BE.Americas by Business Excellence Magazine

BUSINESS EXCELLENCE Issue 56 | www.bus-ex.com

PowerStream Luis Muñoz Marín International Airport

AMERICAS EDITION

No-SpillTM Systems

Adrok

Exploring new possibilities Over the last twelve months Adrok has made its presence known in key North American markets

ITâ&#x20AC;&#x2122;S TIME TO FOCUS ON YOU

Commercial Publishing Services Introducing our new commercial publishing services team Would you like to have your very own corporate magazine or newsletter? We can help you with your publishing needs from CSR, Sustainability or annual investor reports to your employee or shareholder handbooks. Whatever you need, we would love to help

[ Click here to find out more ] or email [ mday@bus-ex.com ]

business excellence

the team business John Oâ&#x20AC;&#x2122;Hanlon Editor johanlon@bus-ex.com

coming soon

Matt Johnson Art Director mjohnson@bus-ex.com

Zambia Special report

Sharon Rooke Administration & Operations srooke@bus-ex.com

<<< more info

Matt Day Head of Technology mday@bus-ex.com Andy Turner Chief Executive aturner@bus-ex.com

Madagascar Special report more info >>>

contributors David Dumeresque Tyzack Partners George F. Brown, JR B-to-B Advisors Gayle Ryan Dundas Data Visualization John Tschohl Service Quality Institute Thomas R. Cutler TR Cutler, Inc.

Involved

John Hayes NoRiskAutomation

To be a part of our authoritative reports promoting emerging markets and showcasing their investment opportunities - contact us today

subscriptions & enquires

aturner@bus-ex.com

info@bus-ex.com

Jacquard House, Queen Street, Norwich, NR2 4SX. England Registered in the UK: 9037437 The content of this magazine is copyright of Hill Top Business Media Ltd. Redistribution or reproduction of any content is prohibited. ÂŠ Copyright 2014 Hill Top Business Media Ltd.

HINT: For the best viewing experience, click the fullscreen icon here

contents 8

Recruitment

How to find a purple squirrel

Recruiting supreme innovators and ultimate game changers.

Strategy

Innovation to reach new markets and tap value pools

Innovation will create the foundation for many manufacturersâ&#x20AC;&#x2122; future success - but innovative thinking is just the first step in creating an innovation portfolio.

Operations

Why Excel is costing you millions

Why, by continuing to use static reports instead of a data discovery solution, companies arenâ&#x20AC;&#x2122;t able to see the larger trends.

operations

Deal with an irate customer, donâ&#x20AC;&#x2122;t lose them

The hardest part of any job can be dealing with angry, upset customers. Here are the secrets to placating, and more importantly retaining such individuals.

[ Issue 56 ] BE Americas

BE Americas [ Issue 56 ]

special focus: manufacturing

Conveyors

Best practices in conveyor relationships

How a collaborative experience among partners, manufacturers and end users creates a culture of best practice.

automation

Agnostic automation vendor selection: Objectivity required

28 36

When selecting a vendor for agnostic automation, objectivity is of paramount importance.

warehousing

Why the cloud is not always the answer for distribution centers

How the lag time of cloud based warehouse management systems are driving more distribution centers to warehouse control systems.

Executive Insight

Glenn Uminger, Director, Lean Systems Program

Glenn discusses the lessons he has learned, the achievements he has made and the people who have inspired him.

business showcase

Lean Systems Program

Celebrations are afoot at the University of Kentucky where 2014 marks the 20th anniversary of its revolutionary Lean Systems Program.

50 BE Americas [ Issue 56 ]

contents

Business of the month

58 Adrok

Exploring new possibilities Over the last twelve months Adrok has experienced significant gains, not just in terms of turnover, but also its presence in key North American markets and its acceptance into important sectors of industry.

oil & gas

Staatsolie

Bringing value back home The national oil company of Suriname has enough hydrocarbon reserves to keep it self sufficient for many years – at the same time it is investing in sustainable energy alternatives.

[ Issue 56 ] BE Americas

No-Spill™ Systems

Inspired innovation No-Spill™ Systems’ commitment is to provide fluid draining solutions that provide high quality and eco-friendly results, and measures its success on its ability to exceed its customers’ expectations.

BE Americas [ Issue 56 ]

mining & minerals

IOS

112

SaskPower

122

LUCELEC

Surfing the booms and busts of the mining industry Serving the Canadian mineral exploration industry since 1992, IOS integrates consulting services, contracting field work and operating a mineralogical laboratory.

Catching carbon In the final stages of completing a truly innovative programme that has attracted the attention of environmentally aware power utilities from across the world.

Powering an island nation Saint Lucia Electricity Services Limited (LUCELEC) was established in 1964, which means that this year it is celebrating its 50th anniversary. Infrastructure

Praxis

Aggregating service Praxis is already known as a reliable partner for crushing services: it has grown through excellence in the way it manages its assets to deliver services to major customers.

132

Luis Muñoz Marín International Airport

Destination Puerto Rico Puerto Rico’s largest airport and on its way to becoming a gateway to the entire Caribbean region.

132

energy & Utilities

100 PowerStream

Skating to the puck A relatively recently formed energy supply company, PowerStream has already shown the way to leverage new technologies and business models in the interest of the customers and communities it serves.

BE Americas [ Issue 56 ]

How to find a purple squirrel Recruiting supreme innovators and ultimate game changers Words by

[ Issue 56 ] BE Americas

David Dumeresque

ix years ago Jan Koum and Brian Acton applied for jobs at Facebook. Both were turned down and Acton would often quip: “We’re part of the Facebook reject club. Today, Ukrainian-born Koum is a good friend of Facebook’s Chairman and CEO, Mark Zuckerberg. He has also joined Facebook’s Board of Directors, but not before Zuckerberg paid him and Acton $19 billion for their company WhatsApp. How the HR people at Facebook must be kicking themselves. If only they had the foresight to employ Koum and Acton when the two applied for positions at the company. They could have saved Facebook a huge amount of money. Or perhaps looking at it another way, they could have made Facebook a huge amount of money! Hindsight is always 20:20 vision and the recruitment industry abounds with not dissimilar stories. Certainly Facebook’s HR team was not to know the eventual outcome regarding Koum and Acton, nor indeed is there any certainty that they would have invented WhatsApp if employed by Facebook. However, there are numerous cases where recruitment is undertaken without a thorough understanding of the drivers behind the role to be filled or the personal attributes required to achieve success in that role. What often happens is that the hiring manager will pass onto the HR Department a job description based on what the previous person had been doing during his or her tenure without thinking

about how things might have changed over that period, briefly discuss the position with the HR team and then wait for the short-list of suitable candidates to materialise. HR will rarely challenge the actual skill sets being sought. Another issue with which we as search consultants are increasingly being confronted is a brief to find a target who we colloquially term a “purple squirrel”. These are the rarest of individuals; extremely talented, supreme innovators and the ultimate game changers who are ‘perfect’ in every way - education, competencies and experience. Whilst they do exist, the reality is that purple squirrels won’t be found using conventional recruitment parameters and the process requires the consultant to have an in-depth knowledge of the client, and the client to trust the consultant’s intuition. Take Jan Koum, James Dyson and Steve Jobs as examples. Highly talented, supreme innovators and the game changers every senior executive would want to have on his or her team. However, prior to achieving the level of success they have become renowned for, all three would have failed the conventional recruitment approach because none of them possessed a university degree. Purple squirrels can be likened to great actors. They are team players operating best with others around them but they often excel

“Hindsight is always 20:20 vision and the recruitment industry abounds with not dissimilar stories”

[ Issue 56 ] BE Americas

recruitment

“why do companies seek to hire a purple squirrel if the process can be so challenging?”

in roles on their own. These people know what they want and where they want to be. For companies looking to recruit them, it is essential that they understand the job acceptance criteria of these purple squirrels. This will often entail having the right amount of leeway to undertake their role. The normal management strictures will be a complete turnoff for them. Indeed, most of the time they won’t want to have much to do with management but prefer to be given a free rein. Certaily, the idea on managing people will not be high on their list of priorities as this can restrain their freedom to think. Furthermore, just a lucrative financial package and the opportunity for career development are never deal clinchers. More often than not, this requires a change in recruitment approach. Rather than the hiring manager concentrating on competency-based recruitment (which certainly plays a part in the general recruitment process but doesn’t work with purple squirrels) the approach needs to be aspirational-based. What should be going through the mind of the recruiting manager is: “What sort of candidate will produce outstanding results for the organisation?” rather than: “Can the candidate do the job?” This makes the recruitment process a driver, rather than an inhibitor, of management innovation. This is really important because unless there is some degree of innovation in the recruitment process, purple squirrels will quickly deduce that the company is lacking in innovation and walk away. Equally important from the hiring managers pointof-view is to make sure that everyone who

BE Americas [ Issue 56 ]

is associated with the recruitment – or who will be affected by the hire of the purple squirrel – has bought into the idea. But why do companies seek to hire a purple squirrel if the process can be so challenging? There are many reasons, not the least of which is the economic impact these people can have on the organisation. Tony Fadell, Philips’ former head of digital audio strategy, was a perspicacious hire by Apple executives. Whilst at Philips, he conceived the concept of the MP3, but took his fledgling technology with him to Apple

and went on to become known as one of the fathers of the iPod, making billions for company in the process. It has also been said that Google is one company that actively chases purple squirrels because they have calculated that recruiting a top technologist will result in around 300 times more productivity and business impact than an average technologist. In financial terms, if (as suggested) the average Google employee generates around $US1 million in revenue each year, hiring a single purple squirrel technologist has the potential to add $US300 million to Google’s revenue annually. Then there is the brand impact hiring a purple squirrel can have on the organisation. When it was announced

“hiring a single purple squirrel technologist has the potential to add $US300 million to Google’s revenue annually”

[ Issue 56 ] BE Americas

recruitment

“Even though they are rare individuals, identifying purple squirrels is not difficult because their achievements and reputation will have been well-documented”

in October 2013 that Burberry’s Chief Executive Angela Ahrendts was leaving the fashion and luxury goods firm to join Apple as Senior VP for retail and online stores, word rapidly spread through all forms of media, thereby boosting still further Apple’s “street cred” – especially useful at a time when people were questioning Apple’s strategy. Additionally, employing a purple squirrel can often attract other top talent. Perhaps it was pure coincidence, but a couple of months before the announcement that Ahrendts was joining Apple, the technology giant had hired Paul Deneve, Yves-Saint Laurent’s former CEO and President, and Enrique Atlenza, a senior vice president at Levi’s. In recruitment we often talk about the need to ensure candidates are a good cultural fit and have skills that complement existing staff. However, in recruiting purple squirrels this often means flipping existing recruitment models on their heads. Certainly we would not identify targets we know to be the diametrical opposite to a firm’s existing culture, but given that these people are pioneers who are capable of disrupting an organisation in a very positive way, there are times when some exceptions have to be made. It may also mean making internal changes to the way in which the organisation operates and driving those changes forward. There are many examples of companies that have successfully done just that. Even though they are rare individuals, identifying purple squirrels is not difficult

because their achievements and reputation will have been well-documented. The difficulty comes in convincing them to change tack. Some will have giant-sized egos that need to be massaged expertly, and hiring managers must be prepared to accept more than a little arrogance. Furthermore, they will not discuss any potential job offer, irrespective of how lucrative it may be, with someone they don’t have a relationship with. This may often entail using business networks to build relationships with potential targets long before any approach is made regarding career change. For companies prepared to put in the groundwork, be adaptable and be seen to be innovative, irrespective of the industry sector, the effort will be well rewarded.

About the author

David Dumeresque David recruits senior executives and board directors for Information, Communications and Entertainment organisations across publishing, broadcast, digital media, as well as leading the firm’s Professional Services practice and acting on behalf of more general consumer products companies. He also has advised a wide spectrum of professional services firm on senior lateral hires, including lawyers, accountants, consultants and real estate professionals. www.tyzackpartners.com

BE Americas [ Issue 56 ]

to reach ne and tap va

Innovation will create the found future success - but innovative t creating an inno Words by

[ Issue 56 ] BE Americas

George

ew markets alue pools

dation for many manufacturersâ&#x20AC;&#x2122; thinking is just the first step in ovation portfolio F. Brown, Jr.

BE Americas [ Issue 56 ]

t is almost impossible to avoid the messages about the importance of innovation that dominate business magazines, web sites, and conferences. At a most recent Annual Meeting of the Institute for the Study of Business Markets, innovation joined “Big Data” and channel disruption as the three themes cited by CEOs, CMOs, and academic experts as most critical to the future success of business-to-business manufacturing firms. That emphasis is nothing new. Peter Drucker said “Innovation is the specific instrument of entrepreneurship, the act that endows resources with a new capacity to create wealth.” Michael Porter similarly observed that “Innovation is the central issue in economic prosperity.” And Steve Jobs believed that “Innovation distinguishes between a leader and a follower.” I agree with the emphasis on innovation as central to the future growth and profitability of our companies. There are far too many success stories rooted in innovation to credibly argue otherwise, and, unfortunately, far too many stories of firms that deteriorated from great to second rate by failing to keep pace with innovative competitors. But, at the same time, I believe our firms far too often have tunnel vision with respect to the ways in which they think about innovation. An example supports that conclusion. Over a breakfast meeting recently with a number of business executives, I asked for their favorite example of an innovation success story, one drawn either from their

“I agree with the emphasis on innovation as central to the future growth and profitability of our companies”

[ Issue 56 ] BE Americas

own experience or from other firms with which they were familiar. Each individual easily offered an example, and in every case, described a situation in which success was achieved by raising the bar – identifying a way to enhance products with new features, improved performance, superior design, or along some other dimension. A few involved success stories familiar to many of us, but most reflected something that was known mostly by participants in the industry in question. There was no question that all of these examples were in fact innovation success stories, ones that any firm would have been proud to claim. In fact, innovations that “raise the bar” are those that we most frequently celebrate, those that we invest scarce technical resources and R&D dollars to achieve. And should there be any question, there are good reasons for investing in raising the bar. A number of years ago, I worked with a client to estimate the relative shares of the “Good”, “Better”, and “Best” segments of their market. With some modest rounding, we found that the split was about 40%, 30%, and 30%. While acknowledging that all generalizations are false, that rule of thumb has been remarkable in terms of being a good approximation in other markets that I’ve studied since then. The finding is also good news in terms of “raise the bar” innovations – 60% of customers are looking for, and willing to pay for, products that go beyond the bare bones “Good” offering. And it is in fact the firms that raise the bar most successfully that are likely to win the customers in the “Best” segment, the customers most likely to pay a price premium for those features and attributes that distinguish each generation of “Best”. Those firms that can raise the bar should raise the bar. They are likely to be rewarded for doing so. But raising the bar is not the only option for innovation strategies. There are two

strategy

very different innovation strategies that should be considered, ones that have the potential for creating value that can be captured. And, like raising the bar, they are demanding in terms of creativity and out-of-the-box thinking. In my experience, western firms are far less likely to assign resources to innovations that fall into these two categories, preferring to focus their attention on opportunities to raise the bar. My perspective on the first of these opportunities for innovation was recently motivated by the work I have done along with my colleague David Hartman on the changing competitive environment. In a series of articles, we have argued that the future competitive landscape will be changed in fundamental ways by firms from emerging markets like China that have learned how to produce “almost-as-good products at a great price point”. What these firms have done is dramatically expand their markets, reaching the large middle markets of countries like China and India with innovative products that retained the key features of the highend “Best” offerings from the west, at a price point affordable to the much larger middle market segments of their home countries. These firms have found innovative ways to preserve the key product features critical to customer acceptance while at the same time identifying economies that allow them to reach a much lower price point. Often their innovations involve strategies to remove costly features that are not critical to the customers in their targeted markets. In other instances, their innovations involve creative approaches to

manufacturing, sourcing, service, and other elements of their cost base. For those that aren’t yet studying the success stories of emerging market firms like Huawei, Mindray, Sany, Haier, and others that have innovated through this “expand the market” strategy, I point to the much more familiar success story of Henry Ford, another creative executive that figured out the “almost-as-good product at a great price point” formula. In his autobiography, Ford wrote: “I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one.” His vision required many innovative concepts, not the least of which was the assembly line, but it not only created value for his company, but in fact a whole industry, by expanding the market. This approach to innovation is particularly important today. Many of the same firms that tout innovation as key to their future cite the middle markets of emerging countries as their growth markets of the future. Success in those segments will only come from the firms that figure out the strategy of creating “almost-as-good products at a great price point”. Without attention and focus on innovations that “expand the market”, it is a good bet that it will be firms from countries like China that are the eventual winners in those huge markets of the future. Today, firms from those countries are probably as far ahead along

BE Americas [ Issue 56 ]

this dimension of innovation as western firms are in terms of innovations that raise the bar. Unless success can be achieved in the increasingly squeezed “Best” segments, investments that can yield success stories in the “Better” and “Good” market segments must be part of the innovation portfolio of western manufacturing companies. Almost every business firm with which I work puts considerable importance on strategies that enable them to reach new markets. And, as mentioned above, today, the broad middle markets of the emerging economies are high on the list of targets that have scale and growth potential. But it is rare that I hear innovation linked to the discussion of strategies through which these markets can be reached. And in fact too often I hear executives sadly dismiss the potential of serving these markets, making statements like “at the price points that exist in that market, we could never hope to make any money”. Innovation is potentially the answer to that problem. Finding creative ways to take costs out while retaining the critical features of products is a possibility, one that can yield major dividends in terms of growth in new markets. There is a third innovation strategy that can yield dividends in some markets. Many manufacturers sell through complex customer chains. Ingredient and component suppliers sell to OEMs and other manufacturers that incorporate their ingredients and components

