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DEPARTMENTS

9 PUBLISHER’S NOTE

10 BUSINESS MONITORPoor Value for Municipal Service; SkillsInternational website; Canada’s Poker Store; Quarterly Report

39 WATERCOOLER

FEATURES

13 NEVER GIVE UP; NEVER GO AWAYBY PAUL KNOWLESThe CFIB is a megaphone for small business.

21 EDUCATION FOR THEREAL WORLDBY JON ROHROur educational system is gearing to preparereal students for real-world job opportunities.

46 MAKING A DIFFERENCEBY BRIAN HUNSBERGERTaking the Road Less TravelledEducator and entrepreneur Larry Smith has a broad range of interests he pursues with passion. He thinks you should too!

COLUMNS

28 MANUFACTURING METHODS / BY DOUG CATERCompeting with Off-Shore Suppliers

29 PUBLIC MARKETSBY JIM KOPPERSONWhat’s Old is New Again

31 GOOD GOVERNANCEBY JOHN T. DINNERRight Information, Right Hands

33 GROWING THE DISTANCEBY JIM CLEMMERStop Working and Start Living

34 WEALTH MANAGEMENTBY DANIEL GIRARDIn Income We Trust

36 ON ASSIGNMENT / BY PAUL KNOWLESExquisite Service

SERVING BUSINESS IN WATERLOO REGION AND GUELPH

P.O. Box 41030, Waterloo ON N2K 3K0 • Tel: (519) 886-2831 • Fax: (519) 886-6409email: editor@exchangemagazine.com

ExchangeCONTENTS

Volume 21, Number 8 SEPTEMBER 2004

On the cover: Larry Smith, educator and entrepreneur

Catherine Swift, President andCEO of CFIB.

Publisher/Editor: Jon Rohr

Associate Editor: Paul Knowles

Feature Writers: Brian Hunsberger,Paul Knowles, Jon Rohr

Advertising Sales: Brian LyonTMR (519) 886-1946

Creative Director: Diane Johnson

Art Direction: Laurie Martin

Circulation/Office Administration: Leanne Rohr

EXCHANGE magazine is a regional business publication pub-lished by Exchange Business Communication Inc. President,Jon Rohr. Eight issues per year are distributed to each companyin Kitchener, Waterloo, Cambridge, Guelph, and Fergus asdetermined by Canada Post Business Postal Walks.Subscriptions are available for $29.90. Send cheque or moneyorder to Exchange, P.O. Box 41030, Waterloo, ON N2K 3K0.Attn: Circulation Department. Back issues are available for $8per copy. Phone: (519) 886-9953. Fax: (519) 886-6409. ISSN0824-457X Copyright, 2004. No part of this magazine may bereproduced without written permission from the publisher.

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SEPTEMBER 2004 l exchangemagazine.com l 9

A Drive for RelevancyBY JON ROHR

It’s a chicken-and-egg problem – but in this case, it‘s whichcomes first, the need or the funding? Organizations thatbase their enterprise model on receiving large sums of

seed funding from various sources will inevitably face thedaunting task of arguing their relevance when their sourcesdry up.

Perceived demand drives seed funding projects – but whichkind of demand? The obvious answerwould be, “market demand,” the demon-strable need for the organization’s prod-uct or service. But often, seed funding isdriven by top-down perceived demand –then organizations craft their requests forfunding to meet the criteria of the fund-ing source, which are not the same crite-ria of those of the marketplace.

In the latter case, relevancy may besacrificed. Funding often comes withstrings attached; funding organizations take control, andagenda transfer occurs. Collaboration takes place, compro-mises are made, money is transferred, programs are estab-lished – but they may meet the needs only of the funder, notof the marketplace. Control remains in the hands of the fun-der, whether it is business, government or venture capitalist.

It is important that those providing seed funding allow thefunded organization to maintain its relevancy in the market-place. And, ideally, the pursuit of relevancy should begetinnovation. There is no guarantee, but true innovators arealways willing to make the effort, to take the risk. They riseabove challenges and even failures, and will eventuallyachieve their goal of relevancy.

Waterloo and Wellington have a number of local institu-tions that exhibit true characteristics of innovation. Organiza-

tions that introduce projects relevant to the times are golden.With the drive to relevancy and innovation, wealth, and,

subsequently, equity, prosperity is realized. But it comes inmany forms – intellectual prosperity, financial prosperity,social prosperity, etc. It results when investment is made insmart projects that originate from the minds of smart peoplewho work in smart organizations.

