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									                   INTRODUCTION

What is Black Eagle Consulting 2000 Inc.?
Primary Sources
   Manufacturers in the Canadian Hardware Housewares
   Industry
Main Secondary Sources
   Thomas Friedman, The World is Flat, A Brief History of the
   Twenty-First Century (New York: Farrar, Straus and
   Giroux, 2005)
   Clyde Prestowitz, Three Billion New Capitalists, The Great
   Shift of Wealth and Power to the East (New York: Basic
   Books, 2005, Paperback, 2006)
   The Globe and Mail
VISION 2020 – CORPORATE ORGANIZATIONAL STRUCTURE
    REQUIREMENTS IN A CHANGING INTERNATIONAL
                     ECONOMY

With ever increasing consolidation of industry retail and manufacturing firms
combined with the continuing migration of manufacturing to Pacific Rim
countries and services to India, the organizational structure of retail and
manufacturing companies in North America is continuing to evolve and change.
What will our industry organizational structures look like in the year 2020? And
how can companies remain competitive and vibrant in the rapidly shifting
structure of our industry?
Today we will review current and future world economic trends with examples of
companies who are already adopting radically different organizational structures
to adapt to the new reality of international trade.
Outline of presentation:
      Current economic trends relevant to Canada’s future.
      Economic status of selected countries
      Review of organization charts of Canadian companies (titles and locations
      have been removed to preserve anonymity) and a suggested future
      organizational chart.
      Recommendations
              BILATERAL TRADE 1990-2004
                       In billions of Canadian current dollars using Canada data*


$30
                                                                            $24.1
$25

$20
                                                                                                  CANADA
$15
                                                                                                  CHINA
$10                                                             $6.7

$5               $1.7         $1.4
$0
                       1990                                           2004
      *Canada’s measure of imports from China is much bigger than China’s measure of exports to
      Canada because Canada includes Chinese goods that pass through a third country such as
      United States or Hong Kong. China does not count those sales as exports to Canada




                          SOURCE: THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT & STATISTICS OF CANADA
       EXPORTS – CHINA/CANADA

        EXPORTS TO THE WORLD 1996-2004 in Canadian Dollars

               $144,346,450,701
1996                                        $275,819,202,123

                     $173,032,025,140
1997                                             $298,072,025,068

                      $177,498,598,770
1998                                                   $318,444,036,137

                        $188,658,699,415
1999                                                           $355,420,330,391

                                    $242,350,591,983
2000                                                                         $413,214,848,279

                                         $258,721,086,149
2001                                                                       $404,085,073,347

                                                       $317,833,281,128
2002                                                                      $396,378,007,416
                                                                                   $429,358,023,215
2003                                                                  $380,865,995,588
                                                                                                      $582,640,440,300
2004                                                                            $411,789,558,633


                                    CANADA             CHINA




           SOURCE: THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT & STATISTICS OF CANADA
                                  EXPORTS – CANADA/CHINA
        CHINA'S TOP 10 EXPORTS TO CANADA IN 2004                                                CANADA'S TOP 10 EXPORTS TO CHINA IN 2004
                           in Canadian Dollars                                                             in Canadian Dollars
                                                                                                                                                      $868,680,000
     TOYS, GAMES, SPORTING GOODS                                  $2,050,510,000    ORGANIC CHEMICALS INCLUDING VITAMINS,
                                                                                         ALKALOIDS AND ANTIBIOTICS

 FURNITURE , LAMPS AND ILLUMINATED
                                                              $1,633,438,000                                     CEREALS                              $766,568,000
   SIGNS, PREFABRICATED BUILDINGS


                  WOVEN CLOTHING                        $1,120,356,000              COMPUTERS AND MECHANICAL APPLIANCES                $321,025,000


                                                                                    FISH, CRUSTACEANS, MOLLUSCS AND OTHER
                        FOOTWEAR                    913,574,000.00                                                                   $295,173,000
                                                                                                 INVERTEBRATES


CROCHETED OR KNITTED CLOTHING AND                                                                             FERTILIZERS            $274,863,000
                                                   888,721,000.00
            APPAREL

                                                                                   ELECTRICAL OR ELECTRONIC MACHINERY AND
                    IRON AND STEEL               750,120,000.00                                                                     $252,219,000
                                                                                                  EQUIPMENT


                                                                                     NICKEL AND ARTICLES MADE FROM NICKEL           $232,150,000
                         PLASTICS                721,344,000.00


OPTICAL, MEDICAL AND PHOTGRAPHIC                                                                       ORES, SLAG AND ASH         $161,135,000
                                                 681,448,000.00
            EQUIPMENT

       COMPUTERS AND MECHANICAL                                                                   FATS AND OILS AND WAXES        $152,785,000
                                             $470,892,800
              APPLIANCES
                                                                                          WOOD PULP AND WASTE AND SCRAP
         ELECTRICAL OR ELECTRONIC                                                                                           $103,323,400
                                           $432,800,300                                            PAPERBOARD
         MACHINERY AND EQUIPMENT




