Archive for November, 2008

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Atlantic Canadians in Chicago

Wednesday 26 November, 2008

The Canadian Consulate in Chicago hosted 1 of the largest trade delegations on a foreign trade mission I’ve ever seen.  They spent almost a week here & had a person from ACOA (Atlantic Canada Opportunities Agency) stationed here for months before & after to organize & follow-up on it.  I attended a panel discussion on innovation which attempted to answer the questions:

How does 1 bring innovation to market?
How does an organization adopt disruptive technology?
How can innovation improve the bottom line?
Where do you find technology that gives you an edge over your competitors?

The panel consisted of a mix of American & Canadian academic, association, economic development, & research experts.  I requested copies of the presentations that were made, but have not received them yet.  My preference is to hear from managers in the trenches who are working on these kinds of things, but experts can add some theory as well.

Here are the Canadian companies which paid us a visit:
Information and Communications Technology (ICT)
AnyWare Group Secure Remote Access hardware & software solutions for hospitals & business
Computer Generated Solutions Canada Custom eLearning solutions for large organizations
dataSentinel Patented portable, encrypted, distributed data storage solution
IC – Agency Canada eMarketing consulting & custom training
OPTIS – Flood IT Solutions Online parent teacher interview scheduler software solution
TeamSpace Programming &Technical Solutions for Rich Media
Timeless Medical Systems Hardware / software solutions for neo-natal intensive care
Business Services
Clear Risk Risk Management solutions & resource materials for SME
GDP Consulting Professional consulting & resource materials for Board Governance
Lexi-tech International Multi language translation services
OYF Consulting Advanced Human Resource Consulting apps for Talent Seeker & Hiring Smart
Thrive Software Marketing Software solutions & resource materials for SME
Vision Research Outsourced call center / data collection for market research
Wreckhouse International Jazz & Blues Festival Music booking, promotion and management
Advanced Manufacturing, Aerospace and Defence
CE3 Custom Electronics Integrators Custom electronic assemblies for aerospace and industry
LuminUltra Technologies Breakthrough technology for monitoring biological activity in water and wastewater
Northstar Networks Contract manufacturing for aerotech, marine, defence & Homeland Security
Building, Construction & Heavy Industry
Chandlers Cabinets & Millwork Custom millwork and cabinets for condo projects & institutions
Fossil Power Systems Aquarian steam/water level detection for industrial boilers
Laurentian Steel Fabricators Custom steel fabrication for industrial rebuilds
Stark Oil Purification Systems Transformer maintenance & oil rejuvenation for heavy industry
Therma-Ray Thermal Heating Systems & Energy Conservation
Labrador Inuit Development Corporation Rare sub-arctic blue stone quarried to order -slabs, tiles, landscape
Consumer Products
“I Get It!” Math Professional development & teacher resources for K – 8 math
Demand Innovation Inc./ Survival Perk Portable pressure infusion coffee maker
Savonnerie Olivier Soapery Eco-Skin Care products & traditional natural soaps
Terra Nova Granite / Hurley Group Quality black granite monuments
Trail Blazer Products Hand tools for lawn & garden and outdoor sporting
Agriculture and Agri-Food
Aqua Prime Mussel Ranch    Fresh cold water cultivated mussels in small order quantities
By the Water Shellfish Fresh lobsters, scallops, mackerel, herring
Canada Ice Enterprises Pure bottled water from icebergs
Duinkerken Foods Tasty Gluten free baking products, mixes for home baking
Farmers Cooperative Dairy Contract manufacturing of fortified sports and health drinks in TetraPaks
Island Abbey Foods    Honey drop – pure honey in single serve non-stick wafers
Menu Tools IT solutions for menu planning & costing for food services
Neptune Sea Products Smoked fish, value added seafood and spreads
Nova Plastics Disposable cutting surface in recyclable plastic for food service sector
South Shore Trading    Oysters, clams, lobsters, eels and fish for restaurants
St. Mary’s River Smokehouses Flavored hot-smoked salmon and cold-smoked salmon
The Cider House Refreshing hard apple cider and Dessert Wine

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should you continue to diversify your financial portfolio internationally?