[ Issue 56 ] BE Americas

into their own products, eventually reaching end customers. Other manufacturers sell to distributors who sell to contractors, installers, and VARs who themselves serve end customers. In many of these situations, the end customers involved are price buyers, giving considerable weight to price in their purchase decisions. The suppliers in such situations frequently report an inability to gain traction from traditional “raise the bar” innovations, as the intermediaries between them and the end customer are unwilling to agree to improvements that carry with them a higher price tag. In numerous instances, I have heard the frustration of suppliers involved in such markets, as their innovations are met with a cold shoulder by their direct customer. What has been far more successful in many of these situations have been innovations that “change the game”, that create value by creative approaches to profitably transform the economic and business relationship between the supplier and their direct customer. The opportunity to “change the game” in this way builds upon the fact that there are significant adjacency costs associated with most products that are sold through the types of complex customer chains described above. Some of those adjacency costs involve the manufacturing process, others are more subtle like those associated with warranty costs. But adjacency costs are always there, and are frequently much larger than the product costs per se. I have seen many instances in which the adjacency costs linked to a product are an order of magnitude larger than the product cost itself. Working recently with a manufacturing firm that supplied an important component to its business customers, we went through a systematic process to identify and quantify these adjacency costs. A few of their strategic accounts provided on-site access to allow the teams working on this initiative to identify

strategy

all of the cost elements that were linked to the use of this firm’s component. The results were shocking to all involved, as it turned out that the “value pool” that emerged from this work was many multiples of the cost of the component itself. As one executive noted, “we’ve not created the opportunity for value creation and capture that goes dramatically beyond the price of our product”. It is such value pools that create the opportunity for innovations that “change the game”, ones that take costs out of the system through creative approaches to product design, through changes in the roles and the boundaries between suppliers and customers, and through other strategies that enable value creation and capture. Such innovations respect the reality of the price pressures of end customers, and enable margin improvements centered in the business processes within and between the manufacturing partners at earlier stages of the customer chain. In interviews with OEMs and other manufacturers, many of the success stories that they tell about their favorite suppliers involve innovations that “change the game”. In some markets, those are in fact about the only opportunities for innovation that are available to suppliers. There is no question that innovation will create the foundation for future success

“Almost every business firm with which I work puts considerable importance on strategies that enable them to reach new markets”

stories for many manufacturing firms. The focus on innovation correctly belongs high on the agenda. But innovative thinking about innovation is the first step in the process. The three flavors of innovation described here – ones that can raise the bar, ones that can expand the market, and ones that change the game by tapping into available value pools – all have the potential to be the foundations of those future success stories. Thinking through your firm’s opportunities within each of these categories, in the context of the markets targeted, the customers along the customer chain, and the competitors against whom you must win can allow the creation of an innovation portfolio that draws appropriately on all three possibilities and allocates resources to those opportunities most likely to yield future success.

About the author

George F. Brown, Jr George consults with industrial firms on growth strategy through his firm B-to-B Advisors, Inc. He is the coauthor of CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs and the cofounder of and a Senior Advisor to Blue Canyon Partners, Inc., which he served as CEO for fifteen years. George has published frequently on topics relating to strategy in business markets, including articles in Industry Week, Industrial Distribution, Chief Executive, Business Excellence, Employment Relations Today, iP Frontline, Industrial Engineer, Industry Today, and many others. gfb@BtoBAdvisors.com

BE Americas [ Issue 56 ]

Why Excel is costing you millions Why, by continuing to use static reports instead of a data discovery solution, companies arenâ&#x20AC;&#x2122;t able to see the larger trends Words by

[ Issue 56 ] BE Americas

Gayle Ryan

few years ago, the ability to capture and manipulate data was an exciting possibility. Organizations often pulled information from databases, which they would then export into Excel to manipulate and analyze. Today, however, static reporting is no longer enough. Recently there has been a shift in Information Technology from traditional Business Intelligence (BI), where reports are static, to data discovery, where the reports are focused on users, and are dynamic and easy to use. Organizations now need to be able to explore their information and visualize the data in order to stay competitive. Organizations have more data than ever before, and companies that have developed a way to harness and explore their data have an advantage in the market. Excel has its place for certain functions, but spreadsheets don’t allow decision makers to see the big picture as effectively as a dashboard. In fact, even Microsoft has noticed the shift away from static reporting and realized that Excel isn’t enough, which is why there are more data discovery capabilities in newer versions of Excel and in Microsoft Power View. Still, even the added capabilities in Microsoft Power View still do not allow users to fully monitor, analyze, and explore their data. In order to remain agile and recognize opportunities, organizations need to invest in BI tools that include data discovery and dashboards. Gartner predicts that more and more devices will be connected with the internet, calling it the “Internet of Everything”. Gartner

“spreadsheets don’t allow decision makers to see the big picture as effectively as a dashboard”

[ Issue 56 ] BE Americas

named this one of the top 10 strategic technology trends for 2014, predicting that this trend will drive an enormous increase in information available. With this massive expansion in available information, the potential for exploration and analysis also grows, requiring the need for more sophisticated and proactive information management and analytical models. Is Excel up to the task? Excel reports are static, and take time to produce. By the time the decision makers receive their report, the information is already out of date. With a real-time dashboard, people receive updates as soon as the information is available. Dashboards are also interactive, unlike Excel, which means that if a certain data point is troubling, dashboard users can drill down to get more information. Dashboards even provide alerts and updates when something is amiss. Excel spreadsheets do not provide alerts or updates, and, they are actually hindering our ability to understand critical information by being difficult to read. Finally, Excel spreadsheets are prone to error. One typo can skew all of the data, and it may take time to notice and correct the mistake. Data discovery tools are automated, and much of the room for human error is eliminated. With more and more information available through a growing number of devices connected to the internet, there are more opportunities for companies to develop new business models, products, marketing strategies, and engagement models for customers, employees, and partners. However, this will only be possible for the organizations that are able to use their information quickly and effectively. Excel spreadsheets are not a reliable way to manage BI, reporting, and data discovery in order to compete in the quickly changing market. Companies need a comprehensive solution, including BI infrastructure, data discovery tools, dashboards, and effective

operations

data visualizations that will allow them to analyze and explore large sets of data. Gartner makes the bold statement that “No business can afford to ignore or underplay the impact of technology-driven disruptions that are even transforming what it means to be a business in a digital world.” Traditional BI is no longer enough; data discovery is now necessary to remain competitive. Comprehensive BI solutions that include data discovery and dashboards, however, can require a large investment of both time and money. Depending on the organization’s requirements and existing IT infrastructure, investments in servers, storage, clients, and networking may be necessary. Implementation, training, and administration also add to the upfront costs. It is possible, however, to reduce the capital expenditure needed for deployment with cloud services. In addition to the up-front costs, BI tools will incur maintenance costs and costs associated with enhancing and extending the application. These costs usually far outweigh the up-front investment. In fact, Gartner estimates that, for a business application that is used for 15 years, the average cost to go live is 8% of the total lifetime cost of ownership. It is important to note that the Total Cost of Ownership (TCO) is highly dependent on design decisions, and so it is important for organizations to design the BI solution according to their needs from the beginning, as this will affect, and could drastically reduce, the maintenance and enhancing costs. However, a BI solution will actually reduce operational costs. Manual reporting can be almost eliminated or greatly reduced with a comprehensive BI and dashboard solution. Each organization’s reporting needs and subsequent savings will vary; however, organizations that assign one analyst to each team can likely reduce the number of analysts to one or just a few for the

“Traditional BI is no longer enough; data discovery is now necessary to remain competitive”

entire organization. Neo@Ogilvy, a Dundas Data Visualization customer, used Excel to analyze and report on its customers’ data. After implementing a BI solution, including a Dundas powered dashboard, the organization saw their reporting time decrease by 90%. There is mounting research that indicates organizations need a BI solution that includes data discovery, dashboards, and data visualization tools in order to use the ever-increasing amount of data available and remain competitive in the market. With this evidence, the question is, can you afford not to invest in BI? The opportunity costs of avoiding a BI solution and continuing to use Excel for reporting and data exploration will soon become apparent, if they aren’t already. By continuing to use traditional BI tools including static Excel reports instead of a data discovery solution, companies aren’t able to aggregate all of their data and see the larger trends. Managers and executives aren’t able to understand their data easily and make fact-based decisions quickly. Organizations aren’t able to harness and use data, an element that has, and will continue to disrupt the way businesses run. About the author

Gayle Ryan Dundas Data Visualization. www.dundas.com

BE Americas [ Issue 56 ]

Deal with an irate customer donâ&#x20AC;&#x2122;t lose them The hardest part of any job can be dealing with angry, upset customers. Here are the secrets to placating, and more importantly retaining such individuals Words by

John Tschohl

BE Americas [ Issue 56 ]

acing off with a screaming, unreasonable, irrational customer represents the ultimate test of any employee’s service skills. It can take you to your breaking point if you’re not careful. Staying grounded and above the fray requires you to find inner strength, and persevere beyond the initial difficulties. Dealing with irate customers is one of the most pressure-packed experiences you will ever encounter on any job. During every confrontation it is important to remember: 1) Every customer is a different person with a unique set of circumstances and personality traits. 2) Irate customer encounters can emerge out of nowhere—the key is to be ready. 3) You represent an opportunity to set things right. 4) Compassion is essential. 5) Despite your best efforts, sometimes there is nothing that can save a situation. Ditch the “I’m Sorry” Script Sorry, just doesn’t cut it sometimes. Saying “”I’m Sorry” is so overused it sounds insincere. Be specific by saying “I apologize for th i s i s s u e …” Make sure your apology directly makes reference to the actual issue, and

ALWAYS try to use the customer’s name when addressing them. It adds a personal connection to them. Get on the customer’s side of the counter Visualize for a moment an upset customer walking in your door and approaching you. The first thing an angry customer does is attack you. It’s very important to remember that you are not personally being attacked but are listening to someone who is in an attacking mode. Partner with your customer Let the customer know that your job is to go to bat for them. This tells them that you are their emissary and you want to resolve it together. The 4 C’s of Handling Irate Customers and Difficult Situations It’s all about: 1) Compassion – Listen carefully and react to their words, not just their behavior. Examine the facts. 2) Calm – Remain calm and don’t lose your cool. 3) Confidence – Handle the situation knowing you are following company guidelines—and serve the customer. 4) Competence – Save the customer with your competent handling of

“Make sure your apology directly makes reference to the actual issue, and ALWAYS try to use the customer’s name when addressing theM”

[ Issue 56 ] BE Americas

operations

“Remember, it costs at least five times as much to gain a new customer than keep an existing one and with social media it’s even more costly”

the situation so he or she continues to be a customer. Regardless of how a problem is solved, getting it done now is the best way to stop the venting and to bring an irate customer around. You need to show your customer than, as an employee and as the face of your organization you are invested in solving the problem. 5 Steps to Handle Irate Customers 1) Listen carefully and with interest. Put yourself in your customer’s place 2) Ask questions and actively listen to the answers 3) Suggest alternatives that address their concerns 4) Apologize without laying blame 5) Solve the problem quickly and efficiently. Remember, it costs at least five times as much to gain a new customer than keep an existing one and with social media it’s even more costly. The average number

of friends on Facebook is 130. Keeping a complaining customer, according to Tschohl, should be the top priority, and at these cost ratios you can afford to be generous in your time and effort. Take Care Of Yourself Dealing with irate customers will drain you physically and emotionally and put your skills to the test. You must find ways to take care of yourself. As part of your “recovery time”, know that dealing with irate customers is allowing yourself to relax, recharge and assess your role. Recovery separates you from the situation and gives you a chance to breathe. Learn from every complaint Do something! Fix the process; train staff in the issue; eliminate the fault. Wherever possible let the complaining customer know that they have helped you resolve a problem – they’ll feel great and come back again and again (and will probably tell their friends!).

About the author

John Tschohl John Tschohl, the internationally recognized service strategist, is founder and president of Service Quality Institute in Minneapolis, Minnesota. Described by USA Today, Time, and Entrepreneur as a “customer service guru,” has written several books on customer service including his new program Handling Irate Customers and Difficult Situations. John’s strategic newsletter is available online. www.johntschohl.com

BE Americas [ Issue 56 ]

Best practices in con How a collaborative experience and end users creates a Words by

[ Issue 56 ] BE Americas

Thom

nveyor relationships among partners, manufacturers culture of best practice

mas R. Cutler BE Americas [ Issue 56 ]

he historical perspective is easy to grasp. Automated product movement is a well-established, easily understood concept. It is so familiar and normative that many in the material handling sector consider conveyance technology little more than a commodity. That is a wild over-simplification. Conveyor solutions are developed from dynamic and complex challenges which require safe, ergonomic, tested and proven products, developed by creative people with a focus on lean manufacturing continuous process improvement. According to Material Handling Equipment Distributors Association

“Hytrol Conveyor Company’s first conveyor, designed by founder Tom Loberg in 1947, moved bags of seed in preparation for stacking, and folded when not in use”

(MHEDA), the only trade association dedicated solely to improving the proficiency of the independent material handling equipment distributor, conveyor systems have been an integral part of material handling for more than a century, and transport of bulk materials by conveyor belts dates back to around 1795; the vast majority of these early iterations were used to move grains over very short distances. The first conveyor belt systems were very primitive and consisted of a leather, canvas or rubber belt traveling over a flat wooden bed. This rudimentary system was successful enough to provide incentive

[ Issue 56 ] BE Americas

for engineers to consider conveyors as an economical and efficient way to haul large quantities of bulk material from one location to another. By the turn of the 20th century, conveyors were being used in the Minneapolis-St. Paul area to unload wooden shingles from railcars. Conveyors are now used for thousands of additional applications, particularly moving items in manufacturing plants and distribution centers. Hytrol Conveyor Company’s first conveyor, designed by founder Tom Loberg in 1947, moved bags of seed in preparation for stacking, and folded when not in use. Loberg discovered that the right angle reducer he had designed for a rotary lawn mower was just the right size to make a belt run at the proper speed on a conveyor. The Tested Conveyor Element Designing an automated conveyance system on paper lacks the kind of rigorous testing needed to ensure that postinstallation the technology solution works the way it was designed and intended. Few organizations have an internal testing system. Based in Jonesboro, Arkansas, Hytrol installed a test system at their Technology Center, allowing customers and integration partners fully test products prior to implementation. This unique resource provides a level of confidence and reassurance to customers. All issues and workability concerns are addressed before conveyors are at the customer plant floor. Until very recently service was a major determining factor in selecting Motor Driven Roller (MDR) equipment. Providing the best 24 volt conveyor drive technology globally is another way to assuage material handling and manufacturing concerns. E24, 24 volt (MDR) conveyors are being

manufacturing

BE Americas [ Issue 56 ]

widely used due to their simplicity and flexibility. Since the drive train is distributed along the conveyor length a single piece of equipment can perform multiple functions. This includes different speeds, multiple directions, and starting/ stopping individual sections. This breakthrough E24 technology is unique among conveyor providers and the modular design allows for easy

â&#x20AC;&#x153;This breakthrough E24 technology is unique among conveyor providersâ&#x20AC;?

[ Issue 56 ] BE Americas

configuration with minimal maintenance. The safe, quiet, and energy efficient operation offers greater speed options because the conveyor speed is not based on fixed gear ratios. Since one motor is used for all widths and speeds, there is only one motor to stock. The minimum conveyor width is not limited by drive components and multiple motors per zone are available for long zones. The People Element Designing and manufacturing for major companies all over the world, Hytrol made clear that these are some of the most advanced conveyor systems in the material handling industry. More than 700 dedicated employees consider themselves

manufacturing

a member of the Hytrol family. It is this cultural context that evaporates the notion that these conveyors are a commodity. The products and services represent personal integrity and dynamic lean thinking. The Partner Integration Element Bob West, Vice President of Corporate Development at Hytrol extended the values of the organizations and noted, “Strong relationships build success. A key component of the Hytrol Advantage is the success of our integration partner network, which is focused on bringing you the best solution. With more than a hundred locations around the world, Hytrol’s network of local service providers offers you great piece of mind. Through

“A key component of the Hytrol Advantage is the success of our integration partner network”

our strong relationships, Hytrol is able to provide local presence, on-site expertise, and the instant assistance needed by customers today.” This sentiment was echoed by Matt Farris, Director of Business Development at Hytrol who remarked, “Our integration partners are experts managing the total

BE Americas [ Issue 56 ]

project with best-of-breed software and equipment. They go beyond just selling equipment and explain how our system solutions can improve your methods. They work hard to develop a deep understanding of each customer’s business in order to recommend the right solution every time.” An integration partner can be on a job site at a moment’s notice. They work with end users to make sure that they understand the system. Strong integration partners integrate conveyor equipment

“Lean principles are at the core of everything we do here at Hytrol”

[ Issue 56 ] BE Americas

with other technology to fit the customer’s needs. Local integration partners know local codes and they understand local law providing conveyor. They are familiar with customers in that area; they are neighbors. The real relationship is at a local level, which makes them accessible anytime the customer needs them. From concept to implementation the integration partner network is a unique business model that allows heightened customer service. The Lean Element Lean manufacturing is a comprehensive approach to preserving value, from concept to completion. Lean manufacturing is infinite and ever evolving. Chris Glenn, Hytrol’s Vice President of Manufacturing and Engineering Operations emphasized the importance of lean manufacturing and urged, “Lean principles are at the core of

manufacturing

everything we do here at Hytrol. It’s a unique way of thinking, a philosophy built on efficiency that offers the most value to our customer.” The execution of best-practice and continuous process improvement was articulated by Chris Taylor, Focus Factory Manager at Hytrol. “It’s all about how the product flows through the facility. It’s about problem solving and streamlining processes to improve production and eliminate waste. We implemented lean principles into the Hytrol facility in 2004, and we’ve never looked back. It’s ingrained in our culture.” Few conveyor companies have been as wise to build the entire enterprise around operator-centric processes. An operator brings value to the manufacturing and assembly of a product that a piece of automation does not always provide. Every Hytrol conveyor system is geared toward supporting that operator and getting product out the door. By continually investing in people, the is a customer competitive advantage driven by these cultural imperatives. Integrating Best Practice Elements The most important thing about fulfilling a customer’s needs is the

“We implemented lean principles into the Hytrol facility in 2004, and we’ve never looked back. It’s ingrained in our culture”

total solution. Putting all of the technologies together with the correct controls and the applications ensures a total system and promises that the implementation goes as smoothly with integration partners. The concept of conveyance is easy to grasp; the execution of great conveyors indeed rests with centers of excellence, supported by comprehensive testing, knowledgeable partners, and creative and passionate people. The conveyor culture modelled at Hytrol illustrates the dynamic requirements of manufacturing best practices. This conveyor culture creates a collaborative experience among the manufacturer, the end user, and the integration partner.

