NOVEMBER 10 NA

Businessexcellence ACHIEVING

NOVEMBER 2010

O N L I N E

www.bus-ex.com

Rewardsof

restoration A new study on the benefits of restoring the Everglades demonstrates some bottom-line lessons

EXCELLENCE BUSINESSEXCELLENCE

Editor’s letter

Businessexcellence AC H I E V I N G

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 Subscriptions info@bus-ex.com Infinity Media LLC 100 Cummings Center Suite 243C Beverly, MA 01915 Tel: 978 232 9284 Fax: 978 560 0999

Ford

fights back

I have to admit, I’ve always had a soft spot for Ford. I drove a series of old Ford Cortinas in the UK in the 1970s, and then graduated to Sierras.

I even had a Capri once. They just kept going and going and going. Later, when I worked for a time in Massachusetts, I drove an Explorer.

And then in 2005 I was lucky enough to interview William (Bill) Clay Ford Jr. after he had become chairman and CEO of the by then ailing auto legend, and was impressed by his dedication, his enthusiasm and his passionate belief in innovation.

Like me, Bill is a big sports fan, and we both know that industry, like sport, is a results business. I love to watch my team play attractive soccer, but I love it most when they win. No-one doubts that quality is a prime attribute for success, but in industry as in sport, there is more to it than that. You can have better players than your opposition, but you have to be a better team to beat them.

So I was secretly pleased last week when Ford Motor Company released its third quarter results, highlighting a nine percent sales increase in the US and a 1.3 percent gain in market share. As the only major US automaker not subject to a US government bail-out during the financial crisis, Ford is moving up the league.

It has some strong attacking players in its team, including the F-Series, Taurus, Fiesta and Edge, with the new fuel efficient 2011 Explorer signing up soon. But Ford has been working hard on its defensive tactics, too, announcing new plans to reduce its borrowing so that by the end of the year it hopes to have as much cash as it has debt. I hope it turns out to be a winning strategy.

Infinity Business Media Ltd Suite 22, St Francis House Queens Road Norwich, NR1 3PN UK Tel: +44 (0) 203 137 7100 Fax: +44 (0) 1603 666466 www.bus-ex.com

NOVEMBER 10 www.bus-ex.com

3

8 SUSTAINABILITY: Everglades Restoration Rewards of restoration The benefits of Everglades restoration include a rise in job creation, real estate values and water quality.

OPERATIONS: OEE Lean OEE Thomas R. Cutler explains the benefits of automated overall equipment effectiveness data in a lean manufacturing environment.

14

SUPPLY CHAIN: Forecasting Rolling forecasts The traditional once-a-year budget is quickly falling by the wayside as a key management tool.

20

STRATEGY: Dealing with change Engage your people Times are different now. To thrive in today’s marketplace requires maximizing employee engagement more than ever.

14 66

4

www.bus-ex.com NOVEMBER 10

8

26

The Ottawa Hospital Building for better health A new Cancer Center and a fully redeveloped Emergency Department are part of the plan to modernize and expand services.

30

Anapharm Science, service and customization Teamwork and close project management ensure that studies are carried out in a timely and cost-efficient way.

36

National Research Corp.

Uncertainty clarified Learn how a healthcare quality improvement firm is bringing some certainty to its clients in the midst of turbulence.

42

Dakota Provisions Center of attention Turkey growers own their own processing facility and are increasing their market share the old-fashioned way.

48

City of Auburn Hills Public service super saver Dedication to innovative leadership, to teamwork and to its customers raise this DPS to the upper echelon.

54

Contents Bird-Graham Schools Building blocks of knowledge The project director describes the challenge of coordinating construction at ten busy building sites at the same time.

60

Fulcrum BioEnergy A trash-to-energy revolution Is this the first step toward producing a billion gallons a year of clean, renewable transportation fuel?

66

Powerwave Technologies Inc. Eyes on the future A broader product lineup provides a solid foundation for the wireless revolution still to come.

72

NuVision Engineering Nuclear options This firm has over 40 years’ experience in nuclear energy generation and knows how to fix every problem that arises.

84

Endeavour Silver Corp.

Finding a vein Using modern exploration methods on old mine properties can uncover new, undiscovered veins.

90

North American Palladium Ltd. One giant step forward When palladium prices plummeted, tough decisions had to be made. Two years later things are turning around.

96

Osisko Mining Corp.

Ahead of the game A bold plan to fast-track the development of a gold deposit by purchasing equipment ahead of the feasibility study.

104

Goldbrook Ventures Exploring the future Resources remain scarce, yet demand continues to soar in some countries, putting a premium on the price of nickel.

110

St. John’s Harbour Cleanup Project No harbor for old pipe Phase two of the 15-year project is essentially complete despite the challenges presented by its historic location.

118

84 Transbay Transit Center Seismic change The transit center promises to modernize the public transportation system and revitalize a neighborhood.

Albert C. Kobayashi, Inc. Another diamond on Waikiki Construction is now complete on the first luxury high-rise project to be built on the world-famous beach in 25 years.

Clark Construction/Balfour Beatty Showing the way A multi-faceted project for the National Geo-Spatial Intelligence Agency is on track for completion in under four years.

Woodward Design+Build Rising to the challenge This company helps the restoration of New Orleans by its expertise and by adhering to its civic responsibilities.

124 130 136 142

118 NOVEMBER 10 www.bus-ex.com

5

154

148 188

6

www.bus-ex.com NOVEMBER 10

VAS Aero Services One-stop parts shop One of the world’s largest airline parts distributors is poised for take-off to a whole new level.

148

Technip Canada Oil production in the North If the last great hydrocarbon deposits lie within the Arctic Circle, it will place extra demands on the likes of Technip Canada.

154

Niagara Falls Bridge Commission Smart new customs As phase II of the Queenston plaza redesign nears completion, traveling between the US and Canada is set to become a whole lot easier.

162

Nyrstar Tennessee Mines Rebuilding trust A move upstream into direct zinc ore mining involves rebuilding the trust of employees, communities, and regulators.

168 176

North American Gem A glittering opportunity in coal Aiming to become a major coal mining presence in Kentucky, with a rare type of coal used in silicon chips and solar panels.

Northgate Minerals Corporation Reinventing the past The Young-Davidson Mine in northern Ontario is poised to take the place of the Kemess South Mine in British Columbia.

182

SEMS Exploration Through thick and thin SEMS Exploration has built its reputation as a mineral exploration service consultancy on a unique business model.

188

Contents

196

220 232

OceanaGold The art of gold mining Mining operations need to think ahead and have plans in place for when the ore runs out.

196

Goldcorp: Musselwhite Mine In pursuit of excellence The foundation is being laid for production expansion to feed the continued high demand for gold.

202

Canada Lithium Weaning away from hydrocarbons North America is reluctant to end its love affair with gasoline, but a new Canadian venture is ready for when it inevitably happens.

208

Ledcor Industrial Division Getting ready Adapting to changing market realities and customer expectations by aligning internally to capture a larger market share.

214

Bastian Material Handling Automatic for the people An automation company that optimizes operations with robotics, modular conveyors, and logistics.

220

Hunter Roberts Construction Group Safe for the workplace The Incident & Injury Free workplace safety program promotes the workplace as a partnership rather than a dictatorship.

226

Yonkers Raceway Back on track A $285 million investment has enabled this historic venue to thrive where many have suffered in the economic slowdown.

232

Heemskirk Consolidated Minerals of the future Many new applications are being found for the specialized mineral output of this Australian mining enterprise with significant operations in Canada.

238

NOVEMBER 10 www.bus-ex.com

7

Rewa restor of

Martin Ashcroft reports on a first-of-itskind economic study detailing the benefits of Everglades restoration, including a rise in job creation, real estate values and water quality

S

ustainability has been seen as a “good thing” for some time. Many have questioned, however, whether the price is worth paying. In the case of the Everglades, at least, what’s good for the environment is proving also to be good for the economy.

In October this year, the Everglades Foundation released the results of a comprehensive analysis of the financial return on investment generated by the restoration of the Everglades ecosystem. The study,

8

www.bus-ex.com NOVEMBER 10

Sustainability: Comprehensive Everglades Restoration Plan

ards ration NOVEMBER 10 www.bus-ex.com

9

Measuring the Economic Benefits of America’s Everglades Restoration: An Economic Evaluation of Ecosystem Services Affiliated with the World’s Largest Ecosystem, was conducted by Mather Economics, and predicts that restoration of the Everglades will produce an increase in economic benefits of approximately $46.5 billion, which could range up to $123.9 billion, based on an investment of only $11.5 billion.

“It is clear that Everglades restoration not only produces ecological benefits, but also generates a robust economic boost to our economy. For every dollar spent on Everglades restoration, we are getting four dollars back in the form of higher home values, increased tourism and stronger fishing, boating and tourism industries,” said Kirk Fordham, CEO, Everglades Foundation. “When we invest in protecting and restoring the Everglades, we are also revving up a powerful job creation engine. Aside from the good paying jobs in construction, engineering and the sciences that come with restoration projects, we are boosting employment in a wide range of industries.”

More than seven million people live in the Everglades watershed and depend on its natural systems for their livelihood. Florida’s agriculture, boating, tourism, real estate, recreational and commercial fishing industries all depend on a healthy Everglades ecosystem, which supports tens of thousands of jobs and contributes billions to the economy.

10

www.bus-ex.com NOVEMBER 10

“Most academic econo used in production, bu to prefer the jobs num

Sustainability: Comprehensive Everglades Restoration Plan

omists would prefer to discuss the sales of the firms rather than the jobs ut for some reason or another, policy makers, pundits and politicians seem mbers approach�

NOVEMBER 10 www.bus-ex.com

11

Unfortunately, the Everglades ecosystem is not in the best of health, due in part to the space program—odd as that might sound. A major cause of the decline of the Everglades is that the rocket engines made by Aerojet Corporation were too large to be trucked to Cape Canaveral by highway, so in the 1960s, a 20-mile long canal was cut across southern Miami-Dade County so that barges could ferry the massive engines north.

