- Executive Summary
- Company Summary
- Market Analysis
- Competitor Analysis
- Our Strategy
- Key Management
- Financial Forecasts
Turbo Charger Ltd. will be a turbocharger and turbocharger parts manufacturer and exporter, supplying high-quality, durable products to turbocharger and auto part wholesalers in Canada and around the world.
It is a wholly owned subsidiary of Manufacturer 1 Corp., a turbocharger export and distribution company based in China, and it will have the leadership and direction of CEO Jack Xi to support the start-up of the business here in Canada.
The turbocharger manufacturing market is seeing positive growth. As environmental regulations on vehicle emissions continue to increase, turbochargers are required in a greater number of vehicles to improve efficiency. Turbo Charger Ltd. is well positioned to take advantage of this growth with an established parent company in China, and a significant number of existing Canadian clients. Last year alone Manufacturer 1 Corp. exported almost $100,000 of turbochargers to Canada from China. With this growing demand, that will only increase with proximity to major turbocharger markets in the United States, we are confident we can grow our successful export business to even greater heights by becoming a Canadian manufacturer.
To accomplish this, Mr. Xi will arrive in Vancouver to establish an office, hire three Canadian employees, and begin growing our domestic and international clientele through building our online presence, digital marketing, attending conferences and exhibitions, and through direct-to-client sales. Although both competition and concentration in this industry are high, we have a history of setting ourselves apart through providing superior quality products with an international presence.
We plan to invest an initial $1.3 million in start-up costs, and an additional $13 million over the next five years to grow the business and launch our factory, including hiring fifteen additional Canadian employees to support turbocharger production. Although we expect a slow initial growth in sales due to the economic slowdown caused by COVID-19, pre-pandemic market forecasts anticipate both industry growth, and growth to the overall industry profit margin which was at 8.3% in 2019. With our existing turbocharger export infrastructure, our proximity to major US markets, and our established client base in Canada, we anticipate breaking even within three years and contributing $250,000 in federal and provincial income taxes in our fifth year.
In the short term, we will continue to export and distribute turbochargers to our growing client base to generate immediate revenue, which to this point has resulted in a healthy 51% profit margin for Manufacturer 1 Corp. in Beijing. We already have a local partner and client prepared to collaborate on a Canadian production facility with us, and we are confident that the growing demand for turbochargers around the world and our exhaustive expertise in this field will ensure its success, generating jobs for Canadians and greater government revenue.
- Company number: BC1573843
- Turbo Charger Ltd. will manufacture and export high-quality turbochargers and turbocharger parts for industrial and commercial engines. Our turbochargers will be manufactured here in Canada and distributed domestically and internationally, primarily to wholesale auto parts distributors.
- Turbo Charger Ltd. is a wholly owned subsidiary of Beijing Manufacturer 1 Corp. based in China, who export turbochargers and turbocharger parts to clients in over 40 countries.
- Turbo Charger Ltd. will be led by Jack Xi, Manufacturer 1 Corp. ’s CEO, who will be coming to Canada to establish an office, hire and train Canadian employees, open a factory, and establish a new client base. As CEO, he has extensive experience in turbocharger exportation and e-commerce, which he will use to expand Turbo Charger Ltd.’s presence internationally.
What Are Turbochargers
Turbochargers are forced induction devices that are used to improve an engine’s efficiency by forcing extra air into the combustion chamber. They allow smaller engines to generate more power, improving efficiency by up to 20% and reducing a vehicle’s carbon footprint.
ABOUT BEIJING MANUFACTURER 1 CORP.
- Company number (China): 8754875775
- Ownership: Jack Xi, CEO (20%), and Welyun Zhi (80%)
- Manufacturer 1 Corp. is a privately owned turbocharger and turbocharger parts exporter for industrial and commercial vehicles such as CAT, Perkins, Cummins, Komatsu, Toyota and Deutz. With clients in over 40 countries, Manufacturer 1 Corp. has expanded its inventory to export 20,000 turbochargers and parts ranging from $90-$400.
- Last year Manufacturer 1 Corp. earned over $1.2 million in revenue, employing 10 staff while maintaining a sizable profit margin of 51%.