About the author

Thomas R. Cutler Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc. Cutler is the founder of the Manufacturing Media Consortium including more than 5000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 500 feature articles annually regarding the manufacturing sector. Cutler is the most published freelance industrial journalist worldwide and can be contacted at: trcutler@trcutlerinc.com @ThomasRCutler www.trcutlerinc.com

BE Americas [ Issue 56 ]

[ Issue 56 ] BE Americas

Agnostic automation vendor selection: Objectivity required When selecting a vendor for agnostic automation, objectivity is of paramount importance Words by

John Hayes

BE Americas [ Issue 56 ]

epresenting an AGV vendor is often a conflict of interest. The end-user customer’s interests may not align with the AGV vendor’s interests. The only way to avoid these conflicts is a vendor agnostic approach to automation. As a sales manager for several automated guided vehicle (AGV) companies there was an intention: sell AGVs. Performance was measured by number of vehicles sold per month, per quarter, per year, year over year, and at a measured profitability. It took courage to say to the customer and to C-level AGV management, “Sorry this isn’t the right product for you.” Rather than entering an automation conversation with a pre-designated solution, there are steps to clearly recognize the best-practices, the leanest solutions, the most rapid return-oninvestment (ROI), while avoiding the landmines and confusing games played by many AGV salespeople. Knowing the “tricks of the trade” has inspired the creation of No Risk Automation. Asking the right questions from the beginning drives a much more precise selection of appropriate automation solutions. This knowledge and experience-based approach cannot be duplicated or Google searched. It requires having walked in the shoes of the AGV vendors and the AGV automation purchaser.

“It took courage to say to the customer and to C-level AGV management, ‘Sorry this isn’t the right product for you’”

[ Issue 56 ] BE Americas

Four Steps to No Risk Automation Step 1: Application Study and Analysis A comprehensive vendor agnostic study of potential automation applications is essential. Some automation projects are simply a waste of time, a poor project concept, or ignore applications that may have immediate positive return on investment. Again an AGV vendor sales pitch essentially suggests to a prospective customer that a prescribed AGV solution is best. Perhaps it is; often it is not. Stopping after this first step may be sufficient to avoid the substantial financial hemorrhaging from poor automation technology solutions. Step 2: Specification Development Automation vendors write proposals based upon what a prospective customer request. If the automation needs are not properly vetted, and a rigorous specification document developed, these same vendors will provide the proposal they deem best (often targeted to their sales goals and profit margins. This step is only needed when a decision has been made to pursue an automation project. The risk is eliminated by clearly directing vendors to propose the specified solutions. All the unneeded bells and whistles, add-on services, and superfluous functionalities are eliminated. Stopping after this second step may also prove efficacious when there are sufficient internal resources to move forward with the internal automation project. Step 3: Vendor Selection Without the need or incentive for advocating a particular automation AGV supplier, a comprehensive and objective viable pool of vendors can establish a fair, unbiased selection process. Instead of “making a solution fit the automation demand” the opposite paradigm is developed. Vendor selection is expressly guided by the

manufacturing

metrics, deliverables, cost-constraints, and objectives of the customer. The goal is to both exclude vendors lacking the specific project automation expertise and include the best vendors with proven knowledge and experience delivering targeted automation solutions. The step is only possible with decades of knowledge about the players in AGV automation. Knowing the successes and failures, the strengths and limitations of each vendor is a shortcut to avoiding an expensive and ineffective automation decision. Vendor selection may be another opportunity to internally handle the implementation, staff permitting. Step 4: Project Manage Once the automation system is purchased, the next risk danger is a poorly implemented solution. If there are sufficiently experienced automation experts employed by the customer, this project management need not be sourced to a third party firm. Often there is a champion of automation, perhaps an operations director, or material handling vicepresident. The daily operational demands and copious responsibilities on that experienced management team member can detract from a correct, efficient, and cost-contained implementation.

“There is no single way to completely eliminate all the risks in automation selection”

Being vendor agnostic at the first phase is critical to eliminating risk, by the time implementation occurs, internal stakeholders have their own interests within the organization. The automation decision team may have consisted of three or four people. By the time project management rolls around an expanded group of individuals at each customer location must be addressed. Each has a different agenda and in most companies the margins are increased by change orders. Effective project management, especially from an outside source, can ensure this does not happen. There is no single way to completely eliminate all the risks in automation selection. There are steps and processes that mitigate the likelihood of costly mistakes. These steps are the same as putting on a seatbelt and having airbags. They go a long way in protecting the automation customer.

About the author

John Hayes John Hayes is a solutions-finder for the material handling industry. For more than twenty years he has been evaluating, designing, developing, and implementing innovative software and hardware solutions for businesses in high-volume retail, wholesale (B2B), and direct-to-consumer (B2C) distribution systems. Hayes is a 2014 Supply & Demand Chain Executive “Pros to Know” recipient with vast and specific expertise in automated guided vehicles (AGVs). NoRiskAutomation is an organization founded by Hayes to inform and protect automation decision-makers. @NoRiskAutomate www.noriskautomation.com

BE Americas [ Issue 56 ]

Why the cloud is not always the answer

for distribution centers How the lag time of cloud based warehouse management systems are driving more distribution centers to warehouse control systems Words by

Thomas R. Cutler

BE Americas [ Issue 56 ]

ich Hite, President of QC Software, a Tier 1 warehouse control systems solutions provider, suggested, “Even the best WMS has a brief lag time in transmitting of instructions to a high-speed sortation system. There are simply too many warehouses with tens of thousands of decisions being made daily that require split-second timing.” Hite, along with other industry leaders agree there is a place for both warehouse management systems (WMS) and warehouse control systems (WCS). Thomas N. Williams is a global expert on WMS and WCS solutions. His client roster includes Home Depot (Atlanta, GA), UPS Airhub (Louisville, KY), and Under Armour (Baltimore, MD). As a systems and industrial engineer with thirty-five years of experience, he has designed, developed, and implemented highly productive and costeffective software and hardware solutions for high-volume distribution systems. His company has won national awards for design in both the US and Canada. Williams noted, “The Material Handling industry continues to change. Recently, ecommerce and multichannel distribution have added new layers of complexity to the supply chain. The IT industry has evolved in response to these changes.” James Cooke, Editor at Large for DC Velocity has covered logistics and transportation as well as supply chain strategy and technology for two decades. A former editor at Logistics Management

magazine, he has earned numerous awards for his well-written, in-depth articles spotlighting developments in distribution. Cooke helped drive the launch of Supply Chain Management Review. He is a frequent speaker on the logistics conference circuit. Cooke offered warnings about cloudbased WMS solutions suggesting, “When it comes to their software, a lot of warehouse and DC managers have their heads in the clouds these days. Rather than buying a traditional warehouse management system (WMS) and installing it on their corporate servers, they’re opting for cloud-based applications that are hosted by the vendor or a third-party on an offsite server, often far away, and delivered via the Internet.” He also acknowledged, “Much of the appeal of cloud-based solutions is their low cost. Companies can avoid a hefty upfront capital outlay for software licenses as well as ongoing expenses for upgrades and maintenance. At present, most cloudbased WMS users are small warehouses that use basic equipment like forklift trucks, bar-code scanners, and radiofrequency devices in their operations.” The WMS is the freighter moving slowly across the ocean (or more literally in a cloud-based transactional modality. The WCS is the agile solution that operates within the four walls of a plant or distribution center. WCS is the speed boat. There is value in both the WMS and WCS, yet as the high volume distribution

“At present, most cloud-based WMS users are small warehouses that use basic equipment like forklift trucks, bar-code scanners, and radio-frequency devices in their operations”

[ Issue 56 ] BE Americas

manufacturing

Tier-1 Warehouse Control System

Inventory Management

Shipping Management

Order Management

Conveyor Management

Core Components

PLAN

EXECUTE

VERIFY

REPORT

SLOTTING LOCATION CONTROL CROSS DOCKING

RECEIVING PUT-AWAY PRODUCT TRANSFER REPLENISHMENTS

CYCLE COUNTING PHYSICAL INVENTORY QUANTITY ADJUSTMENTS AUDIT TRAIL

PALLET BUILDING BOL / MANIFESTING ADVANCED SHIP NOTICE LOCATION METRICS

RATE SHOPPING SHIP METHOD OVERRIDE ADDRESS VALIDATION

MULTI-CARRIER SHIPPING DOMESTIC/INTERNATIONAL CARRIER COMPLIANT LABELS AUTOMATED PRINT & APPLY

EMAIL SHIP NOTIFICATION BUSINESS RULES SHIP LABEL CONFIRMATION

CARRIER COMPLIANT DOCS END OF DAY PROCESS SHIPPING COST

WAVE PLANNING SKU ALLOCATION CARTONIZING WORKLOAD BALANCING

PAPER PICKING RF PICKING PICK-TO-LIGHT VOICE DIRECTED AUTOMATED PICKING SYSTEMS

CONTENTS LIST MANUAL PACK VERIFY WEIGHT CHECK VERIFICATION SCAN/PACK AUDIT RULES

INVOICES/PACK SLIPS FILL COUNTS PICK PRODUCTIVITY SKU METRICS

ROUTE PLANNING FLEXIBLE MAPPING

REAL-TIME SORTATION HOST/WCS DIRECTED ROUTING ZONE SKIPPING ROUND-ROBIN SORT RATE CONTROL

IN-LINE SCALE DIVERT CONFIRMATION CARTON TRACKING SCANNER LOG

SCANNER STATISTICS SORT STATISTICS

FLEX SCREENSTM GRAPHICAL USER INTERFACE SECURITY CONTROL SYSTEM PARAMETERS

HOST INTERFACE SERVICE MANAGER EMAIL/TEXT ALERTS

DIAGNOSTIC TOOLS STATISTICS DEBUG TRACING

FLEX REPORTSTM EXCEL EXPORT CRYSTAL REPORTS

centers with B2C (Business to Consumer) focus attempt to cope with exponential proliferation of SKUs, the WCS is keeping an important reality check. Cooke consulted several industry experts who insisted, “To prevent these kinds of delays, a robust warehouse control system is essential.” Hite agreed that a WCS, installed at the warehouse, serves as a local agent for the remote WMS, downloading information on what items need to be put away or retrieved from inventory and then converting the information into instructions for the sorters, carousels, conveyors, carrying out the required tasks. Because the WCS processes data on-site, delays caused by communication disruptions are virtually eliminated.”

Often a WCS executes instructions provided by an upper-level host system, such as an enterprise resource planning (ERP) system or a WMS system. Tierone WCS software provides advanced management capabilities including inventory control, resource scheduling and order management. The best-of-breed WCS systems are modular in nature, easily configurable and platform independent, with a scalable architecture to satisfy the needs of any size warehouse. There is confusion when to apply a WMS software solution versus a WCS which directs real-time data management and interface responsibilities of the material handling system as well as provides common user interface screens for monitoring, control, and diagnostics.

BE Americas [ Issue 56 ]

“Cartonization allows picking directly to shipping container and eliminates movement from pick container to shipping carton”

The focal point for managing the operational aspects of the material handling system, WCS provides the critical link between the batch-time data host and the real-time programmable logic controller (PLC) material-handling system. The PLC coordinates the various real-time control devices to accomplish the daily workload. At each decision point in the distribution process, the WCS “determines” the most efficient routing of the product and transmits directives to the equipment controllers to achieve the desired result. The decision-making process is often controlled by two separate utilities, the sort manager and the route director. Cartonization allows picking directly

[ Issue 56 ] BE Americas

to shipping container and eliminates movement from pick container to shipping carton. The size and number of cartons are projected up front and the shipping method and cost can be calculated up front as well. This aspect of a warehouse control system (WCS) is vital. Looking the available carton sizes defined by the customer or the carrier also allows for MHE considerations. Cartonization also allows for in-line weight tolerance checking. This is but one element of the WCS and is quite distinction from the purpose and functionality of a warehouse management system (WMS). Wave Management controls release of work to the floor and is an important part

manufacturing

â&#x20AC;&#x153;Often the conversation of WCS versus WMS arises when other inefficiencies are located in the packaging operationâ&#x20AC;?

of warehouse control systems (WCS) and differentiates warehouse management systems (WMS). Work flow can be managed via a wave or waveless operation; group picks are made by order attributes such as shipping method or delivery zone, order types, or pick zones. WCS allows warehouses to limit wave size to balance picking activity and balance picking by zone. There is also the ability to limit work by destination, if required. Often the conversation of WCS versus WMS arises when other inefficiencies are located in the packaging operation, such as orders picked into a tote, not into shipping cartons. This presents a challenge because when the tote is sent to the packing area, the packing operator must select the correct box for the contents, pack it, seal it, and forward it to shipping. Most companies require a system that allows for multiple carriers, where the server passes information only once per day.

One of the schemes many WMS solutions providers utilize to drive increased revenue is to modify a WMS solution to resemble a WCS. Modification is code for charging more money. Once WMS modifications are made, upgrades need to be verified as compatible and integrated with other IT systems (including, but not limited to, ERP - enterprise resource planning software). Some WMS upgrades are a deliberate revenue generating plan for the technology vendor via verification processes and procedures. The cost of these modifications, verification checks and double-checks are often more expensive than the outright purchase of a Tier 1 WCS. Warehouse control systems are not for everyone; yet as lean efficiencies are mandated many companies are looking at WCS solutions which enable them to streamline warehouse operations with a low total cost of ownership.

About the author

BE Americas [ Issue 56 ]

Glenn Uminger Director, Lean Systems Program Glenn Uminger discusses the lessons he has learned, the achievements he has made and the people who have inspired him throughout his career Edited by

Will Daynes

Executive insight Nobody’s perfect. What quality or ability do you wish you had? I would like to have been better in the past at sharing ideas and goals with others related to what I am doing. I realised that in the past, as I moved initiatives forward I would tend to focus on the immediate people needed to achieve the goal. I found that down the road I would come across people I would have loved to have brought in earlier. That has been a pretty big realization for me that over time. I have tried to do more outward and upward communication and engagement. I realise now that this is a critical ingredient to achieving one’s long term goals.

What is the best business book you have ever read, and why? There are two that come to mind, the first one being “Theory Z”, a 1981 book by William Ouchi. I read that when in graduate school, before I had any involvement whatsoever with Toyota or a Japanese company. It just made sense to me because it was not only about engaging people and engaging your whole staff to achieve goals, but also to connect them with the business and the goals of the company. That really had an impact on me. I have been supervising people since I was 23 years old and that book really contributed to the way I supervised people and engaged them to achieve team success while providing for their personal development and satisfaction. I also really liked “Good to Great”, a 2001 book by James C. Collins. What is interesting about that is that it talks about how one doesn’t simply go from being good to being great by saying: “I am going to make a major change” or

“I am going to make this happen now”, rather it is about companies who over many years do the fundamentals well and focus on the longer term aims. I think that really sits well alongside the principles of Lean and with the fundamentals of business excellence.

Who would you say is the individual who has had the most profound impact on your business life? Kaz Nakada, who in my mind was the best person from inside Toyota that I ever worked with. He was the expert in Toyota Production Systems (TPS) who came from Japan to the US, and I was fortunate enough to work alongside him for almost four years leading the Toyota Production System group inside Toyota. Nakada’s clarity, direction and understanding of the fundamentals of TPS were the best I have ever seen to date. Today he is based in Zurich running his own consulting business and I still enjoy regular contact with him.

Someone you would most like to have met, living or dead, and why? John McEnroe. The reason is I saw him as being a perfect example of someone getting the most out of limited physical talent to achieve number one in the tennis world. His drive and his focus managed to get a lot more out of him than perhaps just his talent would warrant. He demonstrated the hard work and dedication, along with very strong mental toughness to over achieve. Combine that with the level of insight and depth he now provides in his role as a commentator at tennis events and it makes for a very interesting character, one I’d take great pleasure in meeting.

