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Businessexcellence ACHIEVING

JUNE 2010

O N L I N E

Let

www.bus-ex.com

fly them

GOAL (German Operating Aircraft Leasing) is an apparently future-proof business


Editor’s letter

Businessexcellence ACHIE VING

Carryon

improving

EDITORIAL

Editor In Chief Martin Ashcroft mashcroft@bus-ex.com Managing Editor Bud Sadler bsadler@bus-ex.com

DESIGN

Production/Creative Director Zachary Smith zsmith@bus-ex.com Production Designer Mallory Lindsley mlindsley@bus-ex.com

BUSINESS

Director of Editorial Research Scott Mason smason@bus-ex.com Director of Sales Sean Brett sbrett@bus-ex.com Administration & Operations Kathy Toomey ktoomey@bus-ex.com Chief Executive Andy Turner info@bus-ex.com

The concept of continuous improvement came to us courtesy of the Toyota Production System (TPS), reinforced by a book about “kaizen” by Masaaki Imai, whom I interviewed in February 2003 for a magazine known simply as Industry. Kaizen is a translation of the Japanses words, kai (change) and zen (good). “Mr. Kaizen,” as I referred to Masaaki Imai at the time, introduced the term to the business lexicon in 1985, and it has since been incorporated into the Oxford English Dictionary. Mr. Kaizen himself, however, was less concerned with his English immortality than he was with the Western tendency to misunderstand what continuous improvement was all about. “Kaizen is like a brick,” he told me. “You need hundreds and thousands of bricks.” What frustrated him was the way Western manufacturers liked to use a brick or two here and there, then convince themselves they had embraced continuous improvement. I have more confidence, however, in the latest initiative from HJ Heinz— the Heinz Global Performance System (HGPS)—which is driving a sustainable continuous improvement effort in its 74 plants around the world. “HGPS is a five to seven year journey that never ends,” says Gary Thomas, director of global continuous improvement and risk management at Heinz. “We’re trying to shift away from project-based productivity to a process-based system. Our employees are solving the problems on the floor, so they don’t have to turn them into projects.”

Subscriptions info@bus-ex.com

The irony is that in the euphoria of overtaking General Motors as the world’s No. 1 automaker, Toyota lost sight of its own model and suffered an unprecedented quality crisis. That’s not to knock the model, though, because it was the model that got Toyota to No. 1 in the first place.

Infinity Media LLC 100 Cummings Center Suite 243C Beverly, MA 01915 Tel: 978 232 9284 • Fax: 978 560 0999

The watchword is still “continuous.” When you have done everything you can think of to improve, somebody will invent a new technology, a new method, or another way of thinking about the process. It might even be you. Carry on improving.

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34 Hunter Roberts Going the extra mile for clients A general contractor building a wide range of projects from residential to healthcare, commercial and institutional.

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Duke University Incentive matters Business excellence in the design and construction industry is all about maintainability, quality and aesthetics.

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T.N. Ward Company: PPL Park Beautiful game, beautiful stadium A purpose-built soccer stadium in Chester, Pennsylvania, will be a great urban regeneration project.

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GOAL (German Operating Aircraft Leasing) Let them fly Owning more aircraft than most passengers realize, this is a strong and apparently futureproof business.

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H.J. Heinz From project to process The culture-changing Heinz Global Performance System is driving sustainable continuous improvement through its sites around the world.

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Triumph Foods High on the hog Premium pork products from a new high-tech meat processing and production plant in St. Joseph, Missouri.

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TOMRA of North America Redeeming features Bringing state-of-the-art technology, hardware and infrastructure to beverage container recycling.

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Contents

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Ledcor Industrial Ready for the next wave Adapting to a changing marketplace by aligning itself internally to capture an even bigger share of the market.

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Warren Resources The glass is three-quarters full Using directional and horizontal drilling to create a new model for oil extraction from mature fields in urban areas.

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Lakeside Steel Corp. 100-year-old “newcomer� A century-old company whose savvy turnaround has vaulted it into the Toronto Venture Top 50.

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Amerigo Resources Getting more from mines The mineral processing plants of Minera Valle Central extract copper and molybdenum from the tailings of the El Teniente mine.

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Alaska Railroad Corp. Riding the rails Striving to be safer, greener, more customerfriendly and an even bigger engine for economic growth in our largest state.

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Denton County Transportation Authority The green link A new commuter rail service in Texas introducing groundbreaking safety technology that could revolutionize train operations in the US.

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Heartland Health Stimulus for change Committed to improving processes and patient care, and winner of the 2009 Malcolm Baldrige National Quality Award for Health Care.

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Smyth Companies Labeled as an innovator Already one of the country’s top ten labeling companies, global expansion is expected thanks to a new private equity agreement.

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Doyle Sailmakers Innovation fuels growth Cutting-edge technologies and a scientific approach to sailmaking are taking sail optimization to a new level. Brijot Imaging Systems Benign waves A unique security imaging system that is safe, effective and non-intrusive has great potential beyond the airport.

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Carbis, Inc. A step above After inventing the aluminum ladder in 1930, Carbis has grown to become a world leader in fall protection equipment.

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Club Car, Inc. Right for the times Manufacturer of golf cars and utility vehicles, at the forefront of the technology that supports the sport.

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New Gold Steady production The new owner of the Mesquite Mine in Southern California has the financial backing and resources it needs.

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Orvana Minerals Golden opportunities A newly acquired gold mining opportunity in Spain, a copper mining project in the US, and an open eye for more.

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Bankers Petroleum Hot oil treatment The economic and technological challenges of steam-heating heavy crude oil for extraction in Europe’s largest onshore oil field.


Contents

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Devin International Drilling for dollars A leading manufacturer and provider of oil and gas equipment to petrochemical customers worldwide. Savannah River Remediation Mentoring for the future In the first year of an eight-year effort to safely disposition some 36 million gallons of radioactive waste.

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Crossby Dewar Getting along An effective merger has produced a major force in the refurbishment of nuclear plants in Canada and around the world.

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Grupo Unidos por el Canal Surgery on a continental scale The Panama Canal Expansion project is one of the largest civil and mechanical engineering jobs under construction today.

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PCL Construction Hats off Canada’s largest construction company is charged with replacing the roof at Vancouver’s BC Place. Turner Construction Company Clash detection Undertaking a ten-story medical facility at Buffalo General Hospital for Kaleida Health. Bell & Associates / Clark Construction Where music calls home A joint venture is bringing Nashville a new Music City Center to be the centerpiece of Tennessee’s capital city.

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Going

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Hunter Roberts Construction Group

gtheextramile for

clients In just five short years, Hunter Roberts has become a major player in the general contracting marketplace, building projects across a wide range of sectors, including residential, healthcare, commercial and institutional. Keith Regan explores the company’s primary objective: to personalize and streamline the construction management process for project owners

T

he founders of Hunter Roberts Construction Group all gained high-level experience while working for a large, local company and shared a common vision: to apply their knowledge in a flexible, more client-focused environment. “We saw a need in the marketplace for another mid-sized to large general contractor,” says Kevin Barrett, a senior vice president and director of operations in Hunter Roberts’ New York office. “We saw a need for a midsized, privately held firm that could offer increased flexibility and senior management involvement in ways that a larger company could not.”

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Hunter Roberts Construction Group

Helmark Steel, Inc. Helmark Steel, Inc. is regarded as one of the nation’s leading fabricators and erectors of structural steel. The company has successfully completed numerous projects ranging from less than 100 tons to over 25,000 tons. We are certified by the AISC Quality Certification Program

for

fabrication

of

complex

steel

buildings and bridges as well as being certified as an “Advanced Certified Steel Erector.” The organization, including the fabrication facility, is headquartered in Wilmington, Delaware. Visit us at www.helmarksteel.com

Hunter Roberts’ demonstrated growth suggests that the founders were correct in their evaluation of the marketplace. After doing $50 million worth of work in its first year, the firm kept increasing its revenue, securing $300 million the following year and $700 million just three years after inception. The company now has a workforce of roughly 260 people, all of whom Barrett credits for the rapid growth and success.

“We saw a need in the marketplace for another midsized to large general contractor, a privately held firm that could offer increased flexibility and senior management involvement in ways that a larger company could not” “I attribute that growth to the talent of our staff,” he says. “At this point, we’re starting to accumulate a number of repeat customers. Our clients have provided us with opportunities, and we’ve made the most of them.” To position itself for success, Hunter Roberts focuses heavily on safety, quality, scheduling and cost-control processes. Over the past two-plus years, the firm has implemented an Incident and Injury-Free (IIF) workplace

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Hunter Roberts Construction Group

“The IIF program encourages employees to view their workplace as a partnership and not a dictatorship. It engages subs and trades in a dialogue, allowing them to have feedback and input. The results have been steadily improving, and we believe our subs appreciate the approach” Pace Plumbing and Fire Protection For over 40 years Pace Plumbing and Fire Protection has been proud to have worked on some of New York City’s most prestigious projects, including currently working closely with Hunter Roberts Construction Group to build Fiterman Hall and Gouverneur’s Hospital. Our products are plumbing and fire protection, our specialties are value engineering, problem solving, responsiveness and above all else integrity.

safety program that has its roots in heavy industry and manufacturing settings. “The program is consistent with our corporate culture and a lot of our ideas,” Barrett says. Approximately 90 percent of the Hunter Roberts

workforce participated in two full days of IIF training to get the program started. From there, the firm reached out to subcontractors and trades people to get them on board. “The program encourages employees to view their workplace as a partnership and not a dictatorship. Previous safety initiatives were full of mandates and punishments for unsafe behavior, but IIF engages subs and trades in a dialogue, allowing them to have feedback and input. The results have been steadily improving, and we believe our subs appreciate the approach we’re using.” While Hunter Roberts believes that safety and quality are important, the firm understands that they aren’t solely sufficient for ultimate client satisfaction. “We want it to be a pleasant experience for clients to work with us,” Barrett says. “Even if you do a great job with things like safety and quality, clients can still walk away feeling unsatisfied with their experience. If they find our employees difficult and unpleasant to work with, it won’t

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Hunter Roberts Construction Group

“Even if you do a great job with things like safety and quality, clients can still walk away feeling unsatisfied with their experience. If they find our employees difficult and unpleasant to work with, it won’t matter if the job was done on time and within budget” matter if the job was done on time and within budget.” The primary way to ensure client satisfaction is to listen, communicate and deliver. “We really stress listening to clients and personalizing our approach to accommodate their particular objectives and preferences. While our professionalism and industry

knowledge always remain the same, our completed projects are widely diverse, as they each uniquely reflect their owners’ needs.” Hunter Roberts has found success across a range of sectors, completing projects in the commercial, residential, healthcare, corporate interiors, sports, educational and

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Hunter Roberts Construction Group

Champion Metal & Glass, Inc. Champion Metal & Glass, Inc. together with and under the direction of Hunter Roberts is working to build a new charter high school that is nearing completion at 1480 Atlantic Avenue in Crown Heights. The 1,600-seat school, a joint venture between Achievement First and Uncommon Schools and funded in part by the Robin Hood Foundation, was designed by Robert A.M. Stern and Gensler. The facility will include six fully-equipped science labs, a 4,000-square-foot library and two gyms and is scheduled to open in time for the 2010-11 academic year.

Capco Steel Capco Steel started in 1990. We maintain a bonding capacity of over 100 million with AON. Our East Providence shop is our heavy structural shop with 60,000 square feet and 15 and 20 ton overhead cranes. On Acorn St. in Providence we have a 170,000 square foot steel production facility. Capco is AISC certified in fabrication (building and bridges) and

advanced

steel

erection.

Capco’s

capabilities include ornamental, structural and miscellaneous steel production.

institutional markets. The bulk of its current portfolio reflects recent economic activity and has shifted from privately funded residential work to publicly funded projects for a variety of New York City–based agencies. For example, the firm is currently constructing the new Fiterman Hall, an academic building at the Borough of Manhattan Community College campus, which is part of the City University of New York (CUNY) system. The building, located at 30 West Broadway, was damaged by falling debris from the collapse of the World Trade Center on September 11, 2001. The $200 million project will require the extensive implementation of 4,400 tons of structural steel, a process that is expected to last through most of 2010.

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Hunter Roberts Construction Group

The 400,000-square-foot project features a number of complexities, including state-of-the-art systems designed to help ventilate smoke in the event of a fire. Work is scheduled to be completed in 2012. “It’s a very high-profile project with a lot of constituencies, and we think our approach will help make it a smooth project all the way through,” says Barrett. Hunter Roberts is also providing ongoing construction management services to the Mount Sinai Medical Center

and is helping to build two New York–based charter schools, which further develop a portfolio that already includes work on the World Trade Center transportation hub, a new training center for the NFL’s New York Jets, corporate interior renovation work for Viacom and MTV Networks, a modernization of the Gouverneur healthcare facility in Lower Manhattan, and Red Bull Arena, the official facility of the New York Red Bulls professional soccer team. www.hunterrobertscg.com

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Incentive

matter

At Duke University, design and co serious business embracing main and aesthetics. Paul Manning, dir management, developed an innov incentive program resulting in sig excellence, and April Terreri learn

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rs

onstruction is a ntainability, quality rector of project vative personnel gnificant business ns all about it

Duke University

I

t’s not the impressive numbers of LEED-certified Gold, Silver and Platinum buildings on the campus of Duke University; it’s the method used to achieve the successful construction of high-quality, aesthetic buildings on the near century-old campus in Durham, North Carolina. And that method has undergone significant improvements since Paul Manning took over as director of the Office of Project Management about five years ago after a successful 27-year executive career as an architect and contractor in Chicago and New York. Manning is acutely aware of his responsibility to the prestigious university to assure that its heritage of aesthetically designed and solidly constructed buildings is the standard against which new construction will be measured. To continue in this tradition of quality design and construction, Manning realized that only the best workers in the best construction companies can accomplish the goals established for any new building at Duke. “If we’re talking about business excellence in the design and construction industry, it’s really all about how to meet the project goals of maintainability, quality and aesthetics,” he says. “We have these beautiful 80-year-old buildings on our 2,000-acre campus. This heritage needs to be honored and protected. So my job is to ensure we get quality construction done on time and under budget while achieving the building’s program goals. Accomplishing this is all about incentivizing the right people who will work on Duke’s projects managed by my office.” This sounds straightforward, but it requires experience and finesse to assure the process works. For instance, Manning points to the construction of a new 150-bed residential building scheduled for a January 4, 2012 delivery. “If that building isn’t ready on time, it’s absolutely worthless to the University,” he says. “If we can’t move in the students for the spring semester that begins in January, the construction company might as well wait until next August to finish it, because we can’t use it until then. So I look for only the best contractors and the best consultants and their best workers to work for Duke.” He offers incentives to the corporations he hires by letting architects, engineers and contractors understand that doing an excellent job working for Duke is to continue to work for Duke. “We don’t incentivize corporations with money,” he explains. “We incentivize them with the chance for continued revenues through continued work here at Duke.” Manning developed a personnel incentive program about five years ago that considers the quality and dedication of the actual workers from those top-notch construction companies he hires. “I want to incentivize the people working for Duke. In the construction agreement, we stipulate that if they meet a set of metric requirements, they will get significant personal bonuses.” Here is how he accomplishes this: Typically, construction companies add into the fringe tax multiplier what equates to a bonus of 7 to 11 percent of the direct personnel expenses. “Then the owner [Duke] pays that, and those monies go to the construction company, which doesn’t always pay that to their employees working on Duke projects, even though we’re paying for it to happen,” explains Manning. “So what I do is pull out of the fringe tax multiplier the bonus component from the labor burden and make it a line item in the contract.” The construction companies Manning hires produce a list of people who will be working on particular projects that he has to approve. He personally interviews those who have not worked with him before and hires workers based on their qualifications and experience, and how well they will work with the others. “Say there is $100,000 in the bonus pool for six or nine workers,” he explains. “I set the metrics, including

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Duke University

Romeo Guest Associates, Inc. Romeo Guest Associates, Inc. is a general contractor

specializing

in

design/build

construction. Throughout our 117 year history we have built relationships with our clients by consistently meeting or exceeding their expectations 100 percent of the time. Our philosophy of working as a team to provide quality, cost effective construction in a timely manner has been the basis for our success and our vision for the future.

Bovis Lend Lease Bovis Lend Lease is proud of its partnership with Duke University and the exceptional teams that have helped deliver successful projects on the Duke campus for 20 years. Whether providing up

front

consultation

or

comprehensive

construction management services, our goal is always the same—delivering safe, sustainable, innovative solutions with profitable outcomes for our clients. the budget, the schedule and the guaranteed maximum price—which are all laid out at an initial meeting with the staff and the construction company’s project executive, as well as me and my project manager. At the completion of the project, I meet with the project executive for the construction company, and we mutually determine how the bonus money will be divided among the workers.” The construction company keeps a small amount for employee withholding taxes and cuts checks for the workers. Everyone meets for lunch, at which time Manning gets to hand out checks to each of the workers. Manning notes that monetary incentives are not appropriate for architects and engineers, because their goals differ. “For instance, their incentive has to be a design problem that is interesting and complex and that piques their intellectual and artistic abilities.” When Manning took on the responsibility of director of the Project Management Office, his first job was to improve the bifurcated project delivery and organizational systems. “There were two groups operating at the time—the Office of the University Architect and the Office of Construction Services. The former was responsible for managing the design

and sometimes the design and procurement of the construction, including setting the budget, schedule and scope. Then that office would turn the project over to Construction Services, which was responsible for implementing the budget, schedule and scope—which they had no involvement in defining. Not surprisingly, this process had some difficulties.” So Manning combined the two staffs into the Office of Project Management, responsible from concept to commissioning all capital projects, utility projects and renewal projects for the University. “It’s now a cradleto-grave responsibility and accountability, which is a big change. Our success rate is a lot better now.” When considering a new project, Manning allows the project priorities to determine what the delivery method will be. “The key is always to define the cost of the project at the appropriate point in the development of the design,” he says. “The earlier you try to transfer risk from me as owner to a contractor, the less definition there is of that project and the softer the number is because of the contingencies and allowances involved.” Typically, larger projects use the construction manager at risk project delivery method since most of the buildings are very complex, in part due to the strict schedule driven by the academic calendar. “When the project’s construction documents are about 70 to 80 percent complete, the construction company produces a guaranteed maximum price, and the risk is transferred from Duke to them. At this point the project is well defined and the risk is minimal, so the allowances and contingencies are minimal.” Duke University has always made it a point to be a preferred client in an area with many construction requirements in the Raleigh–Durham–Chapel Hill area, with its array of universities and pharmaceutical and R&D companies. Although the university side of Duke had been expending about $160 million worth of projects annually, it will expend $100 million this year and $70 million next year as a result of losing about 25 percent of its endowments due to the recession. But when the recession eases, Manning expects the university to increase the number of projects to prerecession levels. “We want contractors in the area to be interested in working for Duke because we’re a lean and private organization,” Manning says. “We pay more quickly than most other companies, and we utilize a net-zero pay for contractors so they receive a check a week after we receive their approved requisition. Duke always wants to be the one that architects, engineers and contractors prefer to work for, and we do that by keeping paperwork streamlined, getting them answers quickly, and getting them paid quickly.” www.duke.edu

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Beautifulgame, beautifulstadium

PPL Park, a purpose-built soccer stadium being completed in Chester, Pennsylvania, will b space for sports and other events, a great urban regeneration project, and a symbol of A growing passion for the game other nations call football. John O’Hanlon speaks to Nick Saki the owners and Richard Bernardini, project manager for the general contractor, T.N. Ward C

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T.N. Ward Company: PPL Park

, mL

be a great America’s iewicz for Company

et’s get one thing clear: not even Nick Sakiewicz thinks soccer is going to replace American football in the nation’s affections any time soon. But he does think there’s a new generation coming along for whom the increasing impact that American teams are having on the international game matters. He ought to know. The 49-year-old Sakiewicz started playing soccer when he was a student at New Haven University and over 10 years had a distinguished career as a goalkeeper, playing for European and American teams until an injury took him out of the game. Nick was a founding member of Major League Soccer 15 years ago. Now his company, Keystone Sport & Entertainment, runs the newest MLS team, the Philadelphia Union, and is the lead partner in the new 18,500-seat PPL Park stadium, which has risen over the last two years on a prime riverside site. This is only the ninth soccerspecific stadium to be built in the US, and it’s much more than just a place for the Union to play its home matches. For Philadelphia it’s an important addition to the social environment, raising the profile of a rather neglected part of the city of Chester. This was a largely industrial part of the town that had become run down, with many firms leaving over the last 20 years. When T.N. Ward Company broke ground in February 2008, they had no idea what kind of terrain they would be working with. “We trained every single worker in hazard assessment and groundwork best practices, and we made sure all the necessary equipment was on site to deal with any hazard we might encounter,” says Rick Bernardini.