Tuesday 25 November, 2008

I perused this article by Carolyn Bigda in the Chicago Tribune Crisis rains on diversification parade which questions “Is diversification (in financial portfolios) dead?”    The implicit assumption in the headline is that American investors should divest themselves of foreign holdings to reduce their diversification.  This would be a mistake for many investors who’ve made a lot of money over the past few years by investing abroad.  As I’m sure any responsible financial planner will tell you, of course diversification is not dead.  This is just another example of irresponsible journalism which questions the “voodoo” of getting involved in foreign markets, in this case in financial investments.  Are foreign investment securities risky?  Yes, because we know less about them.  The tradeoff is the opportunity for greater growth, which is a bit more constrained in the developed world.  Diversification is no guarentee against losses.  Smart investing is at least a small bit of a gamble, & investors have been burned lately by not questioning the assumptions behind many of their investments.  Regardless, the same time-tested tenets hold:  since economic growth is not a 0-sum game, other markets can grow while others shrink.  Other economies are hurt by varying degrees by the economic crisis & thus their financial markets & hence stock share prices change depend on how well each country deals with the crisis.  Although the article closes with a gloomy comparison with the Japanese stock market, 1/2 the article admits that diversification helps long term returns.  Not only should portfolios be diversified geographically, they should be diversified in many other ways as well, for example, in industries, time frames (in expiration dates for some securities), & instruments (stocks vs. bonds, etc.).  To suggest not to diversify in these other dimensions would be considered nonsensical, yet to not diversify geographically is OK?   I think not.  The better question is where, when, & how to invest.  Question transparency, regulation, & liquidity in other places, which are not as open as the US, which offers more of these than anyplace else in the world, but don’t question whether or not to generally diversify foreign investment.  That’s just more anti-foreign rabble rousing.

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European Constitution & Impact on the Individual

Monday 24 November, 2008

I attended this lunch lecture Recent Developments in European Constitutional Law and the Impact on the Individual featuring Fulbright Research Scholar Dr. Vaclav Stehlik of Palacky University Faculty of Law in Olomouc, Czech Republik @ John Marshall Law School.  Here is the presentation he gave stehlik_jmls & here are the hanouts provided to support the lecture  treaty-establishing-the-european-communities-judicial-protection & charter which can also be found @ http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2007:303:0001:0016:EN:PDF

Q&A opined the following:

-although the documents say human rights are protected for only citizens of the EU, they are also protected for residents & visitors as well

-while facism is prohibited in the EU, it means nothing in the Balkans, because no countries there are members of the EU yet.

I’m not an attorney & don’t know the details of these issues well at all, so I’ll just let making these resources available suffice.  In general I will say, my impression has been that human rights have been well-protected in Europe, if only in an old world sort of way.  Although they recognize them, I haven’t seen that they’ve been on the forefront promoting them.  That may be because they are subject to waves of immigrants from time-to-time & leaders may be weary of granting rights to foreigners who might not fit in their countries very well without earning much in taxes from them.

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Molex in Asia…really?

Friday 21 November, 2008

I found this article by Greg Burns in the Chicago Tribune  Lisle-based Molex may follow its fortunes to Far East My 1st impression is “yeah, well…duh.”  That a manufacturer of electronics sees the future in Asia should be no surprise. Many of their suppliers & direct customers are there, so they need to be there in a big way.

What is surprising is considering moving a headquarters location there.  Although being near your suppliers & customers obviously has advantages, leaving well-established legal & financial accounting environments poses some risks.  However, our litigiousness & required transparency might make other locations more desirable.  Marketing & sales are done locally for the most part, so those will be little affected.  Basing division HQ’s there is different from basing the company HQ in a different location.  The company HQ is where the company is “domiciled,” which determines a whole lot of ways it does business.  That’s a big part of the reason the US state of Delaware is the relative king of corporate HQ’s in the US.