“I would like to have been better in the past at sharing ideas and goals with others related to what I am doing”

BE Americas [ Issue 56 ]

What do you consider to be your major achievement (in life or business)? Being a leader in the start-up of Toyota’s North American Manufacturing Headquarters, in 1996. Being one of the first people inside the building while still under construction and tasked with starting up the Production Control and Logistics divisions was a huge challenge. Essentially we had to create from just a blank sheet of paper and meet all the challenges that were presented: hiring people, building organizational capability, establishing processes and systems, all at a time when production capacity in North America was being rapidly expanded was a major accomplishment for me. Along with that there is a different tangent, and that is earning the respect of all those who worked for and with me over the years. To this day I still hear from people who used to be on my staff who show respect and seek out my opinions. That is very rewarding for me personally.

What mistakes have you made (professional or otherwise), and what did you learn from them? My mistake at times has been trusting people too much along the way. I always trust everybody 100 percent, but over the years I have learned to become much more aware of trust and where I place it, and to recognize earlier the signs of when such a large degree of trust perhaps shouldn’t be offered. I mean, I still trust everybody I encounter for the first time, but I am much more aware now than I used to be of when there is reason to not trust somebody or something. Sometimes people have conflicting motivation and objectives.

Who or what do you think is overrated?

Which one piece of wisdom would you pass on to your successor?

The term “results oriented”. Everybody needs to achieve results yes, but there is a right way to go about achieving them. In a number of instances, results are accomplished with force, but that is not sustainable. How one goes about obtaining sustainable results is vital and that is

I would tell them, don’t come storming in. Don’t come into the situation acting like you know it all. Rather you should at first spend time really understanding what you are responsible for. Understand the purpose of what you are doing, the goal, what your customers’ needs are and so forth. Then once you have a sound understanding, take a step back and think, what can I do now to lead the organization to the next level and how can I make my mark.

“Kaz Nakada’s clarity, direction and understanding of the fundamentals of TPS were the best I have ever seen to date”

done more through the adoption and use of proper processes. The results oriented concept often means that people are getting rewarded for achieving short term results and taking personal credit for something that is not at all sustainable. To me that cliché is very overrated.

[ Issue 56 ] BE Americas

What message or piece of wisdom would you pass on to a company that has expressed a desire to adopt Lean principles into the way they do things? The first thing I would do is ask them, why would you want to do that? Based on their

Executive insight

“Unquestionably it was my father who provided me with a better starting point and that allowed me to achieve my success”

answer it would take me to the next step. If there answer was, “well everyone else is doing it so there must be something good about it”, I would say that is not a good reason. But If they can really understand and accept that they can be better as a company and they are patient and committed to long term improvement, and they do have some understanding of what Lean means and that it is a fundamental culture shift - if they have that mind-set I would then be able to help them clarify their way and coach them on their journey.

Who has been your inspiration professionally? My father, who really demonstrated hard work, drive, dedication, humility, no need for excesses and making the most of what you have. He never told me that in words but he demonstrated it in how he conducted his life. He came from nothing, from a family with very limited means. He worked many odd jobs as a young teenager, went into the army, which helped pay for his college education, before going on to become an electrical engineer. Where he came from in life, what he did and where he ended up, that drive and determination really inspired me. Unquestionably it was he who provided me with a better starting point and that allowed me to achieve my success.

Who is inspiring Lean culture today and driving it forward? Actually, clients and customers are driving it forward, their desire to want to pull, learn and do more, and their hunger to apply Lean to their business in order to improve their sustainable capability. There is a varied and wide body of knowledge out there and the pull from companies and leaders from many different industries that want to learn is really engaging and inspiring. The challenge is how to practically apply the Lean Principles and Practices for each specific industry and company.

How would you like to be remembered after you retire? I would like to be known as a person who led people and groups to significant accomplishments as a team, and that each person involved felt that they were challenged personally, were given space to create by themselves, develop themselves, and that they were able to achieve beyond what they thought they could.

Do you have a quote or motto you live (or work) by? “Do the right thing”. When faced with difficult situations and decisions, step back and ask, what really is the right thing to do? Applying this motto to life and work really has served me well throughout my career. Turnover to read about the Lean Systems Program 20th Anniversary and how they’ve developed during that period.

Learn more about Lean Systems Program www.lean.uky.edu

BE Americas [ Issue 56 ]

[ Issue 56 ] BE Americas

A very happy anniversary Lean Systems Program Celebrations are afoot at the University of Kentucky where 2014 marks the 20th anniversary of its revolutionary Lean Systems Program words by

Will Daynes

research by

Vincent Kielty

BE Americas [ Issue 56 ]

n approach to production practices that emphasises efficiency through the systematic identification and elimination of waste, the lean approach was derived from the Toyota Production System, developed in 1948. The lean approach seeks to produce the maximum amount of value for the customer from resources expended in production. “Lean is about the endless pursuit of converting resources, materials, equipment, labour and energy most effectively and

[ Issue 56 ] BE Americas

efficiently,” says Glenn Uminger, the University of Kentucky’s Lean Systems Program director. “The goal is to deliver the highest customer satisfaction with zero waste, while providing an engaging and rewarding environment for employees and delivering a good return for shareholders. This applies to any industry, including manufacturing, service, transportation, healthcare, restaurants, even government.” This year marks 20 years since the University of Kentucky took its first

Lean Systems Program

“This year marks 20 years since the University of Kentucky took its first steps towards becoming one of the world’s leading lean systems trainers”

steps towards becoming what is today recognised as being one of the world’s leading lean systems trainers. Prior to 1994, no comprehensive academic study of the Toyota Manufacturing System had been conducted, nor did an academic centre exist where the principles of the system could be explored and taught, refined, elaborated, and tested experimentally. This all changed in March of that year when Fujio Cho, president of Toyota Motor Manufacturing U.S.A. in Georgetown, Kentucky, sent what

BE Americas [ Issue 56 ]

would become a historic letter to Kozo Saito, professor of mechanical engineering at the University of Kentucky’s College of Engineering. The letter outlined the goals of a proposed collaboration between the University and Toyota, and marked the establishment of a partnership for research on painting technology and lean systems training that has flourished now for two decades. “Cooperation between the University of Kentucky and Toyota was a success from the start,” said Saito, now director of the Institute

of Research for Technology Development (IR4TD). “Kentucky is a manufacturing state and needs to advance its technology constantly to maintain global competitiveness. In keeping with the lean philosophy, Toyota wanted to learn and share knowledge, which is the basic mission of the University. It’s a natural fit.” Working with Toyota, the University of Kentucky’s College of Engineering established the Lean Systems Program to provide training in the Toyota Production System. Starting

“Cooperation between the University of Kentucky and Toyota was a success from the start”

[ Issue 56 ] BE Americas

Lean Systems Program

of Kentucky has grown into a in 1996, the program began Did you know? successful program. Through to offer certification in Lean the Lean Certification Program, Systems, currently featuring the Lean Executive Leadership former Toyota employees as 1948 Institute, and a variety of instructors. Leadership training The year that the different custom-tailored training was also first offered that year, Toyota Production opportunities, an average of with the creation of the Lean System was first 1,500 attendees from about 75 Executive Leadership Institute. developed different companies are served A year later, in 1997, the by the program each year. University played host to the first 20,000+ people “The Lean Systems Program International Lean Manufacturing Served by the Lean has been truly fortunate to conference, featuring a keynote Systems Program in experience the benefit of Dr. address by Mikio Kitano, its 20 year history Cho’s vision, and has developed president of Toyota’s Kentucky and flourished,” Uminger said. manufacturing operations, while “Overall we are humbled to be in 1998, the Toyota Fellows in a position to truly make a Program was created to provide difference and contribute to society.” a unique opportunity for students who want Saito meanwhile believes that the program to help shape the future of manufacturing. will continue to find ways to grow and improve. During the course of the last 20 years “When we started Toyota-sponsored lean the Lean Systems Program at the University

BE Americas [ Issue 56 ]

[ Issue 56 ] BE Americas

Lean Systems Program

“The Lean Systems Program has been truly fortunate to experience the benefit of Dr. Cho’s vision, and has developed and flourished”

and R&D programs, Toyota president Cho gave us his advice: ‘Do not rush, but keep in mind a steady gradual progress over many years to come.’ We’ve kept his advice in our hearts, but never thought we could reach our current status. The Lean Systems Program itself has served over 20,000 people from 48 states and 33 countries over 20 years. We couldn’t have accomplished that without practising continuous improvement. But we can’t stop here, and will continue our journey for the benefit of Kentuckians, the state, the nation, and the world.” The 20th anniversary of the program will be formally observed of 28 October, 2014, with a special program jointly coordinated and sponsored by the University of Kentucky and Toyota. Held in conjunction with the Fourth Annual Lean Users Conference, the celebration will include a reception and dinner with special speakers, company displays and a video, and will be covered in greater depth within Business Excellence later in the year.

Lean Systems Program

(859) 257-9000 @UKYpres www.lean.uky.edu

BE Americas [ Issue 56 ]

Adr

Exploring new

Over the last twelve months Adrok has experienced sig its presence in key North American markets and words by

[ Issue 56 ] BE Americas

Will Daynes

research

rok

w possibilities

gnificant gains, not just in terms of turnover, but also its acceptance into important sectors of industry

research by

James Boyle BE Americas [ Issue 56 ]

Opening of our Canadian office with Prince Edward Islandâ&#x20AC;&#x2122;s Provincial Minister, Allen Roach (left)

[ Issue 56 ] BE Americas

Adrok

usiness since we last spoke has been good for the company,” enthuses Adrok’s Managing Director, Gordon Stove. “We have been growing steadily and in the process increased our turnover for last year compared to that achieved in 2012. At the heart of this has been our ability to win more clients, and with this they have brought us fresh contracts and new sources of revenue. What that means is that at this time we are well on course to increase that turnover again for 2014, so things are going very nicely for us indeed.” That last time we spoke which Stove refers to was in March of last year. It was then that we spoke at length about Adrok’s plans to expand its international presence in core markets, specifically the United States through

North America through the opening of a new Canadian office. Since then, Adrok Canada has provided the business with a base from which to service existing clients in the region and develop relationships with the country’s prosperous mineral exploration industry. “Canada is unique in that it possesses all of the land attributes we can use to demonstrate the versatility of our Atomic Dielectric Resonance (ADR) technology and its capabilities,” Stove says. “There is ice, snow, dry areas, water and high mountainous areas all present within the country, and one of our key unique selling points is that our technology is very portable. This means that we can take our technology and survey crews into areas that other large geophysics techniques, large seismic trucks for example,

“We have been growing steadily and in the process increased our turnover for last year compared to that achieved in 2012” the opening of a new office in Houston, Texas. This office has been operation for well over a year now and is today helping to facilitate some of Adrok’s strongest areas of growth. “In truth we planned for a relatively slow start when it came to our activities in the US, what with it being traditionally a more conservative market,” Stove explains. “With that being said we still challenged ourselves to obtain a certain number of clients and with the two new clients we secured at the turn of the year we have already reached our targets with only a quarter of 2014 behind us. Needless to say therefore that we are quite happy with the progress we have made in this important market to date.” In July of last year the company also made the decision to increase its presence in

won’t necessarily want or be able to go. As a company we pride ourselves on our ability to be very nimble on the ground, as it were, and that makes Canada an ideal playground for us to grow into.” Adrok’s bases in Canada and Houston also present the company with the perfect springboard into other key regions of North America. Its Canadian office will allow the business to test the waters of markets such as Atlantic Canada, Alberta, Colorado and California, while its Houston base will allow it to target the Southern US and Central America in the months to come. By offering a faster, cheaper and greener alternative to traditional seismic exploration methods, Adrok has been able to draw together a portfolio of clients including those specialising

BE Americas [ Issue 56 ]

Gordon Stove Managing Director Gordon has over 10 years’ experience in developing and applying geophysical and remote sensing diagnostic technologies. He is co-founder and shareholder of Adrok Ltd and has helped in the development of Adrok’s intellectual property portfolio. Since Adrok’s inception, Gordon has managed Adrok’s technology developments and managed its global services business. Gordon is currently a member of the Energy Institute, Petroleum Exploration Society of Great Britain, European Association of Geoscientists and Engineers, Society of Exploration Geophysicists, American Association of Petroleum Engineering, Society of Petroleum Engineers, the Scottish Oil Club, Institute of Directors and the Caledonian Club. Gordon supports young entrepreneurs as a Business Mentor for Business Mentoring Scotland, as well as for the Prince’s Trust Youth Business Scotland. Gordon holds a BSc (Hons) in Geography from the University of Edinburgh and is a PRINCE2 Registered Practitioner.

[ Issue 56 ] BE Americas

in geophysical exploration and research. Indeed, the company’s record for winning contracts and projects in the mining sector has continued to gather pace, however a particular area in which it has been earning more business as of late is the oil and gas sector. “Traditionally the oil and gas sector has been very slow to adopt new methodologies or technologies, with the average timeline in this sphere being anything up to 24 years,” Stove highlights. “While we have been around for 15 years, giving us a certain degree of legitimacy, the simple fact is that we are being approached for work because we have a proven history of saving our clients money.” What the company is doing is providing a service to its oil and gas clients before

Adrok

Field crew scanning for oil in Oklahoma

they embark on drilling programmes and Adrok’s technology is being used to guide said clients to the best places to drill for success. Additionally it is helping to reduce the number of drill holes required, thus increasing clients success rates. “With our success to date in the oil and gas sector we have begun to turn our attention towards also getting involved in projects of our own making, almost becoming something of a pseudo oil company ourselves,” Stove reveals. “At present we are working to pick up such projects and are embarking on negotiations with several companies in the US about coming together to operate joint undertakings. It means that our business focus will increasingly turn to not just

providing expert services to certain clients, but also towards taking an active interest in what we find in the ground.” The oil and gas sector also provides the base for a field of expertise that Adrok and Stove are very excited to progress into. “I believe that a real breakthrough for the company in the near future will come from delivering advanced monitoring solutions for existing oilfields,” he says. “Within the vast majority of oil companies one will find an advanced oil recovery programme and we want to be a part of that. By installing a permanent installation in the ground, complete with our sensors and scanners, we will be able to monitor levels of oil and water in the ground, as well as steam injection, water injection and

BE Americas [ Issue 56 ]

Field crew scanning on ice in Canada (on Atlantic Ocean)

[ Issue 56 ] BE Americas

Adrok

“I believe that a real breakthrough for the company in the near future will come from delivering advanced monitoring solutions for existing oilfields” CO2 injection, which are all techniques for enhancing oil recovery. Being able to provide monitoring and surveillance services during the production phase is something we are very interested in capitalising on going forward.” In addition to increasing its turnover last year Adrok also doubled its workforce to 25 people in 2013 and it expects both these facets of the business to continue along the same upward trajectory this year. “Other immediate plans for ourselves include growing our bases in North America, while longer term we can work with the view of perhaps setting up a permanent presence in Australia and perhaps China, which are both markets we see great long term potential in,” Stove concludes. “In the meantime we will continue to provide our services to both existing and new clients, while increasingly utilising our technologies to identify projects of which we could ultimately become part or full owners.”

Adrok

+44(0) 131 555 6662 info@adrokgroup.com @AdrokLtd www.adrokgroup.com

BE Americas [ Issue 56 ]

[ Issue 56 ] BE Americas

Staatsolie

Bringing value

back home

The national oil company of Suriname is facing a very promising future, with enough hydrocarbon reserves to keep it self sufficient for many years – at the same time it is investing in sustainable energy alternatives words by

John O’Hanlon

 research by

David Brogan

BEBE Americas Weekly [ Issue 56 83 ]

he Republic of Suriname, with its capital city Paramaribo, is located just north of the Amazon delta on the northeast coast of South America. It is bordered to the north by the Atlantic Ocean, to the west by Guyana, to the east by French Guiana, and to the south by Brazil. This is a country with a rich mining history as one of the major bauxite and alumina producers in the world, however it also has oil, both onshore and offshore. The systematic search for hydrocarbons began in the early 1960s but petroleum development took a leap after 1980 with the set up of Staatsolie, and production sharing service contract models were introduced for the participation of private oil companies in petroleum activities. All the shares in Staatsolie Maatschappij Suriname NV are held by the government of Suriname. It has two divisions, one that controls the licensing of offshore blocks on behalf of the government to interested companies that include Tullow Oil, Kosmos, Chevron, Petronas and Apache. The other side of the business Staatsolie Production, is much larger and has the job of running the company’s many upstream and downstream projects, including its most ambitious ever, the refinery expansion project (REP) that is nearing completion and will dramatically affect the economy of the country. Staatsolie already accounts for some 25 percent of national revenues through the taxes it pays and the 50 percent of profits that it returns in the form of annual dividend. It is a profitable company, and the other 50 percent is reinvested.

[ Issue 56 ] BE Americas

Aerial view of the refinery expansion project

2014 is going to see a step change for Staatsolie, says Rudolf Elias, Director of Refinery & Marketing and Project Director of the REP. However the company has developed very successfully to date, he explains. “We started with the production of heavy crude that we found in a very small onshore oilfield that was of little commercial interest though it was low sulphur crude. We managed it ourselves, growing from around 300 barrels per day (bpd) gradually building up to more than 17,000 bpd that we extract today.” This equates to some six million barrels per annum (mbpa), an amount more

Staatsolie

“Once the new refinery is operating, we will be able to produce 100 percent of the country’s diesel requirement, all of the bitumen, and 70 percent of the gasoline we need”

or less equivalent to the annual domestic consumption of Suriname. However the crude oil is mainly exported, since the only refining capacity in the country till now has been limited to producing around 7,000 bpd of fuel oil, plus some bitumen that it exports to neighbouring countries. The fuel oil and the exported crude generate handsome profits for Staatsolie. Heavy fuel oil (HFO) is sold to the boats that call at Paramaribo and is in demand for electricity generation thanks to its low sulphur content, and because it is derived from shallow sand deposits it is very cheap to produce coming

BEBE Americas Weekly [ Issue 56 83 ]

IREM S.p.A. & Sices Group

Positive energy The two Italian Companies IREM S.p.A. and SICES Group have been cooperating for many years to deliver complete and efficient services in the design, planning, construction and maintenance of every type of industrial plant. Their mechanical activities include: mechanical erection, skid, packages and modules erection, heavy lifting management, piping prefabrication, supports and steelworks fabrication, ordinary and extraordinary maintenance services and turn-around services. Expertise, flexibility, a solid investment in human and technical resources, plus an ability to work cooperatively, make IREM and SICES a reliable partner, with the necessary skills guaranteeing that Clients receive a top quality service.