- Manufacturer 1 Corp. exported $100,000 to its Canadian clients last year alone. We plan to expand our presence in Canada by opening Turbo Charger Ltd. to both manufacture and distribute Canadian-made turbochargers world-wide.
ABOUT JACK XI
- In order to establish a business in Canada, Turbo Charger Ltd. requires a senior executive to represent the company in establishing an office, liaising with clients, and building processes and procedures for management to run smoothly in his absence. A senior executive is also required to hire the right people.
- Mr. Xi currently serves as Manufacturer 1 Corp. ’s CEO, overseeing 10 employees across their head office and warehouse, and he will oversee Turbo Charger Ltd. as well. As CEO, Mr. Xi has extensive experience in turbocharger export, and he has developed strong relationships with our Canadian clients. Over the twelve years that he has worked as CEO, he has successfully built our e-commerce platform into our main revenue source, resulting in access to global markets and large company growth. Our website has even gotten praise from Google.
- Mr. Xi is in the best position to represent our company in growing our Canadian clientele, opening our factory, and training employees.
- MOTOR VEHICLE GASOLINE ENGINE & ENGINE PARTS MANUFACTURING INDUSTRY (NAICS CODE 33631)
According to Statistics Canada, this industry “comprises establishments primarily engaged in manufacturing and rebuilding motor vehicle gasoline engines and engine parts, whether or not for vehicular use.” These engines would not be found in a typical electric vehicle, but they are found in hybrid vehicles.
- Their primary suppliers are equipment suppliers, and materials producers and manufacturers such as iron, steel, and aluminum.
- While whole engine manufacturing accounts for most of this industry’s revenue, manufacturing of individual engine parts also accounts for 14%, or $824 million.
- In 2019 the industry employed about 10,000 Canadians accounting for $532 million in annual taxable income.
- Key external drivers:
- Demand from transport and equipment manufacturing
- Consumer confidence index
- New vehicle sales
- World price of crude oil
- Canadian effective exchange rate
- Key trend: According to IBISWorld, the efficiency of engine plants is largely dictated by proximity to final assembly plants. Being situated near North American wholesale and manufacturing clients is integral to Turbo Charger Ltd.’s success.
- The US accounts for almost 95% of Canadian auto engine and parts exports
- The US accounts for almost 95% of Canadian auto engine and parts exports
- The turbocharger manufacturing industry produces turbochargers for gasoline engines in recreational, commercial, and industrial vehicles.
- Globally, the industry is estimated to be worth between $14.5 billion and $21 billion. Canada represents $15.8 million of that market, and the US, Turbo Charger Ltd.’s main export market, represents $2.5 billion. Over the last five years, the industry has grown at an annualized rate of 1.3% and is expected to further grow by 2% annually through to 2024.
Key Success Factors:
- Environmental compliance: Manufacturers experience a range of regulations regarding the generation and disposal of hazardous wastes. Failure to meet compliance can increase operating costs.
- Effective quality control: The ability to control quality and minimize faulty products reaching the market will help increase brand loyalty through perceived reliability.
- Automation: Like most manufacturing activities, the ability to automate processes reduces wage costs and increases efficiencies, thereby improving profit margins.
- Proximity to key markets: Successful manufacturers locate close to raw material deposits and the main sources of demand.
- Auto parts wholesaling
- Vehicle Manufacturers
- Auto parts stores
- Direct consumers
- Although the industry is currently in a growth phase, it is also characterized by high competition and rapid technological change as auto and engine makers continuously work to improve the fuel efficiency of their vehicles without sacrificing power.
- Demand for turbochargers is largely determined by both the demand for automobiles and the rise in fuel-efficiency regulation.
- As environmental regulations increase and automakers look for ways to reduce vehicle weight, engine manufacturers are being asked to produce more efficient, light weight engines. Turbochargers support engine efficiency by increasing air output in the combustion chamber, making them a key component in meeting new regulatory requirements.
- These regulations are also expected to increase the number of vehicles using turbochargers: half of all light vehicles are expected to have turbochargers in the next five years.