The C-111 canal, locally known as the Aerojet canal, also served as a major flood control device.

The jet engine manufacturer is long gone, but the canal remains, diverting fresh water that once flowed west and shuttling water east into the Barnes Sound area of Florida Bay. “The canal is sucking what little fresh water there is in the southern Everglades right out,” says Dr. Tom Van Lent, senior scientist, Everglades Foundation.

The mis-directed fresh water upsets the balanced salinity of Taylor Slough, devastating the delicate sea grass beds that are nurseries for young fish, shrimp and sponges and reducing the number of wading birds. Scientists say that 75 percent of the water that once flowed through Taylor Slough to Florida Bay is now sent into the C-111. “If you don’t fix the problems created by the C-111, you don’t fix Florida Bay. It’s that simple,” says Dr. Van Lent.

The first stage of the restoration project is to build a series of retention ponds to hold storm water rather than allowing it to flow to the sound.

Two new pumps will push the water west into Taylor Slough. From there, the water will flow naturally into Everglades National Park and, eventually, Florida Bay. A seepage barrier will be constructed along the canal. Levels in the southernmost canals will be raised by barely an inch a year for several years so the impact can be examined.

The Comprehensive Everglades Restoration Plan will involve the combination of many individual projects over the next few years to restore the Everglades to its natural state. Everglades CERP, if enacted as planned, will restore Everglades sheet flow. Restored sheet flow will provide additional fresh surface water and groundwater, meaning that water available for municipal and private use will be less saline, requiring less electricity to become usable and potable. A restored Everglades would therefore reduce the cost of desalinating increasingly brackish groundwater.

It is benefits like this that the Mather Economics

12

www.bus-ex.com NOVEMBER 10

Sustainability: Comprehensive Everglades Restoration Plan

“If you don’t fix the problems created by the C-111, you don’t fix Florida Bay. It’s that simple” study sets out to calculate. To do so, it divides the restoration project into six distinct categories, with a catch-all seventh.

• Groundwater purification and aquifer recharge • Real estate • Park visitation • Open space • Fishing • Wildlife habitat and hunting • Water quality, biodiversity, and carbon sequestration Wherever estimates needed to be made, Mather took a conservative approach, using the best available data and economic methods. This explains its cautious estimate of a $46.5 billion increase in economic welfare, and its potential value of up to $123 billion. Assuming a total project cost of $11.5 billion, the return on investment at its most conservative level is still over $4 for every dollar invested.

The report estimates that groundwater purification will contribute at least $13 billion, and that real estate values will benefit by at least $16 billion. Wildlife habitat and hunting stands to benefit by $12.5 billion and fishing (commercial and recreational) by $2.5 billion.

Fishing is big business in the Everglades. To calculate the benefits of restoration, Mather used data on commercial catch per species for each of the relevant South Florida counties for the years 1986 through 2008. Earlier data was considered unreliable. Assuming that restoration would enhance commercial fish catch because of increased sheet flow, Mather estimated the change by comparing current levels to peak levels in the late 1980s. Its conservative estimate is that a restored Everglades will provide 75 percent of the difference between current catch levels and catches in 1989, the first year in which there are reliable data.

Water also plays an important role in the determination of residential real estate values.

Lakeside or seaside properties sell at a premium compared to properties located away from water.

A home on a clear stream trades at a premium to a similar home on a polluted stream. Economists have developed techniques to quantify the incremental value of environmental attributes like this, and studies consistently show that water

quality is something that people are willing to pay for. The magnitude of this effect is generally in the 0.5 percent to 7.0 percent range. The Mather study takes the lowest figure as its projection.

The report also concludes that Everglades restoration will have an incremental impact on employment, creating almost 450,000 additional jobs over 50 years, with residential construction and real estate services providing over half of those opportunities. Over 80,000 jobs are expected to be created in wildlife habitat and hunting, and over 40,000 in fishing. Tourism, including lodging, restaurants, transportation, retail and entertainment stands to gain almost 50,000 new jobs. The US Army Corps of Engineers also estimates there will be over 22,000 new short- to mid-term jobs created as a result of actual restoration projects.

But Mather is careful to point out that job creation is not an extra benefit, but merely another way of looking at the same benefits. “Most academic economists would prefer to discuss the sales of the output of the firms rather than the jobs used in production,” the report says, “but for some reason or another, policy makers, pundits and politicians seem to prefer the jobs numbers approach. For sure, jobs are easier to calculate and perhaps easier for lay people to appreciate. Our point here is to respond to that latter audience, but it would be a big mistake for anyone to interpret our discussion here as additive. The jobs are not in addition to the calculated benefits. They are an alternative way of visualizing the impact of Everglades restoration.”

The Comprehensive Everglades Restoration Plan is an ambitious project, to say the least. Equally impressive is the extent to which its social and economic benefits can be quantified. It makes one wonder how many smaller-scale sustainability projects could be undertaken by industry, to the benefit of us all, if we let the accountants loose.

Measuring the Economic Benefits of America’s Everglades Restoration: An Economic Evaluation of Ecosystem Services Affiliated with the World’s Largest Ecosystem is available in its entirety at www.evergladesfoundation.org in the “Reports and Surveys” section of the website.

NOVEMBER 10 www.bus-ex.com

13

Lean OEE Thomas R. Cutler explains the benefits of automated overall equipment effectiveness data in a lean manufacturing environment

M

anufacturers are facing competitive price pressure, shrinking brand loyalty, and increasing costs.

Compliance constraints are impacting business efficiencies while quality expenditures continue to increase. According to John Rattray, a principal of Memex Automation, “The only options to battle these trends are to increase efficiency, improve quality, while reducing fixed costs and lowering cost-of-goods sold (COGS).�

14

www.bus-ex.com NOVEMBER 10

Operations

n NOVEMBER 10 www.bus-ex.com

15

16

www.bus-ex.com NOVEMBER 10

Operations

One way to implement this type of quality initiative is a cost management platform. Another option is to track the true overall equipment effectiveness (OEE) on the plant floor. A 10 percent improvement in OEE can generate a greater than 60 percent increase in operating income, a tremendous increase to the bottom line that could represent over $5 million on sales of $100 million.

The speed of complex machine changeovers has a substantial effect on the profitability of a production run, but manufacturing line workers are often not encouraged to measure effectiveness, and profitability suffers accordingly.

Built-in intelligence goes beyond raw data collection to provide a fully integrated production and quality performance management application.

The quality component for manufacturers is the ability to differentiate and compare real-time data against planned estimates. These discrepancies allow estimates to be validated and automation processes to be quantified.

Overall equipment effectiveness Overall equipment effectiveness (OEE) is critical to quality control, directly measures productivity (actual production compared to capacity to produce), and is correlated directly to operating income and profit.

Production machines are designed on the basis of a certain production capacity. In practice, actual output lags far behind the capacity of the equipment for a number of reasons, meaning that there is hidden production capacity.

The business case for OEE is very sound. In the book, Overall Equipment Effectiveness: A Powerful Production/Maintenance Tool for Increased Profits

by Robert C. Hansen, on pages 47-56 he compares the business case of a 10 percent improvement in

NOVEMBER 10 www.bus-ex.com

17

OEE for a manufacturer producing and selling $100 million per year, generating an EBIT of $9 million.

The base business case of operating at a 60 percent OEE is compared to the same company operating at a 66 percent OEE. First, comparing the reduction of direct labor’s impact to operating income—a 21 percent improvement in EBIT; second, comparing the impact of increased sales to operating income—a 62 percent improvement in EBIT. Machine performance is always in comparison to an ideal machine—specifically a machine which always operates at maximum speed and with a quality rate of 100 percent. OEE is determined by losses in availability, performance, and quality.

The OEE indicates how effectively a machine is being used compared to the ideal machine (OEE = 100%). World class OEE is considered to be 85 percent, made up of 95 percent each of availability, performance, and quality.

Specific measurable results can be realized from OEE technology solutions while it remains a simple and easily understandable tool for improvement.

• OEE solutions automatically and quickly identify the problem (make them visible) • Prioritization of processes to improve becomes clear very quickly • The ability to make well-founded choices for specific improvements is factually (data) based • OEE increases are a direct result of the

18

www.bus-ex.com NOVEMBER 10

improvements and can be observed immediately.

“Most manufacturers like to believe they are operating at a high efficiency level according to traditional methods of measurement using operator collected data,” said Rattray. “But many executives and engineers feel there is much room for improvement on the shop floor, but have difficulty getting actual data to support their case.

When using a world class metric of productivity like OEE, manufacturers often discover that they are operating at only 50 percent of operating efficiency.” By automatically collecting OEE from the machines, a company can apply the paradigm “if you can measure it, then you can manage it.”

Exposing the plant team to the three components of OEE—quality, performance, and availability— they become able to focus on the most critical issues that produce real benefits for the company.

When OEE data is captured directly at the machine, the concept also becomes accessible to the machine operators (the employees who have the most to gain from tracking and improving the effectiveness of the operating equipment).

OEE and lean Blount is a discrete manufacturer specializing in chain saw components. At its plant in Guelph, Ontario, the company operates a 1,200-machine facility and serves a global market. Manufacturing executives were looking for a performance

Operations

management solution to support the company’s lean initiatives and needed to find a means to improve production reporting accuracy, reliability, and frequency.

The company had a particular machine that was only performing at 30 percent OEE, backlogged with thousands of parts, downstream production starved, a classic bottleneck affecting overall plant production.