[ Issue 56 ] BE Americas

The two Companies are committed to sustainable and responsible operations management and to providing and maintaining a healthy, safe and secure working environment. www.iremspa.it www.sicesgroup.com

Staatsolie

The project was started with the first pile driven on 21 February 2012

â&#x20AC;&#x153;I have had 250 people in training for over a year and they will manage the start up alongside Saipemâ&#x20AC;?

in at under $5 per barrel, despite the fact that to produce 17,000 bpd Staatsolie has to operate no fewer than 1,400 separate wells. Nevertheless this oil sells at world oil prices, and in 2012 Staatsolie broke through the $1 billion turnover barrier for the first time. The priority for some time has been to add value to Surinameâ&#x20AC;&#x2122;s crude, rather than exporting the bulk of it, and produce the premium diesel and gasoline needed within the country rather than importing refined product. It took some ten years to finalise the

design for the new $900 million Tout Lui Faut refinery 20 kilometres south of Paramaribo, in partnership with CB&I Lummus of the Hague. The job was then put out to tender and a contract awarded in July 2011 to the Italian O&G contractor Saipem. After ten months of engineering activities the agreement was converted to a full engineering, procurement, fabrication and construction (EPC) contract with fabrication of the pre-assembled portion of the plant being carried out at the Saipem Arbatax fabrication yard in Italy.

BEBE Americas Weekly [ Issue 56 83 ]

Construction has been proceeding according to plan, says Elias. “We are already 70 percent complete, and we expect the plant to be ready during September. Pre-commissioning is under way, and commissioning started in March, with the utilities coming first, followed by the various units.” A 15,000 barrels capacity vacuum tower is at the front of the process, followed by a hydrocracker that will feed into the diesel and gasoline trains, producing 8,000 bpd of the former and 3,000 bpd of the latter. “Once the new refinery is operating, we will be able to produce 100 percent of the country’s

diesel requirement, all of the bitumen, and 70 percent of the gasoline we need.” There’s also a 300 bpd sulphuric acid by-product, all of which will be exported, he adds. Once the project was started, with the first pile driven on 21 February 2012, construction went ahead very smoothly. The contractor Saipem is responsible for the commissioning and startup phase, and low sulphur diesel and gasoline, meeting EU Euro V specifications, should be coming out of the refinery by the end of this year. But running the new plant on a nine hectare area to the east of the existing refinery will make many demands

“At the moment we are flying a Cessna quite successfully but now we are being handed a 747, and that is a different animal altogether!”

Rudolf Elias, Director of Refinery & Marketing and Project Director of the REP

[ Issue 56 ] BE Americas

Staatsolie

In December, Suriname will suddenly have its own petrol and diesel

benefit the company and the on Staatsolie. “At the moment Did you know? entire country, he stresses. Of we are flying a Cessna quite the 2,000 people working on successfully but now we are construction at least 70 percent being handed a 747, and that is 6 million bpa are local Surinamese. And with a different animal altogether!” Staatsolie’s more than 140 local companies Best in class systems are being current crude contracted to work at the site, incorporated, such as a Honeywell production there has been a significant manufac turing execution positive impact on the private system (MES) that he believes 140 sector economy too. “We want will help achieve significantly Local contractors to make a strong contribution to improved operational readiness, working on the the advancement of our society,” optimising workflows, capturing new Tout Lui says Rudolf Elias. knowledge, minimising risks, Faut refinery In December, Suriname will improving safety, and enhancing suddenly have its own petrol the performance and agility of and diesel, and there are just the entire operation. “I have had two players in the downstream market. One of 250 people in training for over a year and they these is Staatsolie itself, though a subsidiary will manage the start up alongside Saipem. called Goto (the word for gold in Surinamese These will be assisted by more than 30 very but doubtless a good name for a petrol station experienced operators I hired from all round serving English speaking customers). Goto the world to assist our people to operate runs the former service station networks of the plant after completion.” The skills that Texaco and Chevron: a competing company will be transferred in the process will greatly

BEBE Americas Weekly [ Issue 56 83 ]

Staatsolie predict there will be enough oil to increase production to 25,000 bpd by 2022

[ Issue 56 ] BE Americas

Staatsolie

“There is no refinery in the region making low sulphur diesel so we have a ready market in French Guyana, Martinique and Guadeloupe”

Sol Petroleum took over the Shell and Esso retail outlets and both will now receive their supply from Tout Lui Faut via a new pipeline that is being installed between the refinery and their distribution facilities. The HFO will continue to be sold to Guyana and Barbados for electricity generation. “We will also use it in our domestic energy generation,” says Elias. “We already have a 28 MW station that uses our crude, and we are expanding it to 62 MW in March 2014.” Most of the crude produced will thus either be consumed for energy generation in Suriname itself or sold to the local retail stations, though some will still be exported. “There is no refinery in the region making low sulphur diesel so we have a ready market in French Guyana, Martinique and Guadeloupe because they operate under EU regulations and require Euro spec diesel.” The old refinery will be closed for a few months once the new one is operational, and some of its units mothballed. The plan is to bring those units back into operation at a future date when greater volumes of oil come on stream. Staatsolie holds seven near-shore blocks along the coast and is confident that it will hit oil during a drilling programme starting this year. “We think we will find enough oil to increase our production to 25,000 bpd by 2022. We are doing drilling on our own account, however if we have commercial finds we will approach an experienced partner to speed up production. The offshore picture in deeper waters is vibrant, with major companies actively drilling. Four wells were drilled in these blocks

over the last ten years but five are expected to be added to this list in 2014 alone. “A lot of people expect big oil and gas finds in our waters,” says Elias. The refinery is the big story for the moment, but Staatsolie is also very keen to balance its hydrocarbon dependency with some sustainable alternatives. The most promising project is a biofuel plant that will produce ethanol from sugar cane. A successful pilot has been running since 2008 in collaboration with Brazil to test whether sugar cane can be grown successfully on old rice fields. “The sugar content and the tonnage per hectare are surprisingly high,” he says. Now 300 hectares are in preparation and an EPC contract put out for tender to supply a hybrid plant to produce ethanol, with sugar and electricity generation as by-products. Hydroelectricity and the production of energy using solar, wind and even algae is under consideration. This means that Staatsolie itself is in transformation from being a pure play fossil fuel company to being something a lot greener and more diverse – it is a vision, admits Rudolf Elias, but not one that will divert his focus on delivering the refinery that means so much to Suriname.

Staatsolie

 (597) 499649  mailstaatsolie@staatsolie.com www.staatsolie.com

BEBE Americas Weekly [ Issue 56 83 ]

[ Issue 56 ] BE Americas

Inspired innovation No-SpillTM Systems No-Spill™ Systems’ commitment is to provide fluid draining solutions that provide high quality and eco-friendly results, and measures its success on its ability to exceed its customers’ expectations words by

Will Daynes

research by

Stuart Platt

BE Americas [ Issue 56 ]

t was a German by the name of Helmut Muller who will always be credited with development of the first environmentally friendly drain plug, patenting the first version of the “pop-up” style, spring-loaded drain plug in 1977. It was then in the mid-1980s that a Dutchman by the name of Poul van Santen would go on to invent an improved version of the aforementioned product. Only a few years after this Lorne and Donna Hasinoff, present day owners of No-Spill™ Systems, were first introduced to the drain plug product. So impressed were they by the product that they subsequently committed their efforts and energy to opening up the North American market for drain plugs, selling them under the name Ettco. Changing its name to Femco Environmental in 1996, the company would go on to champion the development of the Compact and Speed Click™ version of the Dutch drain plug. It was in the year 2000 that the company No-Spill™ Systems was incorporated in the United States. In the years since, No-Spill™ Systems has worked extensively with its customers and utilising its own vast product knowledge is today making its own No-Spill™ branded drain plugs and has improved on every tangible aspect of the product “This No-Spill™ drain plug is now produced using US and Canadian sourced labour and materials and is raising the bar for drain plug quality once again,” enthuses Carrie Hasinoff, Director of Marketing. “This No-Spill™ product is customised for the North American market based on suggestions and years of input from our valued end user customers and dealer network, now over 4,000 strong.” As Hasinoff goes on to state, the need for environmentally sustainable fluid transferring technology is growing stronger by the day. “No-Spill™ Systems is moving

[ Issue 56 ] BE Americas

American made drain plugs ready for shipment

No-SpillTM Systems

forward with this trend by promoting our No-Spill™ System in many markets in multiple continents. Our latest emerging markets are in South America, and Central America. We continue to adjust and tweak our product to provide specialised solutions for our customers wherever they may be. We’ve completely re-invented the same drain plug with better materials, improved thread pitch accuracy, and a truly American product.” No-Spill™ Systems is committed to providing fluid draining solutions that provide high quality and eco-friendly results, with excellent value for its esteemed customers. “Our success is measured by our belief in No-Spill™ Systems’ ability to meet or exceed expectations of value, quality, and service,” explains Sales Manager, Richard Warren. “We truly believe that our product is the best around and that our customers are getting a better, cleaner and safer way to do fluid changing.” No-Spill™ Systems emphasises that its product is not simply a “fitting”, rather it is a living commodity that changes year to year with every change and movement in the market. In the past two years alone the company has gone about the process of modifying all of its NPT plugs in order to reflect what it calls, “a true North American thread pitch”. With a combined experience of more than 88 years in the industry, No-Spill™ Systems is the longest running drain plug company in the world, and from day one its customers have been recognised as being the core reason behind the success of the business. “Our customers are the first to suggest improvements and we are always backing them up and looking for ways to implement their needs into our product,” Hasinoff explains. “For example, there was an increased demand for the body of our Speed Click™ Clicker to be manufactured entirely in brass. We responded and in addition to improving the brass body of the product,

BE Americas [ Issue 56 ]

No-Spillâ&#x201E;˘ production adheres to the highest quality standards

[ Issue 56 ] BE Americas

No-SpillTM Systems

“We truly believe that our product is the best around and that our customers are getting a better, cleaner and safer way to do fluid changing”

have improved the way in which it connects to its mating piece. We have also responded to a resounding customer request for quicker flow of fluids through the product. We collected data from our customers, worked tirelessly with engineers and in the end now have the only Speed Click™ Clicker with a three-quarter inch diameter flow in the industry.” The company has also benefited hugely from the development of a business model that stands strong in the face of economic difficulty. “In the economic fall of 2008, we took a risky counter intuitive business approach and doubled our sales team, to reflect the addition effort that would be required to support growing sales volumes in a depressed market,” Hasinoff reveals. “We also created a Drain Plug Specialist position, whose primary responsibility is researching and matching up new drain plugs with their No-Spill™ match. This was another example of the amount of time, resources, and talent we have invested over the years into bringing the No-Spill™ drain plug into fruition and it’s been well worth it. Our customers appreciate the lower price and they appreciate that we are keeping jobs in our home countries where they matter most to us.” “Every time we talk to our customers the message is always the same and that is that they love our products,” Warren says. “Some of these have been with us over 20 years and they just love our products because they save so much time, money and effort. Our products ensure a quick and easy way

of carrying out fluid changes, meaning that a vital piece of our customer’s equipment that is brought in for a fluid change or preventative maintenance is in our premises for the least amount of time and sent back out into the field as quickly as possible.” For the rest of 2014, the company’s plans are to continue pushing for greater sales in the South American mining and oil and gas industries where it continues to see huge demand for onsite maintenance and its products. Further ahead, into 2015, it foresees future growth in all of its core markets as the global economy shifts upwards. In line with this projected growth, No-Spill™ Systems has devised a strategy to further infiltrate the US market in particular with special attention to addressing the needs its competitors simply cannot complete with. “We recognise that our customers can spend their maintenance budget in many ways and we are thankful every time they choose us,” Hasinoff concludes. “In order to continue to meet their evolving needs we will strive to continuously innovate our product. Recently we came out with a 3/4 inch drain tool and it is product innovations like that that we are looking every single day to do, to innovate and meet new challenges.”

No-SpillTM Systems

1-866-466-7745 info@nospillsystems.com www.nospillsystems.com

BE Americas [ Issue 56 ]

Surfing the bo of the minin

IOS Service GĂŠoscientifiques Inc is a geologic the Canadian mineral exploration industry contracting field work and opera words by

[ Issue 56 ] BE Americas

John Oâ&#x20AC;&#x2122;Hanlon

ooms and busts mining industry

cal consulting firm with a difference: Serving since 1992, it integrates consulting services, ating a mineralogical laboratory research by

Stuart Platt BE Americas [ Issue 56 ]

Drill core logging

[ Issue 56 ] BE Americas

IOS

ince founding IOS 22 years ago at Chicoutimi in Québec, Réjean Girard has seen no fewer than four recessions and it’s an achievement in itself that, as a service provider to the notoriously cyclic mining industry, the firm has managed to grow through each of them. It has forged a reputation well beyond Québec and Canada as an efficient and innovative operator. Canada has a reputation for leadership in mining investment, as evidenced by the success of the TSX in listing companies. However the mining industry is very conservative, and nowhere more so than in Canada itself. Girard notes, and regrets, the fact that investment in technology has been allowed to lag behind field operations. “Exploration is risky and expensive, and to

boom and bust and their consequent cost to the industry. There’s equally no arguing with the fundamental demographics. To fully industrialise the BRIC nations will take more mineral resources than mankind has already produced. With 30 million people in China moving every year off the land and into the cities, that country alone will need to build the equivalent of Canada’s infrastructure every year! They and the mining industry are being done no favours – investors need to take a longer view and the industry needs to iron out its peaks and troughs. It could do worse than look at the example of IOS. Plan for the boom when you are in the doldrums, and for the bust when things are good. And be ready; the boom is coming! In

“This is an industry driven either by greed or passion – two behaviours that are very difficult to manage!” give it a better chance of success we need to constantly renew our toolbox,” he says. “But minimal incentives are made available for doing that.” Drilling cost are humongous – up to 60 percent of all investments – and improved targeting approaches are a must. We have too much tolerance of poor planning, he believes. Marginal projects shall be abandoned earlier, saving large sums for viable ventures. “Overall exploration costs are too high compared to the revenue of the industry. It is a structural problem.” This he thinks is due to investors’ tendency to consider exploration as a goal, not as a means. “This is an industry driven either by greed or passion – two behaviours that are very difficult to manage!” Whatever the cause, there’s no arguing with the fact of

a downturn, budgets are slashed, research gets hit and innovation dries up, but that is just the time when the seed corn should take priority because the current trough has to end soon – he thinks the upturn will be established by the end of this year. The mines will not be ready though – during 2012, some $800 million was invested in exploration in Québec alone, in 2013 less than a twelfth of that. Is this any way to run a business as essential as mining, he asks. No wonder so many companies go to the wall – but not IOS! “It needs a lot of experience to level the field. In the good times we act like squirrels hiding nuts everywhere! Then when the lean times come, we have resources to back our human resources onto scientific research and development processes. That allows them to carry on working when there

BE Americas [ Issue 56 ]

Rock sampling tundra

are no clients, and the company to conceive and develop new product to be ready when the next boom comes.” Something rather remarkable came out of the latest recession – something that looks like an engineering project, despite the fact that IOS is not an engineering firm. Mining in Canada (and right around the tundra belt) is made difficult, slow and expensive by the terrain and the climate. Canadian swamps are endless! The favoured way to get about is by helicopter, which doubles the exploration costs. So IOS got together with its neighbour L’Équipe Fabconcept to develop an all-terrain vehicle (ATV) capable to partly replace helicopters and drastically reduce operating costs. The prototype and the first production Kaskoo-X04 were successfully tested over a variety of unimaginable terrains. Girard believes this vehicle will be outperforming during the harsh Canadian winter, when access roads are closed and the lakes frozen. “This incredible ATV has definitely proved that it can deliver the job.” The Kaskoo-X04’s innovative technology makes it the best all-terrain vehicle on the market today, according to the manufacturer. It’s quite fast, reaching up to 40 kph due to its superior suspension and a comfortable passenger compartment. It floats despite its 1.5 tons cargo; it crawls effortlessly in deep mud and snow – Canada’s lakes and swamps are no obstacle. Fabconcept needed IOS to test the machine and make sure it fits the market requirements. Everyone in Canada knows IOS and that its evaluation of the savings over helicopter usage can be

“We can get a camp running with a single generator burning one drum of fuel a day instead of 20 or so a week”