                                                                                                                            SOURCE: STATISTICS CANADA
            CANADA/CHINA WAGES COMPARED

                      Average annual income in thousands of Canadian dollars



2004                                                                                  $35.3
             $2.3

2003                                                                                 $34.5
             $2.0

2002                                                                               $33.8
             $1.8

2001                                                                             $33.0
            $1.5

       $0       $5         $10        $15        $20        $25        $30        $35        $40

                                        CHINA        CANADA



                    SOURCE: THE ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT & STATISTICS CANADA
CUMULATIVE FOREIGN DIRECT INVESTMENT IN
            CHINA 1999-2004
                                                In billions of Canadian dollars


$35   $32.83   $32.40       $32.09

$30

                                      $23.55
$25                                               $22.91


$20


$15


$10                                                              $7.62         $7.03      $6.63
                                                                                                   $4.83
 $5                                                                                                         $3.56
                                                                                                                       $2.63
                                                                                                                                     $1.77

 $0
       U .S.    V IR GIN    JA PA N   SOU T H     T A IW A N   GER M A N Y   CAY M AN     U .K.   FRANCE   CANADA   A U ST R A LIA   IT A LY
               ISLA N D S             KOR EA                                 ISLA N D S




                                                                                                     SOURCE: EXPORT DEVELOPMENT CANADA
BIRTH RATE CHANGE AND POPULATION IN 2005
1.4%


1.2%


1.0%
                                                                                        CHINA
                                                                                        CANADA
0.8%


0.6%


0.4%
       2000     2001        2002          2003          2004           2005

         CHINA Population                            CANADA Population
            1.3 Billion                                 32.3 Million


                  SOURCE: UN POPULATION FUND & THE UN ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
                  CHINA EXPORTS TO G7 2004
                        In billions of Canadian dollars using China data



$180

       $161.764
$160


$140


$120

                    $95.200
$100


 $80


 $60


 $40
                                 $30.690
                                               $19.367
                                                              $12.858       $11.974
 $20
                                                                                        $10.573


  $0
          US        JAPAN        GERMANY         U.K.         FRANCE         ITALY      CANADA



                                                                        SOURCE: INTERNATIONAL TRADE CANADA
       CHINA IMPORTS FROM THE G7 2004
                     In billions of Canadian dollars using China data



$140


       $122.307
$120




$100




 $80



                  $58.050
 $60



                               $39.212
 $40




 $20
                                             $9.943        $9.550       $8.357       $6.174

  $0
        JAPAN       US         GERMANY        FRANCE       CANADA        ITALY        U.K.



                                                                    SOURCE: INTERNATIONAL TRADE CANADA
    POST SECONDARY EDUCATION 2003


             % of population 25-64



 CANADA                                                           44%

    U.S.                                               38%

    U.K.                              28%

GERMANY                        24%

 FRANCE                       23%




                             SOURCE: OECD, NATIONAL COUNCIL FOR WELFARE & STATISTICS CANADA
           HOUSEHOLD SAVINGS 2004

                     % of disposable income




 FRANCE                                                                11.8%

GERMANY                                                        10.5%

    U.K.                   4.4%

    U.S.      1.8%

 CANADA      1.4%




                                    SOURCE: OECD, NATIONAL COUNCIL FOR WELFARE & STATISTICS CANADA
              DEFICIT AND SURPLUS 2004


                      % of GDP




                                                CANADA                  0.68%

             -3.21%                                   U.K.

         -3.65%                                 FRANCE

         -3.68%                               GERMANY

-4.72%                                                U.S.

          -3.57%                     OECD AVERAGE




                                 SOURCE: OECD, NATIONAL COUNCIL FOR WELFARE & STATISTICS CANADA
        CHINA’S ECONOMIC TARGETS


Category               First half of                2006
                           2006                    Target
Real GDP                 10.9%                       8%
Investments in fixed     31.3%                      18%
assets
Money Supply             17.4%                      16%
Trade                     23%                       15%
Inflation                1.3%                less than 3%




                       SOURCE: NATIONAL BANK FINANICAL, XINHUS NEWS, SCOTIA BANK
                 2010 TRADE ZONES - POPULATION


                  3,100




                                                              431                                        460




  ASSOCIATION OF SOUTH EAST ASIA              NAFTA - Canada, United States, Mexico   European Union - Austria, Belgium, Cyprus,
 NATIONS - Japan, China, India, Australia,                                            Czech Republic, Denmark, Estonia, Finland,
South Korea, New Zealand, 10 member Asean                                             France, Germany, Greece, Hungary, Ireland,
 Group; Brunei, Cambodia, Indonesia, Laos,                                            Italy, Latvia, Lithuania, Luxembourg, Malta,
Malaysia, Myanmar, Singapore, Thailand, The                                           Poland, Portugal, Slovakia, Slovenia, Spain,
          Phillippines and Vietnam                                                       Sweden, Netherlands, United Kingdom