Blount sought a technology solution to help identify the exact cycle time of the machine and gain insight into the process flow (as well as the decision-making flow). Memex Automation offered OEE quantification metrics directly at the machine through hardware and software. Within 48 hours of the implementation the manufacturing engineers were able to reduce waste relative to downtime, labor, energy and raw materials and

percent, and was more than paid for by saving the cost of buying new machines and the huge extra benefit of not having to expand the plant.

At the end of every shift, employees would physically count the number of parts produced and enter the figures into a spreadsheet manually. By automating the process, accurately, direct from the machine, the operators were freed to do other tasks.

“To stay competitive, we needed to invest in lean technology to provide customers with the best possible service,” said Graham Whitelaw, president of Rose Integration Ltd. “Since implementing the OEE solution we have clearly identified the root causes associated with unplanned downtime and as a result we were able to reduce total downtime by 25 percent.

We also improved our material flow by lowering

“Many executives and engineers feel there is much room for improvement on the shop floor, but have difficulty getting actual data to support their case” increased OEE by 100 percent. The technology enabled real-time production reporting for more reliable and accurate data as well as significantly increasing visibility into day-to-day operations with a resultant benefit of increased collaboration between operators, engineers and production.

The primary challenge was to eliminate aspects of the manufacturing process that did not add value to customers. The application of lean principles, including value stream mapping, together with accurate OEE data, was central to the success of the project.

In another case, excessive waste resulting from unplanned downtime and over-consumption of raw materials necessitated drastic changes at Rose Integration Ltd., a Carleton Place, Ontario precision machined components manufacturer. Based on historical data, annual unplanned downtime amounted to 25 percent of the aggregate of all production lines.

Taking the cost of labor, quality, and lost production time into account, the shortfall represented hundreds of thousands of dollars in lost opportunity.

Over and above the cost of downtime, waste due to over-processing translated to excess energy consumption and chemical usage. While parts on the line waited to move from one process to the next, energy was wasted. The company had also grown and had run out of physical space; the project increased production capacity by 25

the incidence of machine stoppages and are better able to manage energy use and keep the costs of quality down to a minimum. The ROI on implementing this solution over all the machines had a payback of less than three months.”

In Progressive Inc.’s Arlington, Texas facility, realtime reporting accuracy and reliability gave way to a number of other capabilities. Automatic event detection and escalation allowed supervisors and managers to keep on top of issues as they arose, rather than after the fact. Better product quality resulted from more efficient use of materials; total operational visibility into production provided managers with access to decision support information from anywhere in the plant.

“Not all OEE technologies are created equally,” said Rattray. “Many are inefficient manual systems, involving operator input on a clipboard, re-keying into a spreadsheet. An intelligent performance management system getting signals direct from the machine is designed to increase operational efficiency, accuracy, improve quality, and drive higher levels of performance in manufacturing and other production operations.”

Thomas R. Cutler is president & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., and founder of the Manufacturing Media Consortium of journalists and editors writing about trends in manufacturing. www.trcutlerinc.com

NOVEMBER 10 www.bus-ex.com

19

Rolling

fo

The traditional by the wayside financial foreca the budget pl

20

www.bus-ex.com NOVEMBER 10

Supply chain – forecasting

orecasts

once-a-year budget is quickly falling e as a key management tool. Rolling asting can take the ambiguity out of lanning process, says Jason Webster

N

o doubt about it; financial forecasting is a perilous task, yet budgetary accuracy remains a consistent top priority concern of most CFOs...and with good reason, since the role of financial forecasting has never been more critical.

In today’s business environment, technological developments have created new opportunities for expansion, but with new opportunities come new challenges. As competition intensifies, businesses are under increasing pressure from shifting customer expectations. Combine that certainty with the unpredictability of data and an economic “perfect storm” could be brewing.

NOVEMBER 10 www.bus-ex.com

21

But rolling financial forecasting can provide a significant instrument to reduce that uncertainty; therefore businesses should arm themselves with as much knowledge about this fundamental component as possible and come to terms with the probability that “old school” forecasting methods may be exercises in futility.

As Jack Welch said in his powerhouse book Winning, “not to beat around the bush, but the budgetary process at most companies has to be the most ineffective practice in management.”

Corporate performance management is no longer a mere buzzword—it is a reality at leading and upwardly mobile organizations and is fast evolving into a core discipline.

The result is better insight, tighter management discipline, and greater forecast accuracy, but to achieve these ideal long-term goals, fiscal planning must include changes to the traditional budget, financial reporting and target-setting.

22

www.bus-ex.com NOVEMBER 10

“A rolling fore and those in t the gap betwe

Supply chain – forecasting

ecast is a combination of customary expenditures, action plans in progress the pipeline. It is a principle that allows companies the capability to close een their operational budget and their strategic plan�

NOVEMBER 10 www.bus-ex.com

23

No longer can companies count on internal historic performance as the core metric for future results inasmuch as the best predictors of performance—financial, sales and supply chain—are often external to the organization.

And that is why the traditional once-a-year budget, which typically requires two or three months of time and effort to accomplish and provides precious little actionable value, is quickly falling by the wayside as a key management tool.

Planning, divorced from the real world, can have little value, but many organizations fail to grasp this insight. The rolling forecasting process can serve as a vehicle to increase confidence in decisions made by management since it takes a rational view of potential financial outcomes based on available information. In other words, “planning” is designed to meet some predefined and agreed upon objective, while “forecasting” seeks to understand the impact of events on the likelihood of achieving the objective.

The rolling forecast methodology is a more realistic planning model since it helps to determine the best methods to integrate a company’s internallydriven data for subsequent budget calculations.

Let’s look at it in terms of a GPS. If your GPS indicates it will take an hour to drive from point A to point B and you decide

24

www.bus-ex.com NOVEMBER 10

“The budget

Supply chain – forecasting

to “beat it” by driving faster, you’ll be in for a surprise—the GPS will adjust to your new speed and you will still arrive at the time of first indication.

The GPS “forecast” is the planning road businesses should travel more often. Constant communication translates into predictability and ultimately into fewer surprises, which is the very definition of the rolling forecast.

based on the most current data and eliminates the many and varied details that ultimately have little or no bearing on business drivers.

And since the rolling forecast provides 12 to 24 month cash projection, the necessary data for borrowing and debt reduction plans and/or potential funding sources for capital or personnel requirements is always at hand.

ary process at most companies has to be the most ineffective practice in management” Whereas the traditional or static annual plan locks a budget in for a year, the rolling forecast approach decreases management’s burden to “crystal ball” the future; this methodology projects performance out over one to two years on a monthly basis, allowing all levels of an organization to illustrate variances in their projections.

That said, it must be noted that financial forecasting is not about predicting and controlling future outcomes; its purpose is to provide the tools for appropriate decision-making that will help shape future outcomes.

A rolling forecast typically looks ahead four to eight quarters into the future and can establish a practical and functional information system for CFOs and other senior management. It provides a continuous or “rolling” picture of all aspects comprising a company’s current, short-term and longer-term financial outlook and is not encumbered by the narrow focus of a calendar or fiscal year viewpoint.

In a nutshell, a rolling forecast is a combination of customary expenditures, action plans in progress and those in the pipeline. It is a principle that allows companies the capability to close the gap between their operational budget and their strategic plan.

One of the fundamental elements of the rolling forecast is an understanding of key business drivers within an organization. As these drivers are updated, changes in financial projections are subsequently reflected, thereby allowing company executives to perform the appropriate analyses to modify crucial driver assumptions.

Consistently up to date, the rolling forecast process has an eye on continuous business management as opposed to annual results.

Moreover, it allows management to make decisions

It should be noted that in order to be effective, a rolling forecast must have a clear long-range “attitude” and inspire executive level personnel to look beyond short-term goals and instead focus on longer-range company objectives. To accomplish that target, rolling forecasts should be performed with an advanced level of summarized detail in contrast to giving credence to monthly budgetary anomalies.

A rolling forecast must also be modeled with appropriate operating metrics and parameters and not with template updates that utilize previous years’ operational statistics. These metrics should transition an organization’s strategy into observable outcomes and allow performance to be measured against purposeful goals.

In addition to grasping a more realistic handle on financial projections, the implementation of a rolling forecast can result in other company-wide achievements, including elimination of the cost and disruption of annual static planning sessions and the ready availability of a future forecast should a lender, shareholder or potential merger partner require that information.

The rolling forecast approach is a model for reliable results that in turn will provide actionable information… to the right people…and in a timely manner. It is an opportunity to replace the traditional “set in stone” budget with a constant changing discipline.

Jason Webster is CEO and co-founder of Archetype Consulting Inc, a leading management consulting firm providing CFO, business analytics, data architecture and infrastructure services for clients throughout the Northeast. He is a highly regarded and sought-after speaker on corporate performance management and finance transformation. For more information call 617.301.8366 or visit www.archetypeconsulting.com

NOVEMBER 10 www.bus-ex.com

25

Engage

26

www.bus-ex.com NOVEMBER 10

Strategy: Dealing with change

people For 35 years, Chicago, Illinois–based consultant Richard Axelrod pioneered and championed the use of employee engagement to effect large-scale organizational change. He believes that times are different now. To achieve change and to thrive in today’s marketplace requires maximizing employee engagement more than ever before. It’s a matter of survival

I

n times past we’ve seen or heard about a government official, corporate president, war hero, John Wayne, Moses, or bold CEO who leads a turnaround. The story is always the same. The heroic figure, because of insight, charisma, and leadership skills, is able to persuade a reluctant group of people to do something they might otherwise not want to do. However, recessions leave no room for leadership and management prima donnas, expensive consultants, and diverse organizational efforts with global integration of outsourced multinational workforces.

NOVEMBER 10 www.bus-ex.com

27

In his latest book, Terms of Engagement, Richard Axelrod says that to survive and thrive in times of economic downturn, all energies must be applied to recognizing how to get the absolute maximum quality and productivity out of the people you have.

First, employees at all levels can make enormous contributions toward improving organizations.