Where do these smart people comefrom?

In this issue we profile people andorganizations that pursue relevance withevery fibre of their being. You’ll meetLarry Smith, economist and president ofEssential Economics, crusader against"cookie cutter" manifestos, and championof adaptation. And Catherine Swift, CEOof the Canadian Federation of Indepen-dent Business, fearless champion of small

and mid-sized business across Canada, Ontario, this area and"pain in the butt" to politicians and bureaucrats at all levels ofGovernment. These two go against the grain, encouragingindependence, challenging systems and influencing or arrest-ing projects gone awry.

Education for the Real World provides an insight into thechanging elementary/secondary school system in WaterlooRegion. Program innovation currently set to launch this Sep-tember is welcome news to businesses looking for good entrylevel employees, prepared to workand contribute in a meaningful wayto companies and society.

PUBLISHER’S NOTE

JON ROHR IS

EDITOR AND PUBLISHER

OF EXCHANGE

MAGAZINE FOR

BUSINESSe-mail: editor@exchangemagazine.com

Quarterly report• Surging consumer demand and a revival in labour markets will drive the U.S.

economy to 4.4% growth this year. China’s booming economy is expected toexpand by 8.6% in 2004 and 7.7% in 2005.

• The Chinese government has adopted measures to put a brake on the runawayeconomic growth, such as forcing banks to increase their reserve requirements.

• Europe’s economy will expand by only 1.6% in 2004, mainly because of a slug-gish rebound in Germany, the region’s largest economy.

• Exporter confidence remained strong during the first half of 2004.

• The majority of Canadian businesses (64%) continue to view the value of theCanadian dollar as pivotal to their success in foreign markets, yet almost one-thirdindicated that they were “riding out” or doing nothing in response to its current level.

• 80% of Canadian exporters continue to identify the U.S. as their export market ofchoice. For the first time, exporters view the Asian market on par with theEuropean Union (15%) as a preferred destination for their exports after the U.S.

• Roger Martin released Working Paper 5 from the Institute for Competitiveness &Prosperity, mid July. Titled “Strengthening structures: Upgrading specialized supportand competitive pressure,” the paper shows “that Ontario’s market structures pro-vide inadequate specialized support and competitive pressure to firms and individu-

10 l exchangemagazine.com l SEPTEMBER 2004

BUSINESS MONITOR

Poor value for municipal service

Independent business people in Waterloo and Wellington are not veryhappy about their municipal governments. At least, that’s the finding

of a survey on “Effectiveness of Local Governments in Waterloo-Wellington,” conducted by the Canadian Federation of IndependentBusiness (see feature story, page 13).

In 2003, CFIB members asked their opinions about property tax lev-els, value-for-money of public services, control of government wagelevels, fairness of bylaws and regulations, and overall awareness of thesmall business sector, gave generally poor grades to local government.

The aggregate scores on all five questions for the 15 local munici-palities show the following results:

On the question of reasonable property tax levels, the businessowners are clearly not happy. Only 3% of Kitchener respondents saidtax levels were good, compared to 2% in Waterloo, 6% in Cambridge,8% in the townships of Waterloo Region, 3% in Guelph; and 5% inWellington County. In contrast, responses rating property tax levels aspoor ranged from 32% in rural Waterloo Region to 51% in Guelph.Kitchener came in at 44% “poor”, Waterloo at 46%, Cambridge at 43%.

On “Value-for-money for public services,” positive response wassomewhat higher, from a low of 6% rating Guelph as “Good” to 17% inKitchener. In Guelph, 50% answered “poor”, with ratings ranging to31% in Kitchener.

Asked about “control of government wage levels”, positiveresponse was back down to the low single digits – between 2% and 5%across the board. Many indicated they did not know, but 55% inKitchener rated local municipal performance as “poor”, 48% in water-loo, 39% in Cambridge, and 32% in Guelph. (In a related release, theCFIB says that public sector wages are significantly higher than wagesfor equivalent private-sector jobs. The CFIB says that in the year 2000,with wages and benefits combined as “total compensation,” federalemployees earned 23.3% more than someone doing the same or equiv-alent job in the private sector; provincial employees earned 14.8%more; and local employees earned 14.2% more. When non-wage ben-efits are excluded, federal employees earn 15.1% more; provincial,9.1% more; and local, 11.4% more than their private sector equivalent.)