[ Issue 56 ] BE Americas

IOS

Drilling in Northern Québec

“A boom is the wrong time to invest because everything costs more, and staff become available during the lean time” depended on. L’Équipe Fabconcept is now tooling up to start production – in small numbers at first but ready to meet demand from Canada and beyond. It’s simple, cost reduction relies upon innovation. The next big thing from IOS neatly complements the Kaskoo-X04. Another huge cost up-country is heating the camps. Heating fuel easily costs $1,200 a drum in the Canadian north, as it needs to be brought in by seaplane or helicopter. IOS developed a geothermal system for the camps that works on the heat differential between the lakes and the atmosphere. “We can get a camp running with a single generator burning one drum of fuel a day instead of 20 or so a week.” The system is modular, can be installed in two days, and provides air conditioning in the

summer and heating in the Canadian winter. “That is the kind of technology that keeps us ahead of the competition. If you do not have it, you are left to compete on price alone!” Remember the analogy of the squirrels? Being canny with its ‘nuts’ in good times has helped IOS through the rough. Rather than keep large sums in the operation attracting the taxman, part of surplus funds are invested in a foundation set up with local universities. This allows it to take staff through higher degrees and funds the research. “I simply set money aside to train the staff. Anyway a boom is the wrong time to invest because everything costs more, and staff become available during the lean time.” As an example, a research project conducted with Sherbrooke University, is

BE Americas [ Issue 56 ]

placing IOS well ahead of the field. The university has no mining department, he explains, but is reputed in environmental engineering – by tapping into this expertise the company has developed a new way to analyse soil samples for their metal in order to trace back the origins of the metals. The method uses an automated electron microscope of the QEMSCAN (quantitative evaluation of minerals by scanning electron microscope) type, which IOS purchased last year at a cost of $1 million. “If you want to know where the metals are coming from, you

have to know how they were precipitated and that is an exercise nobody did before, at least on a commercial basis. We are at the cutting edge of geochemistry here.” A geochemical survey can easily cost $500,000, he says, and lead to further campaigns costing millions. There is a huge amount of money to be saved by better understanding the metal dispersion processes. “Metal assemblages are dissociated in the secondary environment, so you cannot rely on what you see in a mineral deposit to extrapolate their signal. The relation of uranium and thorium is notorious,

“If you want to know where the metals are coming from, you have to know how they were precipitated and that is an exercise nobody did before”

Kaskoo in the snow

[ Issue 56 ] BE Americas

IOS

Valerie operating the electron microscope

yet, even the big laboratory. That and using the association seen Did you know? is why our mineralogy service in deposit at the exploration is still busy after the worst level can be misleading, recession for years!” thus money wasting.” 1992 Innovation also drives Another technique that the Year IOS was IOS’s business approach. 90 company developed seven founded percent of IOS’s work is in years ago with an investment Canada, though even in its of $250,000 perhaps explains $1 million home province 40 percent is it better than any other. Heavy Invested by IOS for outside companies. “We minerals are separated from in its QEMSCAN open the door for external light minerals by using a dense electron companies to invest in Québec, liquor to ‘float’ off the latter. The microscope which has a mining-friendly medium used has traditionally reputation,” he says, pointing been organic-halogen liquor, a out that Québec is not merely carcinogenic mixture of bromine French-speaking but the only province to be and iodine with organics. IOS developed regulated under French-legacy civil law. The and commercialised an alternative based on mining law is quite unique in North America, tungsten salt. It is safer, cheaper, more flexible and unfamiliar to outside companies. and faster, and proved so successful that it “We’ve helped a lot of small companies to paid back its development costs in a year, at come in. We know the rules and how the the same time securing the future of 15 lab systems work as well as being their guide jobs. “Part of it is a top secret process and to the best service providers or community no competitor has been able to reproduce it

BE Americas [ Issue 56 ]

“Our work goes beyond geotechnology into logistical support for projects, administrative support – we even help companies to do their fundraising on the stock exchange”

Lucie and her microscope

[ Issue 56 ] BE Americas

IOS

Sampling in Taiga

relations. We offer turnkey services based upon integrity”. Its francophony is also a help when IOS is working in countries like Burkina Faso, Cote D’Ivoire, Mauritania or Congo, where trust for a Canadian partner is strong – after all they share a common colonial inheritance! A good example of this work is the geological lab that IOS helped Mauritania’s Société Nationale Industrielle et Minière (SNIM) to set up. An iron ore miner, SNIM wanted to develop diamond production. IOS personnel established the laboratory, and have overseen management while at the same time training Mauritanian staff to run it. In another current project in Sudan, IOS geologists work with a local company training local crews. In every case IOS is teaching not just the techniques of exploration but about how it relates to the business as a whole, financing, logistics and how the mining business works. “Our work goes beyond geotechnology into logistical support

for projects, administrative support – we even help companies to do their fundraising on the stock exchange.” Broadening their expertise, he believes, helps his clients to manage the cycles for themselves. All of this accounts for IOS having a healthy order book in the final days of a deep recession. “The industry will bounce back next year and we have to be ready,” says Réjean Girard. “When the bubble bursts, too many companies panic and lay people off. This is not the time to do that: rather get everything in good order and the machinery oiled ready for the next boom!”

IOS

(418) 698-4498 ios@iosgeo.com www.iosgeo.com

BE Americas [ Issue 56 ]

Pra

Aggregatin

Praxis is a young company on a fast track: already it has grown through excellence in the way it mana words by

[ Issue 56 ] BE Americas

John Oâ&#x20AC;&#x2122;Hanlon

axis

ating service

y known as a reliable partner for crushing services ages its assets to deliver services to major customers research by

Peter Rowlston BE Americas [ Issue 56 ]

raxis Earth Works (Praxis), based in Grande Prairie in northern Alberta, is a new company, led by its General Manager Ryan Martin since October 2010 – yet in terms of experience it lacks nothing when it comes to rock crushing, its core competency. The company started out operating a single crusher, making aggregate for a mixture of private clients, government departments and municipalities within a reachable radius of Grande Prairie. “We were working for people who had gravel pits or quarries and needed certain grades for road building or mining purposes,” explains Controller Ryan Gosse. That work got the company off the ground and established it for the first 18 months of its existence. Then came an important breakthrough when Praxis landed a contract with Walter Energy (Walter), which, readers of this magazine will recall, has been growing its business effectively at its three mines, Wolverine, Willow Creek and Brule in northeastern British Columbia. The BC border is less than 100 miles from GP, and it made every sense to secure this important client. But Walter is a big American corporation and getting a job from such a client is different from establishing a partnership. Contractors have to deliver! Praxis in the event delivered the value that Walter expects. As Gosse puts it: “Walter Energy has really been a big part of our growth, making up a significant portion of our business.”

“It is a big pull when we are advertising vacancies to be able to tell people that they can work year round”

[ Issue 56 ] BE Americas

Crushing unit on site

Praxis

“We have transformed from a pure crushing company to a joint crushing and transportation operation”

The wider world might not have registered the emergence of Praxis: so far it has managed to grow on the basis of repeat work or word of mouth referral from satisfied customers. It has not needed to advertise or chase work. For a mining operation like Wolverine, Praxis delivers two types of end product, a larger aggregate around two inches minus for use in blasting operations and a finer gravel, up to maybe half an inch, for laying down on the mine roads. The client has no lack of material, as they are cutting large amounts of overburden. The contractor’s job is simply to crush it to the size specified and load it onto the trucks. Simply? Anybody involved in this work will perhaps query the use of that word as we shall see, but it describes the scope of Praxis’s involvement. If Praxis has a unique selling point, other than the reliability with which it does its job, it is that it works throughout the year. Northern Alberta is not an easy place to work, especially in the winter. “December to March is definitely tough!” Gosse admits. “Minus 30 or 40 degrees is not uncommon where we are.” That is hard on equipment – in fact no equipment is really designed for those conditions so it takes a lot of looking after. “Production slows in the winter, so does our profit but we look on it as better than shutting down and losing our experienced staff. If we shut down in the winter like a lot of companies do we might not get our core staff back come spring.”

BE Americas [ Issue 56 ]

“It is a big pull when we are advertising vacancies to be able to tell people that they can work year round” Year-round working makes sense from both the economic and the HR point of view, he continues. “It is a big pull when we are advertising vacancies to be able to tell people that they can work year round – especially in an area where the O&G industry is a large employer. Those companies usually shut down for three months in the spring melt season

[ Issue 56 ] BE Americas

and that is how we compete with them for the best available labour.” So there are seasonal highs and lows but Praxis crushes 12 months of the year. Walter Energy normally has a spring crush program and a winter one. “We are just finishing up the winter crush program. In between, we squeeze in municipal jobs and similar civil

Praxis

work.” The filler work is always there to keep the company’s capital assets in productive use and the workforce in gainful employment. So as soon as the equipment deployed at Wolverine was dismantled it was shifted on Praxis’s own low-bed trailers to another job for another client. It was in late 2012 that Praxis decided to do its own transportation. Prior to this, equipment movement was contracted out, but bringing that in house made sense for the crushing operations and allowed the company to consider diversification. “We bought a couple of transport tucks and now we transport all our own equipment ourselves

including our crushing plant and the support equipment we use like excavators and loaders. And with that equipment we have also started to do contract trucking when we don’t need it ourselves – so we have transformed from a pure crushing company to a joint crushing and transportation operation.” All of the crushing equipment, he explains, is capable of being put on a low-bed or is mounted on its own axles. At the end of a job it is cleaned off, dismantled, loaded on a trailer and relocated. The fleet is still only two trucks strong but expansion is in the air. Praxis has just landed a big contract which involves aggregate crushing but then stockpiling it at a different

BE Americas [ Issue 56 ]

site. Hauling the gravel has not been part of the deal to date. The plan for the coming year to 18 months is to grow the asset base to three mobile crushing plants and establish a transportation company that combines Praxis’s own trucking requirements with contract low-bedding, moving other people’s heavy equipment, and gravel hauling. This will simply involve obtaining alternative trailers. That will enable the company to expand into civil construction work, road building and forestry work available in Alberta and beyond. Of Praxis’s 30 or so employees it is a remarkable fact that only five are native to

the Grand Prairie area. Most come in for their three weeks ‘on’ and return to their home town for their week ‘off’. This is typical for this town which, is the largest support centre north of Edmonton, the provincial capital. It has, Gosse reveals, a resident population of 55,000 but a transient population of five times that many, mainly working in the O&G and mining sectors, which accounts for its huge number of hotels. Praxis’s employees have to have experience of handling heavy equipment, though only the team supervisors need to have prior crushing experience. It is skilled work, with a

“There is a lot of work available – the limiting factor for us is the amount of equipment we have and the number of staff”

Crushing unit on site

[ Issue 56 ] BE Americas

Praxis

Equipment on the move

lead operator on a control tower overseeing a team of up to four and seeing that the feed matches the machines’ capacity. They work 12 hour shifts, he explains. “At the beginning of the shift they do their pre-equipment checks and make sure everything is up and running and nothing needs to be fixed. After safety meetings they crush for nine or ten hours, and in the last hour or two they do maintenance like oil changes, belt changes, even bearing changes, ready for the next shift to come on.” Major maintenance and overhaul is carried out at the workshop in Grande Prairie, which has a fully equipped service truck in case it needs to go out to the site. It may be harder to maintain something like 100 percent annual expansion beyond the first three years, but Praxis remains hungry for new customers and opportunities, expecting to maintain its 50 percent yearon-year revenue growth record through to 2015 and beyond. With three crushing plants

and a growing tucking operation its reach will spread – ideally it will keep its Grande Prairie service centre for northern Alberta and north-eastern British Columbia but will add a presence in the south of the province near Calgary or Edmonton. “There is a lot of work available – the limiting factor for us is the amount of equipment we have and the number of staff,” concluded Ryan Gosse. “We are a growing business in a growing market.” But ever prudent, he stresses that the market will determine the speed of growth, and the company will never overstretch itself by leveraging beyond its ability to fund expansion from its cash revenues.

Praxis

780-882-8741 rgosse@praxisearthworksltd.com

BE Americas [ Issue 56 ]

PowerS

Skating to

PowerStream is a relatively recently formed energy s leverage new technologies and business models in the words by

100

[ Issue 56 ] BE Americas

John Oâ&#x20AC;&#x2122;Hanlon

Stream

o the puck

supply company but it has already shown the way to e interest of the customers and communities it serves research by

Candice Nice BE Americas [ Issue 56 ]

101

PowerStream maintenance crew

102

[ Issue 56 ] BE Americas

PowerStream

eregulation (better described as re-regulation) came later to Ontario’s energy sector than for example to the UK where it happened in the 1980s. The Energy Competition Act of 1998 (ECA) had as its ultimate goal the creation of a competitive market in the electricity and natural gas industries. Before then the power utilities supplying Ontario were discrete bodies located in various municipalities and in the years immediately following the act there was a frenzy of acquisition in the province, with Hydro One, one of the successor companies to the former provincial utility Ontario Hydro, buying up no more than 80 municipal utilities. In the cities too this was a good opportunity for other municipal utilities to come together to benefit from advantages

services provider, not just a larger electricity distribution company.” It was, and remains to this day, the largest voluntary merger between municipal electric utilities in Ontario. 2004 might seem recent enough but the energy landscape has changed more in the last decade than in the half century preceding the birth of PowerStream. Technology is a huge part of that, and the biggest change has been the introduction of advance metering infrastructure (AMI), or smart metering systems of which more later. Today PowerStream taps into Ontario’s diversified generation fleet, from which coal has been eliminated but which includes a balanced mix of nuclear, hydro and natural gas with a small but significant element of wind and solar. But consumer choice and expectation have

“We’d like to get a little bigger and achieve additional economies of scale” of scale in preparation for the new realities of the sector. To the north of Toronto, the municipally-owned utilities in York Region were no exception. Three utilities, Markham Hydro, Hydro Vaughan and Richmond Hill Hydro came together under a joint board, at which point it became clear that here were significant synergies of capital planning, operations and advocacy to be had if these utilities were brought together. Reporting to that board sat Brian Bentz, now President and Chief Executive Officer of PowerStream, the company created by the merger of the three utilities in 2004. “We had identified a number of synergies and made our business case,” he recalls. “We were aiming to take around 15 percent of costs out of the combined utility to create value, with the vision of building a full energy

both changed, especially around reliability and electricity pricing, says Bentz. The merger allowed PowerStream to grow big enough to specialise and invest in innovation and new technology, while staying small enough to be nimble; to move and adapt quickly, he says. “We’d like to get a little bigger. We have around 400,000 customers now, and would ideally like to be larger to achieve additional economies of scale.” Over the course of the last decade PowerStream has nevertheless been able to make real progress towards identifying and meeting the expectations of its customers. Customers in every community served by PowerStream have seen some rate benefit as a result of the merger, and some have seen distribution rates come down by a third. Reliability has improved and technology has given the

BE Americas [ Issue 56 ]

103

Enterprise Document Management Made Easy The FileNexus Enterprise Document Management System gives organizations the ability to capture any type of document from any source (i.e. paper, host system reports, client statement and payment streams, PC Files, IVR recordings, etc.), organize, and archive them for future recallâ&#x20AC;&#x201D;providing a single cohesive repository for all document management, workflow, management reporting, retention, compliance, and business continuity needs.

Loris Technologies Inc., 1179 King Street West, Suite 110, Toronto, Ontario M6K 3C Tel: 416.252.4701 | Fax: 416.253.7849 | E-mail: sales@loristech.com

Loris Technologies

Instant recall Every business needs to know where it is and where it’s going: the FileNexus Document Management System from Toronto-based Loris Technologies gives instant access to essential data.

The business world is at once a messy place yet interconnected. Paper records, microfilm archives, maps, drawings, manuals as well as electronic files like host generated reports, client statement streams, emails, and voice recordings are all examples of the different formats that management and staff have to track and manage on a day-to-day basis. Worse still, if a business is in the process of expanding, the information from many new systems must also be absorbed, making the task more difficult still. Just imagine – no paper, no microfilm, no logging into multiple applications – everything instantly available at the click of a mouse. That’s what Loris Tech. has been offering its clients since 1980, when it was among the first technical developers in the field of document management software. Today, the FileNexus Enterprise Document Management System has been adopted for mission critical workflow and compliant record management archival by representative organisations employing millions of people worldwide in such sectors as financial services, utilities, healthcare, retail, government, manufacturing, and others. Just as is the case with all organizations, Utility companies need to keep track of their data and FileNexus supports a large number of them right across North America, says Sal Bevan, who has been Loris’s President for over 20 years. “It gets rid of traditional storage media sources and allows the information to be filed any way the client wants. Once we have captured it, we can automate the associated day to day workflow processes in such departments as finance, customer service, procurement, human resources and so on. The

106

[ Issue 56 ] BE Americas

net result is faster business resolutions and a dramatic improvement in both staff efficiency and costs associated with the production, handling and storage of traditional media.” The cost savings of deploying FileNexus can be huge to any organization, in any department, for virtually any task. One financial services company, on their annual audit alone, reduced the need for outside auditors from seven people for five weeks; to two auditors for two days! A life insurance company reduced their contract service time from days to hours and required 50 per cent less staff to do so! Another major client, the north Toronto area PowerStream, grew from the merger of some six utilities each with its own systems. The original company, Richmond Hill Hydro, had implemented FileNexus, says Bevan. “We were able to take all of the information from these systems and bring it into one cohesive repository, so that wherever the information started from originally, it could now be found and managed instantly.” Today more than 30 of the 80 or so utilities in Ontario alone use the System, as well as many others across North America, he says. 416.252.4701 sales@loristech.com www.loristech.com

PowerStream

PowerStream linesman

“We offer conservation and demand management programs to residential and business customers”

citizens a taste at least of the benefits that it is certain to deliver going forward. “We have a implemented a 24/7 System Control Centre with state of the art technology leveraging our AMI system, understanding where outages occur by monitoring meters and voltage in real time, having automated distribution on the system, as well as automated switches and a SCADA system that integrates with all of these systems.” There is a cost to innovation and installing new technology but there would be no change

if no risk were taken. The most important investment, he says, is of time and commitment on the part of PowerStream’s people in changing their focus and approach. “It is leveraging what we have now, and learning the art of the possible. Getting people to think from the customer’s point of view making best use of the building blocks we already have in the system. The question to be asked is, how can we change that value proposition to our customers and think of new ways to provide new energy solutions for consumers?”