Second, without the support and commitment of employees at all levels, significant organizational change is impossible.

Fairness provides an ethical foundation for change. It produces trust and confidence in both the change process and those leading it. It is a universal principle that speaks to the human spirit, the desire to have a say, and the desire to shape one’s own destiny.

These principles and the three key leadership practices of honesty, transparency and trust combine to form a new basis for a system that governs how all work is done in the organization.

“One benefit of engagement is that if the leaders stick with the principles, they will be equipped to deal with changes they don’t even know are coming” He offers up a new paradigm in change management, one that calls for designing work with engagement built in. Axelrod boils it all down to four key activities: 1. Widen the circle of involvement. Include all the stakeholders from inside and outside the organization. Mere buy-in is no longer an acceptable goal. You must move toward deeply engaging people in the change process from the beginning, creating a critical mass of energetic participants who design and support the necessary changes.

When you widen the circle of involvement, you go beyond the dozens who are typically involved in current change practices and instead involve hundreds, even thousands, of employees.

2. Connect people to each other. Use a variety of dialogue methods and techniques. When people connect with each other and to powerful ideas, they generate creativity and action. Barriers to the flow of information and new ideas crumble as people forge links with others. Work also flows more smoothly because people learn how what they do fits into the larger whole and how they can access needed resources.

3. Create communities for action. Create new forums for people to have a voice in change that impacts them. When we create community, we move beyond a group of people who may have personal connections with each other. We create a group of connected people who have both the will and the willingness to work together to accomplish a goal that has meaning for them.

4. Promote fairness throughout the process.

28

www.bus-ex.com NOVEMBER 10

Using this system can be very difficult for many managers who have been with the organization for a long period of time. It means making a change to how things have been done. It means committing to a process that puts an end to the few deciding for the many.

Axelrod finds considerable support for the engagement approach in the newest breakthroughs in neuroscience, which help explain how the old change management actually works against creative problem solving. Simply put, there are two human responses: we move away from threats and we move toward rewards. When the threat response in the brain kicks in, creativity and innovation decrease. When the reward response in the brain kicks in, creativity and innovation increase.

“Engagement sets the path for the future of the organization,” Axelrod says. “Companies have to involve more people and give them a voice in what’s going on.” There are a variety of ways to increase engagement, including in-person meetings and Internet and social media technologies. You can hold large group conferences with workshop-type sessions. You can also carefully build and deploy Internet and social media systems that engage people in real time.

It is important to include people from all levels and functions and other people who are important to your business, such as customers and suppliers. Pay attention to what people are saying and be responsive to the ideas that come out of the dialogue and the feedback the company is receiving.

Strategy: Dealing with change

“One benefit of engagement is that if the leaders stick with the principles, they will be equipped to deal with changes they don’t even know are coming,” Axelrod says. “What you’re really doing is building the capacity for real change in the organization. The lasting benefit is that people at all levels are prepared to deal with change.”

The benefits of engagement are documented and significant. In an engaged organization: • People grasp the big picture, fully understanding the dangers and opportunities.

• There is urgency and energy as people align around a common purpose and create new directions.

• Accountability distributes throughout the organization as people come to understand the whole system.

• Collaboration across organizational boundaries increases as people connect to the issues and to each other.

• Broad participation quickly identifies performance gaps and their solutions, improving productivity and customer satisfaction.

• Creativity is sparked when people from all levels and functions, along with customers, suppliers and important others, contribute their best ideas.

• Capacity for future changes increases as people develop the skills and processes to meet not just the current challenges but future challenges as well.

“The bottom line for companies and organizations dealing with change and trying to survive is this: you have to engage your people, or die trying,” says Axelrod.

TERMS OF ENGAGEMENT: New Ways of Leading and Changing Organizations, by Richard H. Axelrod, captures lessons learned during 35 years of helping management teams develop their business strategies.

For more information visit www.axelrodgroup. com or www.everydayengagement.com.

NOVEMBER 10 www.bus-ex.com

29

Build

A long-range expansion and modernization plan continues to take shape at T Keith Regan learns how a new Regional Cancer Center and a fully redevelop are part of a larger plan to mode 30

www.bus-ex.com NOVEMBER 10

The Ottawa Hospital

ding health

The Ottawa Hospital (TOH). ped Emergency Department ernize and expand services

for betterÂ

T

he hospital is one of the busiest in Canada, servicing more than 125,000 emergency department patient visits, 6,800 births, 34,000 surgeries and 46,000 patient admissions during 2009, while bringing in more than $50 million in external research funding and training almost 2,000 nurses and more than 1,000 medical students, residents and fellows.

Building the bricks and mortar to support that level of work in an environment that allows for maximum efficiency and the most modern techniques both in delivery of care and handling of administrative responsibilities has been the mission of the hospital’s planning and facilities department since TOH was formed through the merger of four hospitals in 1998.

NOVEMBER 10 www.bus-ex.com

31

The Ottawa Hospital

Fleming Communications Inc. (FCi) Fleming Communications Inc. (FCi) provides telecommunications and integrated security system design, installation and maintenance to FP 500 companies, healthcare providers, governments, and educational institutions throughout Canada.

FCi’s ownership is a unique approach to delivering personalized service based on a proven

partnership

concept.

Each

of

our

business partners is established within FCi as an independent business entity dedicated to specific customers and their requirements. Accountability for the customers’ service begins and ends with one particular team of technical representatives.

This concept promotes an increased sense of pride, passion and ownership for the quality of work, operations and total customer satisfaction throughout the entire service cycle.

Over the last decade, TOH has implemented approximately $850 million of development across its three campuses. In the final phases of the current 10-year development strategy, TOH will be completing in December 2010 a $175 million expansion of its Regional Cancer Center.

According to Cameron Love, vice president, planning support services and clinical programs at TOH, the Regional Cancer Center project is an innovative operational and development model that includes the expansion of the base center at the General Campus of TOH and the development of a satellite site at the QueenswayCarleton Hospital, a local community hospital. “It will be a fully integrated, state-of-the-art Cancer Center program, with multiple treatment delivery sites integrated with a comprehensive academic education and research program,” Love says.

In addition, a $20 million Emergency Department project is under way, and the hospital recently opened one of the largest specialty medical education facilities in Canada, a 20,000-squarefoot state-of-the-art Skills and Simulation Center.

The patient-focused investment is being matched

NOVEMBER 10 www.bus-ex.com

33

with extensive work to expand the hospital’s research capabilities, including a $25 million Clinical Epidemiology Center to be completed in fall 2011, an $8 million Vision Research Center expansion project to be completed in winter 2011, and a $12 million Cancer Research Center to be completed in November 2010.

Shepherding the development plans and implementation is the hospital’s planning team, which Love heads up and which includes project managers who work closely with clinical experts during the design and construction phases. “There is a lot of emphasis being placed on replacing and updating older equipment and infrastructure and making sure we’re employing the latest technology wherever possible,” says Love. On the cancer center alone, for instance, a team of 80 healthcare professionals, including doctors, nurses and technicians, was consulted as the facility was designed. The result is a state-of-the-art facility with new technology and equipment, such as the new Tomotherapy and Cyberknife suites, which provide warm, compassionate systemic and radiation treatment environments for patients to receive the best possible quality of care.

“Compared to what the current facilities have to offer,” says Love, “the end result is a dramatically improved patient care environment incorporating comforting finishes and features built around a new care delivery model based on new clinical standards.

“Everything we’re doing is strictly focused around creating state-of-the-art but comforting environments for our patients,” he adds.

“Infection control and safety features of the new environments are being dramatically improved, and it’s all being done around new designs that allow for better flow and better outcomes.”

The funding for these projects comes from the Provincial Government and the community, through Foundation fundraising events. The Ottawa community has been extremely supportive of TOH’s development plans, with the first campaign raising over $100 million and the second campaign well under way with a target to raise an additional $60 million.

While not seeking LEED certification, the projects implemented to date have incorporated elements of LEED criteria. However, TOH has developed and implemented an Energy Management/Greening plan over the last five years. The backbone to this plan was an $18 million energy management

34

www.bus-ex.com NOVEMBER 10

The Ottawa Hospital

“There is a lot of emphasis being placed on replacing and updating older equipment and infrastructure and making sure we’re employing the latest technology wherever possible” project with Honeywell, which included updating the campuses with more efficient lighting, heating and cooling controls and infrastructure, and improvements to the water management system. The project achieved utilities savings of approximately $2.7 million annually through a dramatic decrease in natural gas and electricity consumption. In addition, TOH has implemented a variety of waste management projects including a comprehensive recycling program and the installation of hydroclaves to more effectively manage medical waste.

As new projects come on board, TOH moves closer to a paperless medical environment as well.

Working with partners such as Oracle and IBM,

the organization is moving aggressively toward electronic medical records across the hospital.

Looking forward, TOH has developed a new 2020/21 Master Plan, which includes the development of a new Civic Campus, Maternal Newborn Center, Specialized Rehab Center, Cardiac Center and an expanded freestanding Ambulatory Care Center. The planning is in the early stages of programming and design, and it will take several years to move through the planning process.