Asked about “fairness of by-laws and regulations,” only 2% ofGuelph business owners rated local performance as “Good”. Thatranged up to 14% in Waterloo. In Guelph, 46% said “Poor”; Waterloowas at the other end of the scale, with 26% voting “Poor”.

Municipalities generally failed on the question of “overall aware-ness of small business sector,” with a majority saying “Poor” inKitchener (56%); Waterloo (55%), Waterloo townships (53%); Guelph(51%) and Wellington County (53%). Only Cambridge was slightlykinder, with 17% saying “Good”, and 40%, “Poor”.

For more CFIB survey results, go to www.cfib.ca.

MUNICIPALITY GOOD FAIR POOR RESPONSES

Kitchener 10% 39% 52% 494Waterloo 10% 40% 50% 318Cambridge 11% 42% 47% 165Woolwich 16% 47% 36% 155Wilmot 15% 43% 43% 56Wellesley 5% 53% 43% 43North Dumfries 9% 48% 42% 33Guelph 5% 39% 56% 311Centre Wellington 10% 38% 52% 109Wellington North 7% 45% 48% 54Guelph/Eramosa 7% 32% 61% 50Erin 8% 34% 58% 43Minto 18% 47% 35% 41Mapleton 8% 60% 32% 39Puslinch 4% 37% 60% 30

MUNICIPALITY MUNICIPAL TAX PROVINCIAL TAX

Cambridge Residential $2,450 $746Commercial $4,851 $4,991Industrial $6,444 $6,704

Guelph Residential $2,180 $746Commercial $4,012 $4,512Industrial $5,735 $6,631

Kitchener Residential $2,543 $746Commercial $5,035 $4,991Industrial $6,687 $6,704

Waterloo Residential $2,314 $746Commercial $4,582 $4,991Industrial $6,086 $6,704

Toronto Residential $1,462 $746Commercial $5,323 $5,305Industrial $7,428 $6,856

Property tax gap continues

The Canadian Federation of Independent Business (see featurestory, page 13) represents 105,000 small or independent business-

es across the country. According to CFIB Ontario Vice-President,Judith Andrew, one of the main issues consistently raised by mem-bers is the disproportionate amount of property taxation leviedagainst business – both commercial and industrial.

The CFIB, which is noted for its credible research, has prepared areport on Municipal Taxation Practices in 66 Ontario municipalities, com-paring “tax distortions” – the disproportionate amount paid by businesson properties compared to residential properties of equivalent value.

The following 2002 figures show the amount a $200,000 propertywould be assessed in local urban centres, according to property class:

The CFIB has been calling on municipalities to lesson this “taxdistortion.” Their figures show that, in a comparison of 2000 and2002, all four cities actually lowered the gap between industrialproperties and the other two categories, while they remained static.Kitchener, Cambridge and Waterloo commercial properties contin-ue to pay 2.2 times the amount of property tax compared to residen-tial, while industrial taxes dropped from 3.2 times to 2.6 times theresidential rate. Guelph saw an industrial drop from 3.3 times to 2.6.

SEPTEMBER 2004 l exchangemagazine.com l 11

BUSINESS MONITOR

Neil McVicar likes his poker night – he and six or seven friendshave a long traditional of sitting down to ante up. And these

guys take their poker seriously – one of his buddies recently won$167,000 in a tournament in Las Vegas; another picked up$110,000 in an one-line tournament earlier this year.

Playing serious poker means playing with serious poker gear – Neilnoticed that half of his friends had bought expensive poker chip sets,which come in specially made, lined cases. They were also in the mar-ket for poker tables, software, and other accessories.

McVicar decided he wanted to stock up on some of these items,himself, so he went on the internet to find a Canadian supplier.Detailed web searches came up empty; “I couldn’t find one singleplace on line.” And from this, McVicar’s business was born.

He launched “Canada’s Poker Store,” an internet business(www.pokersupplies.com) in 2002. He sells all the accessories men-tioned above, and his core product is “a set of 500 poker chips in analuminum case,” which retails on-line for about $300. He says todate, he has sold between 500 and 600 of these items.

His business success has left him in an odd start-up situation;while he still holds a day job, he has hired an employee to handlethe e-mail orders generated by the Canada’s Poker Store website.

