Ward, Bedas Canadian Ltd. Initially sold Canadian lumber and salmon to overseas markets, most notably those in the Middle East. When the Iran-Iraq war broke out, the company found that its market largely disappeared in a very short period of time. After doing some amount of research, the company's founder settled on producing and exporting chopsticks from a plant in Minnesota. The company obtained favorable financing through the auspices of the state of Minnesota, the Iron Range Resources Rehabilitation Board, local government tax credits, and similar arrangements. By making his plant nearly completed automated, the company's owner was able to not only build enough capacity to dominate the chopstick market, but also to pre-sell that capacity for five years.
The problem facing Ward is that of long-term survival. While the company has been able to successfully enter and penetrate the chopstick market, it did so through keeping its costs low. To some degree, these low costs came about through the effective but limited use of one-time concessions. Enterprise zone credits, wage subsidies and tax increment financing cannot be counted on to last over the long-term, with the result that the company's costs may well increase considerably over time.
In addition, the company current dominates the chopstick market in large part because it automated its factory. However, it is unlikely to remain the sole factory that does so, particularly once it has demonstrated that chopsticks can be made through an automated process and still meet the rigorous demands of the market.
Ward could simply concentrate on selling chopsticks and not consider future options until the need arises, but its experience with the Iran-Iraq war and its subsequent scrambling for business demonstrates the danger of this strategy.
The company should continue to search out new product opportunities that build on its new expertise. Since the machines it is using...