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T.N. Ward Company: PPL Park

“In the end, we didn’t need it. Part of the site had been occupied by a foundry, part by other manufacturing businesses. We had some very substantial concrete foundations to remove and a considerable amount of slag associated with the foundry, but nothing of a really dangerous nature.” From an engineering point of view, however, the site did present some challenges. The route of the Delaware River had changed, and the original bank of the river was found to run right through the middle of the stadium, so the south side of the site is on reclaimed, filled ground. This was not a major issue for Bernardini; in fact, to meet the schedule, work had started on the site before the design from Rossetti Architects was quite completed, so his team was relieved not to have come across any more serious problems before sinking the piles and starting to pour the foundations of the building. There was always the danger of running into unforeseen groundwater or pollution on the brownfield site.

and even the players’ tunnels. The Philadelphia Union and the architects had asked if these could be hidden, so T.N. Ward positioned them under the concrete slab. “The team of plumbers and electricians did an excellent job of installing and positioning the service cables and pipes. There were hardly any occasions where we had to chop the concrete afterward.” In March, the Philadelphia Union made its MLS debut in Seattle—and lost the match. The first home game will be played at the new stadium on June 27, with opening ceremonies featuring all the major stakeholders, including Pennsylvania Governor Edward G. Rendell; the mayor of Chester, Wendell Butler; Philadelphia’s mayor, Michael Nutter; representatives of Delaware County; and the owners and contractors. The opening match will be a return engagement with the Seattle Sounders, and the Union will be out for revenge. The seats have been installed this month, and the stadium will be ready to receive its first capacity crowd thanks to

“We trained every single worker in hazard assessment and groundwork best practices, and we made sure all the necessary equipment was on site to deal with any hazard we might encounter. In the end, we didn’t need it” The building itself contains many unique features. “We looked at stadiums all over the world and were able to incorporate some of the best ideas and even improve on them,” says Sakiewicz. “For example, the players’ benches were built into the first couple of rows of seating instead of protruding out into the playing area as they traditionally do. This improves the sightlines of the spectators in that area. But we also took great care to ensure that every seat in the building, even the most remote, has an uninterrupted view of the whole playing area. We also raked the seating in the ‘bowl’ at the maximum rake permitted so as to bring all the seats as close as possible to the pitch.” Another feature Sakiewicz likes is the fabric roof structure on the sidelines on either side of the pitch, giving good protection from the elements, better acoustic performance than normal (soccer can, after all, be quite a verbal game), and a unique design appearance that sets PPL Park apart from other stadiums. A familiar feature of soccer stadiums around the world is intrusive pipes and conduits going through the access passages

T.N. Ward, which has delivered the job in time. Whatever the score, this will be a proud moment for Nick Sakiewicz in particular. “We have had quite a journey together, and now there’s so much pride in the fact that we have pulled it off. I see it as more than a good business supporting a great sport: it’s urban renewal with collaboration between public and private enterprise. Today we have hundreds of workers on site. Our operation will have over 100 full-time employees and a further 350 part-time people running events— all this on a piece of land that 18 months ago was abandoned and unproductive.” All the matches scheduled for the remainder of the season have sold out, and this will be a busy soccer season before settling down to one match every week or two. The long-term plan is to have 40 events between March and November each year, of which 20 will be soccer matches. For music and other entertainments, the design permits seats at the south end to be removed and a stage constructed without affecting the playing surface. www.philadelphiaunion.com

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Let them

fl

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GOAL (German Operating Aircraft Leasing GmbH & Co. KG)

fly

GOAL (German Operating Aircraft Leasing GmbH & Co. KG) owns more of Europe’s aircraft than most passengers realize. John O’Hanlon talks to managing director Michael Radunz about this strong and apparently future-proof business

H

ow many people realize how commonly airlines actually own just a few aircraft, holding 80 percent or more of their liveried fleet under a five- or ten-year operating lease? GOAL is a joint venture company owned by KGAL GmbH & Co. (KGAL) and the German national airline, Deutsche Lufthansa AG (Lufthansa). These are a couple of the most experienced players in the airline industry; the Lufthansa group’s fleet of aircraft is the third-largest in the world, and KGAL has financed well over 300 aircraft in its time. “GOAL can offer clients a unique combination of resources,” says managing director Michael Radunz, “KGAL’s 40 years of in-depth involvement in the structured asset finance sector and Lufthansa’s five decades of operational experience in the aircraft industry.”

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From KGAL’s perspective, it suited it well to partner with a professional asset manager that knew the market and how to maximize the value of an asset over the term of the funding, whether through public offer or private equity. When GOAL was founded in 1998, Radunz says, aircraft leasing was already an important activity for Lufthansa. The airline had a business unit, Lufthansa Leasing GmbH, that was provided financial leases to the Lufthansa group and to a number of other airlines, and that business was doing very well. In addition, Lufthansa was active in the operating lease market since 1993. However, Lufthansa wished to put some distance between its brand and these leasing activities. “The task then was to find a partner willing to work with an operating lessor, and because KGAL had already done business with the group’s leasing arm, it was a natural choice.” The business today is led by joint managing directors—Radunz with ten years’ experience at Lufthansa and Christian Schloemann on the financial side. The business case for its establishment was to optimize the use of Lufthansa’s leased assets and to take advantage of market cycles. “The best example I can think of would be five Airbus A310-300s that Lufthansa wanted to sell in 2003. There was a downturn in the market at that time and nobody wanted to pay a sensible price, so those planes were transferred to us. We were able to place the planes out on five-year leases to Air Transat, Canada, and then sell them a couple in 2008–09 when the market had picked up. One of the main objectives of GOAL is to take advantage of cycles in the market and decide precisely the best moment to sell the aircraft.” The sale-and-leaseback model appeals to airlines for different reasons, but typically it is a way for companies to reduce their capital assets while gaining some of the advantages of outsourcing. There’s a lot of administration, document management and recording associated with owning an aircraft, and GOAL has developed its own system for dealing with that, says Radunz. “Every aircraft used to be accompanied by around 30 boxes of documents, tracing the provenance of every replacement part that has gone into it as well as recording its maintenance history in detail. Sometimes when we acquire older aircraft the documentation is not in electronic format—they just hand us the boxes. We had to have an intelligent way to manage all this information. We used our own IT system for a while, but as our portfolio grew above 15 aircraft, that wasn’t really up to the job, so we scanned the market.” Several systems existed. However, it happened that

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GOAL (German Operating Aircraft Leasing GmbH & Co. KG)

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GOAL (German Operating Aircraft Leasing GmbH & Co. KG)

the parent company’s technical arm, Lufthansa Technik AG, was developing a system in collaboration with the Swiss IT developer Open Connect that suited GOAL’s needs much better. “We bought a license and adapted the software to the particular needs of a lessor. One of our key selling points when we go to the market is that we keep track of the assets very closely with this system,” Radunz adds. “The software system is very transparent; our clients can import their monthly flight hours and

cycles into the system in a very convenient way.” If you look at the list of services offered by GOAL, it’s clear that its objective is to be a one-stop shop for its clients. However, each has very different needs according to its size and how long ago it was established. Apart from information management, which safety and international standards demand, insurance is a frequently used service. Some others, like training and catering support, are less often demanded. When they are, though, GOAL can simply make the necessary introductions to the relevant Lufthansa group subsidiaries. The company’s terms of reference require it to have a viable return on investment. Acquisitions must have a lease agreement in place or some other exit for investors such as a “part-out” opportunity, by which an older aircraft is bought, valuable systems like the engines or landing gear removed and resold, and the airframe finally scrapped. The risk has to be a manageable one, he says, and that is also why almost all of GOAL’s client airlines are in Europe—basically, the German investors are reluctant to put their money into a package with an airline they don’t know well. The first deal handed over to GOAL involved two Lufthansa Boeing 737-300 aircraft that Lufthansa had sold and leased back in 1998. This was followed in 2000 by two A310-300s owned by Lufthansa and already leased out to Kenya Airways and Air Afrique. Two 737-400s were provided to the Italian carrier Air One under a long-term agreement, then the company moved into new territory with the sale, leaseback and financing of eight Bombardier CRJ 200 regional jets for Eurowings, a Lufthansa subsidiary. The strategy going forward is to find new aircraft transactions—not so easy in the present climate, he says. “We’re looking at narrow-body transactions involving planes like the Boeing 737 NGs or Airbus A320 family.” Meanwhile, it seems there will be no lack of new opportunities for GOAL in the wake of a contract it is currently executing for the German air force via Lufthansa Technik. In December 2007 it was asked to manage the acquisition, fitting out and commissioning of four Bombardier Global 5000 jets. “We’re very proud to have been selected by Lufthansa Technik to purchase aircraft on behalf of the German government,” says Radunz. “This is a big step for a small company like ours.” The first plane has already been certified “in green,” ready for fitting out, and the rest will follow later this year in time for delivery in the second half of 2011. The contract could well lead to further projects for government and corporate entities looking to acquire executive jets, he believes. www.goal-leasing.de

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From

project to

process Martin Ashcroft revisits HJ Heinz to see how the culture-changing Heinz Global Performance System is driving sustainable continuous improvement through its sites all over the world

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H.J.Heinz

W

hen I last wrote about HJ Heinz two years ago 1 , Gary Thomas, director of global continuous improvement and risk management, told me how lean and six sigma were being used to drive a step change in performance in the company’s North American production facilities. He also gave me a heads-up on the next stage of Heinz’s continuous improvement program, which was even then being planned. “We are currently developing a global continuous improvement roadmap that takes the best processes, tools, and systems from all of our factories around the globe and integrates them into one production system,” he told me at the time. “We truly believe this will give Heinz a global competitive advantage.” The new program is called Heinz Global Performance System (HGPS), and the first eight sites were launched in March 2009. Heinz has 74 production sites around the world, and the global continuous improvement team has over a third of them up and running the HGPS process. “We started with approval from our board of directors for just eight sites,” he says, “but when all the other sites started to see it, they just started pulling it. It wasn’t a push process. Now we’ve got nearly 30 sites up and running on HGPS in just over 15 months.” HGPS marks a transition from a production system to a performance system. The advantage of this, Bob Ostryniec, global supply chain officer, believes, is that it pulls together the entire supply chain into one standardized continuous improvement approach—one standardized global program that everyone can follow, at their own pace, on the journey to become “world class.” All the elements of world class manufacturing, procurement and logistics are sequenced in this system so they can be used at the right time in the improvement process. “I would describe it as ‘just in time’ continuous improvement,” said Ostryniec. “It might sound fundamental and simple to some, but our performance system is all about the people. If we focus on developing the capabilities in our people by empowering them to lead change at all levels of our organization, the process improvements will come. “We went around the world and looked at all the continuous improvement processes we had in Heinz,” he continues, “in Australia, Indonesia, all over Europe, North America and China, and we came back with a war chest of different tools and methods

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H.J.Heinz

TRACC TRACC is the platform and content behind Heinz’s and other leading global companies’ continuous improvement management/production systems. TRACC

has

been

deployed

across

1000

operations in 56 countries and is available in 22 languages. TRACC has incorporated the lean, six sigma, TPM and WCM methodologies onto a common platform that enables rapid deployment, using internal resources for sustainable results. www.etracc.net

that we apply around the world. But we noticed there were a couple of key things that we must do differently to enable further success. First, we must penetrate deeper into the organization with continuous improvement processes. Second, we needed a platform that helped us manage change throughout the organization. HGPS has bridged both gaps on people engagement and leading and managing the change. “It was not the case everywhere, but for the most part our CI processes were project driven,” admits Thomas, “so that meant we really had the few and the proud—five or six people in every factory doing a lot of the work. You always depended on this six sigma black belt or that lean expert to get things done. So when we started to develop a performance system, the philosophy behind it was, how do we tie all the tools together in a sequenced approach so we know we’re doing the right thing at the right time, while engaging line-level employees in the process to drive the change and to make sure that it’s sustained?” HGPS is designed to drive the organization from expert-based to a collaborative continuously improving culture that shares intellectual knowledge gained as the process matures during the five-stage process. Stage one is the status quo, the expert-based, learnas-you-go culture. Stage two is stabilization and awareness, understanding the baselines, where functional excellence emerges. Ownership at all levels of the organization starts to take place in stage three, where organizational excellence begins to flourish, and refinement and technology come to the fore in stage four, creating a learning and sharing organization. Stage five, the ultimate goal, is where world class becomes a way of life in a continuously improving culture. “Where

we are right now is functional excellence,” says Thomas. “We might be really good at 5S or teamwork, but we’re not great at everything. We have pockets of success, and that’s why we are still at stage two.” It’s a long journey, and some factories will reach stage five before others, but at least they are all on the same road, with the same map. “First we engage the entire factory in leading and managing change,” says Thomas, meaning everyone, not just the recognized leaders and managers. “We then conduct a baseline assessment with the site to understand where the site is on the journey to world class.” The site then starts to develop its roadmap and the actions needed to start the transformation. “The performance system not only gives us a visual scorecard on the site gaps but also provides the roadmap, training, templates and all best practices on specific topics from around the world that we can pull from.” Although the goal is for each factory to work its way

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H.J.Heinz

along the HGPS roadmap to become world class in five to seven years, the improvement process does not end there. “HGPS is a five to seven year journey that never ends,” stresses Thomas—even at sites that are more advanced, such as the sauce and ketchup factory in Elst in The Netherlands, which Thomas says could possibly reach world class level in four years. By the time they achieve that status, however, other things will have emerged that could be done to make them even better. Progress is monitored and measured every step of the way, using the TRACC Continuous Improvement Management System provided by Heinz’s consultancy partner Competitive Capabilities International (CCI). This online system provides the sites with a very specific roadmap for each implementation area based on their maturity, gives global visibility on status, allows sharing between sites and is available in 22 languages. It has proved itself with some of the world’s most recognized companies, including DuPont, MolsonCoors, Siemens, SABMiller and CocaCola. Heinz chose CCI after researching approximately 40 consulting firms around the world. Being process-based, HGPS (powered by TRACC) ensures that improvements are sustainable by embedding best practices into the process. Thomas stresses that the process measures “people, practices and performance.” “In order to be a world class company, we’ve got to invest in our people to improve the processes that deliver the performance,” he explains. “If you’re driving performance without a rock-solid process, then you will have a hard time sustaining the improvement because the practices are not embedded into those processes.” When talking about HGPS, Thomas refers to “ownership” as a key ingredient for sustainable improvement.

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Ownership is often touted long and loud in management initiatives, but it can sometimes be a hollow platitude to promote public relations. Not so in this case. The Heinz journey to world class has been designed as a five to seven year process to allow each site to determine its own rate of progress. “Obviously, we do have corporate goals for productivity, customer service, quality and safety, etc., but we actually let the site steering committee set their own goals for HGPS. The factory will come to us and say, ‘We did a baseline assessment of HGPS and we’re at a 1.2 now. Over the next 12 months, if we put these practices in place, we think we can get to a 1.8, and by doing that we can improve efficiency by such and such percent, cut waste by this much and drive quality improvement by this much. So they actually set their own goals by the practices they put in place, and their results are monitored by the regional CI group and the leadership teams.” Any initiative will always have its share of doubters,

each of our sites globally, and we then took that data and went after where we thought the biggest opportunity was, based on cost and business strategy.” That approach certainly makes sense, but Heinz has been flexible enough to accommodate requests from other sites that would not otherwise have been among the first to be chosen. “If a factory called us,” he says, “and didn’t have such a big opportunity but said they wanted to start HGPS, we still went forward with them. There’s no better opportunity than a factory calling and asking to get started. What better motivation could you have?” One of the precepts driving ownership of HGPS is that culture change starts with quick wins, especially where the process is high risk, high impact. It’s rather like the “low hanging fruit” approach to lean manufacturing. Thomas uses Kitt Green, a factory near Wigan in Lancashire, UK, as an example. “When we say high risk we mean a line that is absolutely critical to our business, so if you think

“It was not the case everywhere, but for the most part our CI processes were project driven, so that meant we really had the few and the proud—five or six people in every factory doing a lot of the work. You always depended on this six sigma black belt or that lean expert to get things done” but Thomas is more than pleased with the response from employees. Heinz has a mixture of union and non-union factories, and the unions, he says, have been fantastic. The economic climate in the global downturn has also played a role in focusing the minds of employees on improvement, he believes. When the news is full of layoffs and factory closures every day, workers are motivated to embrace improvement to preserve their jobs. “At the time of an economic crisis I think every factory in the world is asking how they can gain a competitive advantage. With so many people laid off around the world, many that are still employed are starting to think and understand how lucky they are to still have a job,” says Thomas. With 74 factories around the world, implementation of a major initiative like HGPS has to be carefully staged, because they cannot all come on stream at once. How do you decide where to start? That’s a question of having comprehensive information about the current performance of each site, and using it strategically. “Last time we spoke we mentioned the global supply chain task force,” says Thomas. “The task force identified opportunities in

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about all the baked beans we produce in Kitt Green, can making is pretty critical. If it’s not running we can’t produce the beans. High impact means if we can make an improvement it provides the business leaders the opportunity to expand the marketplace and drive more volume for the site and business. We have had many quick wins across the globe that have driven millions of dollars of improvements with the launch of HGPS.” Another ingredient crucial to the success of an initiative like this is communication. You can have the best system in the world, but you must communicate it effectively to your workforce to maximize its potential. Understanding this, Heinz chose The Grossman Group to handle its communications. “We decided if we wanted to roll out a world class program we need to have a world class communication program with it,” says Thomas. “The Grossman Group has been known for its work in improving efficiency at McDonald’s, so our thought was that if they can help 16-year-olds get engaged with their jobs, they should be able to help us.” Instead of concentrating on global savings and


H.J.Heinz

TRACC TRACC offers many value-added services which will help you get on track with the latest thinking in continuous improvement. What Does Good Look Like? (WGLL). Become a member and share in a visual studio consisting of photographs, templates and examples of best practice from leading global operations like Heinz. Membership is FREE! Visit www. etracc.net and join now!

figures that mean little to the individual employee, communication has been targeted at the grass root level, with newsletters highlighting individual achievements. “What we really want to talk about is Jim Smith on the

can line, and what he and his team did to effect the improvement,” explains Thomas. “We actually identify employees and groups that are winning to drive that enthusiasm through the organization. Who doesn’t like to go to a stadium and somebody puts their name up in lights? We look at it the same way. How can we identify these people who are driving improvement throughout our company and put their name up on the big screen?” Summing up the guiding principles of HGPS, Thomas stressed the goal to shift ownership deeper into the organization, by transferring knowledge to a more local level, which enables the transition from project to process. “When you go to conferences and hear people talking about projects, that tells you right away that they’re not focused on the process,” he explains. “We’re trying to shift away from that project-based productivity to a process-based system. Our employees are solving the problems on the floor so they don’t have to turn into projects.” www.heinz.com

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High

on

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Triumph Foods, LLC

h hog

n the

As a top exporter of premium pork products worldwide, Triumph Foods has positioned itself as one of the leading pork processors in the US, David Hendricks finds out

T

riumph Foods, LLC, actually began as Premium Pork, LLC, in March 2003, when a group of large and small hog farms banded together in a cooperative to process and produce their pork products more efficiently and economically than they could negotiate individually. At the end of that year they changed their name and decided to construct a processing and production plant in St. Joseph, Missouri, which they have now completed. Today, Triumph is owned by some of the largest producers in the United States, including Christensen Family Farms (the largest shareholder in Triumph and a leading pork producer in the country), the Hanor Company, New Fashion Pork, Tri-Oak Foods, and Eichelberger Farms. Another owner is Allied Producers Cooperative, which is a group of more than 30 smaller, independent producers scattered across Iowa, Nebraska, Kansas and Minnesota.

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Triumph Foods, LLC

The Dupps Company The Dupps Company offers the protein coproducts

industry

rendering

plants—including

everything

from

turnkey

Triumph

Foods’

complete rendering facility—to the world’s most comprehensive line of rendering systems and equipment, including cookers, dryers, screw presses, size reduction machinery, material handling systems and evaporator systems. Dupps also provides complete maintenance and

repair

of

all

rendering

equipment.

www.dupps.com; phone (937) 855-6555.

