Finding opportunity in recession-ravaged Greece

Greece, according the relentlessly dreary headlines, looks like one of the least promising places in the world to invest. The country’s prolonged recession has no end in sight. The economy is expected to contract for a fourth straight year. A 77-year-old man shot himself last month outside the Greek parliament, blaming the deep poverty he faced as a result of the economy.

Colin Naso inspects a turbine for Endurance Wind Power
Photo: Rafal Gerszak for The Globe and Mail

For Canadian companies, Greece’s misery has made doing business a lot tougher. Canada’s trade balance with Greece has moved from a surplus of $20 million in 2007, when total exports were $155 million, to a trade deficit of $80 million in 2011, with total exports of $88 million.

Despite all the gloom, however, some Canadian companies are finding there are still euros to be made at the epicentre of the continent’s economic crisis. Greece is at the front end of the deep austerity measures sweeping Europe as states wrestle their oppressive debt loads. In spite of this atmosphere–and partly even because of it–some Canadian exporters have found ways to keep European sales shooting higher.

Just four years ago, Glenn Johnson started Endurance Wind Power near his home in Surrey, B.C., making small-scale wind turbines for export to independent businesses, residences and farms. The product has found a receptive market in Greece, Italy, the U.K. and other European markets and Endurance expects it will soon exceed $80 million in annual sales.

Cash-strapped European governments such as Greece are offering feed-in tariff incentives to energy producers for several reasons: energy costs are high, aging power grids can’t handle large new power projects, and European Union countries are still aiming to hit a target of using 20% renewable power by 2020.

“The utilities and the government are not necessarily the most favourite people within these European countries so if [individuals]–whether it’s farmers or industrial-building owners or merchants–have an opportunity to get some autonomy from the leaders, that’s empowering to them,” Johnson said. “So our wind turbines, if they pay off in five to seven years and they have a 20-year life cycle, feel like a good investment to these people. That’s the main reason that we’re having some success in Greece.”

Endurance’s sales in Greece are expected to reach $2 million this year and hit $5 million next year. Other Canadian companies are making a much bigger splash. Vancouver-based Eldorado Gold Corp. received fast-track approval from the Greek government in April for a gold mine in the Thrace region. The project is valued at about $190 million and promises 400 construction jobs and 200 continuing mining jobs.

The project is just one of several Greek mining efforts for Eldorado Gold. In February, shareholders approved its $2.5 billion friendly takeover bid for European Goldfields, which operates a mine in Greece and has undeveloped deposits there. “Eldorado intends to invest more than $1-billion in Greece over the next several years in new mine development and related infrastructure. This significant investment will result in material direct and indirect job creation,” Paul Wright, president and chief executive officer of Eldorado Gold, said in an April 12 statement.

Eleftherios Anghelopoulos, the Greek ambassador to Canada, said in an interview that the government’s approval of the mine is an example of new policies aimed at encouraging foreign investment. Clearly frustrated by the barrage of negative attention his country continues to receive, the ambassador said he hopes these recent investments are a sign of things to come. He’s also hoping the large community of more than 300,000 Greek-Canadians will play a role. “I think the knowledge they have of both Canada and Greece could be instrumental in promoting business co-operation,” Anghelopoulos said.

A 2010 Canadian trade mission to Greece included several Greek-Canadians. One of them, Bill Drikos, vice-president of Toronto-based Vector Aerospace Corp., signed a deal on March 30 of this year with Athens-based Hellenic Aerospace Industry to provide helicopter upgrades. “Greece is changing,” Anghelopoulos said. “There are a lot of reforms that are implemented and I think that in this new, business-positive framework, there will be a lot of opportunities.”

Martin Schwerdtfeger, a Toronto-Dominion Bank economist focused on global markets, said it is true there are opportunities for foreign investors in Greece in areas such as tourism or the export of raw materials. But he predicts Greece will ultimately have to leave the euro zone, creating “tremendous foreign-exchange-rate risk” for investors. “For sure, there are good opportunities,” Schwerdtfeger said. “But it is an economy that is going to undergo, most likely, very drastic structural transformations and that always means a risk.”

THE TRADE SEE-SAW

Canadian exports to Greece have dropped dramatically in the past five years:

2007: $154.7 million

2008: $152.3 million

2009: $111.8 million

2010: $114.8 million

2011: $88.1 million

While imports from Greece have steadily risen:

2007: $134.6 million

2008: $138.8 million

2009: $140.8 million

2010: $142.4 million

2011: $168.2 million

Source: Industry Canada