Given Canada’s vast geographic region, it will come as no surprise to those reading the third annual Job Shops Roundtable that market conditions, business sentiments and future outlooks vary from coast to coast.
On the East Coast, shipbuilding and oil and gas are spurring growth for some companies, such as Mackenzie Atlantic Tool & Die in Musquodoboit, NS, a machine shop employing 18 people. Owner Matthew Mackenzie says his shop is busy.
“We have long-term contracts with navy ship parts and our goal is to continue to grow with other long term contracts with different ship building areas and in the oil and industry. We normally invest in a couple of new pieces of equipment every year. We bought two machines last year and two before that. We’re focused on CNC machining and multi-tasking and all of our machines are Mazak.”
It’s a different story for Art Morris, owner of Brewster’s Machine Shop in Saint John, NB. While the shop has one CNC machine, it hasn’t been working for months. Instead, the shop is using its conventional machines–three milling machines, seven lathes, a boring mill, a rolling machine, ironworkers, presses and welding equipment.
“There is nothing going on in Saint John. We have a good customer base, but there is no activity. If the Irvings would get moving on the pipeline project it would get people working.”
And when there are jobs, Morris says finding workers is tough. “Everyone seems to be out West. I know guys working there now making $40 to $50 an hour but they would come back if they could get guaranteed work because they want to be closer to home and family. I can’t guarantee work and I wouldn’t bring them back for one job. One outfit talked a bunch of people into coming back from out West and then cancelled the job.”
Work for Eastern Canadian job shops (and others across the country) may be around the corner, following the announcement by Irving Shipbuilding in December 2013 that it has awarded $28.2 million in contracts to Canadian-based suppliers as part of its efforts to modernize its shipyard.
At the other end of the country on the West Coast, the job shops in British Columbia faring best are focused on niche markets or niche manufacturing processes. And while you would expect successful job shops in the province to be large businesses, a small, one-man, do-it-all job shop is bucking the trend and finding success in medicine and dentistry markets. Marcus Carius, a former dentist who returned to his original vocation of mouldmaking, formed Implant Mechanix Inc. in 1995 to support his then clinical dental practice.
“I’ve picked a niche in which I deal with stuff that other machine shops shudder at the thought of, miniature and micro-miniature stuff. I build stuff small enough that if you drop it on the floor, you’ll never find it again. That separates me from everybody else and there’s not a lot of that kind of work around, but there’s enough for one guy, so I can be plenty busy.”
For Modern Engineering, Delta, BC, success has come by way of five axis machining. The shop was formed in 1939 by Walter Kent. Today, the business consists of two 15,000 sq ft facilities and is owned by Udo Jahn.
“We’ve become really good at five axis machining. We have a horizontal machining cell attached to a 40-pallet system. We do lights out manufacturing. Why automation? I believe, as a country, we need to make investments in technology. If we do, we can be as productive as our Asian counterparts,” says Jahn.
The big news in Alberta is not news: the market is booming and there’s so much work that job shops are finding it difficult to keep good employees who periodically get lured away by higher wages or other better benefits. One Alberta job shop owner SMT spoke with says he’s paying his certified journeymen $30 to $32/hour but the going rate in Nisku, just outside of Edmonton, AB, is $40+/hour.
Michael Rachul, business manager for Special Metal Fabricating in Edmonton, AB, concurs. “Our economy is so hot that if a guy left a shop today, he’d have a job within hours on the other side paying more. It’s difficult to keep people and some of it is because of skill–we have a lot of people migrating to Alberta because of all the jobs–and part of the problem is attitude because, clearly, if they left now, they’d find another job in a few hours.”
Diversify to grow
For some shops, diversification is key. Ontario is a prime example, as many shops in the province that once serviced big industries such as automotive or shipbuilding, are now transforming themselves to appeal to a broader array of markets. Lakehead Marine Industrial, Thunder Bay, ON, is a good example. Formed in 1910 as a shipbuilding business, the company underwent its first transformation in 2007 when it incorporated as LMI and shifted focus to ship repair instead of shipbuilding. Today, the company is focused on branding itself as a specialist in large scale industrial engineering and manufacturing.
“What we’re really trying to push is getting into industrial work with value-added engineering services, which we started last year,” says Roy Summers, general manager. “We not just trying to be a job shop; we are trying to look at engineering solutions to the problems our clients are having…we try to have knowledge-based people that are a lot more than just ironworkers, machinists or millwrights.”