Before construction could begin on the site chosen for its processing facility, Triumph Foods received a Certificate of Completion for the cleanup of its brownfield property in St. Joseph—65 acres of abandoned property in an area that decades earlier was a busy meat-packing district, with access to the Port Authority of St. Joseph, the Union Pacific Railroad and the St. Joseph Belt Railroad. At least two independent assessment reports agreed that, despite the former uses of the property, there was actually minimal contamination on the site, apart from the removal of petroleum-contaminated soil from several surface spill areas. Fortuitously, in 1997 a portion of the site had been enrolled in the Brownfields Voluntary Cleanup Program by the Port Authority of St. Joseph, in a redevelopment attempt that attracted a lot of community volunteers who donated their efforts to improve that part of the property, but the intended deal apparently fell through. Nonetheless, that part of the site was already clean, so it wasn’t long before the entire site was reclaimed and revitalized, and then was determined suitable for construction of a meat processing facility by the appropriate regulatory environmental agencies at the municipal, state and federal levels. The general contractor for the construction of the new 620,000-square-foot, $140 million facility, including corporate headquarters, was Foley Company, a construction firm based in Kansas City, Missouri, that subcontracted the process piping and plumbing, HVAC, water, wastewater, vacuum and sanitary systems to local St. Joseph contractors. Grinnell Mechanical Products (a subsidiary of Tyco Fire Suppression & Building Products and one of the fastest-growing

manufacturers of piping products) and KC Windustrial (a wholesale distributor of plumbing parts and supplies for plumbing contractors and commercial institutions) supplied components and equipment for the vacuum and water service installations. The contract for the overall design, supply of equipment, outfitting, commissioning and start-up of the plant, including mustering areas, kill floor and automated evisceration equipment including robotic technology, was awarded to Stork-MPS, a leader in the development, production and installation of high-tech animal slaughtering systems. Stork-MPS also designs and installs systems for the portioning, deboning and logistical processing of meat products, as well as effluent treatment systems (the wastewater treatment facilities at the new plant were partially funded by a Missouri Development Board grant of $10.42 million provided by the St. Joseph city council). Sygen International was signatory to one of the largest pig genetics insemination contracts in North America, in order to support 550,000 sows for Triumph Foods. Under the terms, Triumph Foods provided its cooperative shareholders with premium genetics to rear high-quality pigs for slaughter and processing at the new facility. This technologically up-to-date facility includes horizontal bleeding, pull-through scalding, a set of inline dehairers, an automatic polishing line with a double set of dry-singe-polish, and the ergonomic evisceration systems for hygienic and crosscontamination-free removal of the offal. All conveyor systems are equipped with low-maintenance chains and sprockets with typical removable and selfadjusting teeth. But the highlight of the facility is the F-line robots (for cutting of the pelvic bone, opening of the belly and centerline cutting of the breast bone). The F-line is the latest available generation of modular pig slaughtering robots and a wonderful example of the newest technology in meat slaughtering and processing. The Stork-MPS F-line automates precutting, belly opening, rectum drilling, neck cutting, leaf lard removal, splitting and marking. The robots take over the difficult, laborious and not-much-fun tasks on the evisceration line. The F-line consists of a full range of carcass preparation equipment, including the FPC precutter, FBO belly breast opener, FBD bung dropper, FSC splitting chopper, FNC neck cutter, FLR leaf lard remover, and the unique FUM universal marker. The system is fully expandable and can be easily adapted to a wide range of carcass weights and processing cycle times. This new facility, which employs more than 2,500

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Triumph Foods, LLC

“The new facility incorporates a condensation pull-through scalding system that has the industry-leading advantage of using up to 90 percent less water than other systems” workers, also incorporates a condensation pullthrough scalding system that has the industry-leading advantage of using up to 90 percent less water than other systems, and it also happens to be much more hygienic. Generally speaking, the dehairing on the line is carried out by a high-throughput TARZAN machine, which is essentially a heavy-duty, continuous U-bar double scraper roller dehairing machine that can process up to 1,400 hogs per hour. While the construction of the facility was complete at the end of 2005, market demand increased during 2006, particularly for the production of sliced pork bellies and

diced pork—both are products of high demand in parts of Asia. And a $4 million, 10,000-square-foot addition was constructed that included expanded equilibration bays, new carbon dioxide stunning equipment and a new freezer facility, all completed by the beginning of 2007. The producer-owners of Triumph Foods have aligned with Seaboard Foods to market and sell their products and follow a controlled integrated pork production model. Since then, Triumph Foods has enjoyed a marked increase in fresh pork exports to countries such as China, Russia and Japan beginning in 2008. www.triumphfoods.com

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featur

Redeeming

Pam Derringer speaks to a vice president of TOMRA of that brings state-of-the-art technology to beverage con

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res

f North America, a company ntainer recycling

TOMRA of North America

F

or many consumers, bringing recyclable beverage containers to a local supermarket recycling center is a convenient way of disposing of their bottles and cans responsibly. In the customer’s mind, a clean, high-quality recycling center on site at a retailer is a positive benefit that can boost the store’s attractiveness as a place to shop. To collect, sort, compact and store consumer recyclables efficiently, many retailers now use “reverse vending machines” (RVMs) from TOMRA of North America. RVMs, which look much like conventional vending machines, are simple to use: consumers simply drop their recyclables into the receptacle provided. Graphics on an interactive color screen provide guidance if needed. In states with bottle deposit legislation, the machine will then produce a receipt that the consumer can bring inside the store for cash redemption. In addition, RVMs can also print out store coupons. For retailers, particularly those with bottle deposit redemption responsibilities, it’s essential that their RVMs remain in top working condition. TOMRA’s ongoing challenge

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TOMRA of North America

Magnetic Products, Inc. Magnetic Products Inc. (MPI) boasts a fully equipped metal fabricating center within its manufacturing facility. By bringing together a winning combination of experience and processes,

MPI

reduces

manufacturing

costs and increases product functionality for customers. MPI is proud to provide metal fabrication services to TOMRA, a world-class company that shares MPI’s commitment to improve manufacturing processes and build long-term relationships.

“We’re a technology company; we’re not just about recycling. We offer the state of the art in hardware and the infrastructure to support it. By being more efficient and saving money, retailers also benefit, because we can put our machines in their store for less” is to make RVMs even smarter and more efficient for both retailers and consumers. To a great extent, this involves working to optimize servicing and repair across wide geographic areas. “We want to be a full solution provider for our customers—not only by offering a smart, capable, fraudproof RVM that sorts by color, rejects improper objects and keeps meticulous accounts, but also by delivering the best service available to keep the machines running smoothly,” says Rich DeRosa, TOMRA’s senior vice president of operations. Founded in 1972 by two Norwegian brothers, TOMRA has been operating in the US since 1992, primarily in New York and the New England states, which were among the early adopters of bottle deposit laws passed to encourage recycling and reduce littering. TOMRA quickly grew its market share from 20 percent to 80 percent and has maintained a commanding lead in the intervening decades. It has a current installed base of 15,000 machines in the so-called bottle-bill states. Unlike the first-generation machines that frequently rejected recyclable containers or jammed easily, TOMRA’s machines are sophisticated, state-of-the-art processors that not only sort and crush containers but function as accounting clearinghouses, producing receipts for

consumers and reams of reports by bottle distributor and store, ensuring that each party gets the right reimbursement, DeRosa says. And unlike the machines of its competitors, TOMRA’s systems have optical scanners that recognize containers by shape and reject those with bar code labels that don’t match the shape, preventing fraud, he adds. This technology, known as Sure Return Technology, is even patented by TOMRA. “Our competitors’ machines simply read bar codes,” DeRosa says. “But our machines go much further than that. Our machines have more sensors and are designed to be selective; our machines can distinguish beverage brands better than any others. Our technology is what differentiates us.” TOMRA’s machines also will reject containers that are full or have foreign objects in them, he adds. Although most grocery stores have reverse vending machines, that doesn’t mean that redemption volume is flat. Last fall, the company faced a major challenge from a big spike in volume when New York and Connecticut expanded their bottle deposit law from only soft drinks and beer to also include bottled water and some sports drinks, DeRosa says. The volume of containers processed by TOMRA machines jumped 30 percent or more almost overnight, and the quantity of plastic bottles often doubled.

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TOMRA of North America

Like all machinery, the reliability of RVMs is affected by the volume of containers they process; however, TOMRA’s machines performed well during this peak in demand and did not experience a significant increase of problems, DeRosa says. But to be safe, the company increased its schedule of preventive maintenance in response to the change. Building a better machine is only part of TOMRA’s success story. Its other key competitive differentiator is preventive maintenance, and the company has focused a lot of attention on the best way to keep its vast network of machines, extending from New York to Maine, in peak condition. TOMRA used to have six regional repair hubs supporting 70 GPS-equipped service vans on regular routes throughout the Northeast and Michigan. But last year the company closed four locations and will close

Service Hub, using half as many people as it needed for its prior network of repair hubs, DeRosa says. But that’s just for starters. Underpinning TOMRA’s streamlined repair operation is Nexterna’s Clearview service management software, which dispatches service orders via PC, based on the technician’s location, parts inventory and individual skill set. After the job is completed, the technician inputs parts and labor into the computer, which automatically generates an invoice, updates inventory and labor records, and produces a purchase order for replacement parts, maintaining just-in-time inventory levels. It all boils down to TOMRA’s competitive differentiator, which is not just its hefty market share but also the quality of its machines and multiple service levels. “We’re really the only full-service vendor with organic pick-up solutions,” DeRosa says.

“We want to be a full solution provider—not only by offering a smart, capable, fraud-proof RVM that sorts by color, rejects improper objects and keeps meticulous accounts, but also by delivering the best service available to keep the machines running smoothly” the remaining two this year, leaving one repair facility located a few minutes from the company’s headquarters in Shelton, Connecticut. TOMRA’s better idea? Instead of making technicians travel to and from regional repair hubs every day, TOMRA is using the “chuckwagon” concept, a 53-foot custom-fitted semi trailer and rolling warehouse, to bring the parts directly to them in the field. The chuckwagon has preplanned stops along a regular route, and the technicians simply meet it, get the parts and assemblies they need, and go back to the job sites, DeRosa says. The new logistics train of repair parts and replacement assemblies cuts technicians’ travel time from four hours to as little as 30 minutes per week and allows them to spend more time fixing machines and less time pulling parts from the shop. With TOMRA’s streamlined route management system and today’s more reliable reverse vending machines, each technician can handle more than 250 machines a day, compared to 75 machines apiece in the 1990s, DeRosa explains. In addition to saving technicians time and fuel, the chuckwagon will enable TOMRA to consolidate all major repairs and assembly refurbishing at the Shelton

The advantage to the retailer comes from TOMRA’s proactive maintenance and its complete accounting. “The best thing for retailers is that they don’t have to worry about us or think about redemption,” DeRosa says. When a machine does have a problem, the company strives to respond in less than four hours. TOMRA understands that the retailer will lose customers and revenue, which impacts its business as well. Looking to the future, TOMRA is beta-testing a new “smart” Internet-based communication system that can perform remote maintenance and diagnostics and feed data right into the Clearview service management system. With this system reading directly from the machines, technicians will be able to diagnose the problem before their arrival or recognize that failure is imminent. The company expects to roll out the new system sometime later this year, DeRosa says. DeRosa’s take-home message is this: “We’re a technology company; we’re not just about recycling. We offer the state of the art in hardware and the infrastructure to support it. And by being more efficient and saving money, retailers also benefit, because we can put our recycling machines in their store for less.” www.tomrana.com

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Ready nextwav for the

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y ve

Ledcor Industrial

Already a leading contractor to mining and oil and gas companies in Western Canada, Ledcor Industrial believes a significant amount of work in oil sands, mining and related industries could be in the offing in the next year. Keith Regan learns from key executives how Ledcor is adapting to changing marketplace realities and customer expectations by aligning itself internally to capture an even larger share of the market

T

he Ledcor Group has roots as deep as the oil, gas and natural resources it has long helped its clients mine from beneath the earth in Western Canada. The company got its start in 1947 when founder William Lede built the access road and well site for Leduc No. 1, the rig that led to Imperial Oil’s famous discovery of oil in the province of Alberta. As the amount of heavy construction work it performed for clients in the oil, gas, pulp & paper, mining and petrochemical industries grew, Ledcor created its industrial division in 1989. Ledcor Industrial now stands beside the company’s other divisions: Commercial Building, Civil/Mining/Infrastructure, Pipeline and Telecommunications spanning across North America and Hawaii.

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Ledcor Industrial

Terrick Enterprises Ltd. Terrick Enterprises Ltd, is a specialty metal fabricator providing pipe support solutions to the Alberta energy industry since 1994. Terrick has developed strong relationships with our customers by consistently demonstrating our commitment to customer driven solutions. Superior customer service is our objective, while delivering manufacturing excellence in relation to quality, on-time delivery, and competitively priced supports or custom components.

Inland Industrial SupplyEnterprises Ltd. Inland is proud to work with Ledcor on a daily basis. Our dedicated staff ensure on time shipping of correct product to all designated ship tos, tool cribs, and tool warehouses. Ledcor is one of many valued customers, and we continue to provide the very best service to maintain their satisfaction.

Ledcor Industrial handles all aspects of heavy construction, leveraging over 60 years of construction experience to complete site development work, concrete and structural steel erection, mechanical, piping, electrical and instrumentation as well as commissioning and startup assistance. Ledcor Industrial has enjoyed several busy years as it helped clients build out facilities across Western Canada, particularly in the oil sands region. As work ebbed, Ledcor stepped up efforts to improve internal systems and enhance already robust training and safety programs. Ledcor Industrial is also exploring possible partnerships to help it meet client demands for new contracting models and pursuing diversification into areas such as ongoing maintenance of the facilities it helps construct. “We are using this time to improve our internal control systems and invest in the training of our people,” says Ledcor president Don Breen. “We plan to take advantage of this slower time to get ready for the next wave of demand.” Those internal improvements, which include quality

management systems (QMS), enhance a strong portfolio of past projects, including extensive work on multiple projects for Suncor Energy at one of the world’s largest oil sands facilities in Fort McMurray, Alberta, and work on the Long Lake Project, a joint venture between OPTI Canada and Nexen, where Ledcor Industrial was one of the major general contractors that constructed the 70,000 barrel per day production facility. Another longtime client of Ledcor Industrial is DeBeers, with Ledcor performing all the aboveground construction of its process facilities at its diamond mine in the Northwest Territories. Currently, Ledcor is wrapping up completion and startup of major portions of the new 100,000 barrel per day, Shell – Albian Oilsands Plant in Fort McMurray as well as another large project, again for Suncor, completion of the next phase of Suncor Energy’s existing Firebag SAGD (steam assisted gravity draining In situ) oil facility also in Fort McMurray. As the next wave of work approaches, many clients are changing the way they approach large-scale projects, notes Al Beaudry, chief operating officer

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Ledcor Industrial

of Ledcor’s Industrial Division, with an eye toward mitigating their risk by sharing it with the teams that engineer and build their facilities. With its experience in large-scale projects and the resources of its parent company, Ledcor can take on work that many other contractors may not be able to handle. “We’re talking about construction contracts north of $100 million,” says Beaudry. “Owners are trying to get cost certainty and economics that generate an acceptable rate of return from their projects. As contractors, we need to work with our clients to find a balance where we can align pricing and risk under acceptable terms. As a service company, there are risks that we are able to accept and risks that may simply be outside of our business guidelines where we do not have the reserves to be able to accept such risk allocation.” Ledcor Industrial is willing to work with its clients to develop a contracting strategy that shares risk, and

believes that to ensure the lowest final project cost, it is best when risk is taken by the party that controls it or has the best ability to manage and influence; some risk taken by the owner, some by the engineer and some by the contractor. In addition to its experience and technical capabilities, Ledcor Industrial brings a carefully developed workforce strategy to large-scale projects. Over time, Ledcor expects the labor market to tighten up significantly as work begins to present itself once again. The company has been proactive in addressing labor needs by investing significantly in post-secondary institutions with scholarships and bursaries as well as various apprenticeships and trade development training. The company also has experience in handling labor shortages, having supplemented its workforce in the past with a significant number of qualified temporary foreign workers from overseas locations such as the

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Philippines, India and South Africa. Ledcor has also pursued external partnerships with post-secondary institutions to address impacts on the environment. By collaborating with experts in the field, Ledcor is proactively working toward implementing more sustainable operating practices and procedures to ensure the company’s long-term viability in the oil sands sector. Going forward, Ledcor will present a more-unified corporate image to its clients by closely aligning its various divisions, which often partner to complete projects. “As each division grew independently, although we were operating under the same logo we may have appeared to be different in terms of company culture and the way people acted on a job site,” says Breen. Over the last 18 months, Ledcor has focused on creating a more unified culture of safety, openness and quality service. “It takes a while to embed those ideas, but our strong lines of communication with our

employees have made it easier,” adds Beaudry. Internally, Ledcor has also put to use what Breen calls “powerful control systems,” from off-the-shelf software to custom solutions to ensure quality and efficiency in delivery of projects of all sizes. Meanwhile, six senior executives, including Breen, are spearheading a committee focusing on how to improve internal training and leadership development to maximize the workforce it already has and attract the best talent during this slower period and in the future. “There’s a lot of focus on how to capture all the energy and enthusiasm of the next generations and find what motivates them to do great work,” says Breen. “We have been in business for a long time and we see this effort as the backbone and the foundation for the future. We look to continue to under promise and over deliver for our clients and demonstrate our ability to handle projects that only a few contractors have the capability to perform.” www.ledcor.com

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Warren Resources

Warren Resources developed what could become a model for onshore oil drilling. April Terreri talks to Norman Swanton, president and CEO, to learn more

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ith current oil prices at $80 a barrel, we can look back with longing to the late 1990s, when prices were just $10 a barrel. Entrepreneurs like Norman Swanton were taking the long view back then—beyond what the price of gas at the pumps was for consumers. Swanton recognized a ripe opportunity in two adjacent units in the Wilmington field in Southern California, the third-largest field in the history of the country. Exxon and Sun Oil each owned one unit, and the companies were selling them off after each had extracted about 25 percent of the oil from their units in the field.

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Warren Resources

“They were selling their assets at a very low price, even though they realized there was a lot more oil to be extracted,” says Swanton, president and CEO of New York–based Warren Resources. “It was difficult for them to operate when they had neighbors to consider in a residential area. They had to contend with environmental issues like noise, dust, odor, vibrations, and leaks and spills, so they called it a day in the late 1990s, as did a number of other major oil companies in California.” When the two oil companies sold these assets in the late 1990s to two local “mom and pop” operators who in turn sold them to Warren Resources, many of the advanced technologies did not exist that could take into account the sensitive nature of the surrounding area. “They would have had to make new investments at a time when oil was only $10 a barrel,” explains Swanton. “As an optimist and entrepreneur, I thought that was an opportune time to make acquisitions in terms of pricing. Although we had the right to drill in people’s backyards, we didn’t do that.”

Instead, Swanton developed what he believes will become a model for onshore drilling and extracting oil from mature fields in urban areas, where sensitivity to environmental and social considerations must prevail. He and his colleagues approached representatives of the city council district in Wilmington and told them that Warren Resources would like to remove all the existing wellheads over a 12-year period. “We told the council member we would remediate the soil and bring it back to its highest and best use, whether that meant using the land to build houses or parks,” he explains. “Then we would forgo our right to drill new wells where the old wells had been. Instead, we would drill new wells within a central facility, and we would drill directionally and horizontally underground so none of our production equipment would be visible to the general public.” One unit is 1,400 acres and the other is 1,000 acres. Most of the company’s work is being done on the 1,400acre unit, which was formerly owned by Exxon. Warren Resources will develop a mini-version of their current

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work on the 1,000-acre unit. Warren Resources designated about 10 acres to be used as a centralized drilling and production facility that encompasses up to five state-of-the-art drilling and production cellars and modern facilities to separate the oil from extracted fluids. Each cellar sits 10 feet below the surface and is about 500 feet long. Two of the cellars are constructed of reinforced steel and concrete, able to withstand the most severe weather or natural disaster. The drilling rig sits atop the cellar and drills from that position into ports in the cellar. Each cellar is capable of housing 141 wellheads. “When you walk on to our facility, you see a pristine-looking paved site surrounded by Bougainvillea flowers, with no pump jacks, electric cables or other well support equipment visible,” he says. “Using this method means no one in the surrounding area suffers from any adverse effects of our work.” The process involves drilling to predetermined depths and directions informed by seismic and geology data. “It’s smart drilling using the best available control technology,” Swanton says. “Using computer imagery, we can see where we are, and we can maneuver our

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drilling equipment to drill in the most productive zones within the productive reservoirs. Our data goes back about 80 years to when these wells were first being worked. So currently about 95 percent of our work is completed in removing the old wellheads from the surface.” Swanton explains that he borrowed the concept from oil companies who had built islands off the coast of Long Beach in the 1960s from which they drilled horizontally underneath the city of Long Beach. Fluids containing oil and water enter the cellar at each wellhead and then are piped into a system that separates the water from the oil. The water is clarified and injected back down into the water injection wells for pressure maintenance, while the oil is stored in nearby tanks for shipment by underground pipeline to a local refinery operated by Conoco Phillips. Swanton notes that because 25 percent of the oil had already been harvested by the previous owners, a lack of underground pressure requires the company to pump water into the water injection wells to restore enough pressure to move oil out of the rock formations and up into the wellheads.


Warren Resources

Some natural gas is also collected during the production process, and it is replaced, along with the produced fluids, with clarified water injected into the oil reservoir to prevent the occurrence of sinkholes. Swanton reports that the intent is to recover another 25 percent of the remaining oil over the next 20 to 40 years. Oil production at one of the units is currently about 3,000 barrels of oil per day. Warren Resources reports revenues of about $85 million annually and employs about 40 full-time people. The company is also involved in a joint venture with a large company in developing a 200,000-acre coalbed methane project in Wyoming, at which it produces clean methane gas from the coal. The project began full-scale operations in 2008 after receiving approval by the US Bureau of Land Management of an Environmental Impact Statement, and it produces about 50 million cubic feet of gas a day, or about 18.25 billion cubic feet of gas annually.

Swanton believes that Warren Resources’ model of onshore urban drilling will be important to the industry because with an accurate evaluation, a company can determine what the remaining reserves are in the ground. “When you can solve the biggest problem in the oil business—which is ‘where is the oil?’—you know where you can begin to drill,” he says. “This model considers the environment and the surrounding community. We remove all the above-ground equipment from the previous companies, so our central facility doesn’t look like an industrial setting and you can’t see any of the moving parts of our operations. With environmental concerns now the number one issue, you can’t do things the way they were done for generations any longer. I believe new industry regulations will be stiffer, so why fight them? It’s in everyone’s best interests to make new investments in technologies that can do the job better, faster and cleaner, with virtually no chance of health or safety hazards.” www.warrenresources.com

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Lakeside Steel Corp.

r-old

wcomer� Pam Derringer speaks with Ron Bedard, president and CEO of Lakeside Steel Corp., a century-old company whose savvy turnaround has vaulted it into the Toronto Venture Top 50

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t the 100th anniversary of a small Canadian steel pipe manufacturer last fall, local dignitaries and guests had much to celebrate: the opening of a new multimillion-dollar upsetting and threading foundry, a hefty backlog of orders, and a busy 350-employee workforce, all in the midst of a global economic downturn. But the celebration almost didn’t happen.