                                                  Current Population in Millions




                                                                                                           SOURCE: GLOBE AND MAIL 24/08/06
                               2010 TRADE ZONES - GDP

                                                             $12.90
                                                                                                            $11.70

                 $10.00




  ASSOCIATION OF SOUTH EAST ASIA              NAFTA - Canada, United States, Mexico      EUROPEAN UNION - Austria, Belgium, Cyprus,
 NATIONS - Japan, China, India, Australia,                                                 Czech Republic, Denmark, Estonia, Finland,
South Korea, New Zealand, 10 member Asean                                                  France, Germany, Greece, Hungary, Ireland,
 Group; Brunei, Cambodia, Indonesia, Laos,                                                 Italy, Latvia, Lithuania, Luxembourg, Malta,
Malaysia, Myanmar, Singapore, Thailand, The                                                Poland, Portugal, Slovakia, Slovenia, Spain,
          Phillippines and Vietnam                                                            Sweden, Netherlands, United Kingdom

                                              Current GDP in Trillions of U.S. Dollars




                                                                                                               SOURCE: GLOBE AND MAIL 24/08/06
                           NAFTA “AFTA”


China in 2003 replaced Mexico as the #2 exporter to the U.S.
“China beats out Canada as top exporter to U.S.”, The Globe and
Mail, September 5, 2005
      In July, Canada sold goods worth $20.6 billion south of the
      border, down from $24 billion in June. China, meanwhile, sold
      $21.3 billion in exports to the United States, up from $21 billion a
      month earlier.
Mexico’s foreign minister, Jorge Castaneda, 2004: “it’s very
difficult for us to compete with the Chinese, except with high
value-added industries. Where we should be competing, the
services area, we are hit by the Indians with their back offices
and call centers.”
Mexico’s corporate income tax of 34% is twice as high as
China’s.
                                        CHINA

Exports have climbed from $18 billion to nearly $600 billion and China
has a trade surplus that has enabled it to accumulate $650 billion of
foreign exchange reserves, second only to Japan’s $850 billion.
It is not consumption that gave China its miraculous growth but
investment, which reached 44% of GDP. World Bank, World Development
Indicators, 2004 . Nearly all of it goes into building new infrastructure and
manufacturing plants.
By the mid-1990s, Wal-Mart…had formed a kind of ultimate joint
venture with China. Peter Goodman and Philip P. Pan, “Chinese Workers Pay for Wal-
Mart’s low prices: Retailer squeezes its Asian suppliers to cut costs”, Washington Post,
February 8, 2004
      Wal-Mart estimates that it spent $15 billion on Chinese-made goods that
      are exported mostly to the U.S. with some going to Canada and Europe.
      If Wal-Mart were a country, it would rank ahead of Germany and Britain as
      an importer from China. Wal-Mart’s procurement in China accounts for
      over 10% of the bilateral trade deficit with the U.S.
                            INDIA

1947 – Nehru founded the Indian Institute of Technology with
seven campuses throughout the country and a world-class
engineering curriculum
From 1947 through 1990, India economy in disarray due to
declining business with Soviet countries and the Middle East.
Manoham Singh, India’s current prime minister came to the
rescue declaring that “for the foreseeable future the business of
India would be business”. India is to the world’s knowledge and
service supply chain what China and Taiwan are to the
manufacturing ones..
    GE’s biggest research centre outside the U.S. is in Bangladore
    with 1700 engineers, designers, and scientists.
    Renting a car from Avis online? Managed in Bangladore
    Tracing your lost luggage for Delta or British Airways?
    Bangladore
                                        INDIA

Total GDP is about $900 billion (U.S. GDP $11 trillion). GDP
expected to be $2 trillion by 2025.
By 2010 India may be the largest English-speaking country in
the world with more English speakers than the U.S.
Producing 3 million college graduates a year and that will climb
to 6 million in the next 5 years. That compares to 1.3 million in
the U.S. and 2.9 million in Europe, 2.4 million in China. The
European Union is India’s largest trading partner and investor,
as well as its major source of technology. Gurmeet Kanwal “Power
Politics: India’s Quest for Great Power Status, The Statesman, India, February 4, 2003
                           UNITED STATES

With just 5% of the world’s population, the U.S. accounts for
over 30% of its production and 40% of its consumption. At $11
trillion, America’s GDP is more than twice as big as the next
largest national economy, and its real per capita income is far
above that of any other country
Of the world’s largest 1,000 corporation, 423 are American, and
the New York and NASDAQ stock exchanges account for 44%
of the value of all stocks in the world, Business Week, July 26, 2004
The United States is home to the world’s finest universities and
the overwhelming majority of its leading research centers and
its spends more on research and development than the next 5
countries combined. Consolidating and Expanding our Bilateral and Regional
Relationships, Australian Government Department of Foreign Trade and Development
But….
                           UNITED STATES