“The end result will be a stronger healthcare delivery system for our patients,” notes Love. “A lot of planning and attention to detail has gone into making sure that we arrive at that outcome.” www.ottawahospital.on.ca

NOVEMBER 10 www.bus-ex.com

35

Sci

serv

Te ma apply ensure t carefully a tim

36

www.bus-ex.com NOVEMBER 10

Anapharm

ience,

vice and customization

eamwork and close project anagement help Anapharm its resources in ways that that its client’s studies are y planned and executed in mely and cost-efficient way

W

ith its headquarters in Quebec City and clinics in Toronto and Montreal, Anapharm performs earlyphase drug development for its clients in the pharmaceutical, biotechnology and generic drug industries. The private company offers various bioanalytical laboratory services, as well as Phase 1 clinical development and bioequivalence services. It also has access to a global network of resources for Phase 1 to Phase 4 consulting and clinical drug development through its parent company, New Jersey– based PharmaNet Development Group, Inc. Dr. Robert Massé heads Anapharm’s Bioanalytical Division as vice president at its Quebec City and Montreal sites. Beyond managing that division and being responsible for its profitability, his primary responsibilities are to establish strong working relationships with clients to ensure that the bioanalytical aspects of their drug development programs are met both from quality and timeline standpoints; maintaining and improving

NOVEMBER 10 www.bus-ex.com

37

Anapharm

Gamma-Dynacare Gamma-Dynacare has a history of performing both central and local clinical trial laboratory testing for pharmaceutical companies, CRO’s and physicians across Canada. It has developed and utilizes sophisticated instrumentation systems and protocols for collection, transportation, testing and reporting of results customized to suit the sponsor needs. Gamma-Dynacare and its affiliate LabCorp of the US are able to perform international clinical trials.

namely cancer, cardiovascular diseases, endocrinology, CNS and immune diseases in which small synthetic molecules, biological molecules and vaccines can be investigated.

Client categories include pharmaceutical startups, all sizes of established biotech companies, large pharmaceutical companies, generic companies and biosimilar companies, “which develop a similar copy of biological molecules that are already on the market. That’s an emerging area of the pharma industry that we’re seeing increased interest in these days,” Massé says.

If you’re a drug company, he notes, and the development of your drug is critical to the financial well-being of your company, you will choose an

“If there’s no challenge in life, there’s no spark that makes you wake up in the morning with the craving to achieve better every day” Anapharm’s leadership position in bioanalysis by fostering the implementation and use of innovative technology platforms to achieve the company’s business development initiatives; and establishing close business relationships with suppliers, “because some of them, for example, work at developing new technologies that could meet our specific needs and those of our clients,” he says.

“Essentially, we support our clients in the early stages of the development process of their candidate drugs,” Massé continues, “where the tolerance and safety of the drug at rising doses in healthy volunteers is assessed to understand the factors controlling systemic exposure in humans [pharmacokinetics] and to prove in a patient population that the drug works as planned.

In that context, we provide services such as clinical research and bioanalytical services to bring our client’s drugs to their next stage, which means helping sponsors to bring their molecule from preclinical development, to early clinical development, to full clinical development and ultimately approval to market.”

It may be inappropriate for some drug candidates to be tested in healthy volunteers (for example, cytotoxic or radiopharmaceuticals used in chemotherapy), and such clinical testing would therefore begin in a carefully selected target population.

Anapharm performs clinical research services in most therapeutic areas of drug development,

early-stage clinical developer that will provide the quality you expect within the time frame you need, “since quality and time are of the essence in the pharmaceutical business. The first company to file for a given new generic drug or a unique new chemical entity or biological compound might capture a significant share of the market in the therapeutic application of interest.”

Developing a drug in the early-phase stages is a complex process. First, in vivo efficacy has to be demonstrated in animal models or target cellular organisms if it is an antibiotic or antiviral compound.

By providing bioanalytical support in preclinical pharmacokinetic and toxicokinetic studies, Anapharm contributes to the assessment of the “druggability” of drug candidates. In that context, Anapharm provides its clients with bioanalytical data that helps them determine whether their drug is developable. Although preclinical studies may prove that a drug candidate displays therapeutic efficacy in disease animal models while showing an adequate safety profile, an Investigational New Drug (IND) application must be filed if the drug is to be marketed in the US. The IND requires further data concerning metabolism, bioavailability, systemic exposure, pharmacokinetics, predicted pharmacological doses in humans, toxicity in rodents and non-rodents, etc.

Depending on the therapeutic application of a given drug, a cost-benefit evaluation may be

NOVEMBER 10 www.bus-ex.com

39

40

www.bus-ex.com NOVEMBER 10

Anapharm

required to accelerate both clinical development and regulatory acceptance. “In the area of oncology, for example, a drug that displays some toxic effects may also bring a significant benefit to patients,” says Massé. “Therefore, it would not be investigated in healthy volunteers in the clinical development phases but in patients.

Anapharm has developed expertise in Phase 1/ First-in-human studies, which are conducted under very strict medical supervision. In addition to clinical services, Anapharm also provides ancillary services such as pharmacokinetics, regulatory affairs, statistical analysis and clinical biochemistry services.”

Massé looks forward to the challenges his job brings daily. “If there’s no challenge in life, there’s no spark that makes you wake up in the morning with the craving to achieve better every day.

“There are scientific challenges that need to be addressed, so we work as a team within Anapharm.

Teamwork is essential,” Massé explains. “You need to work closely with your team members and empower them, so that they make proper and timely decisions when required. Each member of the team has a complementary role and is expected to be both proactive in anticipating client needs and expectations and responsive during the execution of a project. It’s important that the team concept also includes the client’s representatives.

This shows clients that they’re not just dealing with one or two company executives or managers, but that they are active members of the whole team, which is working for them to achieve their goals.

And our team, together with the client’s team, can accomplish a lot.”

Massé relies on a combination of scientific methodologies developed as per Good Laboratory Practices (GLP), compliance with related regulatory guidance, and a creative approach to

communicating with clients. “Although all clients are demanding, we have a preferred relationship with each of them because we adapt our management and communication processes to their specific needs. Some will actively participate in the resolution of scientific issues, so we don’t just perform the service; we involve the client in every aspect of our research service activities. In such an operational environment, confidentiality is crucial. In fact, it’s an ethical concept that is deeply embedded in all business relationships Anapharm has with its clients and suppliers.”

Some bioanalysis challenges are obviously more difficult than others. “For example, some drugs have a complex metabolism or specific physicochemical features that pose a unique challenge to our bioanalytical scientists. So we investigate those drugs prior to conducting internal studies to make sure all the biological and scientific aspects related to these drugs are mastered, so there are no surprises when the subjects are dosed and the samples are analyzed.”

Project management services are customized for each client, so that all project-related activities are managed by a dedicated project manager.

Therefore, the team is configured to facilitate communications, acquire timely scientific and regulatory advice, coordinate project meetings and teleconferences with key scientists, ensure that all key discussions are documented and, if asked, represent the project on behalf of the client to outside interests, such as investors, the US Food and Drug Administration (FDA) and the sponsor’s management team.

“By focusing on science, service and customization,” Massé concludes, “our resources are applied in ways that ensure our sponsor’s studies are wisely planned and executed in a timely and cost-efficient manner.” www.anapharm.com

NOVEMBER 10 www.bus-ex.com

41

Uncerta

In the current economy the one thing certain about the healthcare indust uncertainty. Paul Getty is quoted as saying, “Without the element of unce the bringing off of even the greatest business triumph would be dull, rout eminently unsatisfying.” Rob Harris reports on how National Research Cor is bringing a level of certainty to its clients in the midst of the current tur

I

n today’s economic climate, the need to maximize a product’s impact in its target market is greater than ever. With current technology, there is no shortage of information available to marketing departments; the problem is in the dissemination of all the obtainable data. How do you qualify and quantify all the relevant particulars? Marketing departments need high-quality analytical tools to help them process all these overwhelming statistics.

The goods and services that healthcare firms provide, however, require that management maintains a very high standard of care within every aspect of the organization, including the marking department.

42

www.bus-ex.com NOVEMBER 10

National Research Corp.

ainty

clarified

try is its ertainty, tine, and rporation rbulence

NOVEMBER 10 www.bus-ex.com

43

National Research Corp.

Toluna At Toluna we provide companies the ability to answer questions of their target audience quickly and efficiently. We leverage a unique approach to respondent recruitment and engagement with our online community and proprietary Real-Time Sampling methodology. At Toluna, we guarantee that the data clients receive is of the highest quality.

Unlike

other

panel

providers,

Toluna

has

developed a unique online community approach to the management of its panels. Through the use of Web 2.0–based technology, it has created the world’s first social voting community site (www.toluna.com) focusing on maximizing panelist engagement to offer increased survey responsiveness and data reliability to its clients.

quality improvement firm that offers performance measurement and improvement services to organizations and businesses specializing exclusively in the healthcare industry. NRC has an established client base of over 2,000 hospital facilities and over 6,000 long-term care providers.

With its technical innovation and the ability to perform large-scale research projects, NRC surveys approximately 2 million patients, 500,000 long-term care patients, 500,000 healthcare employees, and 500,000 senior risk assessments on an annual basis.

NRC not only offers research assistance, it also provides services in hospital governance, marketing performance measurement, and a wide array of other useful marketing tools. Founded in 1981, NRC has maintained a commitment to improving the quality of healthcare through an improvement in the patient’s experience and by improving the healthcare industry with quality performance measurement.

“With current technology, there is no shortage of information available to marketing departments; the problem is in the dissemination of all the obtainable data. How do you qualify and quantify all the relevant particulars?”

According to the Centers for Disease Control and Prevention (CDC), more than 83 percent of adults and more than 91 percent of children in the United States had some form of contact with a healthcare professional last year. This amounts to a staggering 1.1 billion people, and more than 902 million of these contacts were physician office visits.

In the US alone there were more than 116 emergency department visits, 46 million inpatient procedures performed, and over 88 million outpatient procedures performed just last year.

Healthcare is now 15.3 percent of the US gross domestic product and is expected to increase in the next few years. With new legislation regulating the healthcare industry, spiraling costs, and an erosion in consumer confidence, healthcare corporations need solid information in order to make good business decisions for their stakeholders.

