A chill in the air

On January 13, in our first issue of 1992, we reported that three major consumer products marketers were starting the year by realigning their international reporting structures, forming North American business units.Henceforth, Levis Strauss Canada, Kellogg Canada and Nestle Enterprises would...

On January 13, in our first issue of 1992, we reported that three major consumer products marketers were starting the year by realigning their international reporting structures, forming North American business units.

Henceforth, Levis Strauss Canada, Kellogg Canada and Nestle Enterprises would report to the same office as their u.s. counterparts, rather than to a separate international office as was previously the case. The shifts were significant.

As long as a Canadian subsidiary reported to its parent company’s international management, it could maintain the fiction that the Canadian market was distinct from the u.s. market next door. But once the two were placed side by side, the obvious similarities (the Quebec market aside) were bound to emerge.

In the months that followed, numerous additional companies, including Coca-Cola, Warner-Lambert and Northern Telecom, to name just a few, announced similar restructuring.

Fast forward to the end of the year.

In our final issue of 1992, we report in a page one story that Kimberly-Clark of Canada, one of the country’s largest consumer products manufacturers with brands such as Huggies, Kleenex and Kotex, is closing its consumer marketing department. Effective January 1, authority for brand marketing and the associated marketing jobs will be transferred to Kimberly-Clark’s marketing office in Neenah, Wisc. Trade marketing and sales will remain in Canada.

Given the rash of multinational businesses that took tentative steps towards a North American marketing approach earlier in the year, Kimberly-Clark’s bold move should come as no surprise.

Nor should anyone be startled if 1993 brings similar moves by a host of other multinational consumer products manufacturers.

In the words of an executive search professional who regularly speaks frankly with marketers from a wide range of firms, ’1993 is going to be like nothing you ever saw.’

He predicts, based on what he has heard, many more companies will send their marketing departments south over the next 12 months, and after that they will step up their Canadian plant closings, a process already begun by companies such as Colgate-Palmolive, Tambrands and Bic, again to name just a few.

Even if the recession were to give way unexpectedly to robust economic times, Canadian subsidiaries would still face enormous pressure to cut costs. After all, the international business environment is becoming increasingly competitive. The North American free trade agreement looms darkly on the horizon like a gathering storm cloud. And free trade continues to batter relentlessly at our country’s manufacturing base.

Of course, all is not gloom and doom. Scores of Canadian companies have proven it is possible to thrive in the borderless business world of the 1990s. Still, in relinquishing its authority over the Canadian market, Kimberly-Clark has sent a chill up the collective spine of the Canadian marketing community.

And Canadian consumer goods marketers, and the communications service companies that depend on them for their livelihood, would do themselves a severe disservice if they did not enter 1993 heads up and fully prepared to roll with the punches.