Rosewood Case Study: Implications of producing for export to Mexico and other parts of Latin America

Rosewood Case Study: Implications of producing for export to Mexico and other parts of Latin America

A balance between market driven and manufacuring abilities research determines which products will be made available in foreign markets. Product modifications, packaging and reworking to meet local regulations, languages and differences in customer service requirements may simply answer the question based on costs. For many companies the costs out-weigh the benefits.

A simple anecdote may easily illustrate the differences in implications for customer driven versus manufacturing capabilities product placement in foreign markets. In 2004 while living in Busan I was looking for a specific product, a green-glass globed banker's desk lamp. Wandering from market to market and department store to department store it was impossible to find one. There were no varieties of green glass globed lamps anywhere let alone a standard or classic design of a banker's footed lamp. Finally purely by accident I wandered into a building which appeared to be a medium sized department store but upon closer inspection was seven floors of wholey imported Italian furniture.

Resembling a warehouse with retail sales prices displaying similarly repetitive stocks of similarly priced products I was surprised to discover similarly designed lamps, not at all what I was looking for, however of a substitution grade product. Upon closer inspection from shop to shop I was able to find a burnished brass lamp footed with dark burnished marble, nothing like intended purchase, but of a satisfactory price and design. Inspection of other Italian inspired import products recalled quality designs however the materials appeared of inferior workmanship and details finishing were rough-shod. It was difficult to determine original versus possible Chinese forgeries however all prices reflected perceived Italian origin.

However the questions remain:

Can minimal or no modifications of Rosewood products be made? This will keep costs down especially as new markets may be fraught with cyclical demand, sluggish sales and imitator products which could competitively capture consumer demands. For example, Dunkin' Donuts entry to Korea was soon followed by public market sold competitor products with imitation donuts inside a similarly coloured and styled box with the label, "Donald Donuts" for a fraction of the price.

Will current inventory management systems be able to supply the new market or will costly adjustments need to be made to production and supply chain demands? The ongoing beef saga regarding US sourced beef products as recently as two years ago required all beef imported from the US be devoid of bone fragments, which in US and Canadian meat processing facilities, may be impossible to support economically. One tiny centemes long fragment was found in a shipment a couple of years ago causing an entire quarantine of the entire flash frozen meat shipment (I for one would have gladly eaten of this cowed product).

Can necessary market modifications be made with current production and manufacturing technology? Following the Italian furniture encounter I wrote to Bass River Chairs to enquire after their export markets in Asia convinced they produce a better product. Their reply was that their facilities could not support exports, it had been tried before, and it was a fiasco. Bass River Chairs has since gone bankrupt.

Ease of transport/manufacturing? Furniture does not predispose itself to ease of export as my home furnishing shipping from Abu Dhabi may attest unless perhaps Rosewood may break-down its product into flat-pack home assembly units as at Ikea. Being able to do so would implicate Ikea pricing.

Features, Options, Local Requirements? Mexico and Latin America have yet to provide specific research on customer demands regarding veneered office products. This could prove very costly as Mexico is not a similar market either to Canada or to the USA. It could in fact prove a black-hole in terms of costs just as some clothing manufacturers such as Giordano have found when attempting to market a global annual collection. Portions of China and Germany have proven to be markets to exit in terms of minimizing local rework, modifications and redesign. Export products often succeed where minimal modifications are required.



Feasibility and pertinence of implementing DRP and/or MRP processes:

Both entirely relevant to Rosewood in terms of distance between manufacturer and Latin American consumers. Great distances and time for delivery exist perhaps reduced with a FTZ stocking warehouse in Florida (which may suffer from excessive shrinkage however). Review of these systems may have a net benefit for current market costs savings as well.

Distribution Requirements Planning (DRP): Overarching concerns regarding finished product distribution. How shall Rosewood strategize minimal costs for distribution to Latin American customers? Where and what sized warehousing or stocking inventories will be required? How much time will be required to trans-ship products from central housing to customer regional locations in SA? How will economies of scale in load bearing and load volumes match customer demand, exceed costs, and generate profits? Feasible but cost effective?

Forecasting, Gross Demand, On-hand, On-order Inventory Requirements: Assuming Rosewood has already put such measures in place, do they possess a similar effective grasp of Latin purchasing demands to provide necessary precedence for forecasts of that demand? Are time periods and cycles of purchase in Latin America available? Will measures be similar or dissimilar to current export markets? Is there an opportunity to divert excess inventory to Latin America rather than liquidate through clearance? What portions of Latin American markets will determine fixed or variable demands for the master schedule? Will schedule forecasts actually satsify the master demand schedule on an ongoing basis or will costly modifications of that schedule be necessary?



Materials Requirements Planning (MRP): What portion of a customer's order may be flat-packed to minimize shipment volumes? What raw materials may be direct ordered from overseas suppliers and delivered to FTZ Miami for component system assembly at the warehouse there? What scheduling requirements exist to effectively manage Latin American orders? Will the costs of reorganising the schedule be offset by profits in the Latin American market? Again feasible and pertinent but is there a profits based reward?

Strike by truckers paralyzes South Korean ports

Strike by truckers paralyzes South Korean ports (IHT)
By Choe Sang-Hun Published: June 13, 2008

SEOUL: More than 11,000 South Korean truck drivers went on strike Friday to protest rising fuel prices, paralyzing ports and cargo terminals and challenging the already unpopular new government of President Lee Myung Bak.

Across Asia, as in the rest of the world, sharp increases in fuel prices continued to stoke public anger Friday. In Malaysia and Thailand, consumers and truckers demanding more fuel subsidies from their governments threatened to strike and Thai fishermen warned that they would burn their boats.

Tension grew around major ports in export-dependent South Korea as striking truckers blocked entrances and the police vowed to escort nonstriking drivers through the blockades. Television broadcasts showed freight yards filled with shipping containers as trucks stood idle.

After small-scale work stoppages in the past week, members of the Korea Cargo Transport Workers Union went on full strike Friday, demanding that the government lower diesel-fuel costs, raise fees for hauling freight and introduce minimum wages for truckers.

"The government intends to use whatever means necessary to end this transportation crisis as soon as possible and minimize its impact on the national economy," Prime Minister Han Seung Soo said.



The disruptions to freight transport have only added to Lee's political troubles. In December he won election with a promise to reinvigorate the slowing economy by achieving a growth rate of 6 percent this year, a task economists now consider overly ambitious in the face of record oil prices and a global slowdown.

In a separate protest Friday, thousands of people rallied in downtown Seoul to denounce Lee's agreement in April to lift the ban on the importation of American beef, continuing a month-long protest that prompted his entire cabinet to offer to resign.



The government recently announced a $9.77 billion package to help people deal with record-breaking oil costs, but that did little to appease the truck drivers.

The government warned that it would arrest drivers if they attempted to block nonstriking truckers from picking up cargo. The Ministry of Land, Transport and Maritime Affairs confirmed Friday that it would immediately revoke the annual fuel subsidy payments of about 15 million won, or $14,500, for striking truckers.

"If the government arrests any of the striking truckers, our member unions will immediately launch nationwide strikes," said Lee Seok Haeng, head of the Korean Confederation of Trade Unions. The labor group has often led crippling labor strikes in auto and other crucial industries. With the traditional season for negotiating under way, unions have seized on the president's unpopularity to increase their leverage.



A two-week strike by truckers in 2003 cost exporters 540 billion won, or $519 million at today's exchange rates, Han said, citing figures from the Korea International Trade Association. He predicted that this strike would cost 128 billion won in export losses a day.

