May 23rd, 2009 fmorgan
As we are approaching seven years of doing business in Costa Rica, with five years living here full time, it strikes us how it seems like only yesterday and yet a lifetime ago that we started growing trees.
When we think about how much has happened in the last seven years, it feels like there is enough to fill a lifetime. Because of that, we keep saying, “Was that only a year ago?!”
Yet we are so busy here, time goes by in a flash. OK, maybe that’s just because we’re middle-aged, but time does seem to creep when you’re bored.
And we are anything but bored! They say you learn something new every day, well, when you have a business in a culture new to you this is quite literally true.
Here’s just one example of what we’re talking about. As we continue to grow the plantation and wood processing business in Costa Rica, one area of constant learning is the labor law. The up-to-date books on it are available at many bookstores, both the full version and an abbreviated version. The law tends not to cover all the specifics; for that, we consult with lawyers to see how the courts have ruled in cases similar to the situation we are dealing with at the moment. For instance, we had to lay off someone for lack of work in his area. While he was still working for us, during his period of advance notice, we came up with other work that he could do and told him he was not being laid off after all. He had found another job and still wanted to leave. We didn’t think we had to pay the full separation as though we had laid him off, since he was now leaving by his own choice. One of our staff raised a question about it, so we checked with a lawyer. There had just been a ruling by the labor court in favor of the worker in a case exactly like it. Our former employee wasn’t even aware of our mistake, but we went back and paid him the difference. When you think about it, the idea of losing that separation money could keep someone from accepting a job while they have the chance.
The ministry of labor (MTSS) inspected us recently, along with all the farmers and businesses in our area. It was a lawyer who works for the MTSS who came with two assistants. She was friendly, but had the overall demeanor of a schoolmarm bringing her charges back in line. That was with us, who only had to appoint a labor relations committee and add a few lines to our salary receipts that we give our employees. We can only wonder what her demeanor is with companies and farms that she finds not in compliance with the labor laws.
We noticed that one of the assistants always stays in the car, whether because he is just their driver or because he is watching for illegal laborers fleeing the workplace, we don’t know. It’s so interesting to try to understand what’s really going on under the surface here. It’s no wonder we keep feeling like we’re going in and out of some weird time warp.
And in business as in life, “learning is not compulsory…neither is survival” (W. Edwards Deming).
-
Posted in business in Costa Rica, cultural adaptation, labor law | No Comments »
May 8th, 2009 fmorgan
One of the things I learned along the way is the difference between an asset and a liability: Assets make money, liabilities eat money. My family used to tease me that even my hobbies were profitable (or at least broke even). If I went fishing, you could pretty much count on me bringing home a nice mess of perch or panfish for eating.
Recently I was asked if I was interested in selling our old ATV. It was being used almost every day, but it got me thinking, “Why do I have this since I have other modes of transportation?” Back when we bought it used, it was important for hauling seedlings into the farms, but since then we have grown to the point of using a tractor so we can haul up to three thousand seedlings at a time. I was using the ATV to get back and forth between the office and the farms, but I also have a motorcycle that is better and cheaper for that purpose.
So I bargained to swap the ATV for five milk cows with their calves. Our caretaker wants to milk the cows and can cut the grass for them inside our farm with a scythe. I get the manure for the nursery and our garden, and he pays off the cows with his income from making the milk into cheese.
So, the ATV has gone from being a liability that needs repairs to an asset that makes cheese. Just as long as I am not the person who has to milk it in the mornings, I am happy!
Posted in bargaining, business in Costa Rica, nursery, scythe | No Comments »
May 2nd, 2009 fmorgan
One of the areas I think that baffles foreigners most when living in Costa Rica is what things cost. First of all, you have to deal with a new currency, the colon. On top of that, some things are much cheaper here (for example, we just bought a pineapple for less than 50 cents), and other things, much more expensive (imported goods mainly–an apple is about $1.50).
So, getting prices straight can be challenging, especially when you start talking in millions of colones. We just sold a used ATV for 2 million (about 3600 dollars).