Turbocharger manufacturing is likely to see minimal effect from the increase in popularity of electric vehicles, which typically do not utilize turbocharger technology right now. Innovation is spurring the onset of electric engine turbochargers which will allow manufacturers to capture that growing market. In the meantime, most demand for turbochargers is rooted in industrial and heavy commercial vehicles, such as large-haul trucks, construction equipment, or aircraft engines. This market mix will ease the industry’s transition as electric engines for industrial use are still in early stages compared to that of recreational vehicles.
Pre-COVID-19 predictions forecasted engine and engine parts industry revenue to decline slightly through to 2024 as more manufacturing moves abroad. Now, however, COVID-19 has resulted in a dramatic reduction in car sales, the world price of crude oil has declined, and the consumer confidence index has plummeted from 120.6 pre-COVID, to a current 79.7.
- Where there are downturns there are opportunities. Canada has seen a stark increase in business closures over the last three months, with almost 3,200 manufacturing businesses in Canada closing in April alone, representing a 175% increase in closures over last year. Though the circumstances are unfortunate, with manufacturing supply decreasing, Turbo Charger Ltd. has an opportunity to enter the market with fewer competitors than before, and with enough savings to weather the economic crisis.
- Although the number of Canadian customers in wholesaling has also contracted by almost 2,700 businesses, this decrease represents a smaller percent change than that of the manufacturing sector, indicating there will be less supply to meet the remaining wholesale demand. Turbo Charger Ltd. is in an advantageous position to create much needed Canadian jobs and gain market share in an otherwise competitive market.
- Turbocharger manufacturers typically compete on price, quality, reliability, delivery, customer service, performance, applied technology, product innovation and product recognition.
- Operators see both internal and external competition:
- Internally, they are competing with an increasingly competitive marketplace with new, smaller entrants and larger, more dominant players such as BorgWarner, Cummins and IHI Corp.
- External competitors include downstream engine and auto manufacturers or their subsidiary plants who will often manufacture turbochargers for their vehicles in-house. As engines become more complex, however, it is possible that these large auto manufacturers will increase outsourcing to limit costs.
- As a globalized industry, turbocharger manufacturing competes on a global scale, with imports to North America increasingly coming from Mexico, Japan, and elsewhere.
- Overall, competition in the industry is relatively high. Although this trend is expected to increase as new entrants appear to meet the demand for more fuel-efficient vehicles, profit margins are also expected to remain relatively high, as most of the industry is dominated by just a few players, allowing for greater control of the market prices for turbochargers.
BorgWarner: Automotive industry components and parts manufacturer based in the US. They have offices in Waterloo, though they export turbochargers worldwide.
Cummins: Cummins designs, manufactures, distributes, and services engines and engine parts. Although they are also based in the US, they have retail and service centre locations across Canada, and retail partners in almost every country.
IHI Corp: IHI is a heavy-industry manufacturer in four main areas: Resource, Energy and Environment; Social Infrastructure and Offshore Facilities; Industrial Systems and General-purpose Machinery; and Aero Engine, Space and Defense. They are based in Japan with offices in Vancouver and Toronto.
- Turbo Charger Ltd. will manufacture and export high-quality engine turbochargers and turbocharger parts for industrial and commercial engines. Our turbochargers will be manufactured here in Canada and distributed domestically and internationally, primarily to wholesale auto parts distributors.
- Over the first five years, we will focus on building a client base, exporting and distributing our turbocharger inventory, building the Turbo Charger Ltd. team, and launching our factory. Our team will include in-house accounting, marketing, human resources, quality control, production, and warehouse staff.
- After our first three years, we plan to partner with our client Turbo MS Canada to open our factory, which will give them more reliable access to turbochargers and parts while giving Turbo Charger Ltd. a guaranteed initial revenue source while we build a client base for our own manufactured turbochargers. Most products will follow specifications for particular engine models, but we will also provide custom orders for specialized markets, such as turbocharger maintenance services.
- Although we anticipate most sales to be done online, our Canadian office will be available to host clients, sample products, and finalize contracts in-person once COVID-19 restrictions allow it.