The U.S. trade deficit is over $900 billion annually. Joseph E.Stiglitz
article in Globe and Mail, October 12, 2006
The only way out of the current trade deficit is a significant cut
in consumption.
The United States has swung from being a major creditor nation
to having the biggest debt – now nearly $3 trillion.
Manufacturing has declined from 23% of GDP in the 1980s to
12.7% in 2005.
U.S. spending on R&D has declined in critical areas
      ..there is a link between the factory floor and the research lab.
      Neither can survive without the other, i.e., the U.S. cannot lose its
      manufacturing base and still maintain its leading edge in design
      and R&D.
                           UNITED STATES


U.S. high-tech trade deficit is over $30 billion and climbing
powered by a high-tech deficit with China that has gone
from nothing in 1998 to $21 billion in 2003.
While the U.S may still have the best and most flexible
R&D, workforce, universities, rule of law, infrastructure,
and entrepreneurial business climate, along with the
world’s largest market, key elements of this “innovation
ecosystem” are eroding. We are not just competing
against foreign companies, but foreign countries .
President’s Council of Advisors on Science and Technology, Sustaining the Nation’s
Innovation Ecosystem, Information Technology, Manufacturing, and Competitiveness,
January 30, 2004
         UNITED STATES – EDUCATION
              THE QUIET CRISIS

Secondary education – American students now rank near
the bottom of all comparative international tests.
Intel’s director of Corporate Affairs: “Intel has to go where the IQ
is…We have just started a whole engineering function in
Russia, where engineers have wonderful training – and talk
about underemployed!”
Richard Rashid, Director of Research at Microsoft: “..we are not
getting enough students through our systems who want to be
computer scientists and engineers, and if we cut of the flow
from abroad, the confluence of those two will potentially put us
in a very difficult position ten or fifteen years from now”
                     UNITED STATES

Demographics are good:
    By 2050, today’s 293 million Americans will have increased to
    400 million and in the second half of the century, America will
    rapidly pass the EU in population. By 2050 the age of the median
    American will creep up to 40 compared with 43 for China, 48 for
    Europe and 53 for Japan. India will be 38.
However, despite the good demographics, U.S. net saving is
down drastically from 11% in 1960 to near zero today,
government budget deficits are over 4% of GDP and will rise to
over 8% in next 10-15 years. Federal spending on physical
plant, R&D, and education and training which averaged over
6% of GDP in the 1960s and 1970s is now well under 3% of
GDP.
                    UNITED STATES

Nobody is taking an interest in the health of the long term
economic structure of the country because America’s economic
ideology says it is wrong to do so…The U.S. government
proclaims its devotion to laissez faire and retains no mechanism
for considering industry structure issues.
If China is going to be the world’s major manufacturer while
India provides a lot of the services, and Asia and Europe lead
the way in many areas of high technology, with Latin America
supplying the world’s food as U.S. production declines, what will
happen to the U.S. trade deficit and the dollar?
                                   JAPAN

Today Japan enjoys a $45 billion trade surplus with China to go along
with its traditional surpluses with the U.S., Korea, and most other
countries. World Trade Organization, International Trade Statistics, 2004
Japan’s producers dominate the global markets for video camcorders,
digital cameras, DVD recorders, and 2.5 inch hard drives. They have
a monopoly on charge-coupled devices, the chips at the heart of
digital cameras. They have a stranglehold on plasma flat-panel
displays used for large TVs.
With half the population of the U.S., Japan annually graduates 2/3 as
many scientists and engineers, and its students rank near the top in
international math and science assessments. Dobbs, Global Test..
However, Japan has among the worst demographics in the world. Its
workforce is already contracting and its population declining. By 2050,
there will be 100 million Japanese compared to today’s 127 million,
and within 10 years China will pass it in size of GDP. National Institute of
Population and Social Security Research, Population Projections for Japan, 2001-
2050
                             EUROPEAN UNION

The European Union comprises 25 countries with a combined
population of 456 million and a GDP of $12.6 trillion, compared with
the U.S. population of 293 million and GDP of $11.5 trillion.
Of the largest 140 global companies, 61 are European while only 50
are American and 29 are Japanese. Jeremy Rifkin, The European Dream, New
York: Tarcher/Penguin 2004
This new Europe is diverse, tolerant, inclusive, as concerned with the
quality of life as with rate of growth. It emphasizes community
relationships and obligations, sustainable development, and global co-
operation through dialogue and negotiation. It’s about interdependence
rather than autonomy, about peace rather than war, about cooperation
rather than conflict.
Europe’s total population will peak around 2022 and by 2050 will have
contracted by 13% from its 2000 total. The current median age of 37.7
years will rise to 52.3 by 2050 and the working age will fall to 50% of
the total. Like Japan, this is going to be a really old and tired society
unless it gets massive immigration . Richard Bernstein, “An Aging Europe May
Find Itself on the Sidelines” New York Times, June 29, 2003
                           BRAZIL

In the last 7 years, exports have nearly tripled as a percentage
of GDP partly as a result of massive investment in everything
from soybean cultivation to steel and aircraft.
While coffee amounted to over ½ the exports 30 years ago,
today manufactured goods make up the majority of exports,
with coffee less than 2%.
Stable honest government, deregulation, privatization, better
corporate governance, currency devaluation, and better
international debt arrangements have put the Brazilian
economy on track to overtake Germany in GDP by 2035.
The European Union is Brazil’s largest economic partner.
                       OH CANADA!


