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Canadian Fiscal Policy – Issues and Options Canadian Defence Policy – Issues and Options Accountability of Canada’s Governing Institutions – Issues and Options University of Guelph-Humber Course: Ethics & Values in Business (BADM2050), Winter 2004 Semester

Week 3 : Finding the Norm in an Upside-Down World
Lecture Tuesday, January 20, 2004

Days of Reckoning, John Wood, editor (Breakout Educational Network - Dundurn Press, 2003) pp. 108-110

International Wallcoverings, Brampton, Ontario

COLIN BEASLEY

Between 1982 and 1988 the wallpaper industry in North America was tremendously successful and profitable. People made an awful lot of money, but the seeds of what happened in 1989 were sown in that period. Because people were putting out the same boring products year after year, they lost sight of the fact that it is a creative industry where design and colour are very important.

Inevitably the downturn happened, and by 1989 a lot of companies were closing or shutting down plants. People were being laid off. The industry was beginning to go through a complete restructuring and rationalization, and we were very concerned about the future. It was obviously not the environment in which to set up another wallpaper manufacturer. Not that we resented competition, but we were concerned about subsidized competition.

When we heard that St. Clair Paint and Paper had decided to open Cape Breton Wallcoverings and saw that the management team had been put in place and equipment was being bought, we certainly felt that it wouldn’t last – not unless the government was prepared to keep on subsidizing it.

What were the major difficulties for the new wallpaper company in a place like Cape Breton?

COLIN BEASLEY

The principal difficulty was getting the right creative skills and talent there. In this part of Ontario there are six established companies. There are also engraving companies here and book-binding companies. There are ink suppliers and designers. Why go to Cape Breton when St. Clair could have set the company up here, where we have 20 to 25 percent of the U.S. market, as well as a big share of the Canadian market?

What was the effect of this new enterprise on International Wallcoverings?

COLIN BEASLEY

It took away our business in two ways. First of all, because St. Clair had a captive manufacturer, it put more of that product in its stores and replaced some of our product and the products of other suppliers. That was the direct effect. And indirectly they contract-manufactured for a number of other people in the industry while we were also contracting manufacturing for these people. They were selling wallpaper for approximately 25 percent below our price and they were managing to do so for two reasons: because of the subsidies and because they were selling at a loss. We lost, directly or indirectly, $2 million to $3 million a year for three years and we laid off between 12 and 15 people.

The key point is that without subsidies, this plant would never have been set up.

What happened to the company?

COLIN BEASLEY

Cape Breton Wallcoverings went into receivership in 1991. Since then the industry has gone through a rationalization and restructuring. It awoke to the fact that it involves colour and design and creative activity. The products put out today are spectacular. So the market is growing again and we are very successful and highly profitable now.

Do you accept subsidies?

International Wallcoverings accepts training grants and we’re also going to receive a grant toward our new computer system. I’ll be quite honest with you: I feel I have a responsibility as a director of a public company to take advantage of whatever is there. But I wish the subsidies were not there.

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