For some shops, diversification means moving more to OEM type manufacturing. MVM Machining, Calgary, AB, was formed in 2003 by brothers Leigh and Shaun Durling as a machine shop serving the oil and gas industry. Today, the company is focusing more on its own product lines.
“You need to diversify to grow,” says Leigh Durling, operations manager. “If you’re a jobber, you won’t survive. You’ll live day by day and won’t be able to increase business. This company has grown six times in four years because we’re engineering, designing, prototyping and building our own stuff. We’ve developed a fly fishing reel and it’s a complex component. It took three years to engineer and design it and now our guys, who have been machining oil field stuff for 15 years, are able to do something interesting and different. The fishing reel is an example of a market in which you’ll always see money. People will spend money on hobbies no matter whether the economy is up or down and this type of steady business is a way to manage the ups and downs of running a job shop.”
RMS Ross Corp., Chilliwack, BC, also began as a machine shop, known as Rosedale Machine Shop, but then switched gears in 1982 when Scott Plummer took the reins, to focus on mining equipment.
“We are involved in heavy-duty fabrication (steel plate) and machining, and our specialty is mining equipment. We do custom work, but the majority of our manufacturing is our own mining equipment we sell to aggregate producers. Our largest product would be our jig towers and they stand 10 stories tall. They’re for processing 1,000 to 1,200 tons an hour of aggregates.”
For Mackow Industries, a CNC machining and fabricating shop in Winnipeg, MB, diversification is about offering more manufacturing services and not about looking at new markets. In part, it’s because the company has built a successful business servicing the active bus manufacturing industry in the province, says Bob Mackow, part owner.
“I deal with bus companies and I’m a top vendor. We’ve diversified from being just a machine shop and welding shop. I’m a vendor that can turn stuff around quickly. We can laser cut it, bend it, machine it and weld it; we do everything in house. In the last four years, I’ve increased sales every year 10 per cent and we will go up again 10 per cent next year.”
Skilled trades: the issue that won’t go away
“I can’t think of any challenges we face except for finding skilled labour,” says Matthew Mackenzie, owner of Mackenzie Atlantic Tool & Die, a CNC machine shop that employs 18 people.
Indeed, virtually every job shop SMT spoke with say skilled trades shortage is an impediment to success. Some are addressing the issue head on. Udo Jahn, owner of Modern Engineering, Delta, BC, is a good example. The company just won a business of the year award from the Delta Chamber of Commerce for its initiatives with the skilled trades shortage.
“We’ve reached out to high schools and have taken kids in to work part time while they go to school. They need to maintain their marks while working here. We’ve also reached out to technical institutions because businesses haven’t been sponsoring the practicum that machining students are doing. We’ve been at this formally for two years. Instead of giving to charity, I want to champion this.”
For unionized shops, the challenges with skilled trades are sometimes more complex. “My biggest challenge going forward is getting knowledge down and succession planning with the union, which is very difficult,” explains Lakehead Marine Industrial’s general manager Roy Summers. “We have to deal with seniority rights and earnings…we have an aging workforce, but they are very competent. In the next three to five years we’re going to have a major turnover and I’m not sure how to handle it. The union is working with us on this problem.”
While apprenticeship programs are available, Summers says he’s hesitant to take on an apprentice when he can’t guarantee a continuation of work for existing unionized workers.
“What we’re looking at now is to see if there is a way to share an apprentice within our region with different job shops. In this way, we might be able to train people and create a labour pool for shops in our region. It’s a touchy subject though because you’re dealing with competitors.”
Calgary’s MVM Machining’s approach to the skilled trades shortage is to invest in leading edge machining technology to appeal to a younger generation and then hire these workers.
“There is equipment on the market that is unbelievably quick; we have machining centres running at speeds of 12,000 rpm,” says co-owner Leigh Durling. “All our guys are young and we do a lot of training in house. We have four apprentices and six journeymen trained. Job shops are closed-minded. People have to understand that we’re not just competing against other Canadian job shops; we’re competing against US shops and the competition is just going to get stronger.”
For D-M Precision Products, Dunnville, ON, formed in 1960, the focus is on maintaining the quality people the company employs, says Chad Plath, shop manager.
“We’re very competitive on our wages; we pay our employees well. Last year we put together a nice benefit program for employees. That was one of the focuses; to try and retain some of the skill sets. It’s hard for a small company to offer a nice benefit package to its employees because the cost is huge.” SMT