Waterloo Region - Globe & Mail, April 25, 2006
    Last year Waterloo region lost 2300 manufacturing jobs.
    Soon, it will lose another 1100. From the Electrohome TV
    to the Blackberry, it has relied on a century of change and
    innovation to produce one of Canada’s strongest
    economies.
    It’s a knowledge capital with a thriving entrepreneurial
    culture. It’s our future. If Canada is to prosper beyond the
    current commodities boom, we must learn from Waterloo’s
    success, or risk becoming a global economic backwater.
                         CANADA

Waterloo Model
   The soaring dollar, surging commodity prices, globalization
   and crises at the two largest U.S. auto makers have
   exterminated more than 117,000 manufacturing jobs in
   Canada in just 12 months.
   Eight plants have shut or are doomed in Kitchener-
   Waterloo-Cambridge. Massive layoffs have walloped other
   large industrial employers. About 3400 jobs have
   evaporated.
   Kitchener-Waterloo, however, bounds ahead, leading the
   country in economic activity and demonstrating the get-on-
   with-it fortitude displayed by legions of entrepreneurs going
   back for more than a century. The jobless rate actually fell
   last month to 5.2%, among the lowest in the country.”
                        CANADA

Waterloo Model
• “What happens in Kitchener-Waterloo in knowledge
  creation and dissemination, and creation of high-value
  innovation is a metaphor for the 21st century Canadian
  economy.” David Johnston, President of the University of Waterloo.
• (Waterloo is) leaving behind shirts, boots and steel-
  belted radials and rolling into the new economy – world-
  leading Blackberry wireless communications devices at
  Research in Motion Ltd., solar panels at ATS
  Automation Tooling Systems Inc., digital imaging
  systems at DALSA Corp.
                             CANADA

Waterloo Model
• For the moment, RIM, ATS and DALSA are also
  manufacturing in Waterloo region and resisting the siren
  call of China where hourly wages are measured in
  pennies and India, where engineers are a dime a
  dozen.
• Companies are thriving because of co-operation
  between business, governments and educational
  institutions. Tom Jenkins, Chairman and Chief Strategy Officer, Open Text Corp.
• Kitchener-Waterloo operates on a consensus that
  growth need not run roughshod over environmental or
  community goals.
                         CANADA

University of Waterloo
    That’s another area where Waterloo led the country –
    pioneering the co-op program where students spend four-
    month terms working at companies. The co-op program is
    world renowned.
    The university was founded by entrepreneurs who feared a
    looming shortage of technical graduates. The University of
    Waterloo was born with an engineering, computer science,
    and mathematics focus..
    Another crucial decision by the university founders has
    helped incubate hundreds of spin-off companies – allowing
    researchers to retain intellectual property rights for
    anything they developed.
                              CANADA

“Dip in jobless rate masks Ontario woes” Globe and Mail, October 7, 2006
      The national unemployment rate dropped slightly to 6.4% in
      September as employers created 16,200 new jobs but the
      moderate upbeat numbers cover up a worrisome trend. The
      labour market in Ontario.. has deteriorated over the past year.
      Now the province’s unemployment rate is 6.6% - only the second
      time in 30 years that Ontario’s jobless rate has surpassed the
      national average.
      Ontario shed 34,000 full-time jobs last month. It’s the third month
      in a row with declines in Ontario. Part of the explanation for
      Ontario’s recent weakness lies in the province’s large
      manufacturing sector, which has been under mounting pressure
      for the past three years from rising energy costs, a strong dollar
      and intense global competition. 70,000 manufacturing jobs have
      disappeared the past year.
      Expect lackluster job creation, trouble in Ontario, and weak wage
      growth in the months ahead, economists said.
                                      OIL

With 5% of the world’s population, America accounts for over 25% of
global oil consumption of about 80 million barrels a day. In 1973,
imports accounted for about 1/3 of U.S. oil consumption. Today it is
54% and is forecast to hit 70% by 2025. Annual Energy Outlook 2005
Real crisis occurring about 2020 when OPEC and Middle East
(production) peak. After that, oil production will decline inexorably,
never to recover.
Still there are enormous reserves such as the Athabasca tar sands in
Alberta, Canada and the shale oil in the western U.S. Alberta is
producing about a million barrels of oil a day now and could double
that in ten years.
The world’s consumption of oil will climb from today’s 80 million barrels
a day to about 120 million by 2025, Energy Information Administration, Annual
Energy Outlook 2005: Forecasting Tables
                 WORLD FOOD SUPPLIES

