The Journal of 2020 Foresight

Reports from the Knowledge Labs about our recent findings, research topics, and interviews with lifestyle leaders who are creating their own futures.

How to stimulate your own powers of foresight. Consider the following thought provokers. Ask yourself, in these categories what are the brand new trends and forces? Which are the ones growing in importance? Which current forces are loosing their steam? Which have peaked or are reversing themselves? Which are the "wildcards" about to disrupt us in the future? POLITICAL AND TECHNICAL thought for food: Electronics, Materials, Energy, Fossil, Nuclear, Alternative, Other, Manufacturing (techniques), Agriculture, Machinery and Equipment, Distribution, Transportation (Urban, Mass, Personal, Surface, Sea, Subsurface, Space), Communication (Printed, Spoken, Interactive, Media), Computers (Information, Knowledge, Storage & Retrieval, Design, Network Resources), Post-Cold War, Third World, Conflict (Local, Regional, Global), Arms Limitation, Undeclared Wars, Terrorism, Nuclear Proliferation, Weapons of Mass Destruction, Governments (More/Less Power and Larger or Smaller Scale), Taxes, Isms: Nationalism, Regionalism, Protectionism, Populism, Cartels, Multinational Corporations, Balance of Trade, Third Party Payments, Regulations (OSHA, etc.) Environmental Impact, U.S. Prestige Abroad. SOCIAL AND ECONOMIC Food for thought: Labor Movements, Unemployment / Employment Cycles, Recession, Employment Patterns, Work Hours / Schedules, Fringe Benefits, Management Approaches, Accounting Policies, Productivity, Energy Costs, Balance of Payments, Inflation, Taxes, Rates of Real Growth, Distribution of Wealth, Capital Availability and Costs, Reliability of Forecasts, Raw Materials, Availability and Costs, Global versus National Economy, Market versus Planned Economies, Generations: Y, X, Boomers, Elderly, Urban vs. Rural Lifestyles, Affluent vs. Poor, Neighborhoods and Communities, Planned or Organic Growth. Got Knowledge?

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Friday, February 27, 2004

The Company of Adventurers: Commodities Exploration and Development

Chapter Three: The Outpost

By Steve Howard, CKO
The Knowledge Labs

Table of Contents
Chapter One: Basecamp
Chapter Two: The Ridge
Chapter Three: The Outpost
Chapter Four: The Tribal Territories

“The Lewis and Clark Expedition was the first U.S. government sponsored exploring venture. It was the first of what would become many. It and subsequent government expeditions filled in the blanks of the uncharted West and collected data and observations spanning numerous subjects, from botany to zoology, ethnography to geography, and may others.”

James J. Holmberg

Journal of 2020 Foresight: We’ve already established that by the mid 1800’s the Hudson’s Bay Company served customers throughout their “sales” territory stretching from the sources of the Missouri River to San Francisco. As one of 30 other companies studied by Royal Dutch / Shell, you’re saying the Hudson’s Bay Company, the Company of Adventurers, sensed their environment and successfully changed with the times for roughly three and a half centuries?

Explorer: Exactly. For the first 200 years of its history, the Hudson’s Bay Company was primarily concerned with commodity extraction and distribution --the fur trade -- but as the years, decades and centuries went by other profit generating activities were undertaken. The Company, over its history, has been a land company, a transportation company, and a storekeeper – a retail company.

Eagle: While it’s not a California story exclusively, it does illustrate the threats and opportunities companies and communities must survive.

J2020F: How so?

Eagle: According to Pine and Gilmore, commodities are materials extracted from the natural world: animal, mineral, vegetable. People raise them on the ground, dig for them under the ground, or grow them in the ground.

Explorer: After slaughtering, mining, or harvesting the commodity, companies generally process or refine it to yield certain characteristics and then store it in bulk before transporting to market. By definition, commodities are “fungible” – they are what they are.

J2020F: So the risk is that when commodity extraction declines in economic value, profits move elsewhere to distribution and production, for example? You can see the chain reaction today in so-called company towns. The resulting squeeze in profits limits advancement opportunities for loyal workers --Associates. Layoffs precede the closing of operations.Laid-off workers spend less in the local economy, so the whole community suffers.

Explorer: That’s right. Because commodities cannot be differentiated, commodity traders sell them largely into nameless markets where some company purchases them for a price determined by supply and demand.

