Export Opportunity: Ballard Power Systems

Ballard Power Systems Inc. (Ballard) is one of the world's leading companies in hydrogen fuel cell technology, and is primarily concerned with continuing to lead the world in this technology's development. Ballard's employees and managers are motivated to make hydrogen fuel cells commercially viable on a global scale (Business Focus). The company's head office and major manufacturing facilities are located in Burnaby, British Columbia (Facilities and Locations). The company has been specializing in the development, manufacturing, sales and service of hydrogen fuel cell stacks since 1983 (About Ballard). Ballard has developed a number of strategic alliances with corporations such as Daimler AG, Ebana, Ford Motor Company, Danthern Power and Power Plug, which integrate fuel cells into a number of different consumer products (Lead Customers).

Ballard's current operations focus around four main business activities: (1) hydrogen fuel cell stack research, development and manufacturing; (2) in-house testing capabilities; (3) applications engineering support to systems integrators and original equipment manufacturers (OEMs); and (4) customer support (Business Focus). Ballard's fuel cell stack manufacturing facilities develop products for five specific markets including cogeneration, backup power, materials handling, buses and automotive (Product Portfolio). Not all of these products are feasible exports in all countries. Currently Ballard has experience exporting its products and services to markets in France, Germany, Japan, Sweden and the United States (ic.gc.ca).

The global market for hydrogen fuel cells is growing exponentially. Global interest in hydrogen as a source of energy is a result of two incentives (1) a search for new sources of energy as the world's supply of oil is depleted and the price of oil continues to skyrocket, and (2) increased awareness of global warming and pollution. These incentives are of real heightened concern in India. India has the world's second-largest population and is one of the most polluted countries in the world. There is an estimated ten percent of Indians currently suffering from respiratory diseases such as asthma, making air pollution something that needs to be dealt with (Behi, 2007).

India has recognized these issues and is implementing one of the world's largest programs in renewable energy. Renewable resources already contribute to about 5% of the total power generating capacity in the country. In early 2006, the Indian government unveiled a National Hydrogen Energy Road Map (NHERM). This road map has committed the Indian government to having one million hydrogen fuelled vehicles on India's roads by year 2020. Addressing oil consumption and pollution by vehicles on the road is a prime target for India's goals because over 50% of India's energy needs are related to transportation. Further, India is expected to launch its first hydrogen filling station in 2008. These facts, when coupled with India's NHERM initiative, make the Indian transportation and automobile industries a prime target market for Ballard's fuel cells.

Approximately 84% of the 6.3 million vehicles sold per year in India are two and three wheelers which are used primarily for public transportation. Banaras Hindu University (BHU) has had success in developing and testing scooters and two, three, and four wheel vehicles that run on hydrogen. Hydrogen bus technology is also available. Companies such as Daimler Chrysler and Renault have initiated plans to begin manufacturing hybrid fuel cell cars in Ind by as early as 2010. More recently, Tata Motors, an Indian automobile manufacturer, teamed up with the Indian Space Research Organization (ISRO) to produce India's first hydrogen fuel cell car. As these developments show, the market for hydrogen fuel cells in the Indian transportation and automobile industry is growing at an increasingly high rate.

India's biggest hurdle is going to be capacity: being able to produce the necessary amount of hydrogen for hydrogen fuelled vehicles as they begin to appear on the Indian roads. It is exactly this hurdle that creates the export opportunity for Ballard. Ballard can export its fuel cells to India in order to help the country meet its demand as hydrogen vehicles begin to populate Indian roads. Not only can Ballard export its stand alone fuel cell stacks and engineer support to OEMs in India, they can also leverage their current strategic alliances with companies such as Daimler and Ford to export fuel cells through final consumer goods. Additionally, Ballard will be able to export its expertise to provide customer support for importers of the hydrogen fuel cell technology.

Given that an export opportunity exists, the next issue of concern is whether it is a good export opportunity for Ballard. Whether an export opportunity is good depends on several factors, including but not limited to, (1) exporter's competitive/comparative advantages, (2) national borders and distance, (3) international trade rules and tariff policies, and (4) monetary foreign exchange.

Competitive advantage: India's weak infrastructure for Hydrogen production provides a competitive advantage for Canada. As mentioned above, India will have capacity problems in being able to produce hydrogen. It is for this reason that the majority of the US $6.3 billion being invested in hydrogen projects under NHERM will go towards infrastructure. This is where Canada's first comparative advantage lies. As a world leader in hydrogen technology development, Canada already has an established infrastructure comprising facilities for hydrogen production, purification, storage and distribution; take for example Ballard's production of fuel cells. Canada has been leading in this area because of the sharing of knowledge and experience that occurs within the Canadian hydrogen and fuel cell industry. Sharing of knowledge is facilitated by relationships with organizations such as Hydrogen and Fuel Cells Canada. This organization provides strategic, research, financial, promotional and consulting support to the Canadian fuel cell industry (REFERENCE). These support systems are what allow Canadian companies maintain their advantage over other nations.

The Canadian government also provides the industry with a competitive advantage by forming a valuable partnership with companies. The federal government has provided financial support in excess of $200 million in the past 20 years (REFERENCE). This is important funding which has helped Canadian companies in the hydrogen industry stay ahead of competing companies in other countries. Canada's hydrogen industry is expanding and the resulting technology and expertise that has developed is recognized globally (REFERENCE). This