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Ian smith oneNS presentation october 2 2014
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Global Competiveness & Trade
1
So What ?
The world economy is at a pivotal point and Atlantic Canada is lagging behind the
rest of Canada and the world
We need to mobilize for change:
Demographics
Competitiveness & International Trade
Innovation
Labour Productivity
Talent & Skills
Government Processes
Indebtedness
We need greater Private-sector leadership
We need to end Business and Politics as usual
We need to strengthen our region’s global competitiveness
We need to “Go Global ”
1
2
Why is Going Global So
Important ?
3
The GDP of emerging
economies now accounts for
nearly half of global GDP and
is growing at more than
double the rate of western
economies.
Emerging economies and
their rising middle classes will
rely on the rest of the world
for inputs to build their
infrastructure, supply their
factories, design and fuel
their modes of transport, as
well as feed, house and
educate their children.
The Important Issues
26%10%
38%
20%
23%
59%
7% 6%4% 4%2% 1%
2009 2030
North America EuropeAsia Pacific Central / South AmericaMiddle East / North Africa Sub-Sahara Africa
PUCHASING POWER & THE
MIDDLE CLASS IN ASIA
4
Attractive Long-Term Opportunity in China
“This year the Chinese retail sector is expected to complete a
hat trick. It’s going to become the world’s largest grocery
market, the worlds largest luxury market, and also the largest
e-commerce market”
5
We’re Already Competitive….
Aren’t We ?
6
Switzerland and Singapore are the most prosperous and competitive
countries in the world and a key source of their competitiveness is not
natural resources, but success in international trade.
Critical success factors are:
Conscious selection of “champion” industries and sectors.
Broad coordination across public sector, private sector and academic institutions.
The Issue of Competitiveness
6
7
“What is Competitiveness”
7
8
Who’s the Most Competitive?
• Switzerland and Singapore
are the two most prosperous
and globally competitive
economies in the world
• Neither country benefits from
any significant historical
competitive advantage i.e.
natural resources
• One of their greatest sources
of competitiveness and
prosperity is their success in
international trade
• Critical success factors:
Conscious selection of “champion”
industries & sectors
Broad coordination across public sector,
private sector and academic institutions
8
9
BUT
Today, approximately 75% of all Atlantic
Canada’s regional international exports are
to the USA and are accounted for by fewer
than 500 companies.
Even with an improving U.S. economy, we
can no longer afford to be so reliant on one
market.
Canadian industry and assets, such as
energy, mining, agri-food, information and
computer technology, aerospace,
education and tourism can all be positioned
to garner significant benefits from the
growth in global trade flows and from these
rising economies.
Other countries and regions see these
same opportunities and are developing
focused global trading strategies – this is
what Atlantic Canada needs now.
Our Record – Dead Last in Total Economic Growth vs ROC
10
BUT
Today, approximately 75% of all Atlantic
Canada’s regional international exports are
to the USA and are accounted for by fewer
than 500 companies.
Even with an improving U.S. economy, we
can no longer afford to be so reliant on one
market.
Canadian industry and assets, such as
energy, mining, agri-food, information and
computer technology, aerospace,
education and tourism can all be positioned
to garner significant benefits from the
growth in global trade flows and from these
rising economies.
Other countries and regions see these
same opportunities and are developing
focused global trading strategies – this is
what Atlantic Canada needs now.
Our Record – Value of NS Exports 2003 – 2012 : -30%
11
Learn more about emerging market countries and their economies.
Organize or attend a “reverse trade mission”, where key foreign companies come to
Atlantic Canada.
Do a strategic competitive assessment of your company. Is it ready to compete
globally? Can you benefit from:
Rapid economic expansion in emerging economies?
Greater regional focus on champion industry sectors?
The +$100 billion in major capital project investment in Atlantic Canada over
the next 20 years?
Mentor/Hire a new immigrant to Atlantic Canada.
Participate on a industry sector/chamber of commerce task force to develop regional
economic and export strategies.
If you are already global, offer to help someone or a company that’s not.
If you aren’t already global, find someone to help you get there
How Can We Get Started ?
12
Going Global - a Local
Example
@
13
Wild Catch + Aquaculture Growth will be Insufficient to Address Supply-Demand Imbalance
Source: FAO – Fisheries and Aquaculture Information and Statistics Service; OECD-FAO Agricultural Outlook 2011-2020; Moody’s Economy.com; Moody’s Investors Service estimates.
Seafood Supply-Demand Imbalance
26%10%
38%
20%
23%
59%
7% 6%4% 4%2% 1%
2009 2030
North America EuropeAsia Pacific Central / South AmericaMiddle East / North Africa Sub-Sahara Africa
Powerful Industry Fundamentals Will Continue In Our Favour
Asia-Pacific middle class sustainable growth provides a stable
source of long-term demand (six-fold growth in consumer
spending forecast through 2020)
Growing incomes have increased demand for high-capacity
premium products
Increasing adaptation of premium priced western-inspired
products
Robust Emerging
Market Demand
Source: OECD, FAO Secretariates and PricewaterhouseCoopers.