Although I flinch when I see naturalized Brits leading international companies in the US, as many seem to do, a Brit in the leadership position does reflect a level of involvement in international arenas that many more domestically-oriented US companies seem to lack.

What concerns me is the lack of discussion of the ramifications of moving a HQ somewhere else.  An arguement could be made, as with Boeing, that only a few hundred people move, so it’s not that big of a deal.  My response is “Au contraire!”  If you look at the level of involvement of Boeing in Chicago before & after moving their HQ, the differences are palpable.  A move like this means a lot to the company & cities which lose & win the battle.  Hong Kong is an obvious choice which avoids many of the pitfalls which reside in other jurisdictions, but should still not be taken lightly.  Now that Hong Kong is a Special Economic Zone of China, whatever affects China affects Hong Kong as well, so it’s riskier than it used to be.  This seems to be another example which highlights the local media’s ignorance of what’s going on in the rest of the world & how Chicago companies react to changes in it.  Their lack of education & awareness filters down to readers & being uninformed about the rest of the world gets riskier & riskier every day.

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German Green Building conference

Thursday 20 November, 2008

I recently attended this reception & conference sponsored by the German American Chamber of Commerce. Links to the presentations given that day are included on the preceding webpages.  Here are some of the notes I took:

Marc Tomkins of the GACC;
-the Green Party has an influence on policy in Germany

German perspectives-
Prof Hegger of TU Darmstadt;
-gravitational energy is harnessing the power of rising/receding tides in oceans
-it should be no problem to reduce our energy consumption to 1/10 in our existing building stock
-recovering methane gas from former coal pits created a payback of 1.3 years
-flat roofs are no problem for snow loads
-Hamburg is a good example to follow for zoning suggestions
-residential & commercial building technologies are equal in Germany, but not integrated in the US

David Cook of Behnisch Architects;
-IIT is hosting a project on the House of the Future
-we need to work together with nature rather than against it
-architecture is important because absenteeism was reduced 10% for 1 client by moving into a new building in Boston
-renewable energy is not relevant until energy efficiency has been achieved
-using prefabricated materials reduces energy needs

American perspectives-
Laureen Blissard of US Green Building Council & Sachin Anand of dbHMS essentially just read their presentation slides so check them out to see what they have to say

Vuk Vojovic of Legat Architects;
-daylighting (turning off lights in areas lit by external windows) saves big bucks
-China causes 25% of the pollution in California
-rain in Illinois flows to the Mississippi River & not the Great Lakes
-Walmart is saving big bucks by installing skylights

morning panel Q&A
-although there are differences in accounting, green is not expensive when considered over the long term life cycle/amortization period-in Germany, it’s assured you don’t pay more to go green
-3rd party verification is key for green rating systems
-monitoring LEED over time is a voluntary process which is becoming more affordable
-innovation is required in regulation too
-Chicago Mayor Daley is a great advocate for green building
-the Illinois Clean Energy Foundation & Kresge Foundation provide design incentives, funding, & other grants

Scott Mueller of Eclareon;
-70% of productivity improvement comes from inhabitant comfort
-Germany is 10 years ahead of even California’s proposition 24

Please see the presentations from the German companies to learn more about them

In asking about Germany’s advantages in environmental policies, Bruce Bendix of eco2 consulting commented “1 of the major problems in the US is we have no national energy strategy or policy.  Other countries, & Germany is at the top of the list, have focused on particular energy alternatives & benefited greatly from them.”

My take is:  The Germans lead in green building technologies because they value it & devote resouces to it.  Ever since I attended the University of Michigan, I’ve been pretty environmentally aware.  After living in Germany for a couple of years, I learned it’s really ingrained in their culture to consider the environmental ramifications of everything they do.  Part of it is because they have to, since Germany is much more densely populated than here in the States.  Also their longer term view leads them to pay more attention to it.  Politically, part of their success stems from the approach that they eliminated the clout of the incumbant vested interests & allowed new smaller companies to compete on an even playing field with the big guys.  The result is far higher use of renewable energies than anywhere else on Earth.  We’d do well to emulate this model.  My feeling is we have only 1 Earth & we need to do more to take care of it.