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Lakeside Steel Corp.

The potential party spoiler? Stelco, the $3 billion parent of the Stelpipe mills near Niagara Falls, was in the throes of a protracted bankruptcy reorganization a few years back that could have put the mill’s operation at risk. But in 2005, rescue came from an investment banking group that bought the pipe division’s assets, reorganized as Lakeside Steel Corp., and carved out the Stelpipe mills as an independent steel pipe and tube company that could thrive on its own. By the end of 2007, Lakeside had acquired $10 million in venture funding and assembled a management team of veteran steel executives. Lakeside’s steel pipe venture was off and running. Those veterans include Ron Bedard, the current president and CEO, whose lifetime of steel industry expertise includes increasingly responsible positions with Stelco and U.S. Steel.

last fiscal year with a blockbuster quarter ending March 2010: record productivity, record tonnage shipments per employee and record equipment uptime. With March quarterly shipments up 70 percent over the same quarter last year, Bedard is projecting $200 million in annual revenues for the year ending March 31, 2011, a 92 percent increase over the previous years revenue of $104 million. Lakeside’s strong growth also helped it win an additional $2.2 million in venture funding last February and a coveted place among the 2010 Top 50 on Toronto’s TSX Venture Exchange, affirming its strong potential as an emerging company. But its success has been anything but guaranteed. To the contrary, it reflects the industry expertise of the management team and its laser focus on cutting costs, spending smart, increasing operational efficiency and

“We’re a small company, so we want to make sure we get the best return on investment. But if a project fits in with our cost-reduction model or helps us serve customers better, we can find the money for it” Through all the uncertainty and restructuring, Lakeside’s mills never stopped production. Its specialty pipes and tubes just kept coming. Although they serve many diverse industries, nearly all the pipes are made for oil drilling in Alberta and Texas or gas exploration in the Marcellus shale basin that extends from Pennsylvania and New York to Ohio. Lakeside’s assets, Bedard recalls, were great. “The upsetting and finishing mill and the stretch reduction mill are two of the newest in North America, and the people are fantastic, with 20 to 30 years of experience and a shared passion for making high-quality pipe,” he says. “And we have some of the most loyal customers in the business. We had a lot to work with.” The challenges also were daunting for this fledgling entity, previously a division of what is now U.S. Steel Canada. Lakeside needed a reliable network of raw material suppliers for the hot band steel previously purchased from the parent company and used to make its specialty pipes. It also needed cheaper transportation, lower costs across the board and the full support of the union, he recalls. “Working closely with the Canadian Auto Workers is paramount to our success,” he says. “They are part of the solution.” Just three years after the reorganization, Lakeside’s future is looking bright. The Ontario company ended its

forging key partnerships. “We’re a small company, so we want to make sure we get the best return on investment,” Bedard says. “But if a project fits in with our cost-reduction model or helps us serve customers better, we can find the money for it.” Despite the economic recession, for example, Lakeside spent $6 million last year for a new upsetting shop for pipe finishing and also built a three-siding railyard to receive incoming supplies and ship out products cheaper and faster. This year Lakeside will be spending another $5 million for capital improvement projects including a fourth shop, this one for endfinishing large-diameter pipes in-house instead of outsourcing the work. In addition, Lakeside is constantly auction shopping for bargain acquisitions during the current downturn, and it successfully bid for an end-finishing shop in Alberta that will help the company grow, Bedard adds. Other factors in Lakeside’s success include a strong supplier network, especially Tubular Services Inc., Texas Pipe Works, Essar Group, Nucor Corp., and Severstal North America Inc. Lakeside also formed a key transportation partnership with PLS Logistics Services, which not only provides real-time visibility into inbound and outbound trucking shipments but also lowers Lakeside’s purchasing costs, which has helped it provide

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Lakeside Steel Corp.

efficient and cost-effective service, Bedard says. Another promising development is a recent pact with an Ohio firm for heat-treating Lakeside pipe near the Marcellus basin, where it will be used to drill for natural gas. Otherwise, the pipe would have to be shipped to Texas for treatment and then back north at significantly higher cost. In addition, Lakeside has taken a number of steps to maximize profits, improve internal efficiency and, in turn, boost customer service. For example, 70 percent of its pipe is sold with added value, either heat treatment, threading or end-finishing to L80, N80 or P110 industry standards. Pipe that is ready to go down the hole is much more profitable, Bedard explains. Lakeside also has taken numerous steps to boost internal operations, installing Microsoft Great Plains Enterprise Resource Planning software, which has improved material tracking and deliveries, and a Reliability Centered Maintenance application that boosts production uptime. In addition, Lakeside is in the process of installing human-machine interface (HMI) software for measuring

the efficiency of its equipment, Bedard says. The HMI software will help the company measure performance versus goals with key performance indicators (KPIs) that, in turn, will help keep production on track. “You can’t manage what you can’t measure,” he observes. Although Lakeside Steel vies for business with much larger multinationals like Tenaris, U.S. Steel and Evraz Inc., the company believes it can compete effectively on customer service. Lakeside can fill special orders for pipe in a range of diameters and thicknesses, with threaded or plain ends, heat treated (for extracting gas from shale) or regular (for oil drilling), all considerably faster than larger companies, which typically can’t retool their operation as quickly. Looking toward the future, Bedard is cautious due to the ongoing recession but still upbeat. “We need to reduce our costs further,” he says. “However, we have a $100 million backlog that will last until the end of August and full employment; not many companies can say that. But we still need to continue to take small steps and spend wisely.” www.lakesidesteelcorp.ca

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Amerigo Resources

ng efrommines Innovation lies at the heart of Minera Valle Central’s success in the mining sector. Founder and general manager Raul Poblete tells Gay Sutton how the company aims to build on the knowledge and experience gained at El Teniente and expand globally

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n the slopes of the Andes, just 33 kilometers west of El Teniente, the world’s largest underground copper mine, lie the mineral processing plants of Minera Valle Central (MVC). Established in 1991, the company has built a unique and symbiotic relationship with El Teniente, extracting copper and molybdenum from the mine’s waste materials and returning profit to its shareholders and to the mine’s owner, Chile’s national mining company, Codelco. In most copper mining operations, the mine tailings or waste materials are sent directly for safe storage in a tailings dam or pond. A small percentage of valuable mineral resources remain in the tailings, but they are generally considered too small

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Amerigo Resources

to be worth extracting. However, some 20 years ago Codelco decided to challenge that perception and looked for a company to work in collaboration with El Teniente, exploring the possibility of extracting this extra value. A consortium of former Codelco mining experts and financial backers, led by mining engineer Raul Poblete, submitted the winning bid in 1989, and MVC was formed as an independent company. Construction of the Minera Valle Central processing plant began in 1991, and by 1992 the first trucks of copper concentrate were rolling out of the plant. The company’s aim was to extract residual minerals from the mine’s fresh tailings. “We started with a small operation,” explains founder and general manager Raul Poblete. “But then we began to explore and devise new ways to recover more copper from the tailings.” The operation has continuously expanded over the years. Improvements have been made to the grinding and flotation processes, and capacity at the plant has been considerably increased. Meanwhile, the company has negotiated contracts with Codelco to treat the older tailings from the mine, which contain higher concentrations of residual minerals. “Since 1992 we have grown from producing 500 tonnes [metric tons] of copper a month in the first year or so to close to 1,800 tonnes a month today,” Poblete says. “We have invested more than $120 million in the operation, only $10 million of which was in the original construction.” After more than 100 years of operation, El Teniente has four tailings dams, the oldest of which is at the mine site. Two more recent dams are alongside MVC, and the current one is 40 kilometers farther west in the lowlands. In 2003 MVC was acquired by Amerigo Resources of Canada. Today, 60 percent of the company’s production is from the fresh mine tailings, 140,000 tonnes of which arrive at the site each day in the form of pulp: 50 percent water and 50 percent solids. Somewhat resembling a mud slide, the pulp travels by open channel from the mine, gets processed and then returned to the channel where it then flows on to the new Caren tailings dam. “The remaining 40 percent of our production comes from high-grade tailings that we extract from the old Colihues tailings dam one kilometer south of the plant,” Poblete continues. “We handle around 40,000 tonnes per day from Colihues, and these contain 0.3 percent copper. By comparison, the fresh tailings are of a lower grade, at around 0.12 percent copper.” The company has made considerable investments in improving and upgrading its copper extraction

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“We are very interested in the prospect of replicating our processes elsewhere. We’re currently participating in a tender to provide a similar service for another of the divisions” processes. “The process we have devised focuses largely on the recovery of copper in the form of sulphide, using the grinding and flotation method,” explains Poblete. “We intend to produce around 20,000 tonnes of copper this year by this method.” The resulting copper concentrate also contains molybdenum, and by a further process of grinding, depressing the copper and flotation the company is able to extract the molybdenum. “It’s a complex process, but it works. We produce around 800,000 pounds of molybdenum a year, which at $30 per pound is a significant additional income.” Innovation has always played a significant role in the company’s development and is likely to continue doing so. The current treatment processes are not capable of removing all the copper from the fresh or old tailings; a significant amount of copper remains in the tailings after the treatment process. Perhaps 20 percent of the copper content is far too fine to be extracted by flotation, and the older tailings contain another 30 percent that is present in the form of oxides, and these cannot be recovered by flotation. True to form, however, the MVC engineers are

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Amerigo Resources

applying their knowledge and experience to searching for solutions to the problem. “We are currently working on a method that will enable us to recover at least a percentage of those copper oxides.” Looking to the future, the company sees several avenues for growth. First, the El Teniente mine has huge tailings resources that have hardly been tapped. Of the 200 million tonnes of tailings in the Colihues dam, just 10 percent have been processed so far, while just 20 percent of the 100 million tonnes in the Barahona dam alongside the mine have been treated. Meanwhile, just 7 kilometers from the plant lies the Cauquenes dam containing 400 million tonnes of high-grade tailings, and MVC is currently in discussions with Codelco for the right to exploit it. “We also are very interested in the prospect of replicating our processes elsewhere,” Poblete says. Close to home, the company is already in negotiations to operate alongside some of Codelco’s other mining

interests. “We’re currently participating in a tender to provide a similar service for another of the divisions.” The company is also exploring the possibility of expanding its horizons globally. Building on the knowledge and experience it has gained from the El Teniente mining operation, MVC believes it could offer similar services to other mining concerns around the world. “Our aim is to treat the tailings and refuse from the mining industry globally, using the methods and techniques that we have developed,” Poblete concludes. “Most of the things we do are unique: from the processes we’ve developed over the years to the extraction of tailings at the rate we do, and our ability to concentrate material from around 0.1 percent to 30 percent. We believe that no one else offers the service that we do, on the scale that we do. Our aim— and also our challenge over the next few years—is to become the global market leader in this niche industry.” www.amerigoresources.com

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Riding the

rails

Alaska Railroad Corporation is an independent state corporation and one of the last railroads the US that still operates both passenger and freight services. Keith Regan learns from a for locomotive engineer now overseeing transportation for the corporation how it is striving to b greener, more customer-friendly and an even bigger engine for economic growth in our large

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Alaska Railroad Corp.

g

s in rmer be safer, est state

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he Alaska Railroad Corporation (ARRC) traces its roots to 1903, when the Alaska Central Railway built the then-territory’s first railroad, a 50-mile stretch of track that was so costly to build that it propelled its owners into bankruptcy within a few short years. Today, the organization is an autonomous, selfsustaining state-owned corporation that is one of the last railroads in the United States to operate both freight and passenger operations. The Alaska Railroad now owns and operates 651 miles of main line, siding and branch track, running seasonal passenger and year-round freight operations in some of the harshest weather conditions and most remote parts of the country. The railroad had 2009 revenues of $169.4 million and a profit of just under $14 million.

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Alaska Railroad Corp.

In 2009 the railroad handled some 470,786 passengers—many of them cruise-ship passengers who take the railroad’s scenic trips along the Alaska coast or inland through Denali National Park—as well as more than 6.1 million tons of freight such as coal and aggregate, according to Patrick Shake, vice president of transportation and mechanical operations. Shake has been with the railroad for 36 years, starting as a locomotive engineer and holding a number of positions along the way. More recently he has had a hand in an effort to modernize the railroad’s locomotive fleet, a move that has reduced fuel costs and helped move the railroad toward compliance with new emissions standards.

is refined and hauled back to Anchorage by rail. Intermodal and mixed freight is also moved between Anchorage and Fairbanks several days a week, carrying cargo that comes by way of steamships and barges into Alaska. The railroad also handles as much as 800,000 metric tons of export coal each year, product that is bound from Alaska for overseas locations such as Chile and South Korea. Another 2.5 million tons of aggregate material is hauled for use in construction during the state’s short summer building season. In addition to passenger and freight train businesses, the railroad generates revenue by leasing land that it owns all along the rail belt. Real estate leases not only

“We cross-train our employees to work in several aspects of our operations, and that’s how we operate a full-service railroad in a profitable and sustainable way” The Alaska Railroad’s motive power fleet consists of 28 SD70MACs and 23 GP-series locomotives. A number of these locomotives are DP (distributed power) and HEP (head end power) equipped. One benefit that Alaska Railroad has is that it doesn’t interchange or share locomotives with other railroads, Shake explains. “This ensures that our locomotive fleet stays in excellent operating conditions at all times.” The Alaska Railroad’s passenger service is highly seasonal, running largely from mid-May through midSeptember. The long-haul Denali Star train offers a daily connection between Anchorage and Fairbanks with a stop at Denali, home of North America’s tallest peak, Mount McKinley. The Coastal Classic train operates daily, traveling 114 miles between Anchorage and Seward. “It’s just the most beautiful trip you can imagine,” Shake says. “The scenery is spectacular.” Along with ARRC railcars, the Coastal Classic and Denali Star often pull cars privately owned by cruise lines such as Royal Caribbean and Holland America. Among other passenger services is one of the last remaining flag-stop services in the country, allowing anglers, hikers and cabin owners to depart the train in the back country and stop the train for a return trip simply by waving a white cloth. Passenger services are reduced to mainly weekend services in the off-season. On the freight side of the business, the railroad runs daily over the 356 miles between Anchorage and Fairbanks. Petroleum trains carry fuel from the North Pole Refinery in Fairbanks, where crude oil from the Trans-Alaska Pipeline

encourage economic development with prime land adjacent to rail access, but this revenue stream helps to keep the self-sustaining corporation’s books in balance. To support that effort, the railroad created a dedicated facilities department that is actively updating and modernizing many of the older facilities in its portfolio. One such project is the renovation of a historic freight shed that was built in 1941 in the Anchorage terminal area. This facility is now the first historic building in the state certified under the US Green Building Council’s LEED program. The refurbished building will house commercial office space for lease to private companies. Other capital improvements in recent years have included installation of 60 miles of centralized traffic control (CTC), along with a major track upgrade program including concrete ties and welded rail installation. “We’re fortunate to have a highly qualified and dedicated workforce,” Shake says. “We’re a small enough railroad that we have very good interaction with each department and all our employees. “The things that set us apart are that we’re a fullservice railroad that touches every aspect of railroad operations and that we’re here in Alaska,” Shake goes on to say. “We deal with very heavy snowfall and sub-zero temperatures, and then days in the summer when the temperature might reach 80 degrees. We cross-train our employees to work in several aspects of our operations, and that’s how we operate a full-service railroad in a profitable and sustainable way.” www.akrr.com

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Denton County Transportation Authority

The A-train, a new commuter rail service linking Denton County (Texas) to Dallas County, is in the final phases of construction. Tom LeBeau and Jack Rahmes talk to Gay Sutton about groundbreaking new safety technology that could revolutionize train operations in the US

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or the citizens of Denton County, Texas, a transportation transformation is under way. In just 14 months the days of sitting in long traffic jams to reach work in Dallas or return home in the evening will be nothing more than an unpleasant memory. For years, the steadily growing population of Denton County has resulted in serious congestion on Interstate 35E during rush hour, rising CO 2 levels, and stress and frustration for its hard-working citizens. However, the first step in a series of future transportation initiatives is due for completion in June 2011, and this could herald a significant improvement in transportation infrastructure and commuter habits. Formed in 2002 to address the increasing traffic issues in North Texas, the Denton County Transportation Authority (DCTA) was mandated to implement a commuter rail link between downtown Denton and the Dallas Area Rapid Transit (DART) system. As a preliminary measure to relieve some of the congestion while the longer-term project could be fulfilled, a very successful fixed-route commuter bus service was introduced between Denton and downtown Dallas. However, this is only a stopgap. With an estimated program implementation cost of $312 million, the A-train rail link is designed specifically for commuters, but its route between the cities means it will serve much wider community needs. “One of the interesting facts about the DCTA system is that our current commuter bus service has a 57 percent reverse-commute ridership from Dallas to Denton,” says Tom LeBeau, vice president of rail development and capital projects. “This is primarily because the route serves two major universities: University of North Texas and Texas Woman’s University. So the rail link will also serve a great need associated with those two schools.” The project has moved forward very quickly. Environmental assessments were completed in 2007, swiftly followed by the final design phase. With $250 million in funding secured from the Regional Toll Revenue Funding Initiative in January 2009 and

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Denton County Transportation Nova Scotia Authority Power

the remainder coming from local sales tax revenues and a bond issue, ground was immediately broken on the project in April 2009. The route chosen for the A-train along the I-35E corridor includes right-of-way from the old MissouriKansas-Texas Railroad previously owned by the Union Pacific freight railroad and currently owned by DCTA’s Dallas neighbor, DART. The 21-mile corridor will begin in downtown Denton at the future Downtown Denton Transit Center, which will combine rail and bus services. There will be four intermediate stations along the route, each of which will have park-and-ride facilities, and the link will terminate at the DART Trinity Mills Station in the city of Carrollton, which is currently under construction as part of DART’s Greenline Expansion. Passengers will be able simply to cross the platform and transfer to the DART system for the journey into downtown Dallas. The planned convenience doesn’t end there, though. “Our aim, once the rail system is open, is to restructure our local fixed-route bus services in Denton and Lewisville in such a way that they will tie in with the rail service. Passengers can then theoretically step outside their house, take the bus to the nearest station, and board the A-train to ride to their final destination,” LeBeau explains. Meanwhile, work on the A-train rail link has progressed in phases beginning at the southern Carrollton end and moving northward toward Denton. Contracted to perform the construction work, the North Texas Rail Group (NTRG) has been clearing the track, relocating utilities along the route, rebuilding the road bed, installing the signalling equipment and replacing the existing freight track. “Our objective is to get the track completed through the first half of the project from Carrollton to the edge of the city of Lake Dallas by the end of this year, and then to complete the second part from there to downtown Denton by June next year,” explains NTRG project manager Jack Rahmes. In total, the project will involve 41 road crossings and a significant bridge rehabilitation over Lewisville Lake. “Fortunately, the steel girder bridge was in good condition. We have simply had to remove the old deck, replace it with new wood ties and install new rail across it. That job took us two and a half months in total.” The construction work has not been without its challenges. The most complex of these required coordination with the existing freight railroad carrier in the southernmost section of project right-of-way, approximately eight miles in total. This section of track is used on a regular basis by the Dallas, Garland and

Northeastern Railroad (DGNO). “They use the track on average three times a week,” Rahmes continues, “so we’ve had to coordinate our construction work for the four days they’re not using the track, and we’ve been fortunate enough to get a four-day window during the week.” By the end of that window period, however, the section of work has to be completed to industry standards and capable of supporting the existing freight rail service. Perhaps the most exciting element of this project, though, is that DCTA may well be the first passenger rail agency in the US to introduce the safer Alternative Vehicle Technology that has been developed in Europe. “There are many factors that go into this technology, but the leading one is the European Crash Energy Management [CEM] system.” The US Department of Transportation, working through the Federal Railroad Administration (FRA), as well as US transportation agencies, European car builders and members of the American Public Transportation Association (APTA), have been working to define the standards for use of this European CEM technology in the US. “DCTA has taken a leadership role in the process, along with our sister agency DART. Through the efforts of an established Railroad Safety Advisory Committee [RSAC] Engineering Task Force, we’re nearing the stage where the FRA can issue a set of guideline criteria establishing the use of safer CEM technology in the US. This effort on behalf of all parties involved is a major step forward in the evolution and development of safer commuter rail systems across this nation,” LeBeau says. “I believe it will reshape the future of commuter rail in the US. “For the DCTA this is very exciting,” he continues. “We’re currently in active negotiations to procure the Stadler GTW vehicle from a Switzerland-based company, and our goal is to be the first transportation agency to implement the use of FRA Alternative Vehicle Technology–compliant vehicles in the US.” Looking to the future, the A-train is just the beginning. DCTA is in the midst of revising its 2002 service plan, and it is looking at further transit corridors that could be developed to ease congestion and reduce CO 2 emissions—another key element. “We might, for example, provide future commuter rail service from the city of Denton to Forth Worth as well as the city of Frisco to Carrollton. There are a lot of future transportation opportunities, and it begins with the revision to our service plan, which is the first step toward providing cost-effective and efficient transportation alternatives to Denton County and the North Texas region.” www.dcta.net