In the ports of Busan in the southeastern tip of South Korea, the number of operating trucks dwindled to 13 percent of normal levels. The Busan ports handle 76 percent of South Korean container traffic.

"We mostly use nonunion trucks, but the problem is that we can't load or unload our cargo because the gates of the terminals are blocked by striking drivers," a spokeswoman at Posco, the leading South Korean steel maker, said, asking not to be identified by name because of company policy.

The government said it would use military vehicles and increase rail service to keep factories running and ease the paralysis at the ports. But rail unions said Friday that they would not cooperate.



The 14,000 unionized truckers represent only 3 percent of total cargo drivers in South Korea, but they handle more than 20 percent of the total container traffic. Unlike in previous strikes, the current walkout has attracted nonunion members fighting for their own livelihood.

"At the current fuel price level, there is no point for me to drive my truck," said Kim Jin Soo, a nonunion truck driver in Busan. "The more I drive, the more money I lose. How am I going to pay my two daughters' college tuition?"

In Europe, tens of thousands of truck drivers struck this week in Spain, Portugal and France to demand government help to cope with fuel costs.

Their protests have paralyzed roads and left supermarkets short of fresh produce and some gas stations without supplies.

In Malaysia, hundreds of people marched through Kuala Lumpur on Friday, demanding that the government reverse a steep hike in fuel prices or step down, in the biggest protest yet against the coalition led by Prime Minister Abdullah Badawi.

"Down with PM, long live the people," the protesters shouted, Reuters reported. Hundreds of police officers in riot gear stood guard, highlighting the uneasy time for Abdullah, who was reeling after a dismal electoral performance in March.

Let Taiwan Join Global Bodies, U.S. Tells China

Let Taiwan Join Global Bodies, U.S. Tells China
(Taipei Times)

A senior U.S. State Department official on Wednesday called on China to allow Taiwan to “play a full role” in international organizations in response to initiatives taken by President Ma Ying-jeou’s (???) government to ease cross-strait tensions.

Deputy Assistant Secretary of State for East Asian and Pacific Affairs Thomas Christensen said the U.S. hoped that the Ma government’s policies would lead Beijing to adopt a more “expansive” policy in relation to Taiwan’s role in the world community.

Christensen made his comments while testifying before a congressional hearing on China’s relations with Africa.

“We’re hopeful that the warming trend in cross-strait relations will lead the government in Beijing to realize that it is in the long-term interest of stability across the Strait and in the long-term interest of international peace for Taiwan to play a full role on the international stage,” he said.

Christensen was responding to a question about China’s intensive efforts to deny Taiwan diplomatic recognition in Africa, where only four nations recognize Taiwan instead of China, and where China’s often heavy-handed commercial activities have generated resentment.

“I think in general there are optimistic trends in cross-strait relations that may lead to more expansive and open policies by the mainland [sic] toward Taiwan in cross-strait relations, and also toward Taiwan in the international community, to provide Taiwan with more international space, and we push for this as part of our policy. That includes Taiwan’s international space in international organizations,” he said.

Asked by reporters after the hearing whether he thought China would relent in its opposition to Taiwan’s participation in the WHO, Christensen said: “This is something for the future.” He added: “We’re urging them to do this. We take some optimism from the trends across the Strait ... [but] how that will play out over time, we’ll have to see.”

Asked about reports that China may be willing to reducing its 1,300 missiles aimed at Taiwan, Christensen said he had not seen such reports. “We’re hopeful that that will happen in the future, but that’s a goal. I don’t have anything to report to date,” he said.

In his testimony, Christensen said that one of China’s three goals in Africa was to deny diplomatic space to Taiwan. The others were a search for resources and for “prestige.” He and committee members said that while China employs the principle of non-interference in African countries’ affairs in foreign aid, commerce and investment, the one exception was its opposition to diplomatic recognition for Taiwan.

David Emerson: The Prime Minister's Silver Bullet

David Emerson: The Prime Minister's Silver Bullet
(Globe and Mail – Neil Reynolds)

Finally, we have a Minister of Foreign Affairs with the gravitas that a G7 country requires. And the skill set that goes with it. As perhaps the most competent minister at Prime Minister Stephen Harper's disposal, David Emerson was the perfect choice to replace Maxime Bernier, perhaps the least competent.

We should all thank Mr. Bernier for leaving his classified dossier at his girlfriend's place (and forgetting it for the next five weeks), enabling Mr. Harper to bring the embarrassment of the Bernier Bungle (August 2007-May 2008) to a quick, decisive and merciful end.

Having appointed Mr. Bernier for the wrong reasons, the Prime Minister was presumably relieved to dis-appoint him for the right ones.



Ironically, the elevation of Mr. Emerson gives the Bernier Bungle its only lasting importance. It affirms now that quiet leadership, solid performance and authentic achievement are career-enhancing attributes in the ministerial ranks of this government. It promises competent management – on an interim basis, at least – in the departments of external affairs and international trade.

Equally important, perhaps, it puts the right person in the right place to deal with the protectionist administration that Democrat presidential candidate Barack Obama promises to install in Washington next January. Complete Column

Canada-Colombia FTA

Canada-Colombia FTA
(Foreign Affairs & International Trade Canada)

On June 7, 2008, Canada concluded free trade agreement (FTA) negotiations with Colombia, as well as negotiations for an Agreement on the Environment and a Labour Cooperation Agreement. The conclusion of these agreements delivers on Prime Minister Stephen Harper's commitment to Canada's re-engagement in the Americas. Once implemented the agreements will expand Canada-Colombia trade and investment, and will help solidify our bilateral relationship.

Now that negotiations are concluded, a legal review of the negotiated texts will be carried out. Following the legal review, the agreements will be signed by the parties, released to the public, and proceed to each country’s respective legislative bodies for ratification. To allow the agreements to enter into force in Canada, the treaties will be tabled in the House of Commons for a period of 21 sitting days, after which the legislation to implement the treaties will be tabled in Parliament.



Benefits for Canada

Colombia is an established and growing market for Canadian exporters (e.g. wheat, pulses, barley, chemicals, paper products, and heavy equipment) and services providers (mining, oil and gas, engineering, information and communication sectors), as well as a strategic destination for Canadian direct investments (mining, oil exploration, printing and education).

Once implemented, the FTA with Colombia will stimulate the growth of our commercial relationship and help level the playing field for Canadian business vis-à-vis competitors who have or are seeking preferential market access in Colombia.

The FTA will also promote a more stable and predictable investment environment in Colombia.

Complete Announcement

Surging Export Volumes Continue to Create Outbound Logistics Pressures

Surging Export Volumes Continue to Create Outbound Logistics Pressures
(Supply Chain Digest)

With the falling U.S. dollar, U.S. export volumes have continued to strengthen – good for many US-based companies, but creating a variety of challenges in terms of export logistics.

The inbound global supply chain continues to present challenges to many Western companies, but in some respects, with flat or declining import container volumes, the pure inbound logistics execution issues have moderated substantially due to more capacity throughout the supply chain. The exact opposite has occurred in export logistics.

Georgia-Pacific’s buildings products unit is a prime example. In recent times, its international sales and export volumes have risen dramatically – but fulfilling those orders has become increasingly challenging.

“In this environment, it’s critical to well communicate how outbound logistics works to customers and your sales team,” said Lloyd Rich, director of Import/Export and Compliance for Georgia Pacific (GP), at a recent meeting of the Atlanta CSCMP roundtable. “For example, just because you have a “booking” on an ocean container doesn’t guarantee the space or the departure.”