National Research Corporation (NRC) is a

One of the firm’s premiere services is NRC Picker, which gives healthcare firms the analytical ability to view and understand the interactive relationship between the perceptions and experiences of employees and the patient experience. NRC believes that if you have committed employees, your organization will have better patient-centered care. Research has also shown that when patients perceive that their level of care was at a high standard, a higher level of employee performance will result. NRC Picker provides a series of modules that management can choose from based on organizational concerns or needs. At the heart of NRC Picker is its mission to bring you the unfiltered voice of the patient by removing the clutter and noise of unimportant distractions so that you may clearly hear what matters most. NRC Picker gives a Webbased set of tools to caregivers and managers to help continually improve the patient experience and analysis process.

NOVEMBER 10 www.bus-ex.com

45

46

www.bus-ex.com NOVEMBER 10

National Research Corp.

Another product NRC offers is the Illuminate program, which enables hospitals to contact every patient within 48 hours of discharge to assess any clinical or service issues the patient might have.

Illuminate has the capability to be fully operational within 30 days of the initial launch of the program. It provides communication and educational support for the organizational staff to deliver an ongoing patient outreach support and evaluation system. Illuminate has proven over time that it can consistently improve patient satisfaction, reduce preventable readmissions, reduce complaints and claims, and reduce patient and family anxiety. In addition, real-time alerts and aggregate reports are compiled by the system. The quantitative data collected can help management at the systems level to improve overall performance and assist in the employee coaching process.

NRC has recently added a new product to its line of consumer research offerings called Healthcare Market Guide (HCMG) Ticker. Ticker is a new way for organizations in the healthcare industry to gather relevant information about their local market. Traditionally, HCMG has always gathered information for an annual survey for its own corporate use. Ticker takes that information, adds the capability to perform continuous measurement possibilities, and relays this information to a usable format for local client access. With constant updates, immediate local market information can be accessed to gain new insights and help firms make important marketing decisions based on current market trends. Ticker can also be personalized to add survey questions pertaining to clients’ specific local area and includes the ability to establish online focus groups and bulletin boards. This management tool is tailored specifically for marketing departments that need a dynamic, flexible, and easy-to-use Webbased research engine.

With problems in the US economy and uncertainty in the healthcare system due to legislative turmoil, businesses are forced to invest their marketing budgets wisely. They know that their product needs to deliver a customer satisfaction index of 100 percent, must have zero defects, must have no pricing problems, and needs to maintain a reasonable profit level. Knowing that the product in the healthcare industry is the American people, the bar has to be set high when people’s lives and those of their loved ones are on the line. www.nationalresearch.com

NOVEMBER 10 www.bus-ex.com

47

Ce

Rob H to cre Farme increa

48

www.bus-ex.com NOVEMBER 10

Dakota Provisions

enter of

attention

Harris investigates how a group of independent farmers came together eate Dakota Provisions, a multimillion-dollar integrated business solution. ers with a single crop now own their own processing facility and are asing market share in their industry the good old-fashioned way

A

s the temperature starts to cool and the leaves on the trees change from green to bright orange and red, a new season begins. For centuries the arrival of autumn has been a time to harvest crops and to prepare for the cold winter months ahead. Traditionally, many cultures mark the culmination of their hard work of gathering provisions with a celebration to give thanks for the gifts of the harvest.

NOVEMBER 10 www.bus-ex.com

49

“The plant a

50

www.bus-ex.com NOVEMBER 10

Dakota Provisions

has the ability to harvest, debone and cook over 8 million turkeys per year, and the capacity to process over 320 million pounds of live weight annually�

The US is no different, with its story of the Pilgrims and the first Thanksgiving.

President Abraham Lincoln proclaimed Thanksgiving a national holiday in 1863, and in 1941 President Franklin Roosevelt fixed Thanksgiving Day as the fourth Thursday in November. Thanksgiving in America brings thoughts of family, football and great food.

Families gather around the Thanksgiving table with many different traditional foods, but there is usually one dish that’s the center of attention: the turkey.

In 2009 more than 226 million turkeys were consumed in the US alone. Nearly 88 percent of Americans surveyed by the National Turkey Federation eat turkey at Thanksgiving, and almost 736 million pounds of turkey were consumed last year during that holiday period. Since 1970, turkey consumption overall has increased 109 percent, and turkey production has increased 113 percent.

NOVEMBER 10 www.bus-ex.com

51

Turkey companies are traditionally vertically integrated and usually control all phases of the company’s operations. The different processes of the turkey-producing business, from research and development to proper breeding techniques, require many special management skills and abilities. From hatching, feeding and growing of the livestock to processing, packaging, transporting and then marketing the product— all require a special kind of company. Dakota Provisions is proving to be one such operation.

a process called Controlled Atmosphere Stunning (CAS), which modifies the atmosphere to induce a less stressful experience for the animals during the euthanasia process. This produces a much higher quality of meat because there are no broken bones or hemorrhages. Easier animal handling also produces a safer working environment, which is one of Dakota Provisions’ main corporate goals. Turkeys are cleaned using a three-stage process, with the final stage using fresh water.

The raw and ready-to-eat sides of the plant have

“Over the course of the feasibility study, it became apparent to the turkey growers that for their farms to remain in business the group would need to become turkey processors” The vision to create Dakota Provisions started in 2003 when a committee of 44 turkey farmers came together to discuss options for the best way to market their flocks. Over the course of the group’s feasibility study, it became apparent that for their farms to remain in business the group would need to become turkey processors. So in February 2004 the group, Dakota Turkey Growers, voted to invest and build a state-of-the-art facility in Huron, South Dakota. In March 2004 the group hired Kenneth D. Rutledge to lead the newly developed company, Dakota Provisions, as its president and CEO. This vision became a reality on September 27, 2007, when the new $45 million facility was opened after only 15 months of construction.

The 150,000-square-foot plant is located approximately two miles east of Huron on a 114-acre site, and it is the first full-line turkey processing plant built in the US since the 1980s.

The plant has the ability to harvest, debone and cook over 8 million turkeys per year, and the capacity to process over 320 million pounds of live weight annually. This facility can process pork, beef and chicken products as well. Today the company employs more than700 people and has sales of more than $100 million.

The Dakota Provisions plant is the newest and most technologically advanced meat-processing plant in the US today. Turkeys are harvested using

52

www.bus-ex.com NOVEMBER 10

also been designed to be completely separated for maximum food safety. The facility has the capability to produce a fully cooked product and specializes in luncheon meats and deli breasts for its supermarket and foodservice customers.

The Dakota Provisions management team is constantly looking for new ways to improve productivity and operations. Recently, approval has been given for a $1.5 million expansion of the deboning facility, with an additional $5 million worth of new cooking equipment also being purchased. In addition, management is excited about the recently acquired SAP software system, the installation of which should be completed within a few months.

With this new system, the company will be able to share communications and information among operations, supply chain, manufacturing, marketing and sales much more effectively.

However, at the heart of the company is its commitment to food safety and to quality assurance. As part of that commitment, Dakota Provisions uses the Warnex Rapid Pathogen Detection System to ensure that its products are safe. This system assesses the presence of pathogens by rapidly identifying the DNA signature of the target organism. It’s a simple three-step process that doesn’t require specialized lab training, and results can be returned within three to 48 hours. This technology gives more accurate results, is much more user-friendly, and gives the

Dakota Provisions

firm a faster inventory turnover than conventional testing methods.

Over the past 20 years the turkey industry has evolved from a single-product holiday-oriented business model into one that has a varied product line that supplies healthy items to its customers year round. However, when families gather together for the holidays, the meal just doesn’t seem right without turkey. Turkey makes the Thanksgiving meal complete, and it’s the center of attention.

Similarly, Dakota Provisions is an integrated business solution that works together making turkeys the center of its attention. www.dakotaturkeygrowers.com

NOVEMBER 10 www.bus-ex.com

53

Pub

servic

super s

Dedication to innovative lead and to its custome implementation of cost-ef Auburn Hills Department of Pub upper echelon of public servic in Michigan and nationwide, 54

www.bus-ex.com NOVEMBER 10

City of Auburn Hills Department of Public Services

blic

ce

saver

dership, to teamwork ers, coupled with the fficient IT, propel the blic Services into the ce departments both Ric Larson discovers

N

estled on a hill among pine, maple and oak trees about 35 miles north of Detroit and a short distance from the Interstate 75 corridor is the Walter G. Smith Public Services Facility, the headquarters for the Department of Public Services for the City of Auburn Hills, Michigan.

Formerly known as Pontiac Township, Auburn Hills was formed as a city in 1983. It is located in Oakland County—one of the wealthiest counties in the country—and has approximately 21,000 residents and an average median household income of $51,376, according to the 2008 Census. It is home to the Detroit Pistons franchise of the National Basketball Association, which plays at The Palace of Auburn Hills (considered by many as the top sports

NOVEMBER 10 www.bus-ex.com

55

56

www.bus-ex.com NOVEMBER 10

City of Auburn Hills Department of Public Services

and entertainment venue in the US), as well as to the Chrysler Headquarters, Oakland University, BorgWarner, and Michigan’s destination shopping mall, Great Lakes Crossing Outlets.

Ronald J. Melchert is the director of the Department of Public Services (DPS), a position appointed by the Auburn Hills city manager.

Melchert, who has had the title since 2007, is not what anyone would consider to be desultory in his approach to running the DPS or in his constant quest to cut costs, improve efficiency and save the taxpayers and the city money on the services his department provides.

terms of revenue from water billings. “It’s been on the decline,” says Melchert. “Total revenue projected for 2010 will be a little more than $5 million, and we’re looking at a projected drop for 2011 to about $4.9 million. This is due to new development and water consumption tapering off—temporarily, based on some of the new activity we’ve seen in recent months. We collect capital fees for both water and sewer connections to the system, which helps us to maintain that infrastructure for future capital improvements.