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Heartland Health

Stimulus

change for

For well over a decade, Andrew Pelis discovers, Heartland Health has been committed to improving its processes and patient care, and its efforts culminated in 2009 with a Malcolm Baldrige National Quality Award in the Health Care category

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merica’s healthcare system is currently undergoing enormous change. On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA), which greatly affects health information technology (HIT), including incentives for the adoption of electronic health record (EHR) systems. The ARRA provides substantial stimulus expenditures in the healthcare industry—over $20 billion—for the development and adoption of HIT. One organization with preparations already well under way to meet the challenges of the stimulus package is Heartland Health, with quality, technology and continuous improvement at the core of every process. “We are now putting efforts in place to absorb the changes and ensure we continue to deliver healthcare solutions to our patients in an innovative way,” says Monica Ray, process leader, quality, safety and risk at Heartland. “We will focus on how to be nimble and meet the changing environment, and we see things moving from inpatient to outpatient.” Change is nothing new to Heartland Health, which is focused on serving St. Joseph, Missouri, and 23 counties. The organization is a real focal point for the community since it was formed back in 1984 out of the merger of two prominent local hospitals. Today it is an integrated health delivery system, which includes Heartland Regional Medical Center, Heartland Clinic, Heartland Foundation and Community Health Improvement Solutions. It employs more than 3,000 staff and can call upon up to 500 volunteers, making it St. Joseph’s main employer. For well over a decade, Heartland has been committed to improving its processes and therefore its patient care, with significant financial investment, and it is these ongoing initiatives that may offer the blueprint to facing up to federal reform. Its efforts provide more than a foundation for the future; as the recipient of the Malcolm Baldrige National Quality Award for 2009 in the Health Care category, Heartland has achieved national acclaim. The award promotes excellence in organizational performance, recognizes the achievements and results of US organizations, and publicizes successful performance strategies. It is presented to the winner by the president of the United States. “Winning the award has been a long journey going back to the 1990s,” Ray indicates. “But to Heartland this wasn’t about winning an award; it was about improving processes, achieving the highest quality care and patient

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safety. We have built sustainable processes over time and implemented new technology to assist our development. “Heartland used lots of foresight and began looking at new technology in the early 2000s as a means to improve our processes,” Ray continues. “We partnered with the Cerner Corporation, and in 2006 we implemented an electronic medical records system. This system has been incorporated into the regional Lewis and Clark Information Exchange [LACIE] program. It has greatly improved efficiency; everyone can now see the same patient records, which means the patient doesn’t get asked the same questions over and over again, and sharing information leads to safer care. “We are now rolling out our fully automated pharmacy, while our physician order entry system will be up and running later in the year. These two systems will also dramatically improve medical safety.” And safety is, of course, the crux of Heartland’s burgeoning reputation. Ray says that the business has been ranked in the top 5 percent of healthcare organizations nationally for the past five years, and it is acknowledged as one of the top 0.5 percent of hospitals nationally for its sustained level of performance in patient safety. The implementation of new technology has dovetailed with the introduction of continuous improvement methodology; which helped the organization win State Quality Awards in 2000 and 2005 and then seek feedback on how it could further improve and measure up against the best healthcare systems in the country. Along the way Ray suggests it has been essential to engage all personnel. “Major changes are never easy, and it’s a rare person who really enjoys change. When you are on the constant road to continuous improvement, no two days are the same,” she states. “But we have concentrated on maintaining our focus and enthusiasm, and the key has really been to keep the workforce engaged through good communication. We also involved staff and physicians in the design stages of the systems and redesigned them as needed to make operations as efficient as possible. By sharing information we have evolved a method of knowledge management that helped to develop our systems and processes.” Training was crucial as continuous improvement caught hold, and often Heartland’s brightest talent was asked to train people internally. “Training is something Heartland puts a lot of emphasis on,” admits Ray. “We provide day-to-day sessions and also offer a twoyear fellowship program and leadership development institutes for our existing and up-and-coming leaders.” Additionally she says that Heartland has forged


Heartland Health

“Major changes are never easy, and it’s a rare person who really enjoys change. But we have concentrated on maintaining our focus and enthusiasm, and the key has really been to keep the workforce engaged through good communication” a successful partnership with neighboring Missouri Western State University to provide nursing programs and offer scholarships for local people wanting to enter the healthcare arena. Heartland Health continues to be a popular employer in the St. Joseph’s area, and even during the recent economic downturn, it always puts its employees first. “The economy has impacted everybody, but we have a deep responsibility to our community and ensured that our necessary cost-cutting exercises didn’t result in people losing their jobs,” says Ray. “We do so much to support the community,” she continues. “Our programs are ongoing and aim to help with better schooling and health improvement activities.

There is a correlation between low income and lower standards of education and poor health, so we’re committed to improving the situation.” Aside from healthcare reform, Ray predicts further changes on the road ahead at Heartland, as the emphasis switches from inpatient to outpatient care. “Last year we treated around 60,000 patients in our emergency room. We currently run 350 licensed beds, but there is a shift to outpatient treatment. I think there’s been a real sense of growing pride in our workforce over the last couple of years as things have fallen into place. The changes we continue to make will ultimately create a better workplace and healthcare system for everyone.” www.heartland-health.com

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Smyth Companies

abeledanas

nnovator Among the nation’s top 10 labeling companies, Smyth Companies anticipates global expansion within the next few years, thanks to a new private equity agreement, reports April Terreri

O

ne of the oldest companies in the state of Minnesota, Smyth Companies has been producing high-quality printed products for 133 years. Smyth, family-owned and privately held for four generations by the Hickey family, today has an executive team at the helm to guide the company toward a global presence. This past January the company aligned itself with a private equity firm—Novacap of Montreal—now the majority shareholder, which will give Smyth the necessary financial backing for the growth it anticipates in becoming a global company and the premier label supplier in the industry.

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Smyth Companies

“Much of our success up until this point in our history has been due to organic growth and internal initiatives we implemented,” reports Bill Weernink, executive vice president of operations for the St. Paul–headquartered company. “For example, we began implementing six sigma before the beginning of the downward pricing pressures currently challenging this industry.” Smyth also outfitted itself with employees with six sigma green belts and black belts. “These efforts aligned us to be successful and profitable while staying ahead of the curve on current market pressures.” With the financial backing of Novacap, Smyth’s senior executive team is charged with deciding how the company should grow the business going forward and the types of companies the team should consider acquiring. “We’re now beginning to investigate companies to acquire,” explains Weernink. “This could mean choosing a company that produces similar products but with a different customer base. Through such an acquisition, we would be interested in how to maximize synergies between the companies and how to share costs that can contribute to our respective growth.” Another strategy the team is considering is searching for a company with new markets in packaging. “For example, we offer a diverse product line, but we are label printers primarily,” reports Weernink. “We do pressure-sensitive labels, cut-and-stack labels, shrink film, heat transfer and in-mold labels. But we don’t do flexible packaging, folding cartons or pouching. So we’d like to find experts producing these products so that by combining our customer bases, we can offer end-toend products to customers with packaging needs.” Smyth’s customer base includes four major verticals: food and beverage, beer, personal care and household chemical. “We have a very large offering in promotional labels such as couponing, extended text booklets, gaming and sweepstakes,” Weernink says. The company’s equipment group—subsidiary Red Rock Technologies—offers the Gen2 product, the fastest labeler in the world designed to apply promotional labels to the interior and exterior of carton packaging like beer, soda, and breakfast cereal cartons. The machine is retrofitted to carton manufacturing lines and integrates so that the labeling operation has minimal or zero impact on carton production. “We can integrate this product into customers’ packaging lines, allowing them to maintain their production speeds while achieving cost-effective promotions.” Red Rock equipment is designed and built at Smyth’s headquarters and the designs are patented.

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Weernink reports that Smyth plans to acquire one or two companies a year. Initially, the acquisitions will be limited to North American companies, but the plan is to begin international searches soon. “Our CEO, John Hickey, plans to double our size within five years, but I believe our plans could become much more ambitious than that,” he says. The company operates five facilities: a roll-fed plant in Minneapolis; one sheet-fed plant in Austin, Minnesota, and one in Bedford, Virginia; a commercial and fulfillment operation in Austin; and a fulfillment and bottle labeling operation in Golden, Colorado. In this latter facility Smyth is established within the Miller-Coors Beer grounds, where it applies labels for Coors’ short-run beers. “For example, we recently finished a large promotion for their Blue Moon product that highlighted the blue moon seen this past December 31st,” Weernink says. Smyth currently is applying labels for Coors’ new Native product, which is made from native Colorado hops. This is not a model that Smyth Companies currently plans to expand, but it illustrates Smyth’s willingness to offer and support viable solutions to customers. One of Smyth’s customers—the largest pickle producer in the country—recently changed its label formatting. “We have a relationship with them going back over 30 years,” reports Weernink. “They had been using cut-andstack glue-applied labels, but last year they decided to implement a clear pressure-sensitive label design. So we converted this business from our Bedford cut-and-stack facility and brought it here to our Minneapolis facility to print the pressure-sensitive labels. Then we worked with one of our partners, Shorewood, to provide six rotary labeling machines. Together with Shorewood and Red Rock Technologies, we installed the equipment and trained the customer’s personnel. So it was a decoration transfer project that transformed from a paper cut-and-

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stack label to a clear pressure-sensitive label.” Another customer moved from in-mold labeling to pressure-sensitive labeling to shrink labeling within a matter of just six months, with Smyth supporting them along their journey. “They were looking for designs to differentiate their products,” Weernink says. “We definitely see national brands experimenting with continuous design changes, especially if something is not working on the retail shelf. After all, the average time a consumer spends looking at a label is just a half second to one second, so the design really has to be eye-catching to be successful.” All the company’s successes would not be possible without the engaged participation of its workforce, acknowledges Weernink. “We invest in our employees and create opportunities for them to grow professionally. For instance, when we wanted to implement six sigma, rather than going out and hiring people trained in six sigma, we trained people within our own ranks to be black and green belts so they could help move our continuous improvement program along. We have employees who are trained in lean practices and who monitor 5S methodologies, changeover times and help investigate new equipment technologies. We understand that we can’t have management handing down edicts on how to do the work. Our engaged workforce on the floor understands how we can do things better.” Underscoring Smyth’s commitment to its 350 employees are recent awards it received from Printing Industries of America, who awarded the company “Best Workplace in America” in 2008 and “Best of the Best” in 2009. The company, reporting revenues of over $80 million annually, is ISO 9001 and AIB (American Institute of Baking) certified; it is audited annually by each of these organizations to demonstrate its commitment to continuous improvement. In addition, Smyth Companies


Smyth Companies

Anderson & Vreeland, Inc. Anderson & Vreeland is a leading provider of platemaking materials, equipment and technology used in the flexographic printing industry to produce numerous products including labels and packaging. We take pride in our 50-year history of serving great companies like Smyth and share their commitment to excellence and customer satisfaction.

is also LIFE (Label Initiative For the Environment) certified at all of its printing operations and was the first to achieve this. “This is our total commitment to the environment and preserving our planet for future generations.” One of the company’s biggest challenges in recent years has been the extreme downward pricing pressures prevalent in the industry. “To stay ahead of the curve, we have to be innovative in creating value and valueadded services,” Weernink reports. “In order to continue

offering cost-saving propositions to our customers while maintaining our margins, we have to find ways of working with our materials suppliers and work on innovative products that can command a premium price. This is where our lean manufacturing culture and our engaged workforce helps us. In this economic environment, it’s important to continue to invest in new product development. For example, we’ve had a warm reception to our innovation road shows that present innovative products and even prototypes to our customers.” True and continued success really is achieved through a deep understanding of your customer, advises Weernink. “We do an excellent job listening to our customers and understanding their businesses so we can help them understand what they need today and what they will likely need five years from now. In many cases our customers rely more and more on us to help them understand the evolution of their packaging needs.” www.smythco.com

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Innova

g

fuels

Pam Derringer talks to Robbie Doyle, founder and president of Doyle S cutting-edge technologies that make his company an international 98

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Doyle Sailmakers

ation

growth

Sailmakers, about the l leader in sail design

S

omething happened to Robbie Doyle on the way to medical school. He decided to take a six-month break after graduating from Harvard to work at Hood Sailmakers in Marblehead, Massachusetts. He never looked back. The intuitive grasp of the forces of wind and water that made Doyle a natural dinghy sailor as a youth and, years later, an applied physics major in college turned out to be invaluable assets in designing fast, light and powerful sails. Doyle, a former junior national champion who had never sailed anything longer than 30 feet, was suddenly plunged into the intense, high-stakes adventure of ocean racing. “It was a whole world I didn’t know existed,” Doyle recalls.

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Doyle Sailmakers

In 1974, under famed yachtsman and sailmaker Ted Hood’s wing, Doyle designed the sails for Mariner, an experimental 12-meter America’s Cup contender. Mariner’s hull design was not successful, but many of her sails were used by Courageous, which went on to win the America’s Cup that year. In 1977 Doyle designed all the sails for Ted Turner’s successful America’s Cup campaign aboard Courageous, where Doyle also served as mainsail trimmer. Doyle was in the right place at the right time, and his sailing reputation, brains and command of physics and engineering marked him as a rising star. After Hood sold his company, Doyle decided it was time to go out on his own, and in August 1982 he started Doyle Sailmakers. “I already had an international reputation in sailing and sailmaking, and people urged me to start my own venture,” he recalls. “I had nothing to lose and a willing wife. And a lot of top people from Hood chose to join me.” Today, Doyle Sailmakers is a multimillion-dollar business with lofts in over 30 countries. Although you might call Doyle the “accidental sailmaker,” there has been nothing accidental about the rise of his company. Timing is everything, and so is being ahead of the curve—and choosing the right business strategy. Doyle’s goal was to produce better-engineered sails. At a time when the design potential of computers was just beyond the horizon, Doyle, with his background in engineering, aerodynamics and hydrodynamics, was poised to take advantage of it. “Sailmaking had been mostly arts and crafts up to that point, mostly trial and

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error,” which limited its growth, he says. “We basically introduced a scientific approach to sailmaking.” From the beginning, the company’s competitive differentiator and the key to its growth has been innovation, from its jib and mainsail furling systems to its unique methods for attaching corners, to the use of multiple fabrics and new cutting methods, and, of course, the most advanced computer technology. Today, sail design involves a very sophisticated analysis of loads, fabric strength and fibers, which enables designers to calculate wind stress on the mast and sails and, in turn, optimize sails for specific purposes, conditions and locations, Doyle says. “Our focus on solving problems has given us a competitive edge. Our strength continues to be dealing with different engineering challenges.” Doyle Sailmakers was one of the first sailmakers to use the laser cutter to cut panels and one of the first to design with 3-D CAD software. The company’s technology edge grew sharper yet with the arrival of Robbie’s son, Tyler, who became director of engineering in 2004 after earning a master’s degree in mechanical engineering from Stanford University. Tyler’s HPC (high-performance computing) work in applying computational fluid dynamics (CFD) with composite finite element modeling (FEM) takes sail optimization to a new level by simulating air flow at millions of points on the sail, often eliminating the need for wind-tunnel testing. Another key to Doyle’s success has been choosing the right business strategy. Instead of going head-to-head against the larger and well-funded North Sails in the highly demanding racing sector, Doyle decided to focus more on the cruising and superyacht market. “Being chosen for William Simon’s round-the-world yacht Freedom in the mid-‘90s gave us a lot of credibility,” Doyle says. As the superyachts get bigger, people choose Doyle because of the company’s commitment to solving cutting-edge engineering challenges with gear and sails that arise as yacht designers press the outer edge of technology. Doyle continues to serve both the cruising and racing markets. This month’s Newport-to-Bermuda Race will feature a good number of competitive boats sporting Doyle sail inventories. Doyle also makes competitive one-design sails, including several Olympic classes. In his spare time, Doyle sails a 33-foot performance daysailor, the e33, which is a boat of his own design. One of Doyle’s major challenges has been trying to grow the company without capital, which has been especially

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Doyle Sailmakers

Bainbridge International The success of Bainbridge International is based on our commitment to supplying technically innovative solutions for specialist markets based on our extensive knowledge of textiles, associated accessories and hardware. Our attention to product, combined with our world class service, is what has made Bainbridge International a market leading organization. We supply via three locations in the USA, England and Australia.

daunting during several recessions, he says. Other major challenges are trying to run a global company, keeping a close watch on revenues versus expenses, integrating technological changes, and addressing cultural differences that inevitably occur with facilities in so many locations. “Each time we add a new loft, a lot of personal time is required in oversight and resolving potential conflicts.”

Just after the start of the current recession, Doyle Sailmakers moved its headquarters out of its longtime Marblehead facilities to a much larger, custom-designed facility in neighboring Salem. The 32,000-square-foot loft is far more efficient and greatly increases the company’s capabilities. “Despite the economic meltdown, we still have plenty of work and have stayed busy,” Doyle says. “This was the best investment we ever made.” An exciting adventure currently under way at Doyle Sailmakers is not about sailing. It’s applying the sophisticated CFD technology Tyler used to design sails for the 289-foot Maltese Falcon, the world’s largest private sailing yacht, to create green energy. Tyler’s project involves building underwater turbines to harness natural energy from moving currents. “It’s a bit down the road but definitely a game-changer if it works,” Doyle says. “It could win out. It’s the right effort,” with a potential payout far greater than anything a sailmaker could generate. www.doylesails.com

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Brijot Imaging Systems

Benign

waves As quickly as the bad guys are discovering new ways of wreaking havoc, scientists are discovering new ways of stopping them, as Alan Swaby learns from the president of Brijot Imaging Systems

P

ity the poor airport operator charged with ensuring the safety of tens of thousands of travelers a day. Passengers know the dangers and know the solution, but woe betide anyone who subjects them to what they consider an unacceptable level of inconvenience. But Mitchel Laskey, president of Brijot Imaging Systems, has little sympathy with any show of impatience. “Flying is a privilege,” he says, “and anyone wishing to exercise that privilege has to acquiesce to whatever level of screening is considered necessary.” Of course, there are already lots of companies working on new solutions designed to improved detection rates and minimize disruption. But even when solutions arrive that may ease the pressure on those interminable waits in line, there are those who stand up and complain that the new whole body imaging technology, for example, is intrusive and an invasion of privacy.

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That’s why Laskey is on a mission to convince airport operators that the Brijot solution will satisfy both sides of the argument. Unlike other body imaging technologies, the Brijot passive millimeter wave (PMMW) solution is safe and private—there is no radiation, and no anatomical details are revealed. But within as little as a half second, the scanner will determine whether or not a passenger’s clothes are concealing more than just the passenger. The science behind PMMW was discovered in the 1930s when radio astronomers noticed unexplained noise on their supposedly perfect radios. We now know that this is because all bodies, both animate and inanimate, generate radio waves, and humans in particular are very noisy. Brijot exploits this, and by measuring the differential between body noise and anything else picked up, it is possible to detect whether the clothes are concealing anything untoward. “Our system doesn’t give the absolute clarity of image that some systems produce,” says Laskey, “but this is its strength. We provide enough data to demonstrate whether someone is safe or needs further investigation. What we don’t do is reveal anatomical information that many people consider intrusive.” The attractiveness of the Brijot system is its unique ability to detect liquids, gels and other potentially explosive materials as well as solid metal and nonmetal objects. In a test carried out at a federal courthouse on behalf of the US Marshals Service, the Brijot product identified 13 out of 14 improvised explosive devices (IEDs), compared with the court’s conventional metal detectors, which missed 13 out of 14. Brijot Imaging Systems was set up in 2004 when engineers and private equity came together to exploit licenses relating to passive millimeter wave technology. Although the technology existed, putting it into a workable system required lots of time consulting with potential users and two years of development to satisfy

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these needs. Tens of millions of dollars were invested, and by late 2006 it had had a number of units placed with collaborating customers in order to get operational feedback. A few tweaks later and products were ready for distribution in late 2008. Brijot has identified four main areas on which it is concentrating its marketing. For outbound aviation, the system is searching for weapons or improvised explosives. For inbound aviation, the emphasis switches to smuggling of drugs, currency or other contraband. There is also a lot of interest from all manner of industrial or commercial users who see the Brijot scanners as a way of eliminating pilferage and, just as useful, preventing dangerous weapons from entering the workplace. Millimeter waves are naturally occurring larger-than-light electromagnetic waves that pass through most materials such as clothing when light waves and infrared would not. PMMW cameras detect and amplify the emitted or reflected MMW energy of an object without the need for external “illumination” at any other wavelengths. Compared with a human body, which is 90 percent water, very dense materials such as metal, composites or plastics have higher levels of reflectivity that cause the objects to show up as a black image in front of the human figure. The system can be configured in any number of ways, depending on the volume of traffic to be monitored. At an airport, for example, it would be necessary to have multiple cameras in order to screen large numbers of people without unduly slowing them up. But by channeling traffic past the scanning station, incomers can be vetted in real time, with subjects being identified for further investigation either manually or automatically. Talking price tags is difficult, as the cost depends entirely on how it is configured, but Laskey believes that the Brijot system provides lower total cost of ownership.