We all want to know ahead of time what it will cost to build something, but the price always ends up being more than quoted. I finally figured out that contractors here give a bid for the best case scenario. Basically, if everything goes perfectly, it will be that price. In a country where even plans for meetings are preceded by “Si Dios quiere…” (If God wills), you can guess how often everything goes perfectly. You would think that the estimates would reflect the normal course of events, but it doesn’t work that way. Since everyone bids for the impossible ideal situation, anyone who gives an accurate estimate will not get the job. Cost overruns are therefore the norm, and you are responsible for adding your own buffer instead of the contractor tacking it on. The odds of you coming out at the original bid and getting to keep that buffer are worse than the lottery, but I guess it’s fun to try. We have seen that if you work the price down to below usual, what you pay in the end will be the same as if you accepted a quote for around the going price, what with one thing and another. It is very possible the lower bid will end up being the most expensive when you redo the rushed job.
Bargaining is practically a national pastime in Costa Rica, if not an art form. Where you live, are you accustomed to hearing an exchange like this in a retail furniture store? “I appeal to your conscience on the price you are asking me to pay.” “My conscience is perfectly clear, thank you, I know our prices are some of the best around.” That last said with a big smile.
It seems everything can be dickered over, and everything is considered for sale. People frequently walk up to our door and ask to buy equipment that we are using in our business. The above-mentioned ATV was in daily use, but somebody asked if we would part with it. It is always good when you are not the one trying to sell, but the other party is trying to buy.
If you come up to a farmer and say, “I like your farm, how much?” expect to be shocked at the price. The custom is to offer it at 3 times a reasonable amount, which is to say, “I don’t really want to sell, but if you really want it…” More than a few farmers have been shocked when the crazy foreigner paid what they asked, and more than a few foreigners have been very upset to discover they paid three times market value.
The best way to buy land is to locate yourself in the area for a while and give yourself a few months to learn what a good price is. Then let it be known that you will buy land for that price. Resist the pressure to go look at properties that are more than your asking price per hectare or square meter. Eventually someone will show up with a property in your price range, because that is what the locals are paying.
After seven years of doing business in Costa Rica, I can see us now on our next visit to the United States trying to appeal to the conscience of some baffled clerk in Home Depot.
Posted in bargaining, business in Costa Rica, buying land, campo, construction, culture, finca, investing | No Comments »
March 16th, 2009 fmorgan
One of the many big surprises to me when we moved down to Costa Rica was how primitive the wood business was. Here you have a country with hardware stores, tools, etc. but if you want wood, you go to the sawmill and buy green! There are also depositos de madera, or lumberyards, but they usually sell green wood, too. Of course, you can’t install it green, so you have to dry it yourself.
Many people who are building their own home in Costa Rica are surprised to find that you can’t just go down to something like Home Depot and buy a 2×4; nope, you have to find it. Then, after you find it, make sure to get more than you need, because some of them are going to warp, especially if you don’t know how to dry it properly.
The Ticos are an interesting mix of planning and not planning. If they are building your home, it is hard to find someone who understands buying supplies ahead. I think I have finally figured out why. Most Ticos accumulate material and build in stages. Unlike we do in the USA, they don’t generally get a loan, but they store up money for labor and materials until they have enough to start. This means the wood they need for beams, etc. has probably been in the barn for a few years.
We, on the other hand, land here and want to build our home now, the sooner the better. Often the wood is not available except in a tree somewhere, which will require permits that take weeks to get. The wood will be rough cut, often by a chainsaw, then you will wait perhaps 3 months or more for it to dry (sort of). Since most construction people have nothing more than a power hand planer, the cost of planing and sanding can cost as much as the wood itself.
We paid our dues on this for sure. The first house we built was from trees to house using chainsaws with guides and a 15″ planer. It felt like the timeline for the construction was stretching out forever (we know those of you who live here can relate).
As we grew, so did our milling operation, and we got faster and faster — and more predictable. Now if we need a beam, it comes out of the factory dry, at the right dimensions, planed and sanded and ready to install. The cost of planing and sanding isn’t much when you have the equipment. It is a lot less than paying a construction person to do it by hand. In fact, the costs saved in having the wood ready almost pays for the wood itself when you deduct the labor cost of working with rough cut wood. And of course, the quality is better. We use specialty equipment that allows us to work with beautifully grained wood that would otherwise have a lot of tearouts. With our equipment, we are able to make gorgeous teak products that cost about the same as cedar.