When development drops off, we lose a big chunk of that revenue. We’re relying quite heavily on just

“We collect capital fees for both water and sewer connections to the system, which helps us to maintain that infrastructure for future capital improvements. When development drops off, we lose a big chunk of that revenue” The DPS’s main function is the operation and maintenance of the city’s physical infrastructure, which includes 24 buildings and facilities, 193 acres of parks and grounds, 71 miles of major and local roads, 180 miles of water main and 118 miles of sanitary sewer main, 2,580 storm drains, and street lighting, as well as providing support for all business, residential, social and recreational activity within the community.

Melchert oversees 43employees and a fleet of 120 vehicles, with a budget of approximately $24 million and annual total city revenues exceeding $54 million. His team has shaved almost 15 percent off the budget, in part by taking advantage of TIFA (Tax Increment Financing Authority) Funds, created in 1980 by the State of Michigan to help eligible cities stop the decline of property values in specific areas. The projects in a TIFA development plan must be public facilities and include streets, plazas and pedestrian malls as well as improvements to furniture, beautification, parks, parking facilities, schools, libraries and other public institutions.

Bridges, lakes, canals, utility lines, pipelines and other similar facilities are also eligible.

The economic crisis that has befallen Michigan (and the nation) has affected the department in

our water and sewer rates at this point for revenue.

“We project more water revenue in 2012 due to water rate increases,” Melchert continues, “which will keep our fund solvent, as well as keeping up with the City of Detroit rates, where we purchase our water.

We’re hopeful that stimulus grants from the American Recovery and Reinvestment Act and raising the rates appropriately will keep our head above.”

Under the watch of Melchert and his team, DPS has made significant investments in information technology to improve the department’s ability to provide better service to its residents and also save money. One particular investment is the water meter reading system. “We used to have three employees that would physically read ten days out of each month—30 days of reading,” says Melchert. The department replaced that outdated system with radio frequency reading— better known as drive-by reading or automatic meter reading (AMR)—in which a reading device is installed in a vehicle; the meter reader drives the vehicle while the reading device automatically collects the meter readings. The DPS was then able to use one employee to compile the readings for the entire city in only a day and a half to two days, which freed up the other two employees to

NOVEMBER 10 www.bus-ex.com

57

focus on preventive maintenance.

Dave Harran, manager of public utilities for Auburn Hills DPS, is improving upon this system.

“Dave is implementing a radio frequency system that builds upon the system we already have,” says Melchert. “It will be a fixed network reading [a permanently installed network to capture readings via laptops] that takes the reader out of the field to focus on meter maintenance, making sure that the old meters are replaced in a timely fashion and insuring optimal revenue from those meters, which in turn will provide the customer with accurate billings. They deserve that, and we deserve to receive the revenue we should be getting for the services we provide.”

When the system is fully implemented, the cost savings should top $50,000 annually due to the reduced labor associated with meter reading and

58

www.bus-ex.com NOVEMBER 10

responding to consumer concerns.

Melchert stresses the importance of teamwork in his department and is quick to point out the role that others play in getting the job done. “I have the daily support of my colleagues, including a facilities and roads manager, fleet manager, public utilities manager, deputy director and crew leaders in each division,” he explains. “We focus on a vision that becomes the authority that drives us. We’re not an autocratic type of management system; we’re very open to new ideas, and we expect people to lead and manage at all levels.

Our DPS employees are the experts in the field.

When they come across a problem, we look to them to come up with a solution to solve it and incorporate it into their workday. When everybody has the same vision in the organization, any decisions they make, as long as they have

City of Auburn Hills Department of Public Services

“We focus on a vision that becomes the authority that drives us. We’re not an autocratic type of management system; we’re very open to new ideas, and we expect people to lead and manage at all levels” that goal in mind, will minimize mistakes. This approach has saved the city millions of dollars over the last two years,” he says.

Melchert’s philosophy stems in part from the fact that the City of Auburn Hills, including the DPS, is being trained in the “high-performance organization” model, a leadership development curriculum for current and aspiring government leaders.

What’s next for the Auburn Hills DPS? “We’re

currently installing a computerized HVAC energy management system to help us with climate control in public facilities, packaged with energyefficient lighting. We expect to save $17,300 annually in energy costs. Also, we’re researching the feasibility of incorporating alternative fuel vehicles into the city fleet, which is consistent with the city’s green initiatives,” concludes Melchert. www.auburnhills.org

NOVEMBER 10 www.bus-ex.com

59

Across Alberta, the foundations for future education are being laid—but it is no easy task. Lee Davis, project director for the Bird-Graham Schools joint venture, speaks to Andrew Pelis about the challenge to coordinate ten busy building sites at the same time

T 60

he ability to multi-task is something all business leaders are familiar with. However, Lee Davis, project director for the Bird-Graham joint venture to build schools in Alberta, takes multi-tasking to a new level.

At present, Davis is overseeing the design and construction of ten schools across the province, all being built simultaneously but at different stages—and with different designs.

www.bus-ex.com NOVEMBER 10

b

k

Bird-Graham Schools

Building

blocks of

knowledge NOVEMBER 10 www.bus-ex.com

61

62

www.bus-ex.com NOVEMBER 10

Bird-Graham Schools

The initiative, commissioned by the provincial government of Alberta, aims to provide a second Alberta Schools Alternative Procurement project (ASAP II) through a public-private partnership (P3) resulting in 14 new schools in the Calgary and Edmonton Capital regions.

The project has been revised to include a combined procurement approach that will result in ten elementary to junior high and middle schools delivered through a P3 arrangement and four high schools delivered through a design-build approach.

Davis, a 30-year veteran of the construction industry, is ideally placed to head up operations, as he was the regional construction manager on the first round of construction (ASAP I) in Edmonton.

“I am a licensed professional engineer, and have been involved in the construction industry for over 30 years, 11 of those years spent in project management,” he states. “This project involves the construction of ten schools between Edmonton and Calgary, and the joint venture between Bird Construction and Graham Construction—the company I work for—is responsible for the design and construction phase, including obtaining all relevant permits.”

The joint venture was part of a bidding process that involved a Request for Qualifications (RFQ) process, Request for Proposals (RFP) process, and finally an award process established and implemented by the province. Of relevance to this process is the expectation that the project would incorporate LEED Silver standards.

In the meantime, despite the initiative being launched in November 2008, at a time when the global financial crisis was taking hold, funding was made available by many of the same institutions that had lent money on the first schools project.

Davis says the overall construction project is costing $253 million, which represents a savings to the province of $103 million compared to conventional contracts, and with 14 separate contracts, the challenge has been to put together the financing.

“There is a mix of schools—we’re not building any of the high schools but are building middle schools and elementary junior high schools,” he explains. “The sizes will vary from 3,800 square meters to 4,500 square meters.

“All of the sites are being delivered to Silver LEED design,” he continues. “Even though some of the initial construction costs may be higher

NOVEMBER 10 www.bus-ex.com

63

“All of the sites are being delivered to Silver LEED design.

Even though some of the initial construction costs may be higher in order to achieve this, the lifecycle costs to operate the schools will be reduced” in order to achieve this, the lifecycle costs to operate the schools will be reduced. Other examples of how LEED affects construction costs would be the increased costs to complete the building envelope; however, these costs can be offset through more efficient design of the mechanical and electrical systems. For example, all the classrooms are built on the perimeter of the building, with windows letting in natural light, while daylight sensors ensure that when sufficient natural light is available, the sensors shut off one bank of lights nearest to the windows, providing more energy savings. The mechanical system is a combination of radiant heat and a displacement ventilation system that provides air exchanges at a constant volume throughout the day. This results in a more efficient heating system by ensuring the warmer air is circulated throughout the room, virtually eliminating the stratum of higher temperature toward the ceiling produced by a conventional system.”

Davis suggests that one of the main challenges faced with LEED can be the materials required to be used. “Not all, but certain points in the LEED system require the use of specific materials that must be provided within specific distances from the project site and can be required to contain specific amounts of recycled content. Our LEED coordinator oversees this aspect, but it can be a challenge. For example, the plywood that we use usually contains formaldehyde used in the manufacturing of the product, but for LEED the wood products must be formaldehyde-free.”

These challenges are par for the course at Graham, where Davis says there are now over 100 employees that are LEED certified. They work closely with the maintenance team, who will ultimately have responsibility for the buildings over the 30-year period of each lease.

“Throughout the ten schools we will use the same manufacturer for each of the major mechanical

64

www.bus-ex.com NOVEMBER 10

and electrical components. For example, the boiler systems and pumps would be supplied by the same manufacturers throughout the project, meaning that things can be coordinated more easily both now and in the future,” Davis affirms.

Despite the one-manufacturer approach, the schools are not all identical, and Davis says that this has presented its own set of challenges. “The biggest issue is communication, and we have to ensure that information is made available to everyone. So, for instance, if a change is made to one of the school projects, given that several schools may have the same design, this will need to happen on the others that are impacted. A single change could impact anywhere from one to all ten sites.”

It was April 2010 when the Bird-Graham joint venture was awarded the contract, and work began on the first two schools in mid-July. Since then another seven schools have commenced construction, and Davis reports that the first two buildings are now in the foundation stage.

All the schools will have modular classrooms that are built by another of the contractors and are shipped to each site, where they are installed and sit on screw piles.

Davis oversees the ten existing sites with a network of project managers responsible for each individual school. “Each site currently has an average of ten sub-trade staff and roughly four staff from Bird-Graham; at peak this will exceed 60 workers on each site, and every site is responsible for its own construction schedules.

While the sites are split—with Bird Construction looking after some schools while Graham does the same thing—all report back to me.”

Similarly, safety is monitored closely, and a fulltime safety officer does the rounds from site to site.

However, Davis says that computers have played a major role in ensuring he can keep a grip on all activities. “They’re a huge part of the process,” he admits. “Graham has its own IT department,

Bird-Graham Schools

“The mechanical system is a combination of radiant heat and a displacement ventilation system that provides air exchanges at a constant volume throughout the day, resulting in a more efficient heating system” and around 15 years ago we built the system that we’re using today, which incorporates estimating, safety, accounting and project management. It’s a system that works well and has been adopted by Bird for this project.”