Brijot Imaging Systems

Conelec Of Florida: Electronic Manufacturing Services Since 1983 Conelec Of Florida has offered world class EMS services, which include PCB

electro-mechanical

and

system

level

assembly as well as prototyping, new product introduction (NPI), material procurement, supply chain management, global sourcing, printed circuit

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testing,

functional testing, final system box build, depot repair, order fulfillment services, design-formanufacturability

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compliancy and functional test development.

“Training costs are lower,” he says, “as it takes less time for operators to become proficient. Operating costs are also less because the system has no consumables that need replacing nor moving parts that need servicing.”

As a fledgling business, Brijot employs just 50 direct staff at the moment at its Orlando headquarters, responsible for all the engineering and prototype preparation. Component parts are made by subcontractors and returned to Orlando for final assembly. Ironically, Brijot’s lean structure—rather than being an attraction to customers—is something of a drawback. “We’re dealing with some of the country’s largest organizations,” says Laskey, “and they’re used to dealing with equally large suppliers. Being a small company in a large market calls for considerable patience, as the whole sales process is slow and long.” But while airport users are making up their minds, there is no shortage of other potential users to talk to. The possibilities for this technology are wide, and as well as overseas airport users, Brijot is building links with systems development contractors who could incorporate PMMW into whatever they are planning to use to beat the bad guys. www.brijot.com

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step

above

After 80 years of specializing in the design and manufacture of access platforms and bulk material loading systems, Carbis Incorporated is a company whose time has come. Rob Harris reports

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Carbis Incorporated

T

he year 1930 was remarkable for many things: 3M Corporation marketed a product called “Scotch Tape”; the first frozen foods from Clarence Birdseye went on sale in Springfield, Massachusetts; the Hostess Twinkie was invented; and a man named Samuel Carbis invented the aluminum fire ladder and then started a company called Carbis. Eighty years and four generations later, greatgrandfather Samuel’s family-owned business still prides itself on being “the world leader in fall protection equipment.” Helen Cramer, the daughter of Samuel Carbis, eventually took control and ran the company until her passing in 2001. Her son, Sam Cramer, is now the chair of the board, and his son, Scott Cramer, is president of the company. Carbis, Inc. designs, builds and installs bulk loading systems for railcar and trucks, safe access and fall prevention protective equipment and structures, and a complete line of marine loading products and ladders. The company currently has two facilities. The main office, which houses the company’s research and development facility along with engineering and manufacturing, is located in Florence, South Carolina. Just a few miles south in Darlington, the second property contains the company’s main manufacturing site. The company has offices worldwide from London to Bangkok and is well regarded internationally. Many customers of Carbis are listed on the Fortune 500, and the company knows that the best ideas for R&D come from its clients and the markets they serve. Carbis is the industry leader for bulk liquid marine transfer systems. Its articulated pipe system is the industry standard and has been for over 20 years. It is the favored method of transferring liquids from ships for a variety of reasons: it’s cleaner than using hoses, and its automation makes loading and unloading much

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Carbis Incorporated

PumpingSol As the need for oil & gas is increasing and prices custody

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are becoming crucial for both suppliers and receivers. Quantity and quality of crude oils and derivates are precisely measured and monitored by PumpingSol built packaged oil and gas custody transfer systems. Our

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petroleum

industry standards and are shipped as a turnkey solution to terminals. They can be built as a mechanical unit or as a complete package with integrated control systems. Give us a call and let us build your next fluid transfer and blending system. quicker. Most important, it’s much safer for workers than other methods. The design can handle any type of fluid or non-cryogenic gas including hazardous materials and flammable materials. The company’s marine division also manufactures a line of marine ladders, loading arms, stage gangways, ship access equipment and barge access equipment. All items carried by the company can be custom designed and built to fit a customer’s specific needs. The focus that drives the company’s basic philosophy is the safety that it builds into all the equipment it manufactures. That in turn drives its customers’ productivity up by protecting those company workers who load and unload that bulk material every day from trucks, trains, ships or barges. Whether it’s working on an elevated structure or just needing access to a vehicle or piece of equipment, Carbis helps its customers do it more effectively. From complete terminal loading and unloading design and installation to a railcar spill contamination pan design and installation, Carbis has the expertise and experience to do it all. When the economy slowed down, Carbis faced the same dilemma that many other businesses faced during these tough times. Management stepped back and took a hard look at its operations to see what was needed for the company to become more successful in the future. Production times were slow and running at only 50–60 percent on schedule. With the production cycle this far behind, a tremendous amount of stress was placed on

the system, and this resulted in lost profits. To correct these problems, the company has recently changed to a single priority scheduling system. Production scheduling concerns the allocation of a certain amount of resources to a limited number of tasks over a set amount of time. Allocation problems are worked out and then put into a sequence. The result is a detailed item plan where items can be quantified for evaluation and planning. Currently there are three different management perspectives used to evaluate and then finalize the production schedule. The problem solving perspective views the schedule as an optimization problem isolated from manufacturing and control system. The decision making perspective views scheduling as a decision that a human must make and then anticipate any problems that might occur. The organizational perspective is a systems-level view that concludes that scheduling is a part of a complex flow of information and decision making that uses both formal and informal information to accomplish the overall system design. Carbis implemented its production scheduling changes at the beginning of the year. Jobs that were running at the 50–60 percent on-time completion rate last year are now running at 98–100 percent completion rate. This expansion in productivity could not have been accomplished with just the tweaking of a few flow patterns. A production increase of this size requires a partnership of the entire team, including the supply chain. Customization of just-in-time inventory, deliveries and shipments all have to be worked into the management system. This means good trustworthy vendors who are reliable and flexible. By centralizing all this information into one access and decision-making point, Carbis has given management the ability to identify and correct problems quickly and efficiently. Most people don’t get to choose their times of greatness. If they could, would Samuel Carbis have chosen to begin a new company during the Great Depression? Would he have kept moving forward if he knew that almost 70 percent of family-owned businesses fail in the second generation? Was it the times that he lived in, or was it a gift of knowing when it was the right time to step up that made him the successful businessman he became? What is it that makes a family business great and gives it the ability to survive and thrive? For Carbis, Inc., it’s the spirit of inventiveness, concern for customer safety and proper timing that have made this company the market leader it is today. www.carbis.net

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Right

for

The golfing revo that at the fore over 50 years h

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Club Car, Inc.

times

rthe

olution around the world continues unabated, and Andrew Pelis reports efront of the revolutionary technology that has supported the sport for has been Club Car, Inc., manufacturer of golf cars and utility vehicles

A

ugusta, Georgia–based Club Car, Inc. started out making golf cars back in 1958; since then it has expanded its range significantly, with innovation, quality and customer satisfaction at the heart of every vehicle it has produced. Today the Club Car product portfolio includes commercial utility vehicles, multi-passenger shuttle vehicles, and rough-terrain and off-road utility vehicles. Operating as a division of Ingersoll Rand Company, Club Car is the world’s largest manufacturer of electric vehicles, and its reputation for innovation is perhaps best demonstrated by its commitment to the environmentally responsible Zero Emission Vehicle (ZEV) technologies.

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Club Car, Inc.

TEAM Industries TEAM Industries takes power and puts it to work quietly and efficiently with innovative designs and product knowledge that help our customers succeed. Our new EV30 transaxle is the toughest and most quiet axle available for electric vehicles. Our CVTs and transmissions are

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Each Club Car buggy incorporates the latest engineering technology; the aluminum chassis is lightweight and rustproof, while the ArmorFlex body is made from an advanced UV-protected polymer that resists denting,

cracking and fading. Each buggy offers a choice of a PowerDrive electric motor or a gasoline engine. In addition to its lucrative golf business, Club Car designs and manufactures electric and gasoline vehicles for fleet, turf, hospitality, agricultural, recreational, commercial and industrial markets. The company was founded in Houston, Texas, originally manufacturing a range of quiet electric and gas-efficient golf vehicles specially designed for comfort. It then broadened out and started to make quiet turf utility vehicles that allowed golf course superintendents and managers to maintain golf courses with the minimum of noise disruption to the golfer. With 40 years of golfing success under its belt, Club Car was acquired by Ingersoll Rand in 1995. Ingersoll Rand is a global diversified firm providing products, services and solutions to enhance the quality and comfort of air in homes and buildings, transport and protect food and perishables, secure homes and commercial properties,

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and increase industrial productivity and efficiency. By joining the Industrial Technologies sector of Ingersoll Rand, Club Car further strengthened its ability to innovate, and as environmental issues increasingly came to the fore, the company was able to adapt designs to meet new demands. That environmental focus has taken the company in a number of new directions. In February 2010, Club Car president and CEO Gary Michel was named to the Advisory Council of the Environmental Institute for Golf, an organization of the Golf Course Superintendents Association of America that is dedicated to strengthening the compatibility of golf with the natural environment. That mantle fits well with Club Car’s focus; it is said that the company’s efficient battery-powered electric vehicles eliminate an estimated 5 million cold starts a year, thereby reducing pollutants in the air by an estimated 380 metric tons. If further proof was needed of the company’s dedication to the green movement, it came this February with the announcement that, in collaboration with Club Car Solutions Network member SolarDrive, it would enable the installation of solar canopies in three models from its Turf line of utility vehicles. The canopies can extend the vehicles’ range by roughly 30 percent and lower charging costs while reducing carbon emissions. The solar canopies capture energy from the sun and transfer it to the vehicle’s battery system, resulting in additional range between charges. Each solar-cell canopy is capable of producing 200 watts of electrical energy and needs only daylight to operate.

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It was therefore appropriate that earlier this year the company produced its two millionth vehicle on the 40th anniversary of Earth Day. Fittingly, the vehicle that came off the production line was a Villager LSV, an eco-friendly, zero-emission vehicle that incorporates a number of features (as defined by federal regulations) that enable the vehicle to be driven on specified public roads with speed limits of 35 miles per hour or less. The development of the LSV illustrates how Club Car has diversified in recent years as it has become the fastest-growing segment in the light transportation vehicle market. “One of the hallmarks of Club Car over the years has been innovation and the ability to produce vehicles that meet—and sometimes even anticipate—the needs of our customers,” said Michel. “Zero-emission lowspeed vehicles, which reduce our nation’s dependence on foreign oil and provide an environmentally friendly mode of travel, are an example of that ongoing commitment.” To maintain its levels of innovation and customer satisfaction, the company has to be flexible, and that versatility has seen Club Car’s Custom Solutions business really take off in recent years. The company designs and builds accessories to outfit vehicles for specific applications, and back in 1994 it agreed to modify up to 100 of its utility vehicles to satisfy a customer’s request to make special modifications to the vehicles it bought in order to move materials and personnel around its extensive grounds. By the end of that decade, customized Club Car vehicles could be found delivering the mail in Sweden, ice cream treats at a campground in South Carolina, and weapons and


Club Car, Inc.

Curtis Industries LLC For over 40 years, Curtis Industries, LLC remains the industry leader in designing and manufacturing quality cab enclosures for golf cars, compact tractors and UTV/powersports vehicles. Decades of

experience

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innovation

ensure

these

enclosures offer excellent fit-and-finish, superb styling and overall reliable functionality. Curtis is also a significant OEM supplier of quality cab enclosures to top manufacturers. www.curtiscab.com

ammunition at FBI training facilities in Georgia and Texas. The company over the years has established relationships with roughly 600 authorized Club Car dealers and distributors around the world. These links are

important, as they ensure that the quality specifications to which each vehicle is built are maintained with aftermarket care through a series of genuine Club Car parts and accessories that have been precision-crafted. But Club Car’s commitment to the quality of the product goes further still, and the company offers a comprehensive range of classes aimed at teaching customers about the product, maintenance tips and trouble-shooting skills throughout the year from its Augusta manufacturing center. To underline just how quickly the company has grown, Club Car’s milestone two millionth vehicle was produced just nine years and one month after the company hit the one million mark. “Our business continues to evolve as our customers’ needs and the types of customers we serve continue to evolve; it’s hard to predict the vehicle that may symbolize the three millionth Club Car, but I’m sure it will be one that is right for the times,” Michel summarized. www.clubcar.com

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Steady

prod

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New Gold, Inc.: Mesquite Mine

duction Its location near the farmlands of inland Southern California has made the Mesquite Mine unique in the gold mining industry ever since production began in 1986. Now owned by New Gold, Inc. thanks to a recent business combination, the mine has the financial backing and resources it needs to remain viable for years to come, as Keith Regan learns from the mine’s general manager, Cory Atiyeh

M

esquite Mine found its way into the New Gold portfolio in 2009, when the company completed a business combination with Western Goldfields, Inc. It now stands as a key part of New Gold’s global strategy, which includes operations and assets in the United States, Mexico, Australia, Canada and Chile. Mesquite has been actively producing gold since the mid-1980s, though the mine was not active for a short time before Western Goldfields restarted operations in 2007. The open-pit mine is unique for its location in California’s Imperial County, a region in the southeast corner of the state best known for agricultural production.

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New Gold, Inc.: Mesquite Mine

Valley Power Systems Valley Power Systems has been your single source emissions and power solutions provider for over 60 years. Valley is a leading provider of diesel and natural gas fueled power systems and transmissions from 10 to 10,000 horsepower. Valley’s extensive product engineering and service support network ensures our customers have the support they need to keep their equipment up and running. Having New Gold take over the mine means strong support and access to valuable resources and expertise, says vice president and general manager Cory Atiyeh, who has been on the site for some three and a half years. “It has been a very beneficial transaction,” he says. “New Gold has been very supportive not only with technical assistance but also with a culture of and focus on continuous improvement.” Most recently, Atiyeh adds, New Gold invested in two new haul trucks that in the short term boost the amount of ore being hauled to

the processing facility and in the long term improve the overall reliability of the haul fleet. Over the course of the mine’s history, production has ranged from 140,000 ounces of gold to 200,000 ounces annually. Production in 2010 is estimated at 145,000 to 155,000 ounces—a strong output given the record-high gold prices being seen on the worldwide spot market. According to Atiyeh, the mine is believed to have 10plus years of life left at current production rates, though New Gold has planned additional exploratory efforts currently under way that could extend that life. At some points during its history, Mesquite used an ore-crushing process, but it now focuses on a run-ofmine, heap leach operation approach. Ore is drilled and blasted within the open-pit mine, loaded on trucks and subsequently transported to the leach pad, which leads to a new conventional carbon-in-column recovery plant. This plant was replaced as part of an upgrade completed by Western Goldfields before the mine was restarted. The company estimates total production costs for 2010 to be between $540 and $560 per ounce. Mesquite currently employs approximately 260 people, and early on, virtually all the miners hired had

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to be trained from scratch in mining operations. “The main industry in this area is agriculture, and there aren’t really any other mining operations in the vicinity,” Atiyeh notes. Some experienced miners were brought in from Arizona, Utah and other nearby states. “We did a lot of training and we had a lot of success with getting people up to speed quickly on the operational side of mining.” That training has included a heavy emphasis on safety, something New Gold emphasizes at all its locations. “Even though about 70 percent of the people who work with us had never seen a mine before they came to us, we have an injury frequency rate that is below the national average for a mine of our size. We take a lot of pride in that, though we know we can always do better.” Mesquite is now one of three active gold mines in the New Gold portfolio, along with Cerro San Pedro in Mexico, which produced about 100,000 ounces of gold and more than 1 million ounces of silver in 2009, and Peak Mines in Australia’s New South Wales territory, which was expected to produce 100,000 ounces of gold and up to 15 million pounds of copper this year. New Gold also owns several development projects, including the New Afton underground gold-copper mine site in Canada and the El Morro Development Project in Chile, where it is a 30 percent joint venture partner with Goldcorp Inc. The Mesquite Mine’s location in California—at the base of the Chocolate Mountains, about 50 miles northwest of Yuma, Arizona, and 35 miles east of Brawley, California—has exposed it to more stringent environmental regulation and permitting requirements than in jurisdictions where mining is more common. “As you could guess, being in California we are very tightly regulated,” Atiyeh notes. “That’s just a fact of life that comes along with our location.” New Gold’s current production got a boost from an earlier decision made by past owners. Although production was shut down in 2001 due to lower gold prices that made the mine’s cost profile less attractive, the decision was made by then-owners Newmont Mining Corp. to continue to press forward with applications for permits to expand production at a later date. Western Goldfields was able to boost production rates when it restarted the mine as a result. “From a startup standpoint, that decision to press for needed permits for expansion was very beneficial.” Looking ahead, New Gold may endeavor to expand production further at the site, with an eye toward finding an alternative processing method to handle the sulfide resources that lie beneath the pits now being mined. “We have a permit application submitted to expand slightly, but for now we’re focused on getting the most out of our current operations, working safely and maintaining our strong environmental record,” adds Atiyeh. www.newgold.com

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New Gold, Inc.: Mesquite Mine

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Golden opp

Orvana Minerals has a new CEO, a new VP of mining operations gold mining opportunity in Spain. Keith Regan learns how leverage its mining experience on the new opportunity while ad mining project in the US and keeping its eyes open for ad

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n

Orvana Minerals

portunities

and a newly acquired the company plans to dvancing a new copper dditional opportunities

F

or the past several years, Orvana Minerals has been a steady and growing producer of gold thanks to its ownership and operation of the Don Mario mine in eastern Bolivia. Now the Toronto-based company is shifting into expansion and growth mode, moving aggressively to bring a newly acquired gold mining asset in Spain online while also laying the groundwork for copper production in Michigan’s Upper Peninsula. “We’ve done a lot to beef up our senior management ranks as we look to grow,” says CEO Roland Horst, who joined the company in March 2010 to help guide the firm’s entry into the Spanish mining market, raise additional capital, and steer the company toward

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future opportunities. The move also enables longtime CEO Carlos Mirabal, who is now president and COO, to focus his expertise on the operational side of the business. “It’s been a friendly and smooth transition,” he notes. Orvana also recently added a vice president of mining to its executive ranks for the first time. For the past nine years, Orvana’s main revenue source has been Bolivia’s Don Mario mine, an underground mine that has produced on average 60,000 to 80,000 ounces of gold annually while maintaining a low cost profile for an underground mining operation. Exploration work on adjacent areas continues, but Orvana believes that resource will remain active until about 2019. “The company has been focused on Bolivia, which has been an excellent operation and helped generate substantial cash flow over the past few years,” Horst notes. In the fall of 2009, Orvana put US$45 million of that cash toward the purchase of Kinbauri Gold Corp., which controlled the El Valle–Boinás/Carlés goldcopper project in Northern Spain, an asset Orvana is now aggressively moving to get back into production. The purchase came with a plant and mill with a capacity of 750,000 metric tons (tonnes) per year and other infrastructure, including warehouses and office buildings as well as other mining equipment. The area has been an active and productive mining region for some time—in fact, mining began there during the Roman era. With mainly open-pit mining methods used, the area produced approximately 950,000 ounces of gold and 20,000 tonnes of copper between 1997 and 2006. Though some underground work was done, Horst says, it was done mainly historically by contractors whose main expertise was tunneling. While open-pit mining had been primarily employed in the area in the past, Orvana will bring its underground mining experience, refined in Bolivia, to bear on the region. A shaft of approximately 400 meters in depth is expected to help gain access to the majority of the resource. “We’ve got very good underground miners who have worked for the past seven years in Bolivia, including some very senior people such as Carlos,” Horst says. “We’re using guys who really understand underground mining as well as good local expertise.” Historic resources and more recent exploration suggest the area may contain as much as 2.5 million ounces of gold. “This could be quite a long-lived mine.” The area near the mine has an unemployment rate of around 20 percent, helping to create a welcoming environment for the revival of the mining camp. The Spanish acquisition was first struck when gold was selling

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Orvana Minerals

at US$850 an ounce, he adds, while a sustained bull market in the precious metal had it trading at more than US$1,200 just a few months later. Meanwhile, currency fluctuations have helped enhance the economics of the project as well, with a weaker euro helping to lower expense costs relative to the US dollars brought in when the gold is sold. “We expect to spend around US$50 million to put it back into production, but it still represents a significant value that we think we have the expertise to unlock,” says Horst. “Kinbauri’s exploration work was excellent, but where it needed additional firepower was on the mining side.” The bid to acquire the company began as a hostile one but ended up being a friendly deal, and many of the workers in the area have been retained. Along with the project in Spain, Orvana is working to advance a copper mining project in Michigan’s Upper Peninsula. The company acquired extensive mineral leases to the Copperwood deposit, which is less than 20 miles from the former White Pine mine, which produced

copper and silver until the mid-1990s. Horst says Copperwood began as “an opportunistic acquisition” but has proven during additional exploration to be a potentially solid resource, with 20 million tonnes at over 1.8 percent copper. Orvana is weighing its options on how best to proceed with that opportunity. Options that have been discussed include spinning out a base metal company or bringing in a senior partner to help develop it. “We see ourselves as primarily a gold producer, but we know that it’s a very good quality resource,” Horst says. “The other option is to develop it ourselves, and while that would take a fair bit of capital resources, it’s certainly something that’s within our economic grasp.” Meanwhile, the company’s acquisition team continues to explore other potential purchases, partnerships and other opportunities. “Right now we’re very focused on getting Spain up and running, but we look at about one opportunity a month, and if the right one comes along, we will not hesitate to move on it.” www.orvana.com

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Bankers Petroleum

il

treatment Bankers Petroleum CEO Abby Badwi explains the economic and technological challenges of steam-heating heavy crude oil for extraction from deep within the earth