BE Americas [ Issue 56 ]

107

Bentz’s vision is for PowerStream to become Ontario’s premier integrated energy services provider by 2020. The foundation is already in place, he says as he checks off some of the achievements to date: “We offer conservation and demand management programs to residential and business customers. We have built on our core distribution business. We have a rooftop solar generation fleet that soon will be delivering between 30 and 40 MW of power. We also operate a sub-metering business administered by a new affiliate

company, PowerStream Energy Services, a subsidiary.” To sum up his approach to innovation he turns to an aphorism coined by the great Ontario-born hockey star Wayne Gretzky: “We want to skate to where the puck is going to be, not where it has been!” Anticipating a 50 percent increase in demand over the coming 15 years, PowerStream is working with all the major energy stakeholders, especially large business customers and developers of residential and commercial property to forecast the shape

“There is no reason why developers shouldn’t be planning solutions that will give them greater control over their energy requirements”

Aerial of solar panels at Barrie

108

[ Issue 56 ] BE Americas

PowerStream

PowerStream system control centre

of demand to come. A big new phase but are close enough to Did you know? be included in planning. development will no longer Pulling these systems just apply to be connected to together and developing them the grid – it will be offered a 400,000 jointly with commercial partners comprehensive suite of energy PowerStream’s and communities was the services including conservation, current inspiration for PowerStream’s demand management, building customer base Micro Grid initiative which marks efficiency, energy efficiency, the next phase in the company’s energy benchmarking and also 50% aim of supporting smart grid energy production. There is no Expected development at the provincial reason, Brian Bentz stresses, demand level and raising awareness for why developers shouldn’t be increase in the the need to leverage innovative planning solutions that will give next 15 years ‘smart’ technologies in Ontario’s them greater control over their electricity sector. PowerStream energy requirements using the will be implementing the Micro technologies now coming on Grid in two phases, over a twostream. Solar, geothermal and year period. In phase one, the demonstration CHP are quite well tried technologies. Battery phase, working with GE and other technology storage on a project of civic scale and vehicle partners, the company will draw electricity to grid (V2G) systems, which make sense when from existing assets – a solar array, a wind a fleet of vans and trucks can be connected to turbine, a natural-gas generator, a lead acid the grid when parked and used as a storage battery and a lithium battery – in order bank, are emerging from the experimental

BE Americas [ Issue 56 ]

109

Vehicle to grid (V2G) system

110

[ Issue 56 ] BE Americas

PowerStream

“PowerStream’s forwardlooking Micro Grid provides a benchmark for utilities across North America and globally” to provide electricity from loads such as lighting, air conditioning and refrigeration at its head office location. Electricity generated from this combination of clean and renewable sources will also be used to power the company’s electric vehicle charging stations (which energise the company’s fleet of electric vehicles) and to maintain a steady charge in the Micro Grid’s storage batteries. “We want to demonstrate that we can optimise the use of battery technology, NG generation, renewable sources, and electric vehicles (both charging and potentially discharging the vehicle’s battery back into the load),” explains Bentz. Phase two will see the roll out of what has been learned from what is essentially an in-house operation to commercial customers. The longer term goal, he says, is to deliver packaged, scalable Micro Grid type solutions that can be deployed on a mass scale. PowerStream’s forward-looking Micro Grid provides a benchmark for utilities across North America and globally, but so does its management of the day-to-day job of keeping the lights on. As an example it has adopted Loris Technologies’ FileNexus enterprise document management technology to help it become more efficient, give better service and push out the boundaries as it evolves organisationally, picking up awards on the way. Most recently, on April 22, PowerStream was named one of “Canada’s Greenest Employers”. A few weeks earlier, the Electricity Distributors

Brian Bentz, President and Chief Executive Officer

Association (EDA) awarded the company its “Environmental Excellence Award” for the third time in six years, at the same time presenting Brian Bentz with a citation for his outstanding, dedicated service to the EDA and the industry over an extended period of time. In January the company was named as one of the “50 Most Engaged Workplaces in Canada” for 2013 for the second consecutive year, and in 2013, among many other recognitions, it was proclaimed “Smart Community Employer of the Year” in north Toronto.

PowerStream

1-877-963-6900 info@PowerStream.ca @PowerStreamNews www.powerstream.ca

BE Americas [ Issue 56 ]

111

112

[ Issue 56 ] BE Americas

SaskPower

Catching

carbon SaskPower, the electricity generating authority of the Canadian province of Saskatchewan, is in the final stages of completing a truly innovative programme that has attracted the attention of environmentally aware power utilities from across the world words by

John Oâ&#x20AC;&#x2122;Hanlon

research by

David Brogan

BE Americas [ Issue 56 ]

113

Boundary Dam power station

askatchewan covers a similar area to Texas, the largest of the United States barring Alaska, but while Texas has nearly 26 million people Saskatchewan is home to just 1.1 million. Some might say that would make it much easier to supply power to everyone, but considering the power grid covers the entire province from the 49th to the 60th parallel that is not necessarily so. “We have a significant infrastructure to maintain,” says the CEO of SaskPower Robert Watson, “and I think we do a good job.”

114

[ Issue 56 ] BE Americas

This is a growing province. Its energy consumption increased last year by 6.4 percent so SaskPower has all the normal problems of keeping the lights burning over a huge area and in conditions that has just experienced one-in-60 severe winter conditions. To do that the utility has a mix of generating options on stream: no nuclear but 25 percent hydro and 30 percent gas fired generation. The strategy is to maintain and increase that diversity and there are a number of options here. Manitoba to the east has huge hydroelectric resources

SaskPower

“Five years ago SaskPower started to guarantee production from private suppliers: today it has eleven such agreements”

that Saskatchewan could buy into, and five years ago SaskPower started to guarantee production from private suppliers: today it has eleven such agreements including three gas plants and two windfarms in the scheme, and will continue to encourage small scale enterprises of this sort, through its Small Power Producers programme says Watson. However the lion’s share of power is, and will continue to be, provided by coal. The company’s three coal fired power stations, Boundary Dam, Poplar River and Shand, are

BE Americas [ Issue 56 ]

115

TOGETHER, WE CAN HELP FLATTEN THE CO2 CURVE OUR TECHNOLOGY CAN BETTER CAPTURE YOUR CO2 EMISSIONS Shell Cansolv is continuing to lead efforts in the large scale commercial development of innovative post combustion CO2 Capture technology. Our system reduces CO2 emissions helping to achieve a lower carbon energy future. Want to know how? Talk to us: +1.514.382.4411 mail@cansolv.com www.shell.com/shellcansolv

Shell Cansolv

SaskPower

Poplar River power station

“There are hardly any logistical challenges or supply risk – we just bring it to the surface and burn it”

all situated on the southern Saskatchewan coalfield, right on top of the reserves that feed them. That is a considerable bonus for the company says Watson: “There are hardly any logistical challenges or supply risk – we just bring it to the surface and burn it.” Of course it is not quite as simple as all that. Coal is supposed to be in the descendant, being phased out by greener alternatives. But there are ways coal can continue to be viable in the face of ever more rigorous environmental legislation – indeed ways its disadvantages can be turned into positives. Saskatchewan is in front in America and globally in realising that vision. Its Boundary Dam Carbon Capture and Storage (CCS) project is leading the way to make a viable, technical, environmental and

economic case for the continued use of coal. The project is the world’s first and largest post-combustion capture, coal-fired energy generation project of its kind, a $1.35 billion partnership between the Government of Canada and SaskPower. At last, power utilities will be able to study the full integration of a rebuilt coal-fired generation unit with carbon capture technology into the operation of a commercial power station, resulting in lowemission electricity and at the same time producing carbon dioxide (CO2) for enhanced oil recovery operations or storage in a deep saline formation underground. In late 2010, SaskPower kick started the project by committing to rebuild the ageing Unit 3 boiler at Boundary Dam, installing a

BE Americas [ Issue 56 ]

117

“It is to SaskPower’s credit that with the support of provincial and federal governments it has turned a problem into an opportunity”

Robert Watson President and CEO Before joining SaskPower in August 2010, Mr. Watson served as president and CEO of SaskTel. Prior to that appointment he held several senior executive positions in the Canadian communications industry. Mr. Watson is a graduate in electrical technologies from Ryerson University. He has attended the international executive development program at the INSEAD Centre in Fontainebleau, France, as well as the executive management program at Ashridge Business School in the United Kingdom. He also holds an ICD.D designation from the Institute of Corporate Directors. Mr. Watson currently serves as a Board Member for the Canadian Electricity Association, Energy Council of Canada and the Canadian Nuclear Association. In the community, Robert is a recipient of the Saskatchewan Centennial Medal, serves on the Prostate Cancer Canada Board and on the Board for One Life Makes a Difference.

118

[ Issue 56 ] BE Americas

state-of-the-art steam turbine, extending the plant’s lifespan by 30 years and at the same time ensuring it can operate with the planned carbon capture system. Early the following year Babcock & Wilcox were contracted to carry out that work, which has proceeded much as planned, though rebuilding the power facility is taking a little longer than anticipated. “When you take these old units apart you don’t know what you are going to find,” admits Watson. SNC Lavalin and Shell subsidiary Cansolv Technologies Limited were selected in March 2010 to oversee EPC activities and in July 2011 SaskPower placed a $30 million contract with Stantec for engineering consultancy during the design and construction of the system. The good news is that the new facility for capturing sulphur dioxide (SO2) and CO2 will be ready to run as soon as the remaining work on upgrading the boilers and associated steam pipework has been completed. It is to SaskPower’s credit that with the support of provincial and federal governments it has turned a problem into an opportunity. Doing nothing was not an option. Canadian federal legislation being introduced in 2015 says that old coal-fired power stations must close down if they can’t meet new performance standards fixed at 420 tonnes of carbon dioxide per gigawatt hour. “Our unit is expected to achieve emissions in the

SaskPower

Shand power station

of the gas that is not reused stays region of 150 tonnes of CO2/ Did you know? underground permanently, so GWh. It will beat almost any gas one way or another it is all kept plant out there for emissions,â&#x20AC;? from re-entering the atmosphere. Watson enthuses. 5 million The project will thus transform Sulphur dioxide will be made Hours worked the Boundary Dam power into sulphuric acid and sold, without LTI station into a reliable, longand the CO2 that till now was term producer of 110 megawatts nothing but a nuisance will 1 million tonnes (MW) of base-load electricity start to earn its living. Using a of CO2 will be and the CCS facility will capture pioneering amine-based carbon captured annually approximately one million tonnes capture process developed by by Boundary of CO2 per year (the equivalent Cansolv, the gas will be sold Dam CCF to taking 250,000 vehicles off to the Canadian oil extraction the road every year). company Cenovus which will CO2 from the project not pump it 1.5 kilometres down used in enhanced oil production into its adjacent oil resources. will be stored in a safe, permanent deep Enhanced oil recovery (EOR) using CO2 is a saline formation, the nearby Aquistore well tried technology that Cenovus has been Project, hosted by SaskPower and run by using at its Weyburn facility for ten years: the Petroleum Technology Research Centre the CO2 molecules attach to the heavy oil, (PTRC). Research has shown that CO2 can be reducing its viscosity of the oil, forcing more safely and permanently stored in underground of it to the surface, where it is stripped out and geological formations: what the combination of recycled by the oil company. The proportion

BE Americas [ Issue 56 ]

119

“We aim to create a real centre of excellence here in southern Saskatchewan”

what is the world’s first post-combustion coalfired carbon capture facility with Aquistore and the EOR plant will finally demonstrate is the commercial viability of carbon capture to energy authorities across the world. The final piece of the jigsaw is a joint venture with Mitsubishi Hitachi Power Systems located at SaskPower’s Shand facility. The Carbon

120

[ Issue 56 ] BE Americas

Capture Test Facility (CCTF) which will test a range of carbon capture technologies and assess their viability. What makes the CCTF unique is that it has been sized to manage measurement uncertainty and is the only facility emerging from a full-scale project. It should be in operation around the same time as the Boundary Dam facility comes

SaskPower

Boundary Dam power station

on line. “We will get the project running this year and then we will run it for a couple of years to just ensure its integrity and precisely what level of efficiency we can get out of our carbon capture facility,” says Robert Watson. “We aim to test not only the technology itself but also the operating processes, the financial model and the regulatory model creating a real centre of excellence here in southern Saskatchewan.” Totally focused this year on completing not one but three big coal projects, he is looking forward to unveiling his vision and SaskPower’s leadership at a symposium to be held at the end of September in the Saskatchewan provincial capital Regina. It will

be a great opportunity not only to showcase SaskPower as a company but to pay tribute to the teams that have delivered the facility, to whom he gives all credit, and will not fail to mention their outstanding safety record with over 5 million hours worked without a single lost-time incident.

SaskPower

(306) 536-2886 info@saskpower.com @SaskPower www.saskpower.com

BE Americas [ Issue 56 ]

121

LUCE

Powering an

Saint Lucia did not attain full independence t nevertheless its electric power utility Saint Luc established in 1964, which means that this words by

122

[ Issue 56 ] BE Americas

John Oâ&#x20AC;&#x2122;Hanlon

UCELEC

island nation

till 1979, so as a nation it is just 35 years old: cia Electricity Services Limited (LUCELEC) was s year it is celebrating its 50th anniversary research by

Robert Hodgson BE Americas [ Issue 56 ]

123

Line maintenance work being carried out

124

[ Issue 56 ] BE Americas

LUCELEC

rom the outset LUCELEC’s mission has been to provide an excellent service to its customers by adequately supplying a reliable and continuous electrical supply to the Saint Lucian population, at an affordable cost. Though it serves a small country of fewer than 175,000 souls, LUCELEC’s approach has earned it a reputation across the Caribbean as a very well-run, world-class utility regarded as a best practice benchmark company with a strong emphasis on customer service, innovation, employee development and social and economic development. The company went public in 1994, and its shares are traded on the Eastern Caribbean Securities Exchange. The company emerged as a unified and centrally managed source of power, from several small facilities dispersed around the

years ago there were still plenty of people who remembered the days when all we had were a couple of small systems in the larger communities, providing power for limited periods in the day,” he recalls. “We had already made significant progress, but we have made a lot more since. The system has now been developed island wide. Over 99 percent of customers who want electricity have access to it. Quality and reliability of supply has increased by leaps and bounds.” By the end of the 1980s the company was virtually self-sufficient in all but the most specialised needs. In 1990, new generating and transmission systems were commissioned which redefined the standards the company had previously applied to all its operations. The Cul de Sac power station was inaugurated

“Over 99 percent of customers who want electricity have access to it. Quality and reliability of supply has increased by leaps and bounds” island. This allowed for the expansion of facilities island-wide, as well as the opportunity to rationalise operating costs. The 1970s saw the company facing an explosion in the demand for power as hotel development and banana production transformed the economy. By the early 1980s it was clear that the company was entering a new phase and better trained people were needed to cope with an increasingly technological environment. The company initiated a highly successful craft apprenticeship programme and began the recruitment of graduate staff for all senior positions. Trevor Louisy was one of these graduates, a specialist in electrical engineering. He rose through the ranks becoming LUCELEC’s Managing Director in 2005. “When I joined the company 28

with three fuel-efficient, six to seven megawatt MAK engines. A 66 kV transmission system was introduced allowing the more efficient flow of power around the island. Over the years the company has added seven larger Wärtsilä units. The ultra modern power station and distribution grid are now the envy of sister utilities in the Eastern Caribbean says Louisy. Today LUCELEC employs 250 people but creates up to another 200 jobs within Saint Lucia through its contractors, who mainly work on transmission and distribution infrastructure maintenance, vegetation management and street lighting maintenance. These contractors, he says, have been developed and trained by LUCELEC over many years. But there is always room for improvement. “In 2014 we will be trying to improve our

BE Americas [ Issue 56 ]

125

FINAL MILE LOGISTICS FOR OVER A HUNDRED YEARS Greenshields Cowie’s services include: • Pre-shipment inspection • Packing and consolidation • Marine cargo insurance • Warehousing • Multi-modal movements by sea, air and road • Customs clearance • Delivery to final in-country destinations For further details contact Sophie Brayfield Operations Manager, UK at Sophie.brayfield@greenshieldscowie.com Tel: +44 (0) 20 8643 3533 or visit our website www.greenshieldscowie.com

RELIABLE, COMPETITIVE AND FLEXIBLE

126

[ Issue 56 ] BE Americas

LUCELEC

performance in certain specific areas, such as losses, efficiencies and corporate diversification.” Losses are calculated by subtracting the units generated from those sold or consumed. The difference could be technical or non-technical – the latter a combination of illegal energy extraction such as meter tampering or losses resulting from old and inefficient meters. “We have made good progress in dealing with technical losses and we are working very hard to reduce our non-technical losses,” he says. “Last year we finally got total losses below the nine percent level and this year our target is to get the figure down to eight percent or lower.” For larger utilities the buzzword is smart metering. LUCELEC is keeping a close watch on innovation and as part of its programme of phasing out old meters is installing equipment that will support smart grid technology. That’s one for the future though. For now Trevor Louisy is keen to advance the adoption of alternative, green power on the island. “Developing alternative power sources is a major priority for us. We are disappointed that we have not made as much progress in the area of renewable energy as we