Manufacturer 1 Corp. plans to invest $1.3 million for start-up costs. We also have sufficient budget set aside to finance additional unexpected costs we may incur on top of this initial investment. Over Turbo Charger Ltd.’s first five years, we plan to invest a total of $13 million to support admin costs, purchasing a factory and equipment, inventory, an additional 15 Canadian staff, and other expenses required to reach full operational capacity.
International Online Presence: Turbo Charger Ltd.’s emphasis on a seamless, user-friendly online sales experience sets us apart from other international exporters. Under the leadership of Manufacturer 1 Corp. ’s CEO, who has significant experience growing e-commerce businesses and has received praise from Google for his work, we will work towards continuous improvement, regularly updating our site to make turbocharger purchasing and importing as easy as possible for our clients.
Quality: Turbo Charger Ltd. believes that the most important value-driver for our clients is quality, from manufacturing to the final delivery of their products. Under the direction of Manufacturer 1 Corp. , Turbo Charger Ltd. will apply the same high standards for quality to its own processes to ensure every turbocharger produced and delivered will meet or exceed our clients’ expectations. We will accomplish this by following a Six Sigma approach to quality control and process improvement, which asserts that:
- Continuous efforts to achieve stable and predictable process results (i.e. reduce process variation) are of vital importance to business success;
- Manufacturing and business processes have characteristics that can be measured, analyzed, improved and controlled; and
- Achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management.
Name Recognition: As the subsidiary of an established brand in turbocharger exporting and distributing, Turbo Charger Ltd. is in an advantageous position to utilize Manufacturer 1 Corp. ’s existing Canadian clients and worldwide sales record to build its own reputation as a reliable, local brand. We will consistently meet clients’ needs by continuously monitoring trends in automaking to ensure we are keeping adequate inventories of the latest and most popular turbochargers.
Turbocharger Wholesalers (90%)
- The Auto Parts Wholesaling industry in Canada is primarily engaged in wholesaling new and rebuilt automotive parts and accessories.
- Wholesalers and distributors account for 90% of Manufacturer 1 Corp. ’s revenue, and we expect the same to be true for Turbo Charger Ltd. as well.
- Auto parts wholesaling is a $17.5 billion industry in Canada, and a $266 billion industry in the US.
End Users (10%)
- End users account for 10% of Manufacturer 1 Corp. ’s business, and that is expected to be the same for Turbo Charger Ltd. as well.
- With reduced economic activity and reduced consumer driving due to COVID-19, it is expected that this market segment will take longer to build momentum again as engines are requiring less repairs and maintenance. However, as heavy industry resumes with appropriate COVID-19 protocols in place, end-user demand will likely increase again.
- In Canada, most engine and engine parts manufacturers are located in Ontario to be close to the auto manufacturing hubs in the Northeastern US. However, American auto parts and turbocharger wholesalers, Turbo Charger Ltd.’s target export market, are mostly located in California, with the Western US accounting for 20% of all industry establishments.
- With lower Canadian competition and closer proximity to major US wholesaling markets, British Columbia is the ideal location for Turbo Charger Ltd.’s head office and manufacturing facilities.
Website and Digital Marketing
Website: We will repeat our successful web strategy with Manufacturer 1 Corp. ’s site for Turbo Charger Ltd. as well. Our extensive experience in e-commerce and our ability to build clientele digitally puts us in an excellent position to redirect North American clients to Turbo Charger Ltd.’s website.
Digital Media: We will use targeted ads on Google and LinkedIn to attract wholesalers, auto manufacturers, operators, and end users to the website. In addition to purchasing pay-per-click ad space, we will also utilize search engine optimization to ensure Turbo Charger Ltd. is among the top search results for turbocharger manufacturers and exporters in North America.
Manufacturer 1 Corp. has attended international trade shows, allowing us the opportunity to meet our existing clients in person and establish a new client base. Although COVID-19 precautions limit our abilities to attend trade shows in the near future, we will monitor event pages for digital conference offerings and begin attending events in person once the crisis subsides.
Relevant trade shows include:
Messe Frankfurt Exhibitions: https://www.hk.messefrankfurt.com/hongkong/en.html
– For auto parts and machinery
The BAUMA Exhibition: https://www.bauma.de/en/
– For construction equipment
Direct Client Sales
Turbo Charger Ltd. plans to initially hire two sales professionals to contact wholesalers directly and build our client base. One representative will focus on domestic sales, and the other will focus on international sales.