T

he world holds over twice the resources of heavy oil than of light crude oil. The prevalent theory among most geologists who base their hypothesis on petroleum geochemistry applications is that crude oil becomes heavy through a process known as “biodegradation,” by which bacteria seek out and consume oil of lighter viscosity and denseness in the reservoir, leaving behind heavier hydrocarbons. A poorly formed seal in a geologic reservoir results in the exposure of hydrocarbons to contaminants that are present on the surface, which include organic forms of bacterial life that contribute to the process. The extraction of heavy crude oil from oil sand deposits poses formidable economic and technological challenges that are not easily overcome. There are some companies, most notably Bankers Petroleum of Calgary, Alberta, that operate efficiently and profitably in extracting oil from deposits deep within the earth. Bankers uses a method known as thermal extraction, which employs steam-assisted gravity drainage (SAGD) and cyclic steam stimulation (CSS) to remove the oil. SAGD is a process that uses pairs of parallel wells in which one injects steam into the reservoir, with the other being a producer. As steam is introduced into the top well, the chamber it creates superheats the oil and causes it to drain into the lower well, which is then pumped to the surface. CSS, also known as “huff and puff,” is a single well that injects steam into the reservoir to heat and make the oil’s viscosity (the thickness or heaviness of oil) more pliable. When the oil is heated and the viscosity is reduced enough for it to be extracted, the injector well’s purpose is then reversed, thereby becoming the producer. “At $40 a barrel—which translates to $25 for heavy oil—quality, royalties and operating costs exceed net gain, but at $60 to $70 a barrel [$71.71 per barrel in June 2010], enhanced recovery methods make a lot of sense,” says Abby Badwi, CEO of Bankers Petroleum. The oil field the company operates is in Albania, about six miles from the city of Fier, in the south-central portion of the country. Bankers Petroleum has full rights to develop the Patos Marinza (discovered in 1928) and Kuçova (Albania’s

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Bankers Petroleum

GrenCo Industries For 40 years GrenCo Industries Ltd. has set the benchmark of what’s expected from a wellhead drive. The same attention to detail and proven results in the field can be depended on from PC pumps and VFDs. GrenCo

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second-largest oil field) heavy oil fields pursuant to a 25-year license agreement with the Albanian National Agency for Natural Resources (AKBN) and a Petroleum Agreement with Albpetrol Sh.A (Albpetrol), the stateowned oil and gas corporation. Patos Marinza is the largest onshore oil field in continental Europe. “What is special about Albania is that the areas we’re exploiting are ‘heavy oil’ fields,” says Badwi. “Without heavy oil technology, it would have limited recovery and productivity.” Canada is the world’s leader in heavy oil technology and has been throughout history. Canada’s indigenous populations developed some of the world’s earliest techniques for boiling oil sands to extract valuable hydrocarbons. Canada’s heavy oil expertise and infrastructure have thrust it into the forefront as a leader in the development of innovative methodology that is so crucial to the future of oil technology, making it a valuable national resource. “The company was created by people who have heavy oil expertise,” says Badwi, “Some of the original founders were bankers,” explaining the interesting if not unintentionally misleading company name. Bankers Petroleum was established in 2004, the same year it acquired its exploration and exploitation rights. Revenue from oil production as of year-end 2009 was approximately $87 million. Oil revenue has increased by 17 percent from $30 million in the fourth quarter of 2009 to over $35 million in the first quarter of 2010, based on augmented production and favorable oil prices. The company employs about 180 people, around 100 of which work directly in the field. Approximately 100 workers are provided by services and drilling contractors, and that, too, is worthy of comment. Despite oil prices that are below the economic threshold for thermal and water flood extraction, the company is able to work effectively and efficiently.

“We have around 300 million barrels of proven and possible reserves, but that’s based only on conventional primary recovery techniques. We expect to get a great deal more with water flood and thermal extraction techniques. We believe the fields have around 5 billion barrels in place; depending on the recovery factor, it will mean a lot of oil still remains to be extracted,” Badwi explains. “We’d rather get the easily extractable resources out first,” he continues. “It’s the least expensive and most economical at the current time. Using conventional techniques will increase our productivity and cash flow, which will then enable us to deploy enhanced production methods. You can’t simply go in with steam today and produce oil tomorrow; you need the infrastructure, and it takes time and is more expensive. “We’re very focused on all our activities remaining in Albania; we have no interest in looking elsewhere. As a junior oil and gas company, we have enough on our hands for our current financial and personnel resources. Companies our size don’t often have access to large fields, and that’s what we have. We estimate the field’s life to be in the region of 30 to 40 years, and we could get up to 50,000 barrels a day with enhanced methods.” Badwi projects the production profile to be in the neighborhood of 30,000 barrels a day by 2012–13. Last year Bankers invested around $75 million in its assets, to reactivate existing wells and in drilling new ones. It recently undertook the first horizontal drilling operation ever attempted in that part of Europe. With the result of this investment, the company recently announced that it has increased its production from nearly 7,000 to around 10,000 barrels of oil per day by adding a second oil rig in January 2010, which doubled its capability to drill horizontal wells, producing a dramatic upturn in oil production for the first quarter of 2010. Badwi has hailed this as a significant achievement in the growth of the company. Bankers sources its equipment from wherever is appropriate—the US, Canada, Europe—and manages the field by expatriate rotating staff, as well as using local labor. Its banking relations with the International Finance Corporation (part of the World Bank) and the European Bank for Reconstruction and Development are significant and good. “Albania’s involvement with those institutions and its desire to become part of the European Union are very important,” says Badwi. “Albania is a poor country, but it’s very industrious. It has a good democratic system, the economy is growing, and it’s showing good environmental and social concern. Our joint efforts to clean up the field are important and should be noted also.” All in all, Bankers Petroleum’s relationship with Albania sounds like good news for both parties, both now and in the longer term. www.bankerspetroleum.com

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Drilling

dolla

Modern oil drilling is a long way from the B you just fire a shotgun into the earth, “and a-bubbling crude.� Devin International is a and gas equipment to customers worldwide 132 www.bus-ex.com JUNE 10


gfor

ars

Beverly Hillbillies theory that d up through the ground come leading provider of real-life oil e, as Ric Larson discovers

Devin International

W

ith millions of gallons of crude oil leaking into the Gulf of Mexico in the aftermath of the BP Deepwater Horizon offshore rig explosion, creating a potential ecological and environmental disaster far exceeding the 1989 Exxon Valdez oil spill, oil drilling is very much in the news. People want to know more about the process by which oil is brought to the surface from deep underground. What sort of specialized tools and equipment are used to extract it efficiently and safely? To keep up with the global thirst for petroleum, oil companies must constantly look for new sources as well as improving the production of existing wells. To do so, energy companies require the use of specialized equipment. One of the world’s leading companies providing such products is Devin International (a wholly owned subsidiary of Greene’s Energy Group LLC), a company that manufactures and rents oil rig equipment. Devin International is headquartered in Lafayette, Louisiana, with facilities in Houma, Louisiana, and Alice and Victoria, Texas, as well as sales support in Houston. Devin specializes in coiled tubing, elevators, hydraulic lift units, pumps, and safety and support equipment for oil and gas exploration and production worldwide. Originally known as Devin Rental Tools and founded in 1979 by Jim Moncus, the company began primarily as a tool rental company specializing in casing support. Casing is large-diameter pipe that is assembled and inserted directly into a recently drilled section of a borehole and typically held in place by cement. Casing that is cemented in place helps the oil drilling process in several ways: it aids in preventing the contamination of freshwater zones while providing a structurally strong foundation in the upper portion of the borehole for the use of highdensity drilling fluid to enable companies to continue drilling deeper. Probably one of the most significant uses of casing as it relates to the Deepwater Horizon disaster is that it seals off high-pressure zones from the surface, which helps to prevent the possibility of a blowout, the uncontrolled release of crude oil or natural gas from an oil well after pressure control systems have failed. Pressure control equipment wasn’t invented until the 1920s, and before that the wild, uncontrolled release

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Devin International

Blohm + Voss Pipe Handling Equipment For over 35 years Blohm + Voss has been a reputed address for designing pipe handling equipment for the oil and gas industry both onand offshore. Blohm + Voss has been involved in the designing and manufacturing of a wide range of pipe handling equipment to handle capacities beyond 1250 metric tons. The products are designed and manufactured in Hamburg, Germany, in accordance with the latest standards of the American Petroleum Institute API 8C and 7K. Blohm + Voss Integrated Management Systems is certified and complies to DIN EN 9001, DIN EN 14001 and OHSAS 18001. of oil and gas from a well was known as a gusher (what you see in 1940s films like Boom Town, where hundreds of Hollywood oil wells spew oil all over the Oklahoma and Texas landscape, drenching well drillers Clark Gable and Spencer Tracy in “black gold”). Despite the dramatics, gushers were extremely dangerous and wasteful. When they blew, they killed employees of the company involved in the drilling, destroyed expensive equipment, and coated the countryside in thousands of barrels of oil, creating the very real and dangerous possibility of the oil igniting. Over the years Devin has built a large inventory of crossover subs, safety valves and inside blowout preventers. Another of its products is the Devin Surface Test Tree. The surface test tree or flow head supports the test string (a conventional method of formation testing) and provides a means of surface well control when completing, testing or performing live well intervention operations. This product weighs only 4,500 pounds and provides a streamlined solution for all well intervention solutions. It allows for faster rig up, a term meaning to make the oil well ready for use. Equipment must typically be moved onto the rig floor, assembled and connected to power sources or pressurized piping systems. The opposite term, rig down, is the disassembly of oil well equipment for storage and portability, requiring the disconnection of power sources, which are decoupled from pressurized systems, disassembled and moved from the rig floor. In 2007 the company announced that it had

engineered and developed an improved coiled tubing lift frame that eliminates bails and reduces rig-up height for well completions and interventions. An oil well uses coiled tubing—which is essentially metal piping, usually 1 to 3.25 inches in diameter— for pumping chemicals through the coil and into the borehole during interventions in oil and gas wells, and it comes spooled on a large reel. The bail on an oil rig is a curved rod similar to a handle on a bucket but much larger. Just as a bucket may be hung on a hook by its bail, the swivel—which connects the rotating drill string to the drilling rig support system—is hung from the traveling block’s hook by its bail. Sometimes the two steel rods or links that attach the elevator to the hook are also called bails. When an oil company performs an intervention on a well, it is usually during or at the end of its productive life. An intervention alters the state of the well or provides diagnostic information for the production of the well. Devin is proud of the fact that the hydraulics and cleaning fluids it uses are biodegradable and environmentally friendly. It uses a system to clean wastewater before it is returned to its original source. The company was acquired by Greene’s Energy Group in August 2008 and was renamed Devin International. It is now preparing to extend its reach into Brazil and is always looking for acquisitions. It supports offshore deep-water drilling, an area of high growth, as well as onshore drilling and currently has approximately 350 employees and revenues over $60 million. www.devindevin.com

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Savannah River Remediation LLC

entoring forthe

future

The joint venture known as Savannah River Remediation LLC is in the first year of an eight-year effort to safely disposition some 36 million gallons of radioactive waste. Keith Regan learns how the team is using six sigma to improve the main processes used to disposition and encapsulate the waste while also mentoring small businesses in the finer points of becoming a go-to defense contractor

T

he Savannah River Site in South Carolina has been a key part of the US Department of Defense’s nuclear program since the 1950s and is seen by many as a key cog in the machine that helped the country win the Cold War. Over the years, the site has accumulated millions of gallons of radioactive waste, some of it kept in single-walled tanks that are considered potential environmental risks. Addressing that risk is the goal of Savannah River Remediation LLC (SRR), the URS-led joint venture with Bechtel, CH2M Hill and B&W TSG. SRR recently began work on a new eight-year (six-year contract with a two-year option), $3.3 billion project aimed at operationally closing 22 old-style tanks on the site while also

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Savannah River Remediation LLC

maximizing waste throughput at the existing Defense Waste Processing Facility (DWPF) on the site. The current contract began on July 1, 2009, according to public affairs manager Dean Campbell, who notes that, in all, 49 tanks remain active at the site, containing a total of some 36 million gallons of radioactive waste. “Some of it is legacy waste, but the Savannah River Site remains active, and we occasionally receive waste from the operations contractor,” Campbell adds. The remediation efforts will first target single-walled tanks that are considered less robust than more modern containment vessels. The current contract is being carried out with some new process improvements driven by six sigma, which has been a fixture on the Savannah River Site since 2001. Several black belts now hold management positions within the company. Over the years, many of the back-office processes—such as administrative, procurement or supply chain processes—have been reviewed through the six sigma lens, says Kim Cassara, SRR six sigma champion. More recently, six sigma is used to revisit the way the entire remediation process is being handled, with

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an eye toward not only completing the current contract on time, but closing all 22 old-style tanks sooner than originally projected, which could result in significant long-term savings. There are two types of waste in the tanks, that in salt form and that in sludge form, explains Cassara. “We looked at the end state of the contract and took a long hard look at where we are today, and we focused on that gap between reality and the goal and started to look at how we could use six sigma to identify what it would take to close that gap.”

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The result of the examination was a better understanding of the “pinch points” in the multiple processes involved in the main waste treatment and disposition processes. For example, the radioactive sludge is treated through a process that results in more than 99 percent of the radioactivity being encased in glass and immobilized. As part of that process, which takes place in the Defense Waste Processing Facility—the largest radioactive waste glassification plant in the world— material must constantly be sampled and analyzed to verify its readiness for solidification in glass. The team explored taking fewer samples and alternative testing methodologies. “We also looked at the fact that previously we would take a sample and wait for the results before continuing, and we looked at places where we could continue through that time and minimize the overall time it took to move material through the process chain,” Cassara says. In another process, the mixing of decontaminated saltform material with grout that is then disposed of within Saltstone disposal units was examined. “We looked at it with the goal of minimizing the volume of material that has to be disposed of and making sure that we were adding as little grout material as needed to solidify the material,” Cassara adds. “We came up with a number of things that get us to a more efficient ratio of salt to grout material, which will enable us to minimize the overall volume of material that needs to be disposed of.” The joint venture keeps one or two six sigma black belts active at all times, each serving a two-year period before they are moved into management roles and take their knowledge and understanding of six sigma with them. A number of yellow belts are also kept active in various roles. “It’s gratifying as folks go back into their jobs, and you see them using the tools and techniques they gained and watch them appear in memos or come up during


Savannah River Remediation LLC

The ACTS Group Astrid Contract Technical Services, Inc., providing professional, technical support to DOE prime contractors since 1993, including Savannah River Remediation at the Savannah River Site. ACTS Staffing, Inc. is a small, woman owned business established 2010, owners Sheila Thomas, Marianne Scogin, and Vernon Keszler, under mentorship of ACTS, Inc. Thank you SRR for allowing us to serve you!

meetings. That’s when you know it’s really taken hold.” In addition to improving processes, the joint venture is focused on helping small businesses become more efficient defense contractors as it takes part in the Department of Defense’s Mentor-Protégé Program (MPP). All members of the joint venture team have

experience with the program, which has been in place since 1991, notes Katy Burnau, SRR manager of contract administration, procurement and property services and the person overseeing the program for SRR. The team is currently working with Navarro Research and Engineering, Inc., a disadvantaged business that will, over the course of the two-year project-based agreement, gain expertise in the areas of procurement, operations and security in nuclear facilities and business processes that will help it qualify for future DOE contracts. That agreement was put in place in the fall of 2009 and will include formal training as well as informal interaction. “We expect it to really blossom in the next year,” Burnau says. “We see it as an opportunity to pay it forward,” she adds. “It’s good for business all around. It helps us develop relationships with small businesses and provide them with exposure to more parts of a company and the DOE than you would get with an affiliate agreement.” http://srremediation.com

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Getting

along

When two competing companies merge, the result can be greater than parts. That seems to be the case with Crossby Dewar Incorporated, Ric a company that specializes in scaffolding, insulation and environmental 142 www.bus-ex.com JUNE 10


g

ng

n the sum of its c Larson learns, l abatement

Crossby Dewar Inc.

I

n 1949 the great musician, songwriter and bandleader Louis Jordan wrote a jump blues tune that became a number one hit on the R&B charts called “Beans and Cornbread.” The lyrics detail an imaginary fight between beans and cornbread and how one food thought it was better than the other, until they decided to work together and get along. That may have worked in the lyrics of a song, but when you’re talking about business rivals and competitors with more than 100 years’ combined experience in scaffolding, insulation and environmental abatement working together or merging into one entity, then you would think that they’d work together like oil and water rather than strawberries and shortcake. But that’s exactly what happened when Crossby Environmental and Dewar Insulation merged to create Crossby Dewar Incorporated (CDI) after working together on a joint project in 1999 for Ontario Power Generation’s (OPG) Pickering Nuclear Generating Station. The merger became complete in 2000, and since then Crossby Dewar has become a major force in

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Crossby Dewar Inc.

PERI UP Rosett PERI UP Rosett is a modular scaffold system which can be used as shoring, stair tower, access scaffold or working platform. The main feature of PERI UP is the very rigid connection between the rosett and the ledgers. The rosetts are welded on the standards at every 0.50m. The rosett design allows ledger and brace connection in all directions. By inserting the wedge head at the end of the ledger into the rosett, the wedge drops under its own weight into the rosett hole and automatically locks in place.

the refurbishing of nuclear plants across Canada, and globally with forays into Brazil, Puerto Rico and soon Saudi Arabia. For older nuclear plants, the choice to refurbish or repower them as opposed to building new generating capacity makes hard economic sense that can lead to significant improvements in efficiency, environmental performance and capacity that are substantial and cost-effective. Canadian nuclear power facilities have increasingly turned to Crossby Dewar to repair, modernize and upgrade their power plants, and it’s no wonder when you consider that the company has developed state-of-the-art equipment and proprietary techniques to achieve these purposes. CDI is a Canadian company with its base of operations in Pickering, Ontario. It’s a multifaceted corporation working across several platforms, including the manufacturing and production of insulated blankets for use with power turbines and other industrial applications that offer its customers the flexibility of being both removable and recyclable. Recognizing an industrial fact of life—the repetitive process of maintaining, reworking and adjusting equipment to keep it operating at peak effectiveness—the company prefabricates insulation for its clients’ equipment that is user-friendly, which includes insulation for thermal acoustic and cryogenic applications. CDI provides onsite supervision and employee training for installation as well. It currently offers more than 17 types of insulation services ranging in diversity from pipe insulation to sheet metal cladding to consulting services. CDI has many years of experience in project management, maintaining a dedicated group of multi-

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primary focus of the company is the nuclear industry. The company is ISO 9000:2008 certified and accredited, and it is a member of the Organization of CANDU Industries (OCU), as well as holding many other federal and industry certifications. CANDU is an acronym for Canada Deuterium Uranium, which is a Canadian pressurized heavy-water reactor developed in the 1950s and 1960s by Atomic Energy of Canada Limited (AECL) in cooperation with the Hydro-Electric Power Commission of Canada (renamed Ontario Power Generation in 1999), Canadian General Electric (now GE Canada), and other industry leaders. Deuterium uranium refers to deuterium oxide (heavy-water moderator) combined with uranium fuel. The company is heavily involved in the refurbishment of the Pickering Nuclear Generating Station, as well as the Darlington Nuclear Generating Station, Canada’s newest OPG CANDU nuclear power generating station, with a total output of 3,524 megawatts (MW). It provides Ontario with approximately 20 percent of its electric power, supplying enough electricity to power a city of 2 million people. Another key project is Bruce Power, a limited partnership between Cameco Corporation, TransCanada Corporation, BPC Generation Infrastructure Trust, the Power Workers Union and the Society of Energy Professionals, who are the licensed operators of Bruce Nuclear Generating Station, which is located northwest of Toronto on the shores of Lake Huron. Bruce Power comprises eight units that when fully operational will be capable of supplying up to 6,841 MW of electricity, making it the second-largest nuclear power generating station in the world. Currently there are two units shut down for refurbishment by CDI,

“CDI has many years of experience in project management, maintaining a dedicated group of multi-trade professionals who are well versed in planning and scheduling, safety programs, scope development and cost reporting” trade professionals who are well versed in planning and scheduling, safety programs, scope development and cost reporting. Its project management team strives to meet the challenges and stringent requirements of its clients while at the same time providing the utmost in customer satisfaction. The bulk of Crossby Dewar’s business and the

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with completion expected by the company in 2011. At present, Bruce Power is generating 4,640 MW, enough power to supply one-fifth of the population of Ontario, approximately 2,630,000 people. The safety of the company’s workforce and safety on the job site are of the highest priority at Crossby Dewar. The company is committed to the well-being and


Crossby Dewar Inc.

Stanmore Equipment Limited Stanmore Equipment Limited and Load Lifter Manufacturing are Canadian companies privately owned by the Thomas family, with over 48 years designing, building and servicing rough terrain forklifts. Their success can be credited to strong customer relationships, as enjoyed with Crossby Dewar. Exceeding their customers’ needs in a variety of industries has helped these companies become leaders in the Canadian market place.

protection from accidental loss of all their employees and physical assets by ensuring a safe and healthy work environment through compliance and adherence to legislative requirements and industry standards.