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Investor Briefing on Southeast Asia’s New Expanded Special Economic Zone (Riau Islands & Indonesia)

Tuesday 11 November, 2008

I attended this breakfast briefing @ Baker & McKenzie’s offices the morning of Halloween.

The Indonesian ambassador to the US said:
-900 foreign companies are have located in these Special Economic Zones (SEZ’s)
-the US is their 2nd largest export destination
-the local stock market & currency have suffered commensurately with the recent financial crisis along with cutbacks in infrastructure investment.  In response, the government is increasing bank deposit insurance & lowering foreign currency reserves.

The President of the American Indonesian Chamber of Commerce commented:
-Indonesia is the largest least known democracy with 6% growth
-prominent exports are rubber, coffee, & spices
-these SEZ’s are inextricably linked with Singapore, (rather than Jakarta), with which they have a Free Trade Agreement
-it now takes only 4 days to establish a business
-McDermott is touted as a great example of an American company which has had great success on Batam Island

An attorney from Baker McKenzie informed us:
-although the license fee time has been reduced from 151 to 23 days, it still takes 90 days to set up a company, which is a 2-step process  1.  get license 1st 2.  then set up  There is a “negative” list which determines whether you can set up as a restricted or unrestricted business, & whether you can be 100% foreign-owned or need to take on a foreign partner
-the new investment law is still a work-in-progress
-the corporate tax has been reduced from 30% to 28% for 2009, & will go down to 25% in 2010
-big companies wanted 100% ownership to ensure intellectual property protection
-labor law is a big issue with the highest severance costs in SE Asia & a controversy with contract workers
-remaining issues are bureaucracy, corruption, & sanctity of contracts.

A representative of Karta International talked about the opportunities for his aviation services & logistics company, which acts as a nearshore outsourcing destination for the Singapore airport.

Richard Begosi, an investor in Indonesia for 35 years, spoke about his experience in finance in Indonesia with these suggestions:
-it’s an art & science doing business in Asia-be patient
-think long term, i.e. 10-15 years & ride waves up & down
-the right local partner with due diligence is mandatory-100% foreign-owned is naive, failures are due to bad planning & partner choices
-achieve trust
-speak softly
-bring in the lawyers last simply to document
-recognize nationalism can be a force for good & not is not necessarily an enemy
-patience & fear are ingredients for success

The governor of Batam Island’s province provided the most details:
-the island is #2 in tourism behind Bali
-there are 10 big American companies there, such as Perkin Elmer, Seagate, Bechtel, …
-the province received $10B in investment last year & has 350,000 workers with 4,000 ex-pats

Q&A:

-relations with India are good
-religion is no problem
-Batam changed 5 years ago with 22 industrial parks
-relations are closer with Singapore than Jakarta because the province was part of Singapore’s earlier sultanate, schools are run by Singaporeans, etc.
-multiethnic workers come from all over Indonesia to work in the province
-Indonesian banks are behind those of the Middle East
-20% of electronics exports go to the US
-personal income is $6000/year
-Karta develops skills locally & saves 30-40%  by working on Batam Island
-literacy level is 87-90%
-there are no restrictions on capital & foreign exchange

To access foreign investment laws & regulations go to the embassy of Indonesia

Click here for more information on these provinces (I couldn’t find a link to English)

I actually visited Batam Island a few years ago when I was in Singapore for a LISA localization conference. At that time, the ferry terminal was quite spartan, the roads were pretty rough, there didn’t seem to be a lot of businesses in the areas I saw.  I rented a scooter & motored around the island a little bit, but can’t say that I saw the whole island.  It appears as if it’s been quite built up since I was there.  It’s great that this area has done well the past 10-15 years, but that’s not exactly a long track record just yet.  Things look good there, but there still is a fair amount of risk associated with setting up in a place like this.  If you’re looking to expand in this part of the world, & this is where a lot of the growth is, there are a lot of advantages to being a short ride away from Singapore.

batam island, indonesia

batam island, indonesia