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Posted March 30, 2004 by publisher in Cuban American Business

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By SHAWN McCARTHY |  [url=http://www.TheGlobeAndMail.com]http://www.TheGlobeAndMail.com[/url]

NEW YORK—Claude Sauvageau, formerly of Boucherville, Que., and now of Dade City, Fla., makes his living peddling industrial lubricants throughout the United States.

The job can be a grind, but the transplanted Quebecker has found a new enthusiasm: The Latino trade show.

Mr. Sauvageau, the general manager for the United States of Boucherville-based Lubri-Lab Inc., says Hispanics now account for less than 5 per cent of his sales here, but he sees that growing exponentially as he focuses his efforts on the booming Hispanic population.

Earlier this month, the veteran of the industrial lubricant trade fare circuit went to California to attend a series of shows that were aimed primarily at Spanish-speaking business people.

“Wow, what a difference in shows!” he enthused in a telephone interview.

“If you ever went to an industrial show, it is one of the dullest places you could ever go on Earth. But there, no way man. They had salsa and they had every type of music to spice the whole thing up. I’ve never seen that before; it was a very good show.”

Mr. Sauvageau believes he is catching the front end of a huge demographic wave that is sweeping the United States.

He’s not alone—U.S. subsidiaries of Canadian banks are also gearing up to serve the growing Hispanic market, though observers say many Canadian firms have yet to recognize the opportunity.

Immigration and a higher birth-rate are fuelling a surging population as Latinos have now surpassed African Americans as the largest minority group at about 13.4 per cent of the U.S. population, or 38 million people.

Last week, the U.S. census bureau forecast that Latinos will account for a quarter of the population by 2050, representing an additional 67 million people.

The number of black people in America will grow far more slowly, to only 14 per cent of the population by 2050.

Though the Latino market remains relatively small over all in the United States, it is vast in markets such as New York, Chicago, Los Angeles and throughout the southern states.

New York City, for example, is home to 3.6 million Latinos—nearly equal to the total number of people in the city of Toronto.

To tap into the growing Hispanic market, Mr. Sauvageau has had his technical material translated into Spanish and, trilingual himself, also gives courses on industrial lubricants in Spanish. He has hired Spanish-speaking salespeople in key Hispanic regions and the company’s website has a Spanish version as well as those in French and English.

He also sees his increasing ties to the Latino community as an entree into the Latin American market. Next week, he is conducting a Spanish-language seminar on lubricants for a group from Guatemala.

Canada’s consul-general in New York, Pamela Wallin, said the demographic trend is simply part of the landscape that Canadian companies need to consider when they do business south of the border, much as they need to be aware of the increased security at the border.

“This is now the reality of the U.S.,” Ms. Wallin said. “They are a large part of the entrepreneurial class . . . and a powerful, growing force.”

But Jayson Myers, chief economist with the Alliance of Manufacturers and Exporters of Canada, said few of his members appear to be developing strategies to reckon with that force.

“Too many companies think of the U.S. as just one big market. And that’s obviously not true,” Mr. Myers said in an interview.

Former Toronto Sun executive Doug Knight is a principal with Knight Paton Media Corp., which has an ownership stake in two of the largest Spanish-language newspapers in the United States, New York’s el diario/La Prensa and La Opinion of Los Angeles.

He said the Latinos are quickly moving up the socioeconomic ladder in the United States. The market has reached critical mass, with more than a million people in 10 U.S. cities—and Canadian businesses should be paying attention.

“You would think Canadian business people would be particularly adept at bilingual marketing and that should give them some advantage,” Mr. Knight said.

For Canadian firms operating in the United States—as for their American competitors—the booming Latino population means having to deal with a bilingual work force, providing marketing material in Spanish as well as English, and understanding the cultural norms that differentiate the Hispanic consumer.

As Mr. Sauvageau would attest, an appreciation of salsa music would be a plus. More broadly, Latinos are more socially conservative and more family oriented than Americans in general.

A 2002 survey by the Pew Hispanic Center in Washington noted that the Hispanic community in the United States is far from homogeneous.

Mexicans tend to dominate in the southwest and in Chicago; in East Coast cities such as New York and Philadelphia, Puerto Ricans are the largest Hispanic population, while in southern Florida, Cubans dominate.

There are also large concentrations of Dominicans, Colombians and Central Americans throughout the country.

While the various communities tend to identify themselves by nationality and each group has its distinctions, the Pew Center said they share some basic characteristics.

In keeping with their Roman Catholic heritage, they are less accepting of divorce, abortion and same-sex unions than non-Hispanic white Americans. In the Pew survey, 40 per cent of Latinos said divorce was unacceptable, compared with only 24 per cent of non-Hispanic whites, while 77 per cent of Hispanics found abortion to be unacceptable, versus 53 per cent of whites.

Analyst Virginia Heyburn Garcia of Tower Group Inc. said those conservative attitudes spill over into consumer preferences—such as the tendency of intergenerational families to make financial decisions together—and should help shape marketing strategies aimed at Latinos.

In a report last year, Ms. Garcia focused on how banks and other financial institutions can capitalize on the growing Hispanic market. She counselled patience.

“Institutions should not expect immediate results and should be prepared to stay committed to the Hispanic market for the long haul,” she wrote.

But she added that a patient commitment should pay off. Hispanics in the United States are accumulating wealth twice as fast as the population in general, while the number of Latino households with more than $100,000 (U.S.) in earnings is also growing twice as rapidly as the national average.

Chicago-based Harris Bank, a subsidiary of Bank of Montreal, is aggressively going after the Hispanic business in retail banking, mortgages and in small-business lending.

Three years ago, it hired Mexican banker Alberto Azpe to be president of Hispanic banking. Officials at the bank said the hiring sent a strong signal to the Latino community in the Chicago area that the bank took them seriously as customers and wanted their business.

Yasmin Bates, the executive vice-president of the bank’s southern district of the Chicago region, said Harris ensures that its bank staff in Hispanic neighbourhoods are bilingual, that its call centres have a Spanish-language option, and that it offers products that are designed for a segment that typically does not have the credit history that mainstream customers have.

“It is a customer base that we take very seriously and we put in place those tools and services that we need in order to be successful in this market,” Ms. Bates said.

Similarly, RBC Mortgage, a division of Royal Bank of Canada, is taking aim at the Latino market in 11 different metropolitan centres in the United States, though senior vice-president Ted Ahern acknowledges the effort is uneven.

Home ownership among Hispanics is rising sharply, from about 25 per cent of households 15 years ago to more than 40 per cent today. That is still well below the percentage of non-Hispanic, white households that own homes, and Mr. Ahern sees opportunity in the disparity.

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