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Canadian firms drawn stateside Job numbers are small, hopes are growing The Niagara County Industrial Development Agency reaches across the border

Niagara County's proximity to Canada hasn't been a booming source of economic development in the past, but the Niagara County Industrial Development Agency is working hard to change that.

The IDA launched a concerted strategy to recruit Canadian businesses last fall, and so far this year, five companies have been approved for financial assistance from the agency to start new U.S. locations in western Niagara County.

Canadian companies have dealt with the agency before, but never has the IDA so actively pursued them.

"We try to get up to Canada at least once a month, sometimes more," said Susan C. Langdon, the IDA's marketing and project manager. "It's hard work, it's a lot of rejection, but you have to do it."

IDA Executive Director Samuel M. Ferraro said Langdon sets the table for the visits. "She makes the calls, sends out the letters," he said.

Then it's up to IDA Assistant Director Larry D. Witul and County Assistant Business Development Commissioner Michael A. Casale to knock on the doors.

The New York Power Authority, which finances the Niagara Economic Development Fund, kicked in $200,000 for two years of the Canadian marketing effort. The IDA has put in $100,000 from its revolving loan fund.

In the past 11 months, the IDA's salespeople have visited 104 Ontario businesses, from as close as Niagara Falls and St. Catharines to as far afield as Oshawa and Ajax.

"We would characterize 14 as potential [IDA] projects," Casale said. Of those, six are working with the agency for possible applications for assistance in the next few months.

"Those are 14 companies who never would have heard of Niagara County if we hadn't knocked on their doors," said Legislator Lee Simonson, R-Lewiston, chairman of the County Legislature's Economic Development Committee.

Casale and Witul will pack their bags again next month for a two-day trip to Toronto for the Canadian Manufacturers Technology Show on the Canadian National Exhibition grounds.

They will conduct a seminar and workshop at the event on investing in Niagara County for Canadians. "It's a little bit of an experiment for us," Witul said.

"As far as I know, we're the only ones there [from Western New York]," Casale said.

They hope to establish contact with as many as 40 companies.
"The fact is, we've always been working with Canadian companies because of our proximity to the border, but now we're taking a more aggressive approach," Langdon said.

The marketing effort included a billboard on the southbound side of I-190, not far from the Lewiston-Queenston Bridge.

The billboard, which was up from March through May, cost $2,800 a month and generated 2,803 visits to a special Web site, mentioned only on the sign, that touted Niagara County and the IDA as helpful to ambitious Canadian businesses.

The IDA also bought some Canadian mailing lists, targeted by postal codes and types of companies, for a direct mail campaign.

Although the IDA sent out other literature earlier this year, Langdon said the agency is seeking a grant from Niagara Mohawk Power Corp. to pay for a coordinated three-part mailbox attack on companies in the Toronto area.

The first part will be a solicitation letter with a reply card, asking companies to respond if they want to expand into the United States. The next two phases will be follow-up postcards highlighting attractive aspects of the area for Canadian companies.

Simonson has long called for business recruitment from Canada. "I think that's our best bet," he said. "You're not going to get people from Ohio to move here."

> Setting up shop

But right across the Niagara River is the economic heart of Canada, spread across the Golden Horseshoe up to Toronto. And successful companies in southern Ontario that want to dip their toes into the American pool are increasingly setting up shop in Niagara County.

"We need a larger presence to establish ourselves in the U.S. market," said David Swan, vice president for finance of Kushies Baby, a Stoney Creek, Ont., company that makes washable diapers and baby clothing. "We're quite established in Canada. We're trying to get established in the U.S."

Kushies has a warehouse in a strip plaza in the Village of Lewiston, but it's too small and lacks proper shipping facilities, like a loading dock.

After failing to find an existing building near the border that met its needs, Kushies turned to the IDA, which earlier this year approved a 15-year property tax break on Kushies' new 42,000-square-foot U.S. warehouse, now under construction.

The site is in Witmer Industrial Estates, off Witmer Road in the Town of Niagara, a few hundred feet from the Witmer Road exit off I-190. The purchase of a 9-acre lot and construction of the warehouse will cost an estimated $1.76 million.

Not far away is another Canadian project -- the U.S. distribution center of KNP Headwear, a Toronto cap company.

Its U.S. subsidiary, New Path International Holdings, has agreed to a long-term lease on the 38,400-square-foot building constructed by Cherokee Niagara as part of the cap on toxic waste at the former Forest Glen mobile home park off Hyde Park Boulevard.

It's not much of a place to live, but KNP sees it as a good place to store and ship caps into the American market.

The $1.66 million project on Roundtree Drive received a 15-year tax break.