GREENSHIELDS COWIE FINAL MILE LOGISTICS FOR OVER A HUNDRED YEARS In a world that seems to be getting smaller, Greenshields Cowie (GSC) will help you gain an edge in today’s increasingly competitive global marketplace. Our unique network of partners and agents built up over a history that spans some 200 years ensures delivery to final mile destination time and again. We provide bespoke, innovative, logistical solutions to international development agencies and their clients, as well as long-standing commercial clients such as LUCELEC. Our services include packing, consolidation, Air and Sea Freight transportation, marine cargo insurance, warehousing, customs clearance and delivery to final in-country destination. www.greenshieldscowie.com

Trevor A. Philip Agencies Limited Trevor A. Philip Agencies Limited boasts a staff of fifteen (15) and is highly regarded as the number one shipping logistics provider in Saint Lucia if not in the OECS offering Customs Brokerage, Freight Forwarding, Packing, Ship’s Agents, and Household Goods Moving Services. Our affiliations with highly respected Associations, Shipping Companies, Packers and Movers worldwide have put us in the enviable position of being able to provide services to and from any continent. tpagency@candw.lc

Trevor Louisy, Managing Director

BE Americas [ Issue 56 ]

127

inspired Your weekly digest of business news and views

www.bus-ex.com Allied Cables

Allied Export

The Largest Armoured Cable Stocks in the North West

ALLIED CABLES LTD Suppliers to the Utility Companies throughout the Caribbean of Low - Medium & High Voltage Armoured Cables AAC & AAAC Aluminium Overhead Conductors Duplex & Triplex Ariel Bundled Cables

185mm & 240mm 3 CORE Copper 11kv Armoured Cables Leaving our Warrington works for Lucelec For Enquiries / Quotations contact Howard Taylor Email: howard@alliedexport.co.uk Tel: +44 (0) 1925 232662 Cell: +44 (0) 7831 309309

C O N G R AT U L AT I O N S T O L U C E L E C ON THEIR 50TH ANNIVERSARY

www.allied-export.com 128

[ Issue 56 ] BE Americas

would have liked, but I am hopeful of seeing reasonably significant developments this year and next year.” LUCELEC and the Saint Lucia government have been in talks aimed at reaching a consensus over renewables now that the country has changed its target to source 35 percent of its energy from renewable sources by 2020, up from 20 percent. Wind power is on the agenda, however Louisy is very conscious that the sun that brings tourists to the island could also be a major contributor to the energy mix and help reduce dependence on fossil fuels. “We have had some significant discussions regarding utility scale solar installations. Right now we are entering the third year of a pilot photovoltaic (PV) rooftop installation program and are currently finalising the tariff mechanism that governs how these systems feed into our grid.” The aim is to allow residential customers to connect systems of less than five kW to the

LUCELEC

CDS Power Plant at night

“Developing alternative power sources is a major priority for us” network – for now the main brake on rollout is the high capital cost. Recent discussions with the World Bank could open the way to a very interesting geothermal power project, he adds. Saint Lucia has geothermal potential from the sulphur springs in the west coast town of Soufriere, and Dr James Fletcher, Minister for Sustainable Development, Energy, Science and Technology wants to see this potential developed. “We believe it gives us an excellent opportunity to bring down the price

of electricity, secondly it gives us some buffer in volatility in world oil prices - and the more we can move our dependence away from oil and diesel, then the better for us,” he says. Though it ’s not as green as these technologies , natural gas is more environmentally friendly than oil and its increased use would help bring down electricity tariffs for consumers. In the absence of its own gas resources Louisy would like to be able to shift over to natural gas, but is constrained by the existing diesel plant at Cul de Sac. “We looked at HFO a few years ago but found that the investment we would have to make to convert our plant was significant, and it was around the same time that the differential between heavy fuel and diesel had reduced significantly, and along with the environmental considerations, we decided not to go ahead with that. However we took a policy decision that for

BE Americas [ Issue 56 ]

129

LUCELEC was the main sponsor for the National School Sports programme

130

[ Issue 56 ] BE Americas

LUCELEC

“We aim to integrate, implement and promote socially responsible behaviour throughout the organisation and across our sphere of influence”

any new facility we might build we would commission engines designed to run on all or any of these fuels.” To reassure and attract potential investors Saint Lucia is moving to set up an independent national utilities regulator and recently brought together public and private sector stakeholders to discuss the draft legislation. LUCELEC is supporting this process, says Louisy, and taking a proactive stance in the discussions: “We want to make sure that there is transparency and integrity and that the government maintains a sort of arm’s length approach, not influencing or instructing the regulator as to what decisions they should reach!” At its own expense the company has been preparing the organisation and the staff, and engaging the external stakeholders, including the government, towards an understanding of the nature of regulatory best practice. Experts from the London School of Economics were invited to Saint Lucia last year to conduct in-house training “If regulation is not managed properly it can become very costly,” he concludes. “We are trying to make sure that we do the right things from the beginning rather than trying to correct errors at a later stage, when the damage is already done.” As a responsible service company LUCELEC has a robust CSR policy informed by ISO 26000:2010 guidance. “We aim to integrate, implement and promote socially responsible behaviour throughout the organisation and through our policies and practices, right across our sphere of influence,” says Trevor Louisy. The policy translated to

practical wins throughout 2013 in the areas of environment, sport, education, charity, culture and enterprise. Among these was funding for access to early childhood development interventions for children and parents in disadvantaged communities benefiting 3,029 children from 2,918 families. LUCELEC was the main sponsor for the National School Sports programme which included inter-school competitions in football, netball, basketball, cricket, athletics and tennis. It also sponsored the National Arts Festival, with a range of performing arts projects, and the Folk Research Centre’s Jennes Kwéyòl Pageant which encourages secondary school students to celebrate the island’s creole heritage. In the past 15 years LUCELEC has demonstrated a capacity to anticipate and plan for or respond to the changes in the industry and the operating environment, Trevor Louisy relates with pride. “Our resilience and response capacity has been tested and demonstrated with recent natural disasters like Hurricane Tomas in 2010 and more recently on the Christmas Eve trough, where we had significant rains on Christmas Eve and on Christmas morning with the loss of a number of lives. We are confident that we can rise to whatever new challenges are on the horizon!”

LUCELEC

+1 758 457 4400 info@lucelec.com www.lucelec.com

BE Americas [ Issue 56 ]

131

Luis Muñoz Marín In

Destination P

Luis Muñoz Marín International Airport i on its way to becoming a gatewa words by

132

[ Issue 56 ] BE Americas

Will Daynes

nternational Airport

Puerto Rico

is Puerto Ricoâ&#x20AC;&#x2122;s largest airport and is fast ay to the entire Caribbean region research by

Abi Abagun BE Americas [ Issue 56 ]

133

he name José Luis Alberto Muñoz Marín is one that is revered in Puerto Rico. Born in February 1898, he was a poet, journalist, politician and statesman, and to this day remains regarded as both the “Father of Modern Puerto Rico” and the “Architect of the Commonwealth”. In 1948 Marín became the first democratically elected Governor of Puerto Rico and went on to spearhead an administration that would become lauded internationally for engineering significant

134

[ Issue 56 ] BE Americas

economic, political and social reforms that immensely benefited the territory. Today the name Luis Muñoz Marín adorns Puerto Rico’s largest international airport. Located in the area known as Isla Verde, construction of the airport was authorised by Marín himself in 1951. The decision to build it came in response to the changes occurring in the aviation sector at time, with many of the airlines that served Puerto Rico at the time upgrading their fleets from propelled to jet aircraft.

Luis Muñoz Marín International Airport

“The airport is today the busiest in the Caribbean by passenger traffic with over four million people boarding a plane there per year”

As well as ensuring the Caribbean nation would now possess a modern airport with a runway long enough to land jet aircraft, it would also become a major meeting point for tourism in Latin America as well as being a hub for air cargo. Furthermore, in addition to serving as an international airport it was also to become the home of the Puerto Rico Air National Guard. The airport officially opened for business on 22 May 1955, taking its current name in 1985. In the three decades between the

BE Americas [ Issue 56 ]

135

Atkins has been the lead designer of all airfield projects at Luis Muñoz Marín International Airport in San Juan, Puerto Rico for the past 13 years.

Atkins knows aviation. Today, more than 200 million passengers safely arrive or depart from runways constructed from Atkins’ designs. With full-service capabilities in airside, landside, terminal and environmental permitting, combined with community and airport master planning, Atkins is prepared to develop the airports of the future. Our aviation projects range from major air carrier runways to small turf runways, from large hub terminal designs to general aviation T-hangars, and from new greenfield airports to renovations of existing facilities.

Whether you’re looking for technical solutions or project innovation, let Atkins’ global experience take you to new heights.

1.787.294.2010 carlos.arboleda@atkinsglobal.com

www.atkinsglobal.com/northamerica

As part of the CIP program for Luis Muñoz Marin International Airport, Atkins designed state-of-the-art Aircraft Rescue and Firefighting Facilities (ARFF). Atkins also provided services for the Reconstruction of Runway 10-28 and associated taxiway system, including the development of the South General Aviation complex.

Luis Muñoz Marín International Airport

“Over the years the airport has been the hub for numerous Caribbean airlines”

airport grew steadily to include three terminal buildings, a 200 space car park and a second runway, which was finished in 1972. Over the years the airport has been the hub for numerous Caribbean airlines, including Pan Am, Trans Caribbean Airways and Eastern Air Lines. It also acted as the headquarters of the first Puerto Rican international airline, Prinair, from 1966 until its demise in 1984. Owned by the Puerto Rico Ports Authority, Luis Muñoz Marín International Airport is

atkins Atkins Caribe, LLP, is a Puerto Rico-based business unit of Atkins—one of the world’s leading engineering, design, and project management consultancies. Atkins Caribe blends the strength of Atkins’ worldwide expertise in engineering complex infrastructure projects with highly skilled local and North American resources to provide state-of-the art engineering, design, and project management services within the Commonwealth of Puerto Rico and throughout the Caribbean region. Atkins has a decades-long history of successfully completing a broad spectrum of projects in Puerto Rico, including serving as the general airport consultant to the San Juan Luis Muñoz Marin International Airport since 1997. Working with the airport’s management company, Aerostar Airport Holdings, LLC, Atkins has successfully supported the airport’s capital improvement program, providing airport planning and airfield

design services, pavement studies, environmental assessments, construction management services, runway improvements, and much more. For example, Atkins recently completed a major runway safety area (RSA) improvement project for Runway 8-26, the airport’s longest runway. Atkins effectively leverages the expertise of nearly 100 experienced technical and business professionals in North America and the Caribbean region who specialize in airfield and pavement engineering, planning, project management, and administrative support—a multidisciplinary team that works effectively across geographic boundaries to design, plan, and enable some of the largest and most complex aviation-related projects in the western hemisphere. The Atkins Caribe office is strategically located in the San Juan metro area, just minutes away from the Commonwealth’s federal and state governmental agencies. www.atkinsglobal.com/northamerica

BE Americas [ Issue 56 ]

137

Luis Muñoz Marín International Airport

managed by Aerostar Airport Holdings, a public-private partnership awarded a lease by the government to operate and manage the airport for 40 years: the airport is today the busiest in the Caribbean by passenger traffic with over four million people boarding a plane there per year according to the Federal Aviation Administration. Today dozens of airlines continue to operate out of the airport. These include the likes of American Airlines, Air America, Air Canada, United Airlines, WestJet, JetBlue Airways and Delta Air Lines. “On a typical day more than 100 flights take off and land at Luis Muñoz Marín International Airport where we service around 80 percent of Puerto Rican’s that travel back and forth from the US mainland or indeed further afield,” states Manuel Gutierrez, Commercial Director of Grupo Aeroportuario del Sureste, the Mexican company that holds a 50 percent stake in Aerostar Airport Holdings alongside Highstar Capital. “Meanwhile, those visiting Puerto Rico are predominantly tourists coming to enjoy the yearlong good weather,

Gramaslindas Landscape Established in the 1950’s Gramaslindas is the oldest and largest business in Puerto Rico dedicated to sod cultivation and related activities. Our experience in developing and maintaining an inventory of over 500 acres of sod makes us the leading supplier/ contractor for any large scale sodding job and business relation on the island. Gramaslindas has been consistently ranked as one of Puerto Rico’s top five largest landscape contractors in the Caribbean Business Book of Lists. Our business is divided into three major operations: Gramaslindas Sod Farming, Gramaslindas Landscape, Inc. and Tropigardens; a Wholesale Business that Grows ornamental plants, palms and trees. Gramaslindas Landscape, Inc., the division in wich Yamir E. Rodríguez had been involved as a Landscape Manager for the past 11 years; have

a consecutive business growth trend offering different services such as: Landscape Maintenance, Grounds Keeping, Pesticide Application, Tree Care, Planting, Interiorscape, Landscape Design, and others. We are a proud contractor of 48 projects as Home Owners Association, Hotels, Shopping Centers, Commercial Spaces, Federal Projects and the International Airport Luis Muñoz Marín. Gramaslindas is the company contracted by AEROSTAR AIRPORT HOLDING, LLC to provide hand to hand services in this International Airport. Some of the services provided inside and outside of the runways are Landscape Design, Landscape Maintenance and Tree Care on more than 400 acre around the property. This operation was directly supervised by Mr. Rodríguez in coordination with AEROSTAR. www.gramaslindas.com

BE Americas [ Issue 56 ]

139

inspired Your weekly digest of business news and views

www.bus-ex.com 140

[ Issue 56 ] BE Americas

Luis Muñoz Marín International Airport

our wonderful beaches and generally to get away and relax.” Puerto Rico’s desire to capitalise on growth within the tourist sector, and also the business sector for that matter, can be felt throughout the territory and this includes Luis Muñoz Marín International Airport itself. The publicprivate partnership deal that formed part of the agreement for Aerostar Airport Holdings taking managerial control of the airport in February 2013 included a call for the company to invest approximately $1.4 billion over the 40-year life of the lease in order to solidify it as a world-class aviation gateway. It is hoped that this level of investment will not only consolidate the airport as the principal facility serving the Caribbean but also allow Puerto Rico to compete with the 30-odd islands in the region that offer tourism. This past October Aerostar Airport Holdings announced its intention to invest $240 million on renovations to its terminal buildings, with upgrades to terminals B and C marking the first large-scale works to the airport since the company took over operations. These works follow on from other improvements made since 2008, which include the introduction of terminal A and the installation of new light systems, press conference rooms and various new retail and food outlets. “We are currently hard at work implementing a lot of changes throughout the airport,

Power Engineering Do you have millions of dollars allocated in your budget to deal with business disruptions? If not, it is crucial to adapt and adopt Power Engineering’s SPP Model to prevent high voltage electrical failures: Safety: Perform coordination, short circuit, and arc flash study. Predictive: Schedule testing of equipment to create trending and act before it reacts. Preventive: Performing annual shutdown of equipment found to have unsafe trending. Indeed, according to Eng. Agustin Arellano, CEO of AEROSTAR Airport Holdings operators in Puerto Rico, “Power Engineering has become our allies implementing energy strategies and ensuring the reliability of our high voltage electrical system. They have been vital to make our airport safe for our employees and millions of passengers visiting our facilities.” www.powerengineeringpr.com

“We are currently hard at work implementing a lot of changes throughout the airport, particularly when it comes to terminals B and C”

BE Americas [ Issue 56 ]

141

Did you know? 22 May, 1955 The date the airport opened for business 1985 Year Luis Muñoz Marín International Airport took its name $1.4 billion The amount to be invested in the airport during Aerostar Airport Holdings’ 40 year lease 100+ Number of flights which take off and land at Luis Muñoz Marín International Airport during a typical day

“What we are focused on doing is challenging those ... airports that are handling anywhere up to twelve million people per year, in the not too distant future” particularly when it comes to terminals B and C where we are doing things like increasing the size of check in areas, making parts of the building that were previously too narrow wider in order to increase accessibility for passengers,” Gutierrez continues. “Meanwhile we are also constructing a new security

142

[ Issue 56 ] BE Americas

checkpoint that will have as many as twelve access points, which we expect to have up and running by the end of this year.” There is unquestionably much work to be done, what with countless supplementary tasks needing completing as well, from re-flooring the terminal buildings to

Luis Muñoz Marín International Airport

installing air conditioning units, electrical systems, lighting and scanning technology. Nevertheless, Gutierrez recognises that the results of this work will be of massive benefit to all concerned. “While the aforementioned tasks involve a great deal of time, effort and investment, what it will mean is that we end up with what will almost be a whole new airport, one fit for the modern world,” he concludes. “In terms of passenger volumes and traffic we are rated at around number twelve in Latin America. What we are focused on doing is challenging those at the top of the list, airports that are handling anywhere up to twelve million people per year, in the not too distant future.

We realise that to do that we need to achieve that is increase our capacity, which means increasing expenditure, and we feel that is something we can make happen, while at the same time establishing this as the best airport in the Caribbean in terms of service, quality and passenger satisfaction.”

Luis Muñoz Marín Intenational Airport

(787) 289-7240 info@aerostarairports.com www.aeropuertosju.com

BE Americas [ Issue 56 ]

143

ITâ&#x20AC;&#x2122;S TIME TO FOCUS ON YOU

[ Click here to find out more ] or email [ mday@bus-ex.com ]