Eagle: What that means, then, is every commodity trader commands the same price as everyone else selling the same stuff, but when demand greatly exceeds supply, handsome profits arise. When supply outstrips demand, however, profits may be hard to come by.

J2020F: So as margins and profits move up the food chain, so to speak, corporations do too to survive? And communities need to find a replacement or decline and die – if they haven’t diversified their economic offerings?

Eagle: Yes. Take Hudson’s Bay Company. In 1870 the Hudson’s Bay Company's chartered territory in the West was transferred to the government of the newly-created Dominion of Canada in return for a modest cash settlement and a portion of agricultural land in the "fertile belt," which was sold to settlers over the next 85 years.

J2020F: So they diversified as a company, moving into another commodity – agriculture – but then sold the real estate to newcomers.

Explorer: Also in the 1800s they became a major factor in Western transportation, moving goods to isolated communities and outposts by canoe, York Boat, steamer, and, in the twentieth century, by airplane. In the twentieth century the Company brought radio communication to the North.

J2020F: So as the newly settled western territories of Canada created new demands, the Hudson’s Bay Company offered and delivered new products and services?

Eagle: That’s right. As settlement increased in the West, the Hudson’s Bay Company became increasingly involved in the retail trade, and by the early years of the twentieth century shops and stores existed in major centers across Western Canada and in the North.

J2020F: So they moved up the food chain, as it were, moving from wholesale to retail – into the service industry.

Explorer: The first Hudson’s Bay Company "department store" opened in Winnipeg in 1881, and for years was a major hub of the fur trade.

J2020F: In more modern times how did they navigate tough shifting threats and opportunities?

Explorer: In the difficult business climate of the 1980s, the Hudson’s Bay Company, electing to concentrate on its retail activities, moved away from participation in the resource and property development industries.

Eagle: One of its acquisitions, Simpson’s, was absorbed into the Hudson’s Bay Company identity and the Company's Northern Stores operation was sold. In the mid-1980s the company also sold off its wholesale and fur divisions.

J2020F: So, it wasn’t really until a hundred years later that they left their core business entirely?

Explorer: That’s right. As the company moved into the 1990s, profits increased dramatically and expansion resumed with the acquisition of the Woodward's and Towers chains.

Eagle: Today, the Hudson’s Bay Company -- the Company of Adventurers -- continues to play a major role in the unfolding story of Canada.

J2020F: So, back to California …

Eagle: By the mid-1800s the Company of Adventurers had pushed south in a wide area from the sources of the Missouri River to San Francisco Bay.

Explorer: The soon-to-be state flexed its muscle in the same time period. California’s state flag – the Bear Flag -- marked the Bear Flag Revolt in 1846 when Commodore John Sloat and a small group of American settlers raised the US flag at Monterey when news arrived of the US – Mexican War.

J2020F: This was around the time of Sutter’s Mill and the California Gold Rush, right? The rush to extract the gold commodity?

Explorer: After coming to California in 1839, Captain John Sutter received a large land grant along the Sacramento River and set up his outpost known as Sutter’s Fort. On January 24, 1848, one of Sutter’s foremen noticed a few shiny yellow flakes at the bottom of the South Fork of the American River.

Eagle: When news leaked out, one of history’s largest and turbulent migrations ignited – the California gold rush. In 1849 the gold fever spread to ship crews, farmers, and everyone else who dreamed of abandoning their mundane life in pursuit of their own “El Dorado.”

J2020F: While they came from all walks of life and parts of the United States – and they world, they all became known as forty-niners, right? Like the San Francisco football team?

Explorer: Believe me, they were called a lot of things. Do you know what the Hudson’s Bay Company called them?

J2020F: What?

Eagle: I can’t believe you fell for it. He’s been waiting all interview long to work the line in.

Explorer: New customers.

Eagle: Drum roll, please.

J2020F: Great. If I remember my school history course correctly, California attained statehood a year later.

Explorer: That’s right. But, as gold fever abated and the US embroiled itself in the slavery question that played out in the Civil War, California experienced and endured cycles of boom and bust.

Eagle: And don’t forget, through it all, upon completion of the trans-continental railroad, California attracted an influx of people from all over the US and the world. They fueled large-scale agriculture, business and industry. More recently in the 20th century, with the growth of the car, suburbs flourished radiating out from urban centers.

J2020F: If we don't hit the road soon, we won't see any of the "Lodes."

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