Also in the same general neighborhood, Wheels Automotive Dealer Supplies has set up its American headquarters on Maryland Avenue in Niagara Falls, in a warehouse building owned by Frank Amendola.

The IDA's subsidiary, the Niagara County Development Corp., gave the company a $50,000 loan in May.

Richard E. Ashworth, the company's president, said Wheels Automotive "wanted to establish a relationship with the NCIDA, to show them we're good guys, we repay loans, in case we need them in the future."

Ashworth said he thinks the $250,000 project to set up shop in the 3,200-square-foot warehouse will be just the start of an American success story for his company. He signed a three-year lease with Amendola but is already looking beyond that.

"I certainly think there's lots of room to grow. We have 20 employees on the Canadian side, and it's a much smaller market," Ashworth said.

The Stoney Creek company is "dominant" in its Canadian niche, selling promotional tools like flags, pennants, signs and license plate frames to car dealerships.

But in the United States there are more than 100,000 auto dealerships -- more than 14 times as many as in Canada.

The company started by sending out 25,000 copies of its 96-page catalog, Ashworth said.

"I think we're hitting 75 percent of projections," he said. He remains optimistic; he has two employees in Niagara Falls now but thinks he will have as many as 30 by 2010.

"We're pretty confident. We have a lot of unique products," he said.

Ashworth said the Niagara Falls site is only 35 minutes by car from Stoney Creek, and that's why he chose Niagara Falls over Buffalo.
The Buffalo Niagara Enterprise also has an interest. It is trying to lure Canadian businesses to the Buffalo area.

Jerry Murphy, executive vice president, said BNE spends 31 percent of its advertising budget in Canada and did 14 projects with Canadian firms in the past year. Three of those were attributed directly to the advertising, he said.

> Lack of space

A drawback of Niagara Falls for warehousing and distribution is that there aren't many suitable facilities.

"There's a real lack of property, good warehouse space," Ashworth said. "There's a lot of old, decrepit factories."

The IDA is the landlord for another Canadian business, Saksco Gourmet Basket Supplies. In March, the company, based in Mississauga, Ont., signed a one-year, $22,500 lease in the IDA's headquarters building off Lockport Road.

Saksco, which supplies materials for gift baskets, gave up a location on Kenmore Avenue in Buffalo to move to Niagara County.

Lily Marin, the company's U.S. manager, said the Buffalo location was merely an office, but the Wheatfield site is a warehouse and distribution center. "Right now we have a fully functioning business here," Marin said.

The shortage of good commercial space in the Niagara Falls area frustrated Saksco, too. Marin said the company hoped to find about 10,000 square feet near the border, but no such building exists unless, like Kushies, you build it yourself.

The company has met expectations for its U.S. entry, Marin said, and it's looking forward to the holidays, when gift basket companies do 90 percent of their business. "We have three full-time employees and several temps," she said.

At any rate, being able to ship from a U.S. office is preferable to the cumbersome arrangement on Kenmore Avenue, in which baskets were hauled from Mississauga to a Federal Express depot in Buffalo so it would look like they originated in the United States.

Marin said Saksco signed with the IDA for two years and hopes to outgrow its space by then. She said if it does, the company would turn to the IDA for help in finding something bigger.

The agency has 120 acres left in the former Inducon Industrial Park, which it owns, so that's one possibility for new construction.
Two other companies with Canadian roots have been before the IDA this year.

MotoRad of America, a subsidiary of Transcedar Industries of Scarborough, Ont., received a 15-year tax break for an $815,000 expansion of its auto parts plant on Walmore Road in Wheatfield.

That plant was built with IDA aid in 1995. The company application says MotoRad intends to add 20 new jobs within two years.

Aquasol Corp. applied for help in manufacturing products for the oil drilling and refinery business at the former Roblin Steel site on Oliver Street in North Tonawanda. The company is based in the U.S. and has an office in Amherst and a plant in the City of Tonawanda, but its owner is a Canadian.

The project is still pending as the company tries to work out a purchase of the Roblin site from the City of North Tonawanda, Langdon said.

So far, the number of jobs produced by the IDA's Canadian efforts is small. Kushies employs two in Lewiston and predicts eight jobs in the Town of Niagara by 2008; KNP has six now and predicts 13 by 2008; Saksco employs three; Wheels has two workers in Niagara Falls now; MotoRad employs 11 workers and predicts it will have 31 by 2007.

But the Canadian companies are among the 21 projects the IDA board has acted on this year, the largest number since at least 1990.

"You can tell this program is paying dividends for Niagara County," Ferraro said. "It's old- fashioned salesmanship."

e-mail: tprohaska@buffnews.com

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