The start-up has been a learning experience: initial success inmarketing to the U.S. led to delivery and customs nightmares. Alined aluminum case proved irresistible to customs inspectors; morethan half of the product shipped to American customers eitherarrived damaged – usually with the lining cut open for inspection – or never arrived at all. So McVicar has limited sales to Canada,but is now branching out into wholesale. He presently has five wholesale clients, in Waterloo, Toronto and Ottawa.

McVicar says the current exposure poker is receiving on television is boosting the game – and spin-off businesses like his own.“Poker has been on TV a lot; that has a lot to do with the growth.”

He’s betting it will continue. - PK

HE’S BETTING

ON HIS INTERNET

BUSINESS

Its proponents are calling it “the firstwebsite of its kind.” That’s a big state-

ment, supporting an even bigger agenda –to “link employers and internationallyeducated professionals across Ontario.”The provincially run site will involvemore than 51 agencies that work withimmigrants across the province to “pro-vide employment preparation programsand post resumés of qualified applicantsready to work in a field related to theireducation and experience to ease theirexisting shortages.”

This project is a collaboration betweenWIL Employment Connections inLondon, Ont, The Waterloo RegionDistrict School Board and COSTI-IISAImmigrant Services in Toronto, who haveworked together to design, create, imple-ment and promote the websitewww.skillsinternational.ca.

Marlene Kramer, of the New CanadianProgram, initiated the idea; she’s verypleased the program has gone this far.“The idea was drop dead simple,” she says.She contacted Nancy Campbell of theWaterloo District School Board, and thetwo wrote the request for seed moneywhich was provided in January 2002.

Kramer admits that additional fundingfrom the business sector did not instantlypour in. “The timing was bad” she adds,noting the funding struggles not-for-prof-it Non Government Organizations face.

The eventual goal, five years out, is to“expand outside of Ontario and provide

this service to businesses in the rest ofCanada ... but currently, we’ll focus onOntario.”

“We need to launch Skills Internationalwith business, so business sees why this isgoing to be beneficial to them,” saysCampbell. “I think when business startsseeing the skill shortage, and businesessstart discovering that they can’t find ‘X ’engineers, all of a sudden we can pointthem to 100 foreign trained, professionalengineers, on this website.”

Even though this a Ontario-wide initia-tive, many local companies, calledinvestors, are recognized as foundingmembers. Kramer, a key driver along withCampbell, gives this group a lot of credit:Strite Industries, Christie Digital SystemsCanada, Walter Fedy Partnership, MTEConsultants, RevSolutions, Ignite Software,The Waterloo Education Foundation andthe Waterloo Wellington TrainingAdjustment Board. Dofasco is a Hamiltonbased founding member. Early on, saysKramer, Ric Asselstine instilled in her themind-set “get in, get out and get on withthe day”.

Skills International is dedicated to con-necting internationally educated profes-sionals (IEPs) who are job ready and resid-ing in Ontario, to employers. “All had theireducation recognized, in comparable toOntario terms,” adds Campbell.

The Ontario Trillium Foundation isfunding the site with a grant of $441,400over 30 months.

Hidden Brain Gain

Neil McVicar, Canada’s Poker Store

als.” The Institute concludes Ontario provides anadequate level of general support in infrastructureand basic education – to the economy. However,Ontario’s clusters and the overall economy are notbenefiting from specialized support, such as univer-sity/industry collaboration and specialized researchand training. the kind of specialization that createsworld-class advantage for companies and workers.The Task Force will publish results in its Third AnnualReport to the people of Ontario this fall.

• Real gross domestic product (GDP) growth inCanada’s economy will be solid in each of the nexttwo years, but will fail to keep up with the soaringU.S. economy, according to The Conference Boardof Canada’s Canadian Outlook-Summer 2004.“The Canadian outlook is bright, but it immediate-ly loses lustre with one over-the-fence glance atthe U.S. economy,” said Peter Hall, Director ofEconomic Forecasting.

• Delayed visas for foreign business travelers andworkers have cost corporate America $30.7 billionin lost revenue and other costs in the past twoyears. In a recent survey of 734 corporations, pub-lished by the American Council of InternationalPersonnel (ACIP), three-quarters of the companiessurveyed had experienced unexpected delays orarbitrary denials of business or work visa applica-tions, while 60% said delays had hurt their com-panies through increased costs or lost sales. Morethan half the companies surveyed said the visaprocess was worse today than a year ago, thatthere aren’t enough scientific and technicallysavvy job candidates in the United States and thatcorporations are being penalized by being forcedto hire less qualified individuals.

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