With work well under way now, Davis says that the project remains “well ahead of our contractual completion dates and within budget too,” with a planned completion date of mid-May 2012.

Ultimately, the work will leave a lasting

legacy across Alberta and will cater to 7,950 children at a time. But the final word must go to Education Minister Dave Hancock, who says, “These schools will serve as the hub of the communities for many years and provide students exceptional learning opportunities.

Not only are we building centers for excellence in teaching and learning, we’re strengthening growing communities and community spirit.” www.b2lpartnership.ca/project-information

NOVEMBER 10 www.bus-ex.com

65

Fulcrum BioEnergy is poised to begin construction on its first facility that will produce ethanol from household waste.

Keith Regan learns how this trash-toenergy plant could be the first step toward a network of such facilities capable of producing a billion gallons a year of clean, renewable transportation fuel

W

ith permits in hand, engineering under way, and equity financing in place, Fulcrum BioEnergy is poised to start construction late in 2010 on what the Pleasanton, California, company sees as the first in a nationwide network of innovative facilities that will transform postsorted municipal solid waste (MSW)—common household trash—into ethanol, electricity and high-value chemical products.

Sierra BioFuels, as the plant is known, will be located about 20 miles east of Reno, Nevada, and will use a series of technologies and processes that Fulcrum has combined to create what it calls “intelligent biofuel”—ethanol to be used as transportation fuel that reduces dependence on foreign oil and is much cleaner to produce than traditional fuel sources. In addition, the plant will generate electricity to power the facility and high-value chemical products such as propanol, which is used as an industrial solvent and as a chemical intermediate.

66

www.bus-ex.com NOVEMBER 10

A

tras

rev

Fulcrum BioEnergy

A

sh-to-energy

volution NOVEMBER 10 www.bus-ex.com

67

68

www.bus-ex.com NOVEMBER 10

Fulcrum BioEnergy

“The Sierra BioFuels plant is on track to be one of the first plants of its kind when it enters operations in late 2012,” says Fulcrum vice president Rick Barraza. The plant is the result of work dating back to 2007, when Fulcrum’s parent company, US Renewables Group, formed the firm to make the idea of turning trash into ethanol a reality. “We’ve done a lot of work over the past several years to demonstrate that the technology is clean, reliable and economical—ready for commercial deployment.”

The plant, and others that are likely to follow in coming years, will use innovative processes to make ethanol and other commercially viable end products.

Household trash will be pre-sorted by waste service companies and brought to the plant, where it will be shredded and prepared for conversion through a gasification process that uses extremely high temperatures and high pressure in an oxygendeprived environment to create a synthesis gas, or syngas, which is made up of hydrogen, carbon monoxide, carbon dioxide and other components.

Heat produced during this first stage is used to generate steam used in the plant.

The syngas is then passed through an engineered catalyst that converts it into ethanol, which is then shipped to local markets to be used as transportation fuel.

Barraza notes that Fulcrum has done extensive pre-production work to secure long-term contracts for both the off-take of the finished ethanol as well as agreements with waste service companies to bring enough trash to Fulcrum plants to produce up to 1 billion gallons of ethanol annually. The low cost profile of the process suggests a relatively shortterm payback on invested capital. The predictable flow and low cost of the raw material will enable the company to hedge its revenue to further enhance its profitability profile.

“We have a business model that’s very attractive for ourselves and our investors, but it’s also very attractive for the local communities,” Barraza says.

Plants are being sited close to existing landfills, which in turn tend to be near large population centers, thus reducing transportation to and from Fulcrum’s plants. “In addition to new green jobs and local renewable fuel production, Fulcrum’s process produces 75 percent less greenhouse gas emissions when compared to traditional gasoline production from oil.”

NOVEMBER 10 www.bus-ex.com

69

Fulcrum BioEnergy

Thermo Scientific The next-generation Thermo Scientific Prima PRO process mass spectrometer is ideal for a range of biotechnology applications and significantly increases productivity by enabling up to 60 fermentors and bioreactors to be monitored by a single analyzer. It enables customers to track batch progress in real time, identify contamination prior to inoculation, and maximize viable cell mass to ensure an optimal path to the final product.

Not only does the Prima PRO provide rapid, lab-quality gas analysis without compromising sterility, it offers availability of 99.7 percent and has minimal maintenance requirements to reduce operating costs. Visit www.thermoscientific.com/ primapro for additional information.

The project will be one of the nation’s first large-scale commercial facilities capable of transforming everyday trash into a clean, renewable transportation fuel. Sierra BioFuels will convert approximately 90,000 tons of municipal solid waste—the amount of trash produced by a

“In addition to new green jobs and local renewable fuel production, Fulcrum’s process produces 75 percent less greenhouse gas emissions compared to traditional gasoline production from oil” Leading the team building the Sierra BioFuels plant will be the engineering giant Fluor, which was selected after an extensive review process to become the lead engineering, procurement and construction (EPC) contractor.

Fluor is currently working with Fulcrum’s team on the design of the plant and integration of the various technological components. “We had a lot of interest from firms wanting to be a part of the construction of this project,” Barraza says. “This is something new that has gotten the attention of the industry. Our management team is very excited and believes we have partnered with the right firm that in turn will bring the right people into the fold to help make this project a huge success.”

Fulcrum expects the construction of the Sierra BioFuels plant to create around 550 jobs for the Northern Nevada region, while the operating plant itself will employ between 50 and 60, with extensive automation used within the plant where possible.

city with a population of approximately 165,000— into 10.5 million gallons of ethanol and other chemical products annually, meeting the demand for ethanol in the Reno market.

Fulcrum believes the long-term market for ethanol will remain a bullish one, with federal mandates to expand the use of the fuel additive in place. And producing ethanol from trash could become a much more economic and less controversial approach than using corn or even grasses or trees as the feedstock.

Sierra BioFuels should be operating by late 2012, and by then other Fulcrum projects will be moving aggressively through the pipeline as well. “We’ll be producing the ethanol near the population centers where the demand for transportation fuels is the greatest,” Barraza notes. “The more people look at our approach, our technology and our business model, the more we think they’ll become excited about what we’re embarking upon.” www.fulcrum-bioenergy.com

NOVEMBER 10 www.bus-ex.com

71

Eyes the fut

Having digested and integrated a wave of acquisitions to broaden its p make it an even stronger force in the wireless world, Powerwave Techn eyeing long-term future growth. Keith Regan learns how operational ex supplier strategy and low-cost procurement techniques provide a solid company to have a major hand in the wireless revolution that’s still to

72

www.bus-ex.com NOVEMBER 10

sture on

Powerwave Technologies Inc.

product lineup and nologies is now xcellence, a careful foundation for the come

S

ince it was founded in 1985, Powerwave Technologies has evolved and changed dramatically along with the wireless industry itself. Originally a provider solely of power amplifiers for analog land mobile radio wireless networks and first-generation cellular systems, Powerwave executed an aggressive diversification strategy that saw it acquire a host of firms and technologies that in turn expanded the scope and breadth of the company’s product offerings.

NOVEMBER 10 www.bus-ex.com

73

Powerwave Technologies Inc.

Syrma Technology

The Santak Group

Syrma Technology has a rich legacy of providing

Our company specializes in producing precision

innovative

chain

machining components. Our services include

solutions for premier high-technology companies,

mold making, die-casting, precision machining

including Powerwave Technologies. Syrma, with

and

the additional resource depth of the Tandon Group

assembly for customers that require complete

companies, offers global OEMs unparalleled

solutions. The industries we serve include

partnership potential and the ability to rapidly

fiber optics, mobile communications, wireless

profit from the numerous opportunities afforded

communication devices, hard disk drives, and

by the emerging India market.

consumer electronics, etc.

manufacturing

and

supply

From the 1999 purchase of Hewlett-Packard’s radio frequency amplifier business to the 2004 acquisition of LGP Allgon and the 2006 purchase of filtering product lines from Filtronic plc, Powerwave impressively grew its footprint and its reach. Purchases such as that of UK-based Toracomm Ltd. helped provide it with intellectual property in the radio frequency, digital signal processing, system design and system simulation realms, while the 2005 pickup of Kaval Wireless of Ontario, Canada, helped make it a major player in the in-building wireless coverage space, which today is seen as a booming part of the market.

The buying spree left Powerwave with a much larger revenue base—and a product array that made it a favored one-stop shop for its network carrier customers. But it also left the company facing a sizable integration challenge that spanned the globe, according to chief operating officer Marvin MaGee, who has been with Powerwave for three and a half years and in the technology industry for more than two decades.

turning.

We

also

provide

integrated

“There was a lot of demand from our customers for more solutions, so we used our amplifier strength as a platform to acquire antenna solutions, filtering solutions, coverage solutions, towermounted amplifiers and even software solutions,” MaGee says. “The strategy has worked extremely well in terms of enabling us to provide a one-stop shop for operators and one of the most complete and well-integrated and consistent product and service lines that network operators could use.”

The strategy helped grow sales dramatically during the early part of the last decade, and starting in 2007, Powerwave, which is headquartered in Santa Ana, California, sought to accelerate the process of aligning culture and management teams and then drive a consistent supply chain and supplier strategy to create a single, simplified platform. Back-end systems were attacked, with a common IT platform that used standard applications suites from Oracle, PeopleSoft, Microsoft and Agile, among others, and helped support a single strategy around everything from procurement and

NOVEMBER 10 www.bus-ex.com

75

Powerwave Technologies Inc.

UTi We at UTi have been associated with Powerwave Technologies for over three years. The services we offer to Powerwave are warehousing, testing, packaging, transportation and distribution of antennas across India. This is ably supported by IT system WMS4000, which provides real-time visibility and makes the transaction smooth.

We