Era of the U.S as the “world’s bread basket” is over. In 2005,
for the first time since 1959, the U.S. is projected to run a trade
deficit in agricultural products. “We can expect the U.S. to have
a more or less permanent agricultural trade deficit from now as
a result of fundamental shifts in world food consumption and
production” Alberto Jerardo, “The U.S. Ag Trade Balance: More Than Just a Number”
Amber Waves of Grain, February 2004
There has been a boon for traditional food producers like
Australia, Thailand, and Indonesia. And recently South America
has arrived on the scene as a new food producing heavyweight
– countries like Argentina, Brazil, Chile. Brazil has overtaken
the U.S. in exports of soybeans and meat.
                 THE END OF THE DOLLAR

George Soros, currency speculator and Warren Buffett, long-term
investor since 2002 have been moving funds into non-dollar assets.
Carol Loomis , “America’s Growing Trade Deficit”, Fortune, November 10, 2003
American consumers have been buying so much on their credit cards
and home equity lines that U.S. household debt is now at an all-time
high of 120% of household income. Alan Greenspan “The Mortgage Market and
Consumer Debt” remarks before the convention of America’s Community Bankers,
Washington, DC, October 19, 2004
Many foreigners are growing uneasy about the long-term value of the
$1.5 trillion American IOUs that continue to increase.
The Euro and Canadian $ gained over 35% against the U.S. dollar in a
two-year period
China is using its huge trade surpluses to buy oil rather than dollars
    ALTERNATIVES TO THE DOLLAR

Besides the Russians, others are also sneaking into euros, which
is why it has recently strengthened so much . Chris Giles and Sever
Johnson, “Dollar Down as Moscow Trails Case for Euros”. Financial Times,
November 24, 2004
In Asia, there is serious discussion of creating an Asian currency,
or Acu.. Rebecca Buckman and Jason Singer, “Euro for Asia Gains in Allure” Wall
Street Journal, October 3, 2003
The global economy is highly distorted. Americans consume too
much and save nothing, and the rest of the world, especially Asia,
consumes too little and saves too much. There are 3 ways out of
this situation
     1. Americans could consume less and save and invest more
     2. Asia and the rest of the world could cut savings and increase
     consumption
     3.Dollar falls in value with gradual decline of 30-50%
    ECONOMIC FUTURE - UNITED STATES

Conclusions by Clyde Prestowitz, author of Three Billion New Capitalists
    U.S. performance in a broad range if areas – saving, education, energy
    and water conversation, R&D investment, and workforce upskilling – is far
    below the standard for many other nations.
    Refusal to have a broad competitiveness strategy is, in fact, a policy. This
    policy leaves decisions to the “unseen hand” of the market.
    Solutions for the United States:
     1. Balance the federal budget
     2. Reduce energy consumption
     3. Encourage personal saving
     4. Introduce new consumption taxes
     5. Reduce defense spending
     6. Evaluate and re-structure education system.
     7. Develop a national “ecosystem of competitiveness” such as Silicon
         Valley (Waterloo in Canada)
     8. Develop bilateral international initiatives with NAFTA, Japan, the
         European Union, India, and China.
ECONOMIC FUTURE – EUROPE AND JAPAN

With high unemployment, aging populations, soaring social welfare
expenses, little venture capital activity, low of rates of adoption of
information technology, and rigid labor laws coupled with lower labor
mobility, Europe will have trouble adjusting to the new world of 3 billion
new capitalists.
Japan may even by in worse shape. Burdened by a moribund banking
and financial sector and mountains of bad debt, its economy over the
past decade has also been anemic. Its GDP growth per capita over the
past 13 years has been less than 1% annually, the lowest of all major
economies.
However, Europe and Japan may do better than the U.S. in the next
10-15 years. Japan has a trade surplus with China of $13.5 billion and
the EU has a trade deficit with China of $55 billion but good 2-way
trade.
Economic policy makers in Europe and Japan accept the legitimacy of
and the need for an economic strategy. They accept the notion that the
structure of the economy has a significant influence on its long-term
performance.
              ECONOMIC FUTURE – CHINA

By 2050, China will be the world’s largest market for virtually everything
as well as the biggest recipient of investment from, and the largest
investor in, most other countries. It will be a large international creditor,
and the yuan could become the world’s money, or at least one of its
major reserve currencies.
Success is coming at the cost of pollution, water shortages, and
disease:
     Rapid economic growth has cut forest cover in northern and
     central China by more than ½ since 1985, and the country’s
     deserts are growing by several hundred thousand square miles
     annually.
     By 2020, ½ million people will die prematurely every year from
     bronchitis and similar illnesses while many farmers in central
     China will have to abandon their land to rapidly advancing deserts.
     The water in 5 of China’s largest rivers is dangerous to touch.
     China is already the world’s second largest greenhouse gas
     emitter.. This is environmentally unsustainable for China and the
     rest of the world. Lester Brown and Chris Flavin, “China’s challenge to the U.S.
      and to the Earth”, World Watch, September – October 1996
               ECONOMIC FUTURE - INDIA