In fact, just getting sufficient outbound containers for shipping continues to be a real supply chain constraint for many companies. A large percentage of the export volumes from the US are coming from inland regions or other areas far away from the major inbound ports, such as LA/Long Beach. Getting them to where they are needed for export is itself a huge logistics and cost challenge.

Agricultural exports are a big source of the outbound volume growth and focal point of the container shortage. U.S. agricultural exports have jumped 20% by weight in the six months ending Feb. 29, compared with the same period last year, according to the Department of Agriculture.

But they might have been even more, if not for these logistics constraints. For example, Peter Friedman, executive director of the Agricultural Transportation Coalition, believes agricultural exporters could have shipped 20 to 30% more products in the past six months if more shipping containers were available. Other companies are similarly reporting lost sales due to container shortages.

GP’s Rich also said it is critical for shippers to monitor export container availability at key ports to have the best chance of catching potential container shortage issues before it’s too late.

Even if exporters secure the booking and the containers, stuff happens – and ocean carriers are much less likely today to try to catch up to the schedule as a result of the tremendous rise in fuel costs. “The ships are slowing their average speeds down to save on fuel,” Rich said. “The will not speed up now as they did in the past to try to make up lost schedule time.”

Container availability and shipping capacities/schedules are two key issues. Inevitably, cost increases are also a growing concern, as fuel surcharges rise and guaranteed pricing windows shrink.

“The rate validity with the ocean carriers is now one quarter, and it may go less than that,” Rich said. “Not long ago, the rate you paid could be locked in 6-12 months. We’re lucky to get one quarter now.”

Obviously, this environment can play havoc with absolute logistics costs and costs relative to budget – and ultimately to the bottom line.

Latin American Economic Growth Could Approach Five Percent This Year

Latin American Economic Growth Could Approach Five Percent This Year
(World Trade Interactive)

According to a recent report by the Economic Commission for Latin America and the Caribbean (CEPAL), economic growth in Latin America is expected to slow to 4.7% in 2008 from 5.7% in 2007. Individual country forecasts range from 2.7% for Mexico to 8% for Panama. Peru and Argentina will show significant progress, with gross domestic product increases of 7%, followed by Uruguay at 6.5%, Colombia and Venezuela at 6%, Bolivia and Paraguay at 5%, Brazil at 4.8% and Chile at 4.5%.

CEPAL Executive Secretary Jose Luis Machinea said the anticipated slowdown in regional growth is due to several factors. One is the U.S. economy, which Machinea expects to go through a soft recession this year due to the decline in the domestic housing market. While this will put pressure on the region’s poorer countries as well as industries that rely on exporting manufactured products to the U.S., he said, overall the impact on Latin America will not be significant. Economic expansion will be hindered by increasing prices for food and fuel as well.

D&B Report Says Indian Exports to Non-U.S. Markets Increasing

D&B Report Says Indian Exports to Non-U.S. Markets Increasing
(Economic Times, India)

The trend of India's exports is shifting from the traditional U.S. market to the UAE, a Dun & Bradstreet report said.

The U.S. has traditionally been India's leading export destination and in FY 07 too, it accounted for as much as 14.9% of the total merchandise exports worth an estimated USD 18.9-billion, the report said.

Even though the U.S. share in India's merchandise exports dwindled from 20.7% in FY 03 to 14.9% in FY 07, in value terms it increased from USD 10.9-billion to USD 18.9-billion. "This was also an indication of India's growing preference for trading with other emerging markets by diversifying its product group and improving its quality, etc," the report said.

The UAE which is the second-largest export market, accounted for 9.5% of the country's total exports in FY 07, while in FY 03 it accounted for 6.3% only, the report said. The spurt in exports to the UAE can be largely attributed to a rise in exports of mineral fuels, mineral oils and products, which constituted almost 30.4% of total exports to the UAE, the report said. UAE is also an important market for re-export in the entire Middle East region and in 2005, its total re-export was as high as USD 26.4-billion, it said.

India's exports to China have also seen a rapid growth from just 3.7% in FY 03 to 6.6% in FY 07. India's export share to Singapore has gone up from around 2% in FY 01 to 4.8% in FY 07.

Report Forecasts Higher Food Prices for Next Decade

Report Forecasts Higher Food Prices for Next Decade
(International Herald Tribune – Andrew Martin)

Record prices for farm crops should gradually recede, but they will remain substantially higher than average over the next decade because of fundamental changes in demand, according to a report released Thursday by the United Nations and the Organization for Economic Cooperation and Development.

Because the recent spike in crop and food prices has been caused in part by temporary factors like drought, the report predicted that prices should decrease as weather conditions return to normal and crop yields improve.

"At least we hope they are temporary," said Angel Gurria, secretary general of the OECD, alluding to the potential impact of climate change on agricultural production.

The report was critical of government policies that encouraged biofuel production, saying that their environmental, energy security and economic benefits were modest at best and "sometimes even negative." And the report suggested that those policies should be re-examined in light of the current food crisis, as should government trade policies like export bans that do not allow farmers to take advantage of higher global prices for agriculture commodities. The report also encouraged countries that have balked at allowing genetically modified crops to reconsider their use as a way to improve yields.

In a related matter, the World Bank on Thursday announced that it would increase its spending on agriculture and food programs to $6 billion in the coming fiscal year, which begins July 1, up from $4 billion. The additional money includes $800 million that has already been earmarked for Africa and an additional $1.2 billion to rapidly finance things like seeds, fertilizer and irrigation for small-scale farmers, food for work programs and school feeding initiatives.

"These initiatives will help address the immediate danger of hunger and malnutrition for the two billion people struggling to survive in the face of rising food prices," the president of the World Bank Group, Robert Zoellick said, in a statement.

According to the report by the OECD and the Food and Agriculture Organization of the United Nations, released Thursday in Paris, the anticipated causes of higher than average prices during the next decade include a doubling of biofuel production, higher fuel costs that increase the cost of producing crops and food and greater demand for food and animal feed in developing countries where incomes are rising. …

Read the complete article at http://www.iht.com/articles/2008/05/29/business/food.php?WT.mc_id=newsalert

Slow Freight Growth for Asia-Pac Carriers

Slow Freight Growth for Asia-Pac Carriers
(Cargonews Asia)

International freight traffic carried by Association of Asia Pacific Airlines (AAPA) grew just 2.1 percent in April. However, the average cargo load factor for the month gained 1.6 percentage points to 67.2%, on a 0.3% reduction in offered capacity.

“Airlines around the world are struggling to cope with the impact of runaway oil prices, amidst signs of weakening demand growth, for both business and leisure traffic,” said Andrew Herdman, AAPA’s director-general. “Sharply higher fuel costs are inevitably driving up the cost of travel. Meanwhile, airlines are looking to cut back poorly performing routes, whilst maximising their utilisation of more fuel-efficient aircraft. Nevertheless, after the doubling of oil prices over the past year, there is no sign of any respite from the current challenges.”

U.S. Exporters Face New Hurdle at Home: Full Ships

U.S. Exporters Face New Hurdle at Home: Full Ships
(The Guardian – James B. Kelleher, Reuters)
As U.S. exporters scramble to meet the increased demand for their products created by the weak U.S. dollar, they are running into an unexpected snag: space on ships leaving U.S. ports is suddenly scarce.

So the country's farmers, chemical companies, machinery makers and other exporters are facing delays dockside that erode the currency advantage they enjoy over foreign rivals. Or they end up paying a premium for space that until recently shippers were almost giving away, producers and shippers say.