CHIEF EXECUTIVE OFFICER (NOC 0016): JACK XI
Since founding Manufacturer 1 Corp. Mr. Xi has been responsible for substantially growing the company to becoming a turbocharger exporter to over 40 countries. During that time, he has taken additional courses in business administration, e-commerce, AutoCAD, LEAN production, and metal cutting. Prior to beginning with Manufacturer 1 Corp. , he gained essential business and leadership experience working for GE in China.
Beijing Manufacturer 1 Corp: CEO, 2008-Present
– Responsible for overseeing the strategic, financial, and operational management of the company, ensuring regulatory compliance while generating value.
GE Hangwei Medical Systems: E-Business Project Manager, 2000-2005
– Responsible for implementing LEAN production through digitizing operations to achieve improved efficiency and reductions in costs.
– Created an e-commerce platform to increase company profitability.
GE Hangwei Medical Systems: System Commissioning Engineer, 1995-2000
– Responsible for system commissioning of CT scanners and ensuring they meet quality standards.
Responsibilities will include:
- Establish a standardized internal management system, operations management process, and risk management procedure
- Develop corporate strategies, plans, policies, etc., and making dynamic adjustments according to company development and market conditions.
- Inspect, supervise and coordinate the work progress of various departments, and make decisions on major issues.
- Recruit, onboard, train, and complete performance evaluations for employees.
- According to the annual business objectives issued by the board of directors, prepare and revise the annual business plan and key performance indicators.
- Oversee each cooperative company and agent, determine any capital risks, and provide necessary services.
- Oversee procurement management, and participate in the bidding and negotiation of major contracts.
- Establish good governance, financial controls, media relations, and partnerships.
- Ensure compliance with provincial and federal legislative and regulatory requirements
Year 1 Timeline:
Month 1 Establish Turbo Charger Ltd. Office
Create corporate structure for tracking finances, payroll, and other required reporting
Month 2 Hire, Onboard and Train Employees
Month 3 Develop corporate policies and procedures for operations
Month 5 Develop Turbo Charger Ltd. website and online store
Month 6 Develop detailed marketing implementation plan and promotional campaign
Month 7 Begin attending sales calls and networking events to promote Turbo Charger Ltd. Brand
Month 8-12 Continue training employees and building client base
ADMINISTRATIVE ASSISTANT (NOC 2011)
We will hire one administrative professional to support the operational and administrative functions of the business.
Responsibilities will involve supporting the CEO in day-to-day operations. Basic duties will include:
– Taking meeting minutes
– Drafting written materials as requested
– Responding to client or public inquiries, and directing questions to the appropriate employees
– Purchasing of office equipment and supplies
– Act as a translator in meetings and communications, when required
– Additional tasks to support business functions, as required
SALES AND ACCOUNT REPRESENTATIVES (NOC 6411)
Salary: $3,950-$5,900/month, depending on sales results
We will hire two sales representatives: one to manage international sales, and one to manage domestic sales. Their primary purpose is to contact potential customers, fill orders for turbochargers, and negotiate and sign contracts.
International Sales Representative
Responsible for the negotiation, document review, order management, transportation, customs declaration, and foreign exchange collection of international orders. Initial duties will include:
– Evaluating, tracking, and managing risk control of international orders.
– Implement foreign trade process management and risk control.
– Oversee the production and supply of orders received, tracking goods for commodity inspection and customs declaration, and timely handling problems in each link.
– Organize customer information, providing timely feedback and processing of customer requirements.
– Address any issues or emergencies during the execution of the contract.
– Support the training and guidance of junior salespersons.
Domestic Sales Representative
Responsible for the negotiation, document review, order management, transportation, and payment collection for domestic orders. Initial duties will include:
– Evaluating, tracking, and managing risk control of domestic orders.
– Implement process management and risk control.
– Oversee the production and supply of orders received, tracking goods in transport and delivery, and timely handling problems in each link.
– Organize customer information, providing timely feedback and processing of customer requirements.