India will be to the world’s knowledge and service supply chain what
China and Taiwan are to the manufacturing ones.
In 2001, India had 1 billion people compared to China’s 1.3 billion. It
will pass China in population around 2035 and keep on going to at
least 1.6 billion people while China contracts. Two Systems, One Great
Rivalry, Economist, June 19, 2003
India’s water problems may be even worse than China’s. The loss of ½
of India’s forest cover has resulted in flooding, loss of water retention,
erosion of topsoil and further pollution of drinking water. Up to 70% of
people who contract serious illnesses in India do so as the result of
contact with polluted water. Ashish Khotari, et al.” Impact of Environmental
Degradation”, February 24, 2005
India’s air pollution is nearly as bad as China’s. Coal is the dominant
fuel and India is the world’s third largest producer after China and the
United States. The combination of coal and untreated industrial smoke
creates hazardous air pollution problems.
       NORTH AMERICAN PARENT – SUPPLIER TO WORLD

                                                                                         NORTH AMERICAN
                                                                                          CEO PRESIDENT




                                                                          FINANCE                                       LAW VP
                                                                          VP & CFO                                & GENERAL COUNSEL



                                                                                                                       BUSINESS UNIT          BUSINESS UNIT
                              ORGANIZATION &                         INDUSTRIAL BUSINESS UNIT
                                                                                                                 GENERAL MANAGER/PRESIDENT   GENERAL MANAGER
                            STRATEGY SENIOR VP                      GENERAL MANAGER/PRESIDENT
                                                                                                                       NORTH AMERICA             EUROPE


                                                                                                  SALES VP
Strategy and Acquisitions
                                                       SALES VP                                 U.S./CANADA
  Senior Vice President
                                                                                                Vice President



  HR & Administration                                SUPPLY CHAIN                        RETAIL OPERATIONS ASIA
    Vice President                                    SENIOR VP                            GENERAL MANAGER




 Quality and Processes                            SALES INTERNATIONAL
        Director                                       DIRECTOR




Sales & Systems Support                          PRODUCT DEVELOPMENT
         Director                                  & TECH SUPPORT VP




  Marketing & Internet                           INDUSTRIAL OPERATIONS
       Director                                           ASIA




Information Technology
       Director
              U.S. PARENT – SUPPLIER TO WORLD

                                                              PRESIDENT
                                                                 U.S.




                                                               GENERAL
                                                               MANAGER
                                                                CANADA




          FINANCE/                  PRODUCT 1                 PRODUCT 1      PRODUCT 2                 PRODUCT 2
         OPERATIONS                   SALES                   MARKETING        SALES                   MARKETING




                             NATIONAL       OUTSIDE                   NATIONAL       OUTSIDE
ACCOUNTING/                                            PRODUCT                                  PRODUCT
                  QUALITY    ACCOUNT         SALES                    ACCOUNT         SALES
  FINANCE                                             MANAGEMEN T                              MANAGEMEN T
                            MANAGEMEN T      REPS                    MANAGEMEN T      REPS




    IT          WAREHOUSE




 CUSTOMER
                  IMPORT
  SERVICE
          U.S. PARENT – SUPPLIER TO WORLD

                                   U.S.
                                PRESIDENT




                                                      U.S.
  U.S.       U.S.           U.S.          U.S.                    U.S.
                                                   CATEGORY
FINANCE    LOGISTICS   MANUFACTURING   MARKETING                SENIOR VP
                                                   MANAGMENT




                                                                PRESIDENT
                                                                 CANADA




                                                                               CATEGORY      HUMAN       CUSTOMER
                          FINANCE      LOGISTICS    PLANT      BRAND GROUP
                                                                             DEVELOPMENT   RESOURCES    MANAGEMEN T
                         DIRECTOR      DIRECTOR    MANAGER      DIRECTOR
                                                                               DIRECTOR     DIRECTOR        VP




                                                                                                 ACCOUNT       MERCHANDISERS/
                                                                                                MANAGEMEN T      FIELD SALES
   EUROPEAN PARENT – SUPPLIER TO WORLD

                                                                     CEO
                                                                   EUROPE




                                                              COMMERCIAL
                                                           MARKETING DIRECTOR
                                                                EUROPE




                                                                  PRESIDENT
                                                                   CANADA




                                    SUPPLY CHAIN                 REFURBISHING           FINANCE MANAGER/   MARKETING/
               VP OF SALES
                                      MANAGER                      MANAGER                 CONTROLLER       MANAGER