Timothy Powers, chief executive of Hubbell Inc, an Orange, Connecticut-based electronics maker, told investors this week that in March, his company saw East Coast wait times for cargo space jump from two days to three weeks. "There's a constraint on out-bound containers," he said.

Part of the problem is the weak dollar, which has boosted overseas demand for cheaper U.S.-made products even as it sent costlier imports lower, industry experts and executives say. That's reversed a long-term trend in trade and thrown shippers off balance.

But Brian Conrad, spokesman for the WTSA, a trade group representing major shippers operating between the United States and Asia, says other factors are contributing to the problem, including a surge in demand for U.S. farm goods, many of which are now shipped in containers rather than bulk cargo ships.

Soaring fuel prices also are contributing to the shortage of containers, especially in the nation's interior. That's where most of the agricultural exports are grown. But it's often a thousand miles away from the distribution centers in California and New York where most inbound containers are unloaded.

"It's a more severe problem the further you are away from a port," said Don Westfall, who monitors logistics issues for the Manufacturers Alliance/MAPI trade group.

In the past, shippers would send the empty containers to such remote areas at their own expense. But with trucking companies and railroads slapping steep surcharges on customers to deal with surging diesel prices, Conrad said: "The carriers are asking themselves, 'Does it really pay for us to be moving an empty container at our own expense?'" At a time when other trade routes are booming, the answer, increasingly, is no."For every piece of equipment the carriers have, there are three or four markets where someone is saying, 'I need that container here," Conrad said.

Container Shortage a Weighty Issue

Given the fact that the United States runs a huge trade deficit and imports twice what it exports, it seems odd that the country's exporters would have any difficulty finding space aboard vessels headed overseas. Indeed, for every one container that the U.S. exports, it imports two-and-a-half, according to industry figures.

But the goods the U.S. exports – grains, heavy machinery, chemical products and scrap metal – tend to weigh a lot more than the consumer products it imports.

"The main stuff we import from Asia is clothing and electronics," Conrad said. "That's quite light cargo and you can put a lot of those containers on the ship before it deadweights out. By contrast, export cargo is very heavy ... So you can't put as much of it on the ship."

All of that is creating a headache for exporters, and may help explain why the Commerce Department was forced on Thursday to sharply revise lower its estimate of first-quarter export growth. But not everyone is being affected the same way.

"Generally speaking, what I'm hearing is a moderate level of disruption for some, none for others," said Westfall, who polled Manufacturers Alliance/MAPI members this week. "The weak dollar has tipped things in favor of exports rather quickly and so you've suddenly got a lot of people who were not major exporters trying to export – and you've got fewer ships coming into the United States laden with cargo."

Take the Port of Los Angeles, one of the nation's busiest. In April, the number of outbound loaded containers leaving the port was up 20% from last year. But the number of inbound loaded containers was down almost 11%. Some containers still left LA empty, but that volume was down 30% from last year. "That's the dramatic shift right there," said port spokeswoman Theresa Adams Lopez. In the old days, she said, "that's primarily what we were exporting – empty containers."

With their vessels suddenly filling up, the carriers are beginning to play hardball, especially with smaller exporters. The people who are having problems "have contractual issues, where they negotiated special discounts with the steam ship lines. Now they can't get space on the ships because the lines are saying they only allocated so much space to those fares," Westfall said. "It's like the airlines, where there are only a certain number of discounted seats."

Canada Signs Free Trade, Labour Cooperation and Environment Cooperation Agreements with Peru

Canada Signs Free Trade, Labour Cooperation and Environment Cooperation Agreements with Peru (Foreign Affairs & International Trade Canada)

Secretary of State Guergis signed the Canada-Peru Free Trade Agreement during a ceremony in Lima, Peru, on May 29, 2008. The Canada-Peru FTA will benefit exporters, service providers and investors in several sectors, including mining, manufacturing and agriculture. …

Read the full press release

US foreclosure filings surge 48 percent in May

AP
US foreclosure filings surge 48 percent in May
Friday June 13, 7:29 am ET
By Alan Zibel, AP Business Writer

Housing crisis worsens as number of US homes facing foreclosure in May up 48 percent

WASHINGTON (AP) -- The number of U.S. homeowners swept up in the housing crisis rose further last month, with foreclosure filings up nearly 50 percent compared with a year earlier, a foreclosure listing company said Friday.
Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, RealtyTrac Inc. said.

One in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.

Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the company said.

In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.

The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't get refinanced into an affordable loan.

Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week, the highest level in nearly eight months and up sharply from 6.09 percent last week.



Efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners, and critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.

Rick Sharga, RealtyTrac's vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. "I don't think we've seen the high point," he said.

About 50 to 60 percent of borrowers who receive foreclosure filings are likely to lose their homes, Sharga said. The rest are likely to be able to sell or refinance.

A new government report released Wednesday found that among mortgages held by Bank of America, Citigroup Inc. and seven other large banks, foreclosures climbed to 1.23 percent of all loans in March from 0.9 percent in October.

As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.

Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.

Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 percent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody's Economy.com.

In some neighborhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers.

While that's a positive for the real estate market, buyers in other parts of the country are still holding back.

"I think a lot of people are waiting to see if we really have hit the bottom," Sharga said.

Lehman Brothers economist Michelle Meyer said in a report Thursday that U.S. home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be "feeble." Home prices, she wrote, are still expected to fall another 10 percent by the end of 2009.

RealtyTrac Inc.: http://www.realtytrac.com

Rosewood Case Study: JIT Discussion

Rosewood Case Study

JIT Advantages for Rosewood:

*Shorten Production Lead Times
*Reduce Inventories

In concert with bar coding technologies inventory monitoring will enable Rosewood to keep track of materials from source of purchase to point of sale. This could be a rocky beginning to resolving inefficiencies in the overall operations but with a steady stock-piling it could create value for the company. In selecting new suppliers in Brazil Rosewood may be able to determine best value in introducing bar coding systems there under terms of contract.

*Increase Quality

Quality of product will be more easily controlled. The production and traffic schedule may benefit from simple GANTT diagrams and load balancing vis a vis Poisson /Bayesian methods (hip pocket calculations) which might enable cellular manufacturing layouts to provide a more effective use of time and manpower.

*Improve Relations
*Keep Improving

Reaction to possible market demand may them be concentrated on assembly to match orders. It may be assumed that Rosewood employees are similar to their bosses and prefer a quality work environment which approaches the furnishings as the work of guild-craft or artisan-ship which provides ample opportunities to develop company-sourced quality improvement suggestions and methods which reflect the commitment of the leadership to a better product and not necessarily a line manufacturing environment.

JIT Disadvantages for Rosewood:

*Price Disadvantages
*Distance From Suppliers

Rosewood may not require the kinds of volume purchases which might easily reduce shipping and discount prices on a distant and premium sourced material. It would work better for alternative Canadian hardwoods sourced veneers.

*Lack of Concessions

While inventory may be more easily monitored with some reductions a full extension to the entire supply chain may be impossible due to distances in suppliers which exceed 2000 km which will minimize the benefits which volume pricing concessions would bring. In addition Distribution inventory may heavily rely on continued warehousing of materials and products at distance. It has yet to be determined if purchase volumes reflect demand variation annually on a seasonal or cyclical basis.

Cost savings in product management may be found in reducing poor quality veneers however without compliance upstream in the supply chain defective materials or those damaged enroute may continue to be shipped to manufacturing before they are rejected which remains wasteful. It will be impossible to locate local suppliers of rain-forest hardwoods to implement a growth oriented JIT system.

