Gordon Knowlton (left) and Josh Warren of Platinum Builders in Glenwood work on a set of cabinets for a customer. Platinum Builders was one of the four businesses that signed on with the Central Newfoundland Manufacturing Co-operative this summer. Photo
For small businesses in Newfoundland and Labrador, operating costs can be an extremely big burden and can prohibit these businesses from growing to their full potential.
Bigger businesses, on the other hand, enjoy lower prices on certain services, allowing them the ability to invest in ventures that can be beneficial in many ways.
This is precisely why four manufacturing companies in central Newfoundland decided that co-operation would be a wise economic decision.
Earlier this summer, New Wood Manufacturers of Centreville, Superior Waterproof Coatings of Gander, Blanchards Cabinet Doors of Bishops Falls and Platinum Builders, formerly Geanges Manufacturing, of Glenwood announced the official formation of the Central Newfoundland Manufacturing Co-operative.
It is one of six co-operatives formed in the province since 2005.
The co-operative was almost a year in the making, the idea making its first appearance last fall. Shane Noble, owner of New-Wood Manufacturing and chairman of the co-op told The Beacon the initial three companies New-Wood Manufacturing, Blanchards Cabinet Doors, and Platinum Builders met at a conference held by Innovation Trade and Rural Development, a branch of the provincial government. The workshop was on lean manufacturing, which is a form of business practice that allows companies to be more productive.
The three agreed hiring a consultant to help their companies practise lean manufacturing would be very beneficial, but too costly for the individual companies.
Its a costly venture, and for a company with less than 20 employees, its probably not cost-effective to bring in a consultant, said Noble. As a group sharing the cost, though, it makes a lot more sense.
Derek Marsh, owner of Superior Waterproof Coatings and co-operative co-chairman, said he was throwing around the possibility of a co-op for years. When Alex Pelley, innovation trade consultant for central Newfoundland and Labrador, told him about the developments at the workshop, he was happy to join.
The representatives for the four companies met several times throughout the year, and decided, after seeing the success of other regional manufacturing co-ops in the province, forming a co-operative would be a logical decision.
Apart from sharing the costs of the lean manufacturing venture, there are scores of other benefits of being in a co-op.
Distanced from main ports, central Newfoundland has to deal with higher shipping costs than other places on the island. When small businesses are forced to pay for half, or even quarter shipping loads to bring supplies in or ship product out, it can get extremely expensive.
If youre bringing a third of a load down from Toronto, youre running around $5-6,000, but to bring a full load down its only $8,000, said Marsh. So, if weve got an order coming in from Toronto and were only taking up a third of a load, we can contact the other members of the co-op and see if they want to fill up the rest. Its big savings when you get together and do stuff like that.
The co-op members can also get cheaper rates on insurance than they would alone.
There are also many training courses that deal with safety, for example, that decrease the business owners liability if they are provided to employees, but they run a big bill for one business. When a trainer is hired for three or four companies, the shared cost is a lot cheaper.
Trade missions are a big part of it, too, said Marsh.
Trade missions can be beneficial to the business as advertising, but the price can run up to $10,000 per mission.
We can send down one business rep at a shared cost, and they would be representing four clients.
Once the companies have cut costs in other areas by sharing expenses, they can each have more money for marketing, which will give them an opportunity to grow. This is also a plus for the consumer.
The benefits will go to the customers eventually, as we grow in numbers and cut costs we should be able to achieve better prices, said Noble.
Apart from allowing companies to share many expenses, there are more advantages to being in a co-operative.
Sharing experiences from each individual is a big thing, said Marsh.
Noble said the co-op will also give the members strength in numbers.
The more companies we have involved the more strength we have and the more voice we have when it comes to government funding and opportunities abroad, said Noble.
Marsh said the co-operative hopes to extend its membership base to include more manufacturing companies in central Newfoundland and Labrador. It hopes to reach 25 members for maximum advantages and solid lobbying power.
Marsh said he doesnt think getting other businesses to join the co-op will be much of an obstacle.
I think theyll come to the door, he said. Once other businesses see what were doing and what we can achieve as a co-op, word will get out and itll come together.