CDI has achieved this through management excellence in conjunction with active employee involvement. The company stresses that loss prevention is the direct responsibility of line managers, employees and subcontractors. While all their procedures comply with federal and provincial Occupational Health and Safety standards (carrying an OHSAS 18001:2007 certification), they must also meet the rigorous internal requirements that the company has set for itself. The results of this are the impressive safety records the company has established in compiling over 3 million continuous hours without injury or lost time, and one year event-free on two of their sites. CDI’s continued success is clearly tied to the future of the nuclear industry in Canada and abroad. With its proven abilities and commitment to excellence coupled with cost control and maintenance of tight project schedules, the future is blindingly bright. www.crossbydewar.com

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Surgery

sc

onacontinen

The Panama Canal Expansion project is one of the largest c jobs under construction today. John O’Hanlon speaks to Ant of Grupo Unidos por el Canal, the consortium responsible fo 148

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cale

ntal

civil and mechanical engineering tonio Zaffaroni, managing director or its flagship contract

Grupo Unidos por el Canal

O

n July 15, 2009, the Panama Canal Authority (ACP) announced that Grupo Unidos por el Canal (GUPC) been granted the job of designing and building the new set of locks that join the Panama Canal to the Atlantic Ocean at one end and the Pacific Ocean at the other. There was fierce competition for this massive project, worth well over $3 billion, with two other international consortia prequalified and in the bidding, but ACP judged that GUPC presented the best value proposition and had the resources to execute the project and bring it to completion by the scheduled date, August 2014, on the centenary of the canal’s opening. ACP has had the job of managing the world’s most important commercial and strategic waterway since it was handed over to Panama by the US in 1977. The expansion megaproject is a big deal for Panama and international trade since the canal had been running close to capacity for some time now and needed to be able to handle larger ships.

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Grupo Unidos por el Canal

Aggreko Established in 1962 as a generator rental company, Aggreko has expanded to be the largest provider of short-term power solutions. Dedicated to the highest levels of service and reliability, Aggreko delivers temporary solutions 24/7/365 to a wide range of industries from over 131 locations worldwide. Our turnkey rental power solutions come complete with generation and transformation equipment, control

rooms,

fuel

storage,

distribution

equipment, spare parts, ancillary items and highly trained technicians to operate and maintain. From small mobile power equipment for construction projects to multi-megawatts for regional grids, Aggreko keeps your power on and your business moving forward, anytime, anywhere.

The existing two sets of locks, which raise ships 85 feet from sea level, define the “Panamax” standard limiting container vessels to 5,000 TEU (twenty-foot equivalent units); the new locks will be able to handle 13,000 TEU “post-Panamax” ships. The new Pacific locks are to the southwest of the existing Miraflores Locks. The Atlantic locks are east of Gatun Locks. Each set of locks will have three gravity-operated levels or chambers. Each chamber will be accompanied by three water-saving basins, allowing the reutilization of 60 percent of the water in each transit. GUPC is a consortium comprising Sacyr Vallehermoso SA of Spain, Impregilo SpA of Italy, dredging specialist Jan De Nul NV of the Netherlands, and the Panamanian construction company Constructora Urbana. It is led by Antonio Zaffaroni, an Italian engineer who has spent the last 35 years working on some of the largest projects in the world—most recently the spectacular (but delayed) €6 billion Messina Bridge that will one day link Italy and Sicily. The Panama Canal may be his swan song, and he recognizes that for any engineer this would be a good way to close out a career.

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The project is a large one, but not particularly complex, says Zaffaroni. It has gone smoothly so far with installation, industrial preparation and mobilization of heavy-duty machines precisely on schedule. In fact, he expects to be able to complete the current excavation phase almost a year under schedule. “The contract consists of three main elements: excavation, concreting, and the installation of the gates and all the electromechanical equipment,” he explains. “Getting the excavation done and cleaned up early is beginning to seem feasible, so we are moving in that direction. That will give us better conditions to do the concrete pouring, and then we will see if we can save time on the concreting phase.” The installation phase and the time that will have to be spent testing the operating systems can’t really be cut, Zaffaroni says, so don’t expect him to pull back the completion date by a whole year. But he promises to save a significant amount of time, and time saved means savings in indirect costs. Not that either of these considerations is the main motivation. “It’s always good if you can conclude the work early, but this is really about professional pride, for our team to prove that we can do the highest-profile

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job in the world in the best possible way.” In fact, the scale of the project helps rather than hinders the schedule. When a problem is encountered, you simply get on with another part of it while you sort it out, he says. “We hit some geological problems in the lower chamber on the Pacific side, so we shifted our priority to the upper chamber and maintained the program as a whole.” You might also expect the day-to-day demands of canal operations to be affected by an upgrade of this magnitude, but not so, says Zaffaroni. “We do have to coordinate blasting operations on the Pacific side, but we work farther away from the Miraflores Locks and we do not foresee any interference.” The only activity carried out in the same place where the ACP operates is the movement of aggregates by barge through the canal, he adds. That’s just one of the logistics streams that play a key part in the smooth operation of this and any other project, Zaffaroni emphasizes. “We have thousands of tons and millions of dollars of supplies that have to be designed, produced, tested, transported to the site, installed and tested again. The civil engineering underpins the whole


Grupo Unidos por el Canal

thing, but even that can’t go ahead if the supply of the other elements is not done in good time.” MRP, design and project planning, financial control, HR and the like are controlled by a combination of proprietary programs like Primavera and software developed in-house by GUPC and by the companies constituting the joint venture. The expansion program is important to Panama not only because of the income it will generate from traffic; it is a huge opportunity for development, and not least for raising the education and skills level of its population. GUPC is currently employing 2,000 workers, but at the end of 2010 it will be increasing this to 7,000. The company is working with the Ministry of Labor and with the National Vocational Training Institute for Human Development (INADEH) to recruit the best graduates from universities and colleges, offer them jobs on the project, and train them. “At the beginning

we have relatively high numbers of foreign experts coming in to set up the facilities, but these guys are just meant to come in and train the locals. Knowledge transfer is one of the collateral benefits of the project.” The experience will create a pool of qualified and employable people ready to use their skills and expertise in Panama. Once the project is complete, it is the policy of companies like Sacyr Vallehermoso and Impregilo to employ some of them in its operations around the world. In the meantime there’s a great deal of infrastructure work to be done in this fast-developing country, paid for by the income it will receive from the Canal. Estimated at $2 billion this year, the Canal contributes about 20 percent to Panama’s GDP. If traffic increases as expected with the estimated rise in toll rates as sea trade picks up after the recession, that figure could increase significantly. www.acp.gob.pa/eng/index.html

www.pancanal.com/eng/pr/press-releases/2009/07/15/pr343.html

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Hatso 154

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off

PCL Construction

Sometimes it’s not the individual elements of a project that make it unique but how they collectively create an impact, as Alan Swaby learns from construction manager Lorne Ebenal of PCL Construction

I

f you watched the 2010 Winter Olympics from Vancouver then you’ve seen inside BC Place—one of Canada’s largest stadiums and venue for the Olympics’ opening and closing ceremonies. What isn’t immediately apparent—unless you’ve visited in person—is that BC Place is, in effect, a huge tent. The only thing separating spectators from the heavens above is a thin membrane of PTFE (polytetrafluoroethylene) floating on a cushion of positive-pressure air created by 16 giant fans.

PHOTO CREDIT: Nic Lehoux Architectural Photography

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BC Place has been an iconic Vancouver waterside landmark since it opened in 1983. For almost 30 years it has played host to sports events, concerts, exhibitions and special events. But while the solid outer walls are good for another 30 years, the roof itself has long passed its life expectancy and is being replaced. “The roof isn’t being replaced like for like,” explains Lorne Ebenal, construction manager for PCL Construction. “Instead, the opportunity is being taken to install a retractable roof with a somewhat higher roof line than previously. The material being used is still fabric, but the design will provide an altogether more spectacular vision against the city skyline.” It’s a big decision to make because it means BC Place will be out of action, since its final event just completed in April this year until summer 2011. But once complete, the venue will be even more versatile and noticeable than before. But the very first step of all has been to dismantle the existing 720,000-square-foot dome. On May 4, Kevin Krueger, Minister of Tourism, Culture & the Arts for the Province of British Columbia, and BC Pavilion Corporation Chair David Podmore officially launched the construction of a new retractable roof by commencing a controlled deflation of the existing roof. It took approximately 45 minutes to deflate. All that was necessary was to switch off the fans, open the doors, and let the fabric gently sink back to earth. It has now been sectioned and taken away to a specialist recycling firm in Minneapolis that will cut, patch, clean and repackage the PTFE and sell it on for a myriad of new uses. Similarly, the old steel cable system will also be recycled, leaving little

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PCL Construction

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PCL Construction

Centaur Products As part of the BC Place Phase 2 project Centaur will be providing the artificial turf system – manufactured by German-based, Polytan GmbH. Featuring the super Polyshock Pad under the artificial turf fibers providing a

high

performance

field

with

increased

levels of athlete safety. Centaur and Polytan bring a combined 75 years’ experience and unmatched levels of service and quality.

or no environmental impact on the site. The roof will be totally different: two meters higher, with a new contour and façade and a curved, retractable opening the size of a soccer pitch or a football field. The desire to have a retractable roof means that support by inflation is no longer an option. Instead, the stadium will be ringed by 36 steel masts, leaning outward at 17 degrees and reaching 150 feet into the air. Opposing pairs will be linked by cables in a similar manner to a suspension bridge and the fabric roof attached to the cables. From across the city it will look like a giant crown, interlaced with a spider’s web of cables. The steel masts are to sit on the ring beam of the existing

perimeter walls. It isn’t a job the walls were designed to do, so the first stage of reconstruction is to reinforce the structure. Concurrently, in the center of the stadium a temporary 200-foot-high mast is being constructed to support the center node where all the cables converge. In a completely counter-intuitive way, when the roof is opened, instead of it peeling back to the outside, the roof fabric will be drawn toward the center and gathered into a basket, high above the sight line of spectators. This means that two different kinds of material have to be used. For the fixed portion, a similar PTFE to that previously used has been selected, while the movable part is to be made from a strong, yet soft, Gore-Tex–like material that will accommodate the necessary folds of the contracting roof. “Individually, all the elements of this project have been done many times before,” says Ebenal. “But when put together, there is nothing in the world quite like what’s happening at BC Place. It calls for very complex engineering solutions and meticulous planning. Component parts have been sourced from every part of the globe, and getting them here when needed to meet the construction schedule is a huge logistical task.” It seems appropriate, then, that one of Canada’s largest entertainment venues has enlisted the services of Canada’s largest construction company to do the work. PCL has been around for over 100 years and remained in the founder’s family’s hands until 1977, when the decision was made to sell the company to its employees. “This is the secret of our success,” says Ebenal. “Almost everyone is a shareholder, and so we’re effectively working for our own future. We also stick firmly to our founder’s ‘Poole’s Rules,’ which help to create the right type of long-term relationship with clients, making them want to come back time and again.” As such, PCL has built up a $6–7 billion business employing over 8,000 across the whole of Canada and great swaths of the US. There’s barely an aspect of building and civil construction or heavy industrial construction in which PCL doesn’t operate. Such depths of skills and talent have been invaluable with the BC Place project. The unique nature of the design has called for considerable effort in planning exactly how the work will be executed. Numerous peer reviews have been held to ensure that nothing has been overlooked that would compromise the safety and integrity of the construction. It might be a good many years until Vancouver has the opportunity to host the Winter Olympics again, but in the meantime sport will continue to have a major role at BC Place, as it continues to be home field for the BC Lions and welcomes the newest MLS franchise in 2011. www.pcl.ca

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Clash

detec

Construction projects and problems are never as Alan Swaby learns from Turner Constructio with careful planning most of those problems

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h

ction

r too far apart, but on project execs, can be avoided

Turner Construction Company

H

ealthcare building projects are notoriously challenging. Seldom do they have the luxury of a greenfield site; instead they are typically located in a campus environment, among a myriad of other buildings, where the show must go on. Patients continue to be treated by medical and support staff scurrying around the campus like ants, interspersed by hundreds of daily visitors who expect to be able to see friends and family with minimal disruption and maximum safety. To make matters even more complicated, the buildings being designed often have to house equipment whose exact specifications are still to be finalized. It follows, then, that experience is vital, and in this respect, Turner Construction has lots of it. For 30 of the 32 years that project executive Steve McGlone has worked for Turner, the company has been ranked number one in the health segment of the construction industry, and for the other two years it was second. On average, Turner delivers more than 125 health-related projects each year, and in 2008, for example, the health sector contributed 25 percent of Turner’s $2.6 billion revenue. Not surprisingly, McGlone considers that there is precious little anyone could ask of Turner that couldn’t be taken on. “Turner has been involved with construction for more than 100 years,” says McGlone, “and has built up a network of 44 offices around the country, let alone our overseas connections. Somewhere in the US or among our colleagues in Germany there will be someone who has the right kind of experience for every project we are asked to bid on and who can be assigned to that job.” One such project on Turner’s order book is the Global Vascular Heart Institute being built at the Buffalo General Hospital site in New York State. The $167 million construction project has been commissioned by Kaleida Health and has a completion date of February 2012. The new 10-story tower features four clinical floors at the lower level and a further four floors, referred to as a Clinical Translational Research Center (CTRC), occupied by University of Buffalo medical research scientists. Between the two zones there is to be a collaboration level where clinicians and researchers come together to share ideas. The whole project represents a unique partnership between university-based research and a commercial healthcare provider and will provide the area with state-of-the-art emergency care. Ground was broken in August last year, so a completion date of February 2012 is a challenge, especially since the custom-designed curtain wall alone would normally require a year or more before anything was seen. “We quickly made the decision,” says project manager Mark Dowling, “that a design-assist approach was the only way we could meet the client’s completion requirements.”

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Turner Construction Company

John W. Danforth Company We

are

proud

to

partner

with

Turner

Construction and Kaleida Health on the new Global Vascular Institute. Danforth is using the latest tools and technology, including 3D Building Modeling, to complete the mechanical portion of this state-of-the art medical facility. We are thrilled to take part in the growth of Buffalo’s medical corridor and the future of medicine and research.

The normal approach is to ask curtain wall manufacturers to bid against completed architectural drawings, which invariably involves a good deal of back-and-forth negotiation before details can be ironed out and prototypes tested for structural integrity or against water infiltration. But by taking architectural design to near-completion and then asking curtain wall suppliers to complete the detailed

design around their own capabilities, much of the back and forth has been avoided. In this instance, the contract for curtain wall was awarded in October and the building will be enclosed in November this year—a valuable couple of months sooner than would otherwise have been the case. Another aspect of the job that’s calling for meticulous planning is the routing of incoming power. The current building work is coinciding with ongoing upgrading of a substation with four power feeds from National Grid that forms the basis of the power distribution system at Buffalo General. All four feeders are being replaced, but three must always remain active to ensure no disruption of service to the hospital, and each individual feed, when switched over, can be out of service for a maximum of two days. “The only way such a project can really work,” says McGlone, “is by constant close liaison with every single partner in the production. Nothing can be left to chance. It involves planning of Pentagon-level precision.” Compared with typical hospital buildings, where floor-tofloor height is around 16 feet, the new Buffalo building has 18 feet to give a bit more breathing space for the mass of pipes and cables transporting all the necessary utilities— hot and cold water, steam, electric power, electronic signal and data wiring, oxygen and other gases. It’s part of the construction process that has been transformed by Building Information Modeling (BIM), which provides a 3-D look at the entire building and its contents and pinpoints areas of conflict in good time for them to be corrected long before they bring construction to a halt. “Each subcontractor makes its own contribution to the model,” says Dowling, “and problems are highlighted immediately. When they can’t be resolved on paper between the various parties, we hold a weekly clash-detection meeting to resolve the trickier issues.” The ramifications of using BIM are endless. Subcontractors have the confidence to pre-fabricate ducting and pipework, leaving them much less to do in the field. This, of course, translates into lower bids because contractors no longer need to build in such large amounts for contingency work. Once construction is complete, the final model can be handed over to the building’s maintenance contractors, who have definitive data with which to work. Maintenance provisions can even be considered during detailed design and exclusion zones can be established to provide the physical access that maintenance engineers need for working space. Kaleida has commissioned Turner to build a cutting-edge hospital, which Turner is doing thanks to a combination of its own advanced technology and a good dose of careful project management. www.turnerconstruction.com

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A joint venture between Clark Music City Center to be the ce


Bell & Associates / Clark Construction: Music City Center

siccallshome

k Construction and Bell & Associates is bringing Nashville a new enterpiece of Tennessee’s capital city, Iris Seymour reports

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N

ashville soon will have a shining jewel added to the city’s downtown skyline. The Music City Center (MCC) is scheduled to be completed in early 2013. The $415 million project is the largest municipal project in Tennessee history. The new MCC will be 1.2 million square feet in size, three times the size of the current music center. The building will feature a 350,000-square-foot exhibit hall that is designed also to function as a concert hall. There will be over 50 meeting rooms, two ballrooms, and about 36 loading docks for facilitating ongoing events. The new building replaces the existing Nashville Convention Center on a 16-acre downtown location south of Broadway, near the Country Music Hall of Fame.

musical influences of Nashville’s history that give the city its nickname of Music City. A 175,000-square-foot LEED Silver certified green roof is the rippling roof’s signature focal point, and it is touted as one of the nation’s largest of its kind. The convention center will feature a clear-span exhibit hall that utilizes a unique cable-braced structure supporting the rooftop’s topography. According to the designers, the 58,000-square-foot ballroom is designed in such a way to suggest the feeling of being inside a finely crafted instrument. The exposed ballroom creates the eastern façade that houses the meeting rooms and the junior ballroom. This past May the project team began assembling the MCC’s structure, which is constructed of 13,000 tons of structural steel and

“The economic impact locally of the MCC is expected to create about 1,500 jobs with an earning potential of about $43 million” The MCC is being constructed under a joint venture between Bell & Associates and Clark Construction, with three construction teams involved in the construction: Clark Construction Group of Bethesda, Maryland; Bell & Associates Construction of Brentwood, Tennessee; and Harmony Construction Group of Nashville. The design team includes architects tvsdesign of Atlanta, Tuck-Hinton Architects of Nashville, and MoodyNolan, also of Nashville. Nashville-based project partners include Ross Bryan & Associates and Logan Patri Engineering, structural engineers; I.C. Thomasson Associates Inc., and ECS mechanical engineers; and Barge Waggoner Sumner and Cannon, Inc., and K.S. Ware & Associates, civil engineers. The joint venture is designed so each member of the team shares in all the responsibilities of construction management. According to a Bell spokesman, Bell’s experience and knowledge of the local subcontractor and supplier market enhances Clark’s vast convention center construction portfolios. And the commitment and energy of Harmony blended with the strengths of the other two companies produces an outstanding team for a project of this magnitude. One of the building’s more stunning architectural features will be the 14-acre rippling roof that designers say recalls both the rolling hills of Tennessee and the

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110,000 cubic yards of concrete. The new MCC will bring a number of economic benefits to the Nashville community by increasing the number of citywide events offered throughout the year, drawing extra visitors to the city. The MCC replaces the old music hall, which was too small to compete in the industry by attracting profitable events and the consequent visitors. The larger convention center is projected to increase hotel room-tax receipts to $30.5 million in 2014 from just over $28 million in 2009; and by 2019 the projection is to exceed $40 million a year. A study found that the new center will draw 45 more events, 180,000 more guests, and 207,900 new room nights a year than the existing convention hall. The city expects that convention attendees, event planners and exhibitors will spend $86.6 million during a stabilized year of the MCC’s operations. According to available statistics, Nashville attracts over 11 million visitors annually, with visitor spending reported to be over $4 billion annually. The economic impact locally of the MCC is expected to create about 1,500 jobs with an earning potential of about $43 million. In order to complete its financing obligations, the MCC required a change in Tennessee law. State lawmakers had to rush a bill through the legislature that would exempt the project from lending laws that other government projects must follow. This is because current state law prevents municipalities from borrowing money at four points above the prime lending


Bell & Associates / Clark Construction: Music City Center

rate. Because the prime rate is low, state law prevents the Metro Council from borrowing at a rate above 7.25 percent. Metro Council wants to use bonds that will provide a federal subsidy on the back end, which will save the Council millions of dollars over the long term. Although the project got off to a somewhat controversial start, it is progressing well. Initially, opponents of the project criticized it as a bad investment for the city in a declining industry. Although acknowledging that some financial risks exist in going forward with the citybacked debt for the project, city governmental officials agreed that investments for the project are necessary and will be vital to the city’s economy. The MCC will present the city with an opportunity to collect visitor taxes and fees and invest them in such a way to create jobs and grow the local economy. The City of Nashville hopes to enhance tourism by creating retail and parking areas, tripling exhibit space to 350,000 square feet and adding 64,000 square feet of

ballroom space. The amenities offered by the new MCC will enable the city to compete for larger meetings. The facility projects yields of about $12 million in new tax revenue beyond tourism levies dedicated to the $40 million annual debt service. The MCC is expected to generate $134.9 million in new annual spending in Nashville by 2017. Construction began early this year, and even as early as March the executive director of the Nashville Convention Center reported that they were able to book more rooms and space prior to groundbreaking than any convention center in the history of the country. As of March, 29 conventions have been booked for the new center, and 300,000 room nights have been reserved, representing about $85 million in direct visitor spending for the city. City tourism leaders are hopeful that Nashville will be chosen as a site to host soccer’s 2018 or 2022 World Cup. So far, the project is off to a very promising and bright beginning. www.clarkconstruction.com

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June 2010  

June 2010 magazine

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