Now we are in the process of educating the construction bosses from Guanacaste to the central valley that they can buy wood ready to install, which helps keep their clients happy. We not only sell the dimensional lumber, but also the tongue-end-groove wood for ceilings and walls (called tablilla here) and floors. In fact, just about anything that is wood in a house, from furniture to cabinets, to floors and doors, we make and sell. And that uses a lot of wood, which is good for our tree owners.
Posted in business in Costa Rica, cabinets, campo, construction, cultural adaptation, doors, drying wood, forestry, furniture, kiln, tablilla, teak, trees, wood | 1 Comment »
July 18th, 2008 fmorgan
After living in Costa Rica for nearly 4 years, I am finding that I am turning bilingual. Not like Amy who can speak English and Spanish very well - I have enough problems with English. This is not to say that I can’t communicate well in Spanish, I do, it is just I mangle it at times.
When I say I am turning bilingual, I mean that there are words that between English and Spanish, I select the one from one language or the other, depending on the concept I am trying to express, even though they both, in theory, mean the same.
A good example is months of the year. July means hot, dusty, Fourth of July - grass dying, daylight until 9 pm, etc. Julio (Spanish for July) means planting seasons, mud, everything super green, well into the rainy season with no sign of dry for the next 6 months. If I say that it is July now, my brain gets seriously confused. Darkness here is at 6 pm and we have roughly 12 hours of daylight. That should be March, but no, it is too warm. Much easier for me to think, it is julio now.
Another word is nursery, as in our tree nursery. My family had nurseries in the USA, and a nursery is something with a plastic over it and a source of heat so you can start plants early while there is still threat of frost. Excuse me? Costa Rica doesn’t even use the word for frost, unless maybe it is referring to what builds up inside the freezer. What we have here is a vivero, where you put up shading material so that the new seedlings aren’t cooked by the sun, even during the rainy season. Also, since we tend to start the seedlings during the dry season, a water supply is important - and there is no need to worry about heat, except perhaps heat stroke!
One last example is when we are talking about measurements of wood. The standard measurement here is a pulgada cubica (cubic inch) which doesn’t mean a square inch like in English. It is 132 square inches. Usually, in the USA we are used to using board foot (BF), which is 144 square inches. The reason is that a pulgada cubica (usually just said pulgada) is 1 inch by 1 inch by 4 varas. What is a vara you say? It is 33 inches. So, 4 x 33 = 132. A curiosity is that they used to use varas for measuring land in Texas. So, I think readily in pulgadas now - which is a good thing because it is how you buy wood here. You can imagine the confusion when people first start dealing with wood here and someone says that it is 1 dollar per cubic inch!
Before we moved to Costa Rica, I was talking to a little girl whose parents were North American and Costa Rican. She had two sets of grandparents, one who was English speaking, the other who spoke Spanish. She was completely bilingual. Once while making conversation in Spanish, I asked her about her abuelos (grandparents) in California. She told me she had no abuelos in California, only grandparents. In her mind, the parents of her tico father were the only abuelos she had, the others where grandparents. At the time I was amazed, but now I am starting to understand.
Posted in Spanish, business in Costa Rica, communications, cultural adaptation, language learning, nursery, trees, wood | No Comments »
June 20th, 2008 fmorgan
Due to our plantations, we are on a first name basis with MINAE, the ministry of environment. This can be an adventure in and of itself. MINAE has the responsibility to safeguard the forest and environment of Costa Rica. Like many government organizations, they are understaffed for the size of the job.
We truly try to follow all the rules of Costa Rica. This can be a real trial at times. Not because of the rules, but because of timetables.
Just to give an example, we recently hauled all of those great logs out of the river from the old bridge. Come to find out, before we could cut them, we had to have MINAE visit to verify - even though we sent them pictures. But we had to wait. We were already waiting for 13+ weeks for other permits! I thought we wouldn’t need permits for the bridge logs until it was time to transport the wood, but nope, before we cut it up too (Strange, the trees have been dead for years and years…).
Finally, MINAE notified us that they were ready to come and would meet us at the gas station in Monterrey. Our forestry engineer, Angie, and one of our wood experts went to meet with them and all went great. Angie asked, “What was the holdup?”
The answer, believe it or not, was that they didn’t have enough money for gas to come out and visit! Angie actually gave them some money for gas so they could return to their office, knowing that we would reimburse her.