– Address any issues or emergencies during the execution of the contract.
– Support the training and guidance of junior salespersons.
Over time, with experience and proof of competence, sales employees can take on additional responsibilities, including greater control of contract negotiation and employee oversight. Additional duties might include:
– Providing quotes
– Negotiating, executing and signing major contracts
– Selecting vendors for freight, shipping and insurance
– Invoicing clients
– Overseeing junior staff members, including coordinating workloads and schedules, hiring and training staff, and suggesting rewards or dismissals to management when required.
YEAR 1 ORGANIZATIONAL CHART
YEAR 5 ORGANIZATIONAL CHART
Turbo Charger Ltd. plans to expand its operations to include a full suite of office personnel, including finance, human resources, design, customer service, marketing, quality control, procurement, and warehousing. During this period we will also be launching our factory, which will bring our number of employees to 15 by Year 5.
- With an investment of $1.3 million, we will cover all expenses for initial setup, staff salaries, operating expenses, and advertising for the first year. We also plan to contribute an additional $13 million over the first five years to support any additional start-up costs or investments while we continue to build the Turbo Charger Ltd. brand and launch our manufacturing facility.
- With Turbo Charger Ltd.’s established client base through Manufacturer 1 Corp. and our commitment to focusing on sales growth, we expect to generate sufficient revenue to turn a profit in our third year of operation.
- Over the first five years, we plan to make substantial investments into purchasing a manufacturing facility, purchasing equipment, and taking on additional overhead expenses such as hiring production workers leading up to the sales of Turbo Charger Ltd. turbochargers. These investments will result in minimal immediate returns and, therefore, minimal corporate tax payments; however, with a growing industry and existing clients already prepared to purchase our turbochargers, we expect to recoup the costs of our investments into manufacturing and generate larger revenues in the following two years.
IMPACT ON THE CANADIAN ECONOMY
- Although Turbo Charger Ltd.’s impact on the Canadian economy will not be reflected in our corporate income taxes in the first five years, our investments in staffing while the business grows will result in significant benefits. In the first year while we have four employees, payroll tax earnings are expected to reach $72,000.
- By Year 5, we plan to employ 15 workers, providing much needed jobs for Canadians. This will result in approximately $1 million dollars in household income, increased consumer spending, and nearly $250,000 in federal and provincial income taxes in Year 5 alone.
- As the business grows, we plan to hire an additional five workers to expand production and support the administrative functions of the business, providing additional consumer spending and government tax revenue.
Turbo Charger Ltd. plans to become a major player turbocharger manufacturing and export in Canada, serving clients across North America and the world. With headquarters in the Greater Vancouver Area to service wholesalers in California, and with an emphasis on developing a high-quality, user-friendly online platform, we will set Turbo Charger Ltd. up to be an internationally recognized name in the turbocharger and turbocharger parts industry.
Wholly owned by Beijing Manufacturer 1 Corp. Development Machinery Co., who has an established client base in Canada, Turbo Charger Ltd. will be led by CEO Jack Xi, who will come to Canada to grow the business and mentor Canadian employees to manage operations. Manufacturer 1 Corp. plans to invest an initial $1.3 million into start-up costs, and an additional $13 million over five years to build Turbo Charger Ltd.’s brand and launch a manufacturing facility.
Under Mr. Xi’s leadership, we plan to grow our sales from a current $100,000 within Canada to $2,000,000 world-wide in five years by focusing on building client relationships, developing an effective online presence and sales function, and by manufacturing our own turbochargers to meet a growing industry demand.
In addition to generating an economic impact through working with Canadian businesses along our supply chain, Turbo Charger Ltd. will hire 15 Canadian employees in its first five years and plans to expand that number to twenty shortly thereafter. This is anticipated to generate $2.7 million in household income, increase consumer spending, and contribute nearly $700,000 in federal and provincial income taxes by our fifth year of operations.
These employment opportunities will not only generate economic impact, they will also provide valuable workplace knowledge and skills to Turbo Charger Ltd. staff. With an experienced business owner overseeing Canadian operations, these employees can expect mentorship and skills development that they can bring with them to future career opportunities in Canada.
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