What is the effect of European regional economic instability on the North American Producers of Wood Pellet?
This has recently been raised as a legitimate concern by some of the North American producers. Without a doubt, when it comes to international trade, one of the main factors in sustained business relations is the regional economic stability of export markets.
Especially at the international level the impact of economic instability in one part of the world is beyond the control of the producer and exporter of a product. This added high risk is naturally a contributing element in withholding the initiation of the key business developments and withdrawing from engaging in contractual agreements.
Having said that, it is notable that international trade is not decreasing, but is in fact increasing. Why?
The logical answer lends itself to the following key business principles:
- The correlation between the specific market and the region
- The level of familiarity of the producers with the market and its key parameters
The correlation between the specific market and the region:
To perhaps explore this business principle further, for the Wood Pellet market, let's review two following key elements:
Demand: As it was explained in the January newsletter, the EU's Renewable Energy Directive and its 20-20-20 Targets go beyond one specific country. It maps the future of European energy infrastructure and introduces a new bio-energy landscape. The consequence is that this new infrastructural mandate has become the basis of the high demand for importing of Non-EU Wood Pellets and particularly from the North America:
End Users: The nature of the bio industry market in Europe is such that the bio-energy key end users are established beyond the regional boundaries. This cross-border business status not only has allowed these key players to deflect any market fluctuations and regional instability, but also has enabled them to continually maintain the high demand by offering flexible and long term contracts. Some of such key end users are from:
The level of familiarity of the producers with the market and its key parameters:
Undeniably, the common myth amongst North American producers is that establishing their local offices in Europe and frequent travel to the region is sufficient to establish key business contacts with the key end users and secure the long term contracts.
Although without a doubt, such activities will increase the exposure in the European marketplace; it will be at an enormous cost. Furthermore, in reality they will not replace the well established key executive level business contacts and interactions, which are the basis for attaining secured long term contracts at the best rates.
As one may appreciate, the other key factor of a successful business engagement is the in-depth familiarity with the industry at the local level. In other words, although knowledge of a North American producer may be sufficient for sustaining its local presence, it may be challenging to extend such expertise and applying it in another part of the world. Naturally, if the roles were to be reversed, the producers from Europe will face the same challenges in establishing roots in the North American market.
Being specific, the European market has about 8 key players, who represent and control more than 90% of the industrial Wood Pellet market and the demand. As end users they are very selective and if acted independently, the margin of error for a North American producer is much smaller than one may imagine.
Furthermore, unfamiliarity with the European market, culture and the language of the contracts has, in the past, resulted in the acceptance of certain wordings by the North American producers in the signed contracts, which had adverse financial effects, yet extremely difficult to alter afterwards.
This is where our key role becomes a vital factor in overcoming the geographical and cultural challenges, which North American producers of Wood Pellet are faced with in the European market. In specific, as senior executive level key players in both European Wood Pellet and North American markets, with utmost professionalism, we have been extremely successful in representing the North American producers in this overseas market and securing financially attractive long term contracts and financial support. Furthermore, we will continue our role in providing the qualified North American producers with pragmatic solutions and financial support, including raising funds through exclusive sources, and the offer of guaranteed flexible long term contracts.
On behalf of bio wood pellet, Canada, and its European business affiliates,
Rahmat Ushaksaraei, AInstIB, P.Eng., PMP
bio wood pellet
GeBTL, Global executive Business & Trade Links
accrete, The Business Excellence Realization
Founder & President
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