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Welcome everyone to Construct Canada.
I'm Michael Mancini,
Editor-in-Chief of CanadExport, the e-Magazine
of the Canadian Trade Commissioner Service.
Today I'll be speaking to a variety of Canadian companies
and experts live here at Construct Canada.
I invite you to stop by and listen to what our experts
have to say about this booming sector
and about what this sector will be going through especially
as world economies begin to struggle.
I also invite you to learn more about the Canadian Trade
Commissioner Service, Canada's most comprehensive network
of international business professionals.
So go to tradecommissioner.gc.ca
for more information.
And while you're there don't forget to subscribe
to CanadExport, our free twice monthly magazine.
I'd like to welcome my next guest now,
Mr. Christopher Lindal, executive vice president,
chief operating officer and director at Viceroy Homes
Limited, thank you very much for speaking with me today.
Well good afternoon and thank you for having me.
We're pleased to be here.
Now first of all tell me about your company.
Viceroy is a Canadian company with headquarters in Ontario,
a factory in both Ontario and British Columbia
and we've been in business for 52 years.
The main product line of Viceroy Homes is an integrated
host package, pretty much the superstructure of the,
of any home and these could be detached,
these could be multi family, townhouses,
we've done golf course clubhouses,
and we're kind of a combination
of an architectural design form connected
to a rather large multi faceted building materials factory.
Right.
And together we provide a solution for anybody wanting
to build a specialty structure or a sophisticated custom home.
Now obviously you're well established here in Canada,
tell me about the opportunities that your
company has found in international markets.
Viceroy has been pursuing international markets
for many years, most prominently Japan.
Okay.
Where we got deeply involved in the early to mid 90's
and continue to this day to be deeply involved in Japan.
We've got a network of 100 independent builders over
there and have shipped since the start of the program about
14,000 houses representing about $600 million in revenue.
Now what was it about Japan that you saw opportunity there?
In the early 90's the Japanese government,
the Japanese building industry developed a large fascination
if you will with the North American 2 x 4 framing style.
And we became aware that this interest was starting
to build, so we began to travel to Japan, present conventions,
Japanese began coming to Canada and the United States
for that matter, touring factories
and looking for partners in essence.
The Japanese business culture is highly rooted
in having a trusted partner.
And you develop these relationships
and then it blossoms.
Right.
And that's kind of what happened.
This is all predating the Kobe earthquake which happened
in 1995 and it gave a further impetus to the interest
in North American housing because they viewed it
accurately as being much structurally stronger
and better designed to withstand the seismic of (Inaudible).
Right.
Now obviously the demand was there,
what were the challenges that you faced
in doing business in Japan?
Well the challenges was, the main challenge of course
was to get an extremely rapid learning curve
and capabilities in Japanese language across different
functions in our company.
So very, very quickly when we recognized the opportunity,
we had Japanese speaking people,
primarily native Japanese in drafting and engineering
departments, customer service, order processing,
and of course on the sort of senior sales representation
side as well.
We translated all contract documents, shipping documents,
bills of material, marketing documents into Japanese.
We then had to adapt our product line
to suit their requirements.
Designs are different, specifications are different,
the way they do their kitchens,
the way they do many different parts of a home.
Not hugely different but different enough
that we had to make adjustments just about
in every single product category.
And we had to do this in a compressed time frame
to convince them that we could actually do the job.
Right, wow.
So we jumped on it.
Yes.
Now you know obviously wood framed construction is not,
is not available everywhere, it's not popular everywhere,
you know why, why was it that you were the first one in there?
Were you just sort of quicker out of the gate to capitalize
on the Japanese demand for wood framed homes?
Or is there a lot of competition
in the Japanese market now for wood framed homes?
Well Japan's had a thousand year tradition of building
a unique Japanese post and beam.
Okay.
Type of home which are wood components.
Right, right.
So the culture and the industry were highly receptive
to wood as a, you know as a material that would be say
distinct from China where it's an uphill battle to break
in with a wood product because concrete is very much
the only way they prefer to build in China.
A lot of the groundwork was laid by some of big industry
organizations with the primary lumber and plywood producers.
For example COFI(ph) and others who had been even since
the 70's trying to convince the Japanese to swing
their wood framed methodology over from the Zirye(ph) post
and beam method that they were accustomed to.
Yes.
Towards a North American platform framing system.
Wow.
So they laid the early groundwork and then we were
like the second wave who came in when the builder community
was ready to embrace this and actually adopt it.
Right.
Well obviously, now important is doing business
internationally for your company?
You're obviously well rooted in Japan
and the United States I understand?
Yes.
We, we would certainly classify the United States
as one of our export markets.
We've got offices in Boston, Detroit and the east,
Seattle in the west as well as a network
of independent dealers.
So it's critical to it and of course given the housing
starts in the United States in a typical year,
it's a massive market and cannot be ignored.
We also are in Russia, that is the most promising market
going forward of all.
Is that right?
Oh, interesting.
Yes, I guess I could you know further...
Yes, why is that?
Expand on that.
Yes.
Certainly for the hundred years of communism and lets
call it totalitarianism, Russian citizens couldn't
simply immigrate from one city to another,
you couldn't just say well I'm moving from Toronto
to Calgary or from Moscow to St. Peterburg
cause I feel like it.
That was completely out and private enterprise
including building subdivisions, developments was completely out.
The entire population was housed in these
high rise apartments, often numerous families cramped in.
So there was no development to speak of in the way we
understand it in terms of residential housing
for 75 to 100 years.
Imagine Toronto without Brampton, Mississauga,
Pickering, Oakville, etcetera.
When you get outside of Moscow it's just vacant land.
So they have no suburbs.
Now of course they're embracing
a totally different philosophy, a market orientation
and pent up demand is enormous.
If you combine with the fact that they have some
of the world's best forestry resources,
the Russian government recognizes this and wants
to develop their own forestry industry,
they have said flat out that they want to see wood framed
housing become a dominant part of Russian
home building market share.
Wow.