I wish I had known so that we could have offered to pay expenses. MINAE has taken us up before on our offer to provide horses for them to inspect our properties, so why should this be any different?
Posted in MINAE, business in Costa Rica, forestry, resources, wood | No Comments »
June 16th, 2008 fmorgan
We live above San Rafael de Guatuso, or perhaps I should say after nearly four years in Costa Rica, we are about to live there. We have lived in Costa Rica since July 20. 2004, and to this time, we have yet to have our own home. This is about to change; our home is nearly finished and we are very excited.
There is no phone service available there. Phone we can handle with wireless easily enough, but Internet service is a must for the business.
Having a background in telecommunications, I noticed a wireless bridge on a tower of El Colono, a building supply company with about 70 locations in Costa Rica. We are VERY good customers there, averaging in the thousands every month.
So we asked nicely if we could use their tower. The owner agreed and in fact connected us to their provider who came out, talked with us, did a site survey and installed a 6-meter post on the roof of our new home and the Internet bridge. We now have 256/256. I know that might not sound like much, but for us, it is twice what we have had. Then they came out again and did the wiring between our home and the office, including a wireless Internet bridge that we owned to connect the two buildings.
I feel so high tech! Here we are in the middle of the frontier of Costa Rica where there is no phone service having a line of sight wireless Internet bridge system! A funny story–ICE, the phone monopoly, had a rep out and our office administrator said, ¨Oh, we´ll just pay that bill right now on the Internet.¨ The rep said, ¨Internet?! What do you MEAN you have Internet here?¨ as he craned his neck searching all around for the wire.
I tried to do the outside wiring myself, but never could find the cable (special type for outside). Come to find out, you can only by it by the 1,000 meter roll and have to import it from the USA, or so I was told.
Anyway, tomorrow we pack up the office and move it to the Monte Cristo house and start staging our move.
Quick note: I originally wrote this back on May 15th, and now it is June 16th. Yes, we got moved - but this post sort of fell by the wayside. One thing as well, in the morning and the evening, our Internet works very well - but during the day, when it is sunny, not so well. The reason is interesting. It seems that there are some trees in the way, and in the morning, usually the limbs are lower due to rain and moisture, but during the day, they reach for the sun, and interfere with our connection… only in the tropics.
The solution is a 21 meter tower complete with aircraft warning light, scheduled within three weeks to be finished.
Posted in business in Costa Rica, cell phone, communications, forest, off the grid | No Comments »
May 6th, 2008 fmorgan
Due to the overall lack of capital in a developing economy like Costa Rica, the availability of heavy equipment of any type is not very good. To get a backhoe to do some work, you have to commit to no less than 3 days, and often 1 week of work to make it worth their while.
But you don’t always need a week’s worth of work, so a lot of the work is done by hand. This makes for very efficient ditch diggers. We had one worker who was incredible. Give him a shovel and tell him to make a hole and you better get back quickly to tell him to stop or he would be in China!
But, as we have grown, so have our needs. With more than 500 acres of plantions, road and bridge repair is a pretty much yearly cost - and a sizeable one. Also, the nursery needs dirt from somewhere. We have found it quickly uses the topsoil around it - so we have to haul it in.
So, we bought a backhoe. Now, that seems like just a simple thing and it is, but the emotional impact is significant to me. I don’t know why, but I never imagined having a backhoe. A farm excavator, yes. Perhaps even a small bulldozer - sure. Of course we have a tractor. But for some reason, I am particularly proud of owning a backhoe. Maybe it´s because of the variety of things it can do.
A backhoe has been called the Swiss Army knife of construction projects, and they really are. You have the huge shovel in the front and the bucket in the back and a lot of power in between. We bought a used one, a 2003, with lots of life still in it.
One of its first jobs was take apart a bridge. This bridge was made of Corteza and Tamarindo - both of these woods are very hard, so much so they survive just fine buried in mud over streams and rivers to make bridges. Pretty incredible really. One of our bridges was damaged by a storm and needed serious repair. The problem is, the wood from these trees has gotten very expensive. So, getting a log to fix a bridge could be in the thousands of dollars - whereas five years ago it was only 300 dollars - which gives you an idea of the rise in price of this wood.