Canadian Hardwood Plywood and Veneer Association

Recommendations:

*Reduce Inventory

Zero inventory might be possible with introduction of a lower cost and lower priced line of Canadian hardwood veneered furnishing products. This would provide a secondary niche category if necessary for explosive growth.

*Focus On Quality and Continuous Improvement

A focus on gemba kaizen rather than exclusively JIT (another Japanese management sytem which borrows much from Deming and TQM) might prove useful in encouraging the Rosewood workforce to improve those systems within which they may find tangible improvements over the quality of their individual and collective work to improve the company's overall manufacturing and customer delivery process. Consulting and benchmarking direct and indriect competitors may be significant recommendation. A series of questions may be raised to formulate a flexible improvement plan:

S — Situation: "Where are we now?"
T — Target: "Where do we want to be?"
R — Research: "What research do we need?"
I — Implementation: "What is our plan?"
D — Do it! "Let's do it!"
E — Evaluate: "What's working? What's not?"
S — Standardize: "How will we standardize?"

This type of initial planning may cost little and reward much.

Gemba Research

Rosewood Case Study: E-Commerce Technologies Benefits and Solutions

Rosewood Case Study: E-Commerce Technologies Benefits and Solutions for Rosewood Furniture and Cabinets Ltd.

Operations:

EDI may not be a suitable method of recording and tracking product sourced shipments from Brazil as their national level of B2B technological capabilities may not be sufficient for the task. In particular a JIT system may be impossible to sustain on a materials sourcing level. An inventory reserve for factory production scaled to online ordering systems may however function effectively. However base component systems for the furniture exclusive of veneers may possibly be easily streamlined with JIT levels of improvement.

A JIT system would allow Rosewood to implement Deming/Shewhart Cycle type reduction of waste and elimination of defects, all through plan, do, check, act. However as is demonstrated by recent GMC announcements regarding the closure of an Ontario truck manufacturing plant, inefficiencies and productivity issues concerning worker and management costs of production could obliterate any attempts to implement significant quality improvement measures within Rosewood's manufacturing facility. A commitment to total quality improvement has obviously not been made in many North American manufacturing facilities. Often the strategy of American and Canadian producers when faced with international competitiors with stronger quality commitments has been to exit the product category in question, such as Haier's purchase of Siemens AG computer division products or Sony-Ericsson buy-outs. An ineffective JIT implementation at Rosewood might easily place it in the target cross-hairs of superior quality management competitors. More recent Toyota pull-system negotiations have revealed a questionable commitment to partnership in relation to suppliers and more of a strong-arm tactical approach to pricing and defects intolerances which highlight an inflexible nature in respect for rate of quality improvement. Rosewood Ltd. needs to be reminded that the nature of their premium product may not require uber-competitive predatory management of operations, process, supplier, or employee relationships.

Market Objectives: Michelle and Curtis Cook (CITP) describe the general benefits of e-commerce technologies for Canadian exporters at Export Source. http://www.exportsource.ca/gol...te.nsf/en/es02782.html

Numerous functions fulfilled are listed such as:

Eliminating the need for on-site salespeople: This may be an ideal solution for numerous products as evidenced by web sales at Amazon and Overstock which have increased the global reach of many small and medium sized businesses particularly in clearing excess inventory. However Rosewood would need to exercise caution and evaluate its platform to determine customer acceptance of this method of sales for their particular products. Premium ranges often denote premium costs for marketing and competition is often stiff due to the possible high profit margins involved. However traditional and loyal customers may not easily transition to web-based sales unless their target profile determines an openess to new marketing approaches.

Confirming product ranges and availability: While this is a standard feature of online sales benefits to large scale businesses an opposite and detrimental effect could harm Rosewood's position in local and international export markets. Unless a JIT system of manufacturing is effectively implemented or otherwise an inventory safety stock-piling is in place, sudden increases in orders due to online sales could impede efficient push or pull systems in the manufacturing schedules at Rosewood. Lack of availability due to an under-stocked order schedule could cause Rosewood to lose valuable loyal repeat customers however it is yet to be determined if Rosewood customers actually are one-time or repeat buyers unless they represent a wholesale distributor or possess agency agreements with showrooms and retail sellers in the USA and Canada.

Providing real time prices and methods of payment: Anecdotal evidence for example, in the provisioning of premium products such as fine furniture suggests that the sales approach to pricing and payment strategies often attempt to mirror the exclusive cache of "by appointment only" or "pricing on request" which shields the manufacturer from competitive pricing strategies in new or developing markets. This might not be the best choice for Rosewood.

Determining methods of shipment: This would provide ample research into customer preferred shipping methods and perhaps eliminate a need for JIT materials sourcing especially if customers are willing to wait for exclusive options, designed, build and crafted fine furnishings. Obviously if these customers wanted a large factory built product JIT they might have contacted Sears and Roebuck.

Online ordering and confirmation: Again depending upon the target customer profile the comfort and convenience of online ordering and confirmation of order may not match consumer preferences for this product and needs to be determined by market research on the ground.

Evaluating customer satisfaction: This could be a double-edged sword as is the case at Sierra Trading Post "Geoffrey Beene Linen Sport Coat (For Men)" receives numerous but mixed reviews perhaps discouraging first-time or new buyers from making purchase. Rosewood would need to provide continuous improvement performace reviews for products and refine quality based upon customer recommendations. There is just no point in gathering customer satisfaction ratings if one has no intention of responding to and improving upon them. Rolls Royce might provide a sterling example of a product for which improvement has never really been a serious customer concern. Perhaps Rosewood furnishing must avoid online sales and marketing to maintain a high perceived value for money product, in short supply and often, in high demand. http://www.sierratradingpost.c...ort-Coat-For-Men-.html

Providing secure and safe transactions: Again security issues will be determined by target customers comfort with conducting transactions online. For example, while older does not necessarily mean richer, it often means less inclined to conduct transactions online out of unfamiliarity with e-commerce technologies.

Niche: JIT and E-commerce are most effectively implemented in large scale multinational corporations with similarly sized market-based captialist competitive aggressors jostling and jousting over market share and seeking to increase profits for the benefit of stakeholders and shareholders. It needs to be determined whether Rosewood's products and category require such improvements at present or in future. Cautious and experimental changes might be made but at present Rosewood appears to possess a unique product with unique features and small to moderate production outputs. In such a position growing market share and maintaining the niche are exactly the reasons Dobson and Green left a high scale production oriented employment to start their own business. Are they eager to build such a business around themselves again?