Growing focus on health and wellness driving interest in
“higher-quality” protein
Increasing consumer willingness to pay a premium for
“sustainable” , traceable, safe food
Desire for “authentic” taste experiences (wild-caught vs. farm-
raised) and scarcity premium (the seafood connoisseur)
Compelling
Market
“Mega Trends” in
Advanced
Economies
Supplier Pricing
Power
Global demand outstripping finite wild-caught supply sources
Regulatory bodies managing wild-caught fisheries
conservatively to protect long-term supply
Declining growth of both wild-caught and aquaculture
production
Customers willing to pay a premium for high-quality
sustainable supply
19%23%
30%
43%50%
Fish Oil Capture/Wild
Traded/Export
Fish Meal Aquaculture
Projected 2000-2020 Price Growth
14
15
Source: APEC and OECD
Growth Opportunity - A Healing Global Economy
16
Source: APEC and IMF
Growth Opportunity: Emerging Markets – Led by China
17
0
50
100
150
200
250
300
350
400
450
2001A 2002A 2003A 2004A 2005A 2007A 2010A 2015P 2020P
Annual per capita seafood consumption
Historical Disposable Income in China
Per Capita Seafood Consumption in China
6,280 6,860 7,703 8,4729,422
10,49311,760
13,78615,781
17,17519,109
2,253 2,366 2,476 2,622 2,936 3,255 3,587 4,140 4,761 5,153 5,919
0
5,000
10,000
15,000
20,000
25,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Urban Rural
China has become a key
seafood growth market
Processed seafood, amongst
other nutritional sources,
meets the consumer’s
demand for a healthy and
convenient diet
China is expected to double
its per capita spending on
seafood products from 2007 to
2020
Advancing lifestyles and rising
disposable incomes support
strong long-term demand
Source: Wall Street research and 2011 Global Seafood Outlook report.
(Seafood purchased in Yuan per capita)
(RMB per Household)
Attractive Long-Term Opportunity in China
18
Source: APEC and Statistics Canada
Growth Opportunity: A Falling Canadian Dollar vs. Major Trading Currencies
19
Growth Opportunity: Free Trade with the EU
Source: APEC and Statistics Canada
20
USA 62%
CHINA 11%
EU 8%
JAPAN 6%
A/O 13%
2012 CANADIAN SEAFOOD EXPORTS
$2.5 B
$451 M
$328 M
$246 M $533 M
Opportunity – Expand AC Seafood Exports Beyond The US
Source: Agriculture and Agri-Food Canada
21
Opportunity – Global Seafood Export Growth
3,948 7,976
25 5,000 3,626 1,654
51,583
4,060
8,376 3,339 4,302
1,497 0
10,000
20,000
30,000
40,000
50,000
60,000
China EU India USA Japan Korea
Seaf
oo
d C
on
sum
pti
on
(kt
)
Proportion of Imports to Total Seafood Consumption
Consumption from Imports
Consumption from Domestic Product
7.1% 66.3% 0.3% 60.0% 45.7% 52.5%
Source: OECD-FAO Agricultural Outlook
22
Opportunity – Global Seafood Consumption Growth
7594.1
1947.4
1235.8
256.1 84.7
-336.5 -1000
0
1000
2000
3000
4000
5000
6000
7000
8000
China India EU USA Korea Japan
Tota
l Ch
ange
in S
eaf
oo
d C
on
sum
pti
on
(kt
)
Total Seafood Consumption Growth (2014-2022)
Total Seafood Consumption Growth (2014-2022)13.68 % 23.18 % 10.27 % 3.07 % 2.69 % -4.24 %
Source: OECD-FAO Agricultural Outlook
23
Product Current Tariff Eliminated
Scallop 8% Upon ratification
Live Lobster 8% Upon ratification
FAS Shrimp 12% Upon ratification
Snow crab 8% Upon ratification
Clam 13% Upon ratification
C&P Shrimp 20% Eliminated over 7 years, Canada ATRQ in place
of 23,000mt
Raw Lobster 20% Eliminated over 5 years
Value Added 20% Eliminated over 5 years
Europe is one of the world’s top consumption markets for seafood.
It is a significant market for Canadian scallops, cold water shrimp and lobster etc…
When CETA comes into force, almost 96 percent of EU tariffs for fish and seafood products
will be duty-free. Seven years later, 100 percent of these tariff lines will be duty-free.
As an exporter our plan will be to leverage this agreement export more of our Canadian
seafood into this market
CETA Eliminates Millions of $ in Tariffs & Duties on Canadian Seafood Exports and Make us more Competitive
24
China, 16%
Japan, 10%
Other Asia 5%
Europe, 34%
United States 15%
Canada
14%
Source: Clearwater Seafoods Inc. Annual Report, 2013 Net Sales
The EU is Already Clearwater’s Largest Market But…
25
Key Value Drivers
Value Chain Research
Differentiation
Pricing (leveraging vs. conceding)
Solutions vs. Products
Branding, Innovation, Quality
Improvements
Exporters Must Do Their Homework to Capture Value
26
Widest selection of MSC-certified species of any seafood
harvester worldwide
Value Driver : Sustainability
27
Value Driver: Food Safety & 100% Traceability
Eliminating our Food Safety Risk
1. “Trust, but Verify” philosophy
Meets or Exceeds
Standards
2. GFSI-BRC Accreditation
3. Enterprise wide buy-in and support
4. Education and training
5. Environmental swabbing
6. Product Micro
7. Positive release protocol
28
Value Driver: Consumer Insights & Category Management
Impulse Purchasers
24%
Bargain Hunters
20%
Cautious Loyalists
44%
Seafood-Connoisseurs
12%
4 MAJOR SEAFOOD CONSUMER SEGMENTS
29
Value Driver: Customer Co-creation
30
Value Driver: New Products, Packaging & Brand Investment
31
Does Any of this “Stuff”
Ever Really Work ?
32
Clearwater Seafoods - Today (TSX: CLR)
33
Thank you