So, we got a quote from someone to make two bridges from steel and concrete (one is the replacement, the other was needed too, so might as well) and it came to 6 million colones - or about 12,000 dollars. The amount of wood that we could salvage from the old bridge was 16,000 dollars. So, by using the wood in the bridge for other things, we actually manage to make a little and have new bridges, too! Without a backhoe, it would be impossible to get out the logs, so the backhoe already is paying for itself.
Posted in business in Costa Rica, wood | 2 Comments »
March 29th, 2008 fmorgan
We had a visit from a tree owner and spent a full day with them. They have been with us for a while and we have had numerous conversations with them. I always appreciate their visits because we have so much in common.
The good news is that after reviewing their trees they told us that there wasn’t anything they felt was wrong at all with them and they were thrilled at the size and quality. This of course was wonderful to hear. We do try very hard to do a great job and be diligent in following through with people, but as with all things that are part of nature, there are imperfections. I worry about imperfections. It is probably true that I don’t see the forest for the trees at times. If I see 5% of the trees not doing well it bothers me (and we replace them), and I can forget that means we have 95% growing very well. Our tree owners are always less critical than I am.
I think one of the reasons they gave us such high marks was that they visited trees that they own with someone else (people they bought with before they knew about us) and were much less pleased. In fact, nearly 50% of their trees were replanted after 2 1/2 years and it was obvious that the care just wasn’t being done. It appeared that their trees were planted and then ignored. Also, some trees were planted in areas that were not appropriate for those trees.
Worse yet, when they arrived, it was obvious that the area had just been brushed out, i.e. all the undergrowth removed, and all nearby trees owned by other people had brush about six feet tall, which will choke out the trees. An example is their acacia. Their acacia with the other people after 2 1/2 years is the same size as ours after 6 months! If there was ever a good example of the difference between growing trees correctly or not, this is one.
The bad news for them, of course, is that they have to deal with this, but also it is sad because we in Costa Rica need every bit of lumber we can get. To plant and not try your best to produce the best trees you can just seems to me to be so short-sighted. After all, it isn’t like there isn’t a good market — no, correct that, a great market — for the wood after it is grown.
On top of that, it is hard enough for people to have the confidence to have people in a foreign land grow trees for them, and to not do the job hurts everyone, not just your own business. Thankfully, we have many people who have visited us (and some visit yearly) and so have seen the plantations for themselves and can attest to our quality.
After all, it really is about quality. The price of wood is shooting up as the supply dwindles. For us, to achieve our goal of reforesting a significant amount of land, we have to make sure to meet the obligations we have to those who have trusted us to grow trees for them.
I am happy to be able to say it appears that we are acheiving more than they expected.
Posted in acacia, business in Costa Rica, conservation, finca, forest, forestry, investing, tree owners, trees, wood | No Comments »
March 20th, 2008 fmorgan
We have entered an agreement with Tropical Latitudes to be our importer of wood products into the USA. We were approached by Craig, who originally wanted us to plant trees for them from their profits and then found out that we also had products to sell.
To get to know them better, I flew up to Orlando to participate with them at a Home and Garden show. I was very happy at what I saw, and they survived having me as a guest for most of a week, which shows that truly they are cut out to survive in business.
What I most appreciate about Tropical Latitudes is their commitment to having everyone win. They will not deal with any company that does not treat their employees fairly nor do they work through brokers. In this way they can offer unique products to their customers at a very good price, and the makers of the products do well also.
It was very interesting at the show when a broker who wanted to be a supplier for Tropical Latitudes looked at a solid hardwood frog that our woodcarver had made that Craig was selling for 65 dollars. The broker said that the best he could sell it to Craig for was 60 dollars. This illustrates very well why it is so much better not to have several middlemen. However, because of the difficulty of getting things from the tropics to the USA, you are generally dealing with middlemen, and each one tends to want to double the price.
A positive thing for all those who have wanted to buy furniture from us is that now Tropical Latitudes can take the orders and arrange for the furniture to come up in the next shipment with everything else. This should make it possible to have furniture from us at a very reasonable price.
It is good news for our tree owners that not only are we doing great at producing products for the local market, but now we are selling into the USA as well.
Posted in business in Costa Rica, furniture, importing, investing, tree owners, wood | No Comments »