these sales have declined the sales of British pottery to Canadian shops has suffered in comparison with those of other goods less tempting to the tourist.

In spite of these conditions it would be wrong to suppose that the ceiling for British pottery to Canada has now been reached. This is a rapidly expanding market and increase of sales to Canadians of 5 % per annum or even more is not an unreasonable target. In a few years this expansion will far outweigh the decline in tourist business, even if this continues.

There is, however, another reason why considerably much larger business may perhaps be looked for. I will not bore you with detailed figures. I would mention however that in these calculations, of which I will only give you the results, I have assumed that half the British pottery imported to this country is resold to Americans--I believe this the official figure. I have allowed also for import duty on various classes of goods and for the additions made to prices by wholesalers and retailers.

My conclusion is that the total value at shop prices on tableware of all sorts sold to the citizens of this country amounts to not more than $35 million--it may well be less. This represents an average of purchases of $2.00 per head to the population as a whole (including pottery bought by hotels, institutions, etc.) of one-ninth of a cent for each dollar. of the Canadian national income. These are figures appreciably less than those which at present are obtained in Britain which in themselves have been recently described as unreasonably small.

It would seem, therefore, that there is a vast field in Canada for increased sales--a terrific job to be done in advertising and public relations. Surely people ought to spend more on good pottery in a year than they do on cigarettes in a single week; anyway it is up to us to see that they do.

Although I feel proud of the service which the British pottery trade has been able to give the Canadian market in past years and which has enabled us to hold so large a share of the total I feel, nevertheless, there is room for further improvement. Perhaps we should have done more to explain to the public, for example, the difference between bone china and earthenware. My own company manufactures both these products in common with Royal Dalton and Spode.

The manufacturer of high quality earthenware which is now produced all over the world originated in Britain and British earthenware, I think, is still regarded as the best that is made. Bone china is uniquely a British product made virtually only in England and not even in Scotland or Wales.

The two are easily distinguished. China is translucent and earthenware is opaque. British Bone China is the strongest and whitest ceramic tableware material made anywhere in the world. British earthenware is also an excellent product entirely suitable for its purpose and appreciably less costly.

Owing to lack of specificity in popular parlance earthenware is often referred to popularly as china but never as bone china. If you have any doubts hold up a piece in front of the light and see if you can discern the shadow of your fingers through the substance.

English potters enjoy nearly 4/5 of the Canadian market for importing tableware. Since British manufacturers as a whole have only captured about 1/10 of the Canadian trade there is obviously room for considerable expansion. How can this best be achieved?

The means whereby the industry, or company, can increase its business in any market are the special problems of that industry alone. There are, however, certain principles which must be observed, viz. suitability of products, price, delivery time, after-sales service, publicity and public relations.

To fail to produce over a period goods suitable in design and other respects is surely inexcusable, especially for a market like Canada, where there is no language barrier. The manufacturer need merely follow the advice of a competent representative or importer. If after a time he proves unsuccessful, employ another.

Representatives of the manufacturers should visit the important foreign market at least once, better twice, a year. These visits should not be the perquisites of directors only. Sales Manager, Designers, and Technicians are quite as important. Sometimes it may be advisable to employ a resident designer.

The manufacturer's representative in Canada should not be prevented by expense from visiting his principal at least annually.

Money wages in Britain are still much lower than those which are obtained in North America so there should be no difficulty in supplying goods at competitive prices, except perhaps where an excessive tariff must be paid. It is nonsense to argue otherwise.

Domestic and U.S. manufacturers have an advantage over the British in that they are nearer to the Canadian market; this helps them over delivery and other sales service. The British manufacturer can have an advantage by holding stocks and having depots in Canada. It may even be advisable to have two or more such sub-centres of distribution. It is not always reasonable to require the importer and wholesale distributor to accept full financial responsibility for holding stock.

Advertising and publicity are domestic problems. The exporter is not normally qualified to make all the decisions. He can only judge the wisdom of a policy in the light of results obtained over a period. The Canadian importer must make the short term decisions. The British manufacturers are sometimes accused of not spending enough on publicity. One cannot generalize about this. It may pay off in some cases deliberately to increase prices and to spend the increased receipts so obtained entirely in advertising.

If British exporters fail to raise their sales in Canada annually by at least as much as the growth of the wealth of the market they are actually losing ground. A greater increase than this must be obtained if advantage is to be gained over other foreign manufacturers. The bare minimum target should be an increase of 5%.

THANKS OF THE MEETING were expressed by Mr. John Bonus.