                                                   REFURBISHER
NATIONAL ACCOUNTS       SALES SUPERVISOR/
                                                    FULL-TIME               FINANCIAL ANALYST
     MANAGER              EDI MANAGER
                                                   & CONTRACT



    LOGISTICS &
     NATIONAL
 SERVICE MANAGER
     ASIAN PARENT – SUPPLIER TO NORTH AMERICA


                                              ASIAN PARENT




       U.S.                                                      CANADA                         NORTH AMERCIA
 VICE PRESIDENT/                                             VICE PRESIDENT/                    DIRECT IMPORT/
GENERAL MANAGER                                             GENERAL MANAGER                 CUSTOMER WAREHOUSES*




 NORTH AMERCIA                                                 ACCOUNT
                           ADMINISTRATION                                                          OPERATIONS
   MARKETING                                                  EXECUTIVES




                                         STORE SUPPORT
                                                                                 MARKETING
                                       CUSTOMER SERVICE
                                                                                  SUPPORT
                                        IN-STORE SERVICE




                   *All product shipped from Asian port is shipped directly to retail customer warehouses
EUROPE HOLDING COMPANY – SUPPLIER TO WORLD



                                   EUROPE
                            CEO HOLDING COMPANY

                                               WORLD
                                     PRESIDENT PRODUCT DIVISION

   NORTH AMERICA
        CEO

                                              CANADA
                                             PRESIDENT

                   HUMAN RESOURCE                                 LOGISTICS
                      DIRECTOR                                    DIRECTOR

                        SALES                                     MARKETING
                      DIRECTOR                                    DIRECTOR

                    ENGINEERING                                    FINANCE
                     DIRECTOR                                     DIRECTOR

                       PLANT
                        1,2,3
FUTURE ORGANIZATION CHART – SUPPLIER TO WORLD

                                  CEO PARENT COMPANY
                                        WORLD


                      ORGANIZATION &                    CORPORATE
                       STRATEGY VP                       SERVICES



                                     CEO PRODUCT
                                    DIVISION, WORLD


                         EUROPEAN                         ASIAN
                            CEO                            CEO

                                    NORTH AMERICA
                                        CEO
                                          PRESIDENT
                                           CANADA

   HR       SALES                         MARKETING                  LOGISTICS                FINANCE
DIRECTOR   DIRECTOR                       DIRECTOR                   DIRECTOR                DIRECTOR

                      ACCOUNT EXECUTIVE                  PRODUCT                  WAREHOUSE
                       SALES PERSONNEL                  MANAGEMENT               REPLENISHMENT

                                     IN-STORE SERVICE
                                        OUTSOURCED                                     IT


                      CUSTOMER SERVICE                                           MANUFACTURING
                        OUTSOURCED                                                OUTSOURCED
RECOMMENDATIONS – FOR CANADA
Develop a Formal Industrial Strategy for Canada including
these key factors:
 1. Protect key resource, high-tech, and agricultural businesses from
    foreign takeover
 2. Foster trade relationships, co-operation and dialogue with China,
    Japan, other Asian countries, India and the European Union.
 3. Support and assist Canadian companies locating in China, India, and
    other growth economies.
 4. Take advantage of Canada’s natural strengths in agriculture, water
    preservation, pollution controls to assist other countries
 5. Strengthen immigration policy to insure availability of skilled workers
    and professionals and to maintain population growth
 6. Upgrade the educational system to insure global competitiveness
 7. Support high-tech infrastructure, e.g. Waterloo example
 8. Give priority to environmental issues in regards to air and water
    pollution both for health and business opportunity reasons
 9. Promote the strengths of our land – vast open areas of land, water,
    and forest, natural resources, highly educated population, high
    technology competence.
 10.Continue the “Canadian” way of being an open, tolerant, peaceful, and
    multi-ethnic society.
 RECOMMENDATIONS - FOR CANADIAN
          COMPANIES
1.   Establish an organizational structure that will meet the challenges of the
     changing international economy.
2.   Give priority to R&D, new product development, and innovation
3.   Seek partnerships with governments, universities, and other businesses
     for new product and process development
4.   Balance growth objectives with environmental and community goals
5.   Consider or augment investments in China, India– provides entrée to their
     billion+ consumers.
6.   Lobby Federal Government for development of an Industrial Strategy for
     Canada including government, business, and university participants.
7.   Consider the Waterloo region’s lessons for Canada:
       • Be entrepreneurial
       •    Innovate - develop deep pool of technical expertise and innovation
       • Network – build networks of visionary business, government, and
            university leaders
       • Build on strengths – recognize your company and industry’s
            strengths and build on them
       • Diversify – old products die, new products thrive
       • Attract smart people – hire the brightest and best
And for further information:


    www.blackeagle.ca



    Black Eagle Consulting 2000 Inc.
    Richard Simms, President
    Oakville, Ontario
    Tel: 905.842.3010
    Fax: 905.842.9586
    Email: rsimms@blackeagle.ca

								
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