Report: Canadian Quality and Standards

Report: Canadian Quality and Standards

Canada's National Quality Institute provides frameworks, assessment and training information in the realm of improving people-focused quality management in the workplace with incentives training, leadership and governance. This is useful to me because I would prefer any future Canadian employers I may work for to have global management experience and consistent retraining to meet global measures of competitiveness in hiring me. http://www.canadaimmigrants.com/perspectives.asp http://www.nqi.ca/personnel/default.aspx

Too often the business world appears to forget that quality management owes no small debt to Dr. W. Edwards Deming, a statistically-minded American with a global outlook whose quality influence in Japan during the Marshall Plan post 1945 enabled a shattered economy to rebuild with quality concepts provisioned by his points of quality. Curious Cat provides an extensive list of resources related to self-education in Deming Management. Deming lives especially in his fourteen points of quality. http://www.referenceforbusines...005_0001_0_img0140.jpg
http://curiouscat.com/management/deming.cfm

In terms of educational quality MIT provides all of its coursework materials free online through terms of open source learning which would be a productive step for Canadian educators to emulate in terms of elucidating knowledge and quality to Canadian learners revealing the true power of the internet and online learning in respect to global economic growth. The best things in life are free. http://ocw.mit.edu/OcwWeb/web/home/home/index.htm

The International Chamber of Commerce provides a framework of international trade policies including and not limited to: anti-corruption, arbitration, business, commercial law & practice, competition, customs & trade regulations, transport & logistics. In particular it provides original incoterms obligations and responsibilities useful for reviewing contract terms to accompany any or all export or import trade contracts. http://www.iccwbo.org/ http://www.iccwbo.org/incoterms/id3045/index.html

The IEEE Standards Association provides details and data relevant to ongoing standards development globally across multiple associations and searchable reference features in amendments, conferences and industry-specific provisions useful in assessing global trends towards standardisation of products and service quality. http://standards.ieee.org/

The Times Higher Educational Supplement provides a basis for assessing and improving the quality of education globally and provides the necessary global measures of competitiveness which a national assessment made by MacLean's in Canada distinctively lacks - a global measure of educational competitiveness. Concordia ranks 383 out of 400 while my graduating university UOW ranks 199 in 2007 for example. Online learning options in Canada are for some reason highly limited while at the same time on-site learning entry often appears overly competitive. http://www.topuniversities.com.../top_400_universities/

According to Mel Hurtig, Canada as an economic nation needs higher rates of research and development to maintain global competitiveness in trade let alone increase it. This would require more targetted researchers as well as diffusely thoughtful thinkers entrenched in global quality and standards improvement for the benefit of shareholders, stakeholder and tax-payers alike possibly completely out of tune with Canadain perspectives. Hard to attain a global view in Canada according to many news releases available at IE Canada. http://www.importers.ca/industry_links.html

http://lifestyle.sympatico.msn...mp;detect=&abc=abc

Finally STFX Adult Education Certification exists which enables adult educators nationwide to benefit from learning and developing methods of teaching which truly succeed and exceed learner expectations. Still waiting for multiple choice quiz samples on an export certification exam which under Canadian standards for adult education should be administered in a non-punitive and adult as learner process or learning cycle assessment methodology. In plain English that would mean no one fails and if they fail then are permitted to take it again and again an unlimited number of times without deadline or penalty until they pass it. http://www.stfx.ca/academic/adulted-diploma/

Rosewood Case Study: The import of wood from Brazil.

Rosewood Case Study: The import of wood from Brazil. Terms of purchase: CIF Montreal.

Risks, responsibilities and obligations of the seller.

First of all the monetary risk of loss for the seller may come about through failure to secure contract terms which include a force majeure clause and arbitration rules which provide terms of mediation where an absence of such a clause could make seller liable for damages or losses during transit which neither the insurance company nor the carrier may be responsible for. Also should there be any discrepancies in the financing or purchase terms documentary credit should be irrevocable and shipment should not be made until confirmation of payment has been made finally at the Brazilian company's local bank. However ensuring that the financing of Rosewood's purchase is legal, legitimate and timely should also be reviewed by the exporter's bankers.

The Brazilian seller, principal party or agent of the principal seller, which must be specified in the contract is responsible for processing storage fees and labour charges for any and all warehousing, secure packing in accordance with agreed terms of contract, secured loading at point of origin, port receiving charges, all transport documents usually including but not limited to contract specified numbers of copies of commercial invoices, clean ocean bill of lading and insurance certificates and any or all other export and customs documents required by the Government of Brazil, export clearance usually through official agents and or freight forwarders specified in the contract, fulfilled loading schedule or shipper's declaration, contracting the ocean freight carrier and insurance coverage which generally equals the total commercial invoice value with an additional 10% to provide for claims and or inspection of claims and or deductible in event of loss, damage, pilferage, fire, or other conditions specified in the insurance coverage to the port of destination. In the end the seller must ensure some degree of profit margin for the CIF terms of sale to ensure future company operations. Furthermore, the seller should refrain from contractually guaranteeing any or all exact day delivery dates with possible penalties or claims liable for late delivery charges. It is better to provide a period of delivery in accordance with the credit cycle validities.

Other risks are that the particular port of origin may prove difficult to insure against loss or pilferage as once was the case with JFK.
http://money.cnn.com/magazines.../06/22/69172/index.htm

Risks, responsibilities and obligations of Rosewood as the buyer.

Rosewood must ensure that the CIF terms of contract are fully fortified with an explicit contract arrangement reviewed by a Canadian international trade arbitration lawyer and or legal firm with specific experience in Brazilian international trade law to ensure that the terms of contract reflect a mutually agreeable and profitable or satisfactory review of all prices and risks including the EXWORKS prices and that the export agent or principal seller contracted to provide services at the Brazilian end is truly delivering competitively priced wood products which do not include domestic handling, labour or marketing costs in the delivered product price. In addition the buyer must confirm that the seller selected carrier, delivery terms and charges, as well as insurance coverage represent the best prices and coverage, generally minimally "ALL RISK" coverage is preferred by the buyer for these services.

The CIF terms obligate the buyer to be responsible for any or all changes to shipping destination schedule, payment of all import duties or taxes, delivery charges to final destination and pre-arrangement with seller to ensure that all Canada-bound documents and certificates relevant to the product identification category which may be required be provided to ensure delay-free clearance and clarity in responsible party for costs incurred due to processing of documents delays or errors.

Those terms of CIF which leave risks and responsibilities in handling and port processing fees in limbo must be included under terms of contract and would likely be covered due to availability of import brokers and buyer's agents in Canada which certify and provide inspection and processing fees for clearance of port controlled cargo. These costs must be absorbed by the buyer. Again the overall cost of CIF imported products must ensure a price to the final customer which allows for a margin of profit in eventual finished product sales for Rosewood as the buyer.

Rosewood Case Study: Customs Procedures

Rosewood Case Study: Customs Procedures

Should Rosewood find a viable, cost effective and profitable supplier for these wood veneer products automated customs clearances exist such as CADEX and ACROSS which will require considerable examination of permits and certificates issued in Brazil on any CITES listed products let alone wood products concerning agricultural and environmental safety standards. http://81.201.103.160/PS/VCont...2d71&NoLayout=true

RMD is available on suitable bonds coverage of taxes and duties, the PARS system provides advance fax or EDI transmission to expedite customs clearances. The most relevant process for a monthly delivery would be the FIRST system where compliance and reliability of importer and carrier are proven over time. It would appear a preferred method of customs clearance which might necessitate transitional processing through the first two steps over a period of time.

However concerning modern day slavery in Brazil, companies like DLH Nordisk Inc., and BR-111, both importers of exotic hardwoods in the US are being pressured by consumers to voluntarily suspend imports without Forest Stewardship Council Certification by consumers and human rights advocacy groups such as: The International Labor Rights Fund, Greenpeace International, Environmental Defense, Rainforest Relief, and the World Wildlife Fund-Brazil. Rosewood could expect similar pressure in Canada. http://www.fsccanada.org/FindWoodProducts.htm

The discordant voice such as that of Knight Ridder editorials regarding the presence of WMDs in Iraq prior to the second Iraq War, a single voice based upon available data, which provided evidence of business or political cognitive bias in collective decision making and fully recounted at PBS Frontline "News War" http://www-c.pbs.org/wgbh/pages/frontline/newswar/view/ is of importance to Rosewood's designation as an importer of a controlled product. New regulations could quickly arrive which cut off any supply from Brazil without Forest Stewardship Council Certification. http://www.fscus.org/faqs/what_is_certification.php

Canadian businesses need to be wary of possible liabilities in supplier relationships in Brazil which may effect future delays in free import of Brazilian products to Canada due to public sentiment. Clearances, permits, public information, and consumer sentiment effect regulations in Canada. I wonder how many Chinese toy importers possessed FIRST system privileges prior to the poisoning issues? http://www.mongabay.com/external/slavery_in_brazil.htm

Rosewood Case Study: Product Sourcing Considerations

Rosewood Case Study: Product Sourcing Considerations


a) The most important considerations that could affect Rosewood’s strategy to source wood from Brazil:

Economy and Political Environment

EDC has updated their Brazil overview on April 1, 2008. http://www.edc.ca/english/docs/gbrazil_e.pdf Positive notes for the economy are encouraging particularly that Brazil has recently become a net creditor in international trade for the first time in history with the expectation that investment grade designation will be granted by Moody’s or Standard & Poor’s later this year. On the downside however inflation at 4.7% is slightly higher than current annual growth rate at 4.6% which a future increasing rate of FDI may assist in resolving. Politically Lula’s parliamentary minority government looks a lot shakier than Canada’s Harper’s with an eleven party coalition. However the OECD approves of Brazil’s current macroeconomic policies as of 2006, noting improvements in business innovation and labour skills development. http://www.oecd.org/document/2...690114_1_1_1_1,00.html

Building Supplier Relationship

In terms of building a partnering relationship between Rosewood and a supplier in Brazil the cultural dimensions model provided by Geert Hofstede http://www.geert-hofstede.com/...re1=14&culture2=11 indicates that personal relationships between Canadians and Brazilians will have challenging elements in terms of building trust, sharing information, and making decisions. Canadians score higher on terms of individual initiative, while Brazilians may be generally considered less likely to challenge managerial decisions, more likely to avoid risk or uncertainty, and more likely to seek a long-term strategic partnership than Canadians. This could implicate difficulties in building a relationship or partnership beneficial to successful negotiation and creating or claiming value and equitable distribution of profits. http://www.geert-hofstede.com/hofstede_brazil.shtml

b) The main challenges in negotiating long-term supply agreements with Brazilian suppliers:

Supplier Criteria

Compatibility issues concerning regulatory import and export environments in both countries will implicate successful agreements in Brazil. For example, veneers and finishing woods are perhaps under-advertised on the internet at alibaba. http://www.alibaba.com/trade/s...product_en&CatId=0

While several of these exporters may have experience in the delivery of rosewood, teak, ebony, and mahogany, their methods of production may not meet or satisfy Rosewood’s current requirements. It would be ideal to source all required veneers from a single supplier to minimize costs, paperwork and consolidate orders and/or export/import documentation requirements.

However some solid companies listed online such as Trade Link http://www.tradelink-group.com/ which may produce teak in some quantities or Robinson Lumber http://www.robinsonlumberandflooring.com/ with a service history since 1893 (locations in Breves, Belem and Curitiba) may provide quick company references to competent and reputable exotic veneers suppliers in Brazil.

Quality Standards

The global exports of Dalbergia stevensonii, Family: Leguminosae, Honduras Rosewood represents a controlled species and is currently registered under The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) regulations. http://www2.fpl.fs.fed.us/tech...bergiastevensonii.html

Dalbergia stevensonii is considered a threatened species globally. http://www.cites.org/eng/com/pc/17/E-PC17-16-03.pdf

Origin and certification information is often thus difficult to procure and possibly falsified under trans-border shipments inter-Mexico, Guatemala and Belize. Thus any shipments originating from Brazil would need to meet extensive and stringent documentation and permits processes throughout the production, export, shipment and import process either to Canada, The USA or Mexico under NAFTA regulations. http://intranet.iucn.org/webfi...esEN/cites_prop_32.pdf

This would require a supplier committed to ethics and moral observance of due diligence. Brazil is ranked just above Algeria in the Global Index of Economic Freedom 2008 making such a disciplined broker perhaps difficult to find. http://www.heritage.org/index/country.cfm?id=Brazil

While considered of larger commercial value, Swietenia macrophylla, Family: Meliaceae, Honduras Mahogany has seen heightened export regulations implemented under a voluntary export restrictions process since October 22, 2001 when Brazil curtailed exports to the US by 27% in one year which, “suspended logging, transport, and trade of S. macrophylla.” http://www.globaltrees.org/proj.asp?id=39

However CITES has listed this wood in Appendix II with problems in enforcement of control of this species existing due to “World Customs Organization Harmonized System (HS) commodity codes for Parties to apply in describing the commodity.” Exports in the forms of lumber and veneers were restricted while other classifications saw unhindered controls in 2003. Current policies permit exports with proper permits which smells like a loophole. http://www.cites.org/common/pr...G2/E-MWG2-10-02-US.pdf

It is questionable whether Brazil or even Honduras can provide a legally transparent source of supply for Diospyros spp. , Family: Ebenaceae , African Ebony whereas a partnership with any of various ebony sustainability projects in Africa such as The African Blackwood Conservation Project in Tanzania http://www.ventureco-worldwide...blackwood_project1.htm might prove prudent. A supplier in the UK lists various ebony products sourced from Malaysia, the Celebes, India, West Africa (including Cameroon, Gabon and Nigeria). Brazil as a source of ebony is noticeably absent perhaps due to consumer knowledge. www.exotichardwoods.co.uk/docs/TimberlineGeneralCatalogue2007.doc

A 2004 article from Knight Ridder describes the case of Tectona grandis, Family: Verbenaceae, Teak exports from Brazil which makes its supply appear not unlike the extraction of African blood diamonds. http://www.mongabay.com/external/slavery_in_brazil.htm

One might again recommend switching to Canadian sourced veneers on the grounds of the Gettysburg Address, “that government of the people, by the people, for the people, shall not perish from the earth.” Knowledge of possible human rights abuses in the source of its veneer products in Brazil might eat into Rosewood's corporate profits. Assessment of current global broker of these products may be prudent.

Rosewood Case Study: Key Issues In Exporting To Mexico

Rosewood Case Study: Key Issues In Exporting To Mexico

* Customer Service

Sales in Mexico will require consideration of significant lead time and possibly a specialized product mix to match unique Spanish language and Hispano-cultural requirements on packaging and in communciations. This will cost money. As mentioned in current technological trends e-commerce opportunities are high in Mexico at this time and may provide opportunities for online cataloguing and ordering versus new warehousing considerations or implicating JIT processes. For example, San Carlos Imports and Southwest Furniture Design Inc. provde style and trend samples such as Sante Fe, Mission or Spanish Colonial styles which might influence design modifications for Rosewood's product line in Mexico. http://www.sancarlosimports.com/ofrusfur.html http://www.greatswfurniture.com/Office.htm

* Manufacturing

At the same time options exist for Rosewood to choose to continue full production in Canada. However this would be determined by forecasting sales in Mexico first. International partnership opportunities exist with ventures such as San Carlos Imports or Southwest Furniture Design Inc. where profit sharing from manufacturing parts of the product in their facilities, or purchasing portions of finished product from them and detailing it at a final finishing facility in Mexico exist. Consulting maquilladora contractors concerning industrial locations might help. http://www.madeinmexicoinc.com/

A complete turnkey operation in Mexico might not be the best first option for small sales forecasts. Perhaps first direct export of domestic production would be followed by increased demand with a profit-sharing partnership with a finisher closer to the border followed by increased demand with a complete Mexican production facility.

* Marketing

Rosewood seeks to be a niche player possibly developing products singularly designed for the Mexican market, aiming for a small pool of rich customers - research would need to determine current luxury office furniture sales companies in the market to determine the feasability of acquiring their customers. For example is it a saturated market? Are these customers extremely loyal? What kind of commitment to customers will ensure their product loyalty? What kind of customer turnover is acceptable which maintains global market approaches to growth and profitability? An expensive office furniture set may be a rare once in a life time purchase. What kind of social or community commitment with such Mexican furniture consumers is required to ensure any growth in customer base? Several agencies excel at answering these types of questions. http://www.webmarketcentral.com/Agencies.htm

* Inventory

The supply chain needs to be mapped out to provide "oriented for action" changes which minimize costs for distribution of product stocking points, levels and locations. Cooperation between all supply chain partners will be essential to make effective and streamlined decisions regarding continuous improvements. Such an orientation is often difficult for western-world businesses to make independent of contracting consultants to make recommendations for them. Loads of free case studies to extrapolate however. http://www.businessballs.com/qualitymanagement.htm

* Transportation

The best methods of shipping, delivery, choice of carriers, speed of service, consolidation, and monitoring to minimize costs of transport need to be determined. Obviously this is not an air-freight product. However the choices between multi-modal rail, truck or ship movements must be balanced to provide the best opportunities to maintain a margin of profit. Tricky to determine considering trends and pace of change in environmental conditions relating to transport infrastructure. Statscan comes through but busy may not always mean better. It could just mean slower. http://www.statcan.ca/english/.../50-501-XIE/sect11.pdf

Rosewood Case Study: Country Profile Mexico

Rosewood Case Study: Country Profile Mexico

Briefly Appendix 2 Data is out of date and paints a rose-coloured glasses image of trade with Mexico. Caveat empor! In all things, due diligence and the latest trends and market data must prevail. ANything less might highlight complacency.

Political Legal Regulatory Factors:

Prior to the election of Vicente Fox, a former Coca Cola Executive, the Institutional Revolutionary Party ruled Mexico for 71 years. Reforms instituted since NAFTA have allowed regulatory agencies to develop business-friendly registration processes, and clear legal frameworks for foreign investors. However challenges remain in simplifying legal frameworks, compliance and enforcement, tax system, and regulatory appeals processes, all from the OECD. http://www.oecd.org/document/5...873595_1_1_1_1,00.html

Labelling, import regimes, documentation, insurance, direct sales taxation, transfer pricing, Vienna Convention regulations, trade disputes arbitration under Mexican and NAFTA processes are all relevant areas of interest to Rosewood's Logistics Plan and may be reviewed in detail at BancoMext. http://www.mexico-trade.com/table.html

Economic and Stability Factors:

The Mexican economy is described as highly linked to the US economy. The early 1990's provided opportunities for learning about currency crises provisions following a 1994 devaluation of the peso and an IMF bailout program which influenced export growth. Per capita growth has been mostly absent since that time. Poverty effects most regions of Mexico and is one of the most serious economic problems however in accordance with Latin American averages. This may be entirely irrelevant to Rosewood if their sole buyers in Mexico are represented by the idle rich of the nation. This data is from a US Congress Report from 2005. http://www.fas.org/sgp/crs/row/RL32934.pdf

The IMF anticipates 4% overall growth for Mexico from a Wharton School of Business article on 2008 forecasts. http://www.wharton.universia.net/index.cfm?

Cultural and Social Changes:

Historian Lorenzo Meyer describes the lack of development of the middle class consumer market in Mexico, ''The idea of Mexico as a middle-class country is a delusion. This is a country of extremes.'' An inability to raise investment capital appears to minimize growth opportunities for middle income earners again perhaps irrelevant to Rosewood. Small and medium-sized businesses are often ineligible for bank financed credit opportunities and presents a historical hierarchical social stratification which has existed since the days of Cortez. Sourced from today's New York Times. http://query.nytimes.com/gst/f...spon=&pagewanted=2

Technological Changes:

Media globalisation perhaps represents the largest factor in Mexican technological change with direct to home and internet based media showing tremendous gains which might implicate real e-commerce opportunities for Rosewood. However without middle class buyers economies of scale could be problematic. This data is sourced from a 2006 article. http://www.entrepreneur.com/tr...ticle/157946573_5.html

Rosewood Case Study: Logistics Is The Glue

Rosewood Case Study: Logistics Is The Glue

If logistics is the glue that holds Rosewood Cabinets and Furniture Ltd. together they may need to reassess their entire business strategy, let alone market entry into Mexico. Let's start with adapting and refining the base product: rosewood.

Not a native species of Canada, its costs are invariably increasing as its sources are limited to vastly depleted forest regions in Brazil and South America or India and the south-east Asian tropical regions. As its costs increase Stone and Willis may find their profits eaten up. It might be better to source veneers in greater quantity and local availability in Canada. Failure to do so may implicate corporate image and loss of market share as many veneers now fall under CITES protection laws.

Oak, cherry, walnut and maple would make great environmental and competitively priced available substitutes. In addition, labour costs in Canada are increasing with the inflation rate. So regardless of the amount of primary research that needs to be done regarding Mexico as a consumer market for their products, its free trade zones must be considered to provide flexiblized labour and overall lower variable costs of production. Several US and Canadian based agencies and consultancies specialize in contracting turn-key manufacturing start-ups in the border regions spilling over into the Rio Grande valleys where a small or medium sized company like Rosewood might recoup the costs of relocation in as little as two to three years.

In the development of a streamlined customs-free NAFTA superhighway Stone and Willis may find their market accessibility in the US could offer positive share of total market growth there regardless of a decision on Mexico where their production and inventory would be closer to the US market which provides more opportunities for growth. While it would be tempting to develop a full strategy targeting Mexico City, Gudalajara and Monterrey the anecdotal evidence of one Mexican politician's suggestion might not be enough to sustain an economy of scale which supports profits, sales and growth. Infrastructure in Mexico is not yet fully efficient and contacting freight forwarders from port transfer to inland destination might be very expensive due to high communications and or interpreter's fees, travel and meetings which also eats into profits. The fact that there are only three freight forwarders listed makes it very difficult to determine comparative quality of service which can often be extremely variable dependent upon quality of common carriers.

Furthermore market entry costs could be extremely high due to unforseen customs regulations, snags and pitfalls and current lack of major furniture imports to Mexico from Canada. The Mexican economy does not currently support a large monied class of rich politicians, nor has it ever done so, as compared to Canada or the US per capita for example. Mexico could represent a black hole for the company logistically and it might make sense to follow my prior recommendations first or lose big and lose fast.

Lean Delivery Systems

Lean Delivery Systems

Toyota Motor Company developed many early lean delivery systems processes to improve up-stream to down-stream customer services internally and externally. Their network of supplier sources willingly reduced distances between manufacturing plants to reduce necessary lead time and improve fill rates. Additionally these suppliers began to build component or cellular manufacturing units, for example entire drive train component systems and or interior electrical units to simplify delivery and accelerate flow. Ultimately the end user customer could benefit from higher quality measures, shorter delivery times for optionalized products and more competitive pricing options based on just in time inventory which allowed Toyota to grow its market share through increased production at lower unit costs than many of its competitors.

Walmart was mentioned as an example of the push versus pull transition in supply chain management. A full sixty minutes documentary, "Is Walmart Good for America?" may be watched for free(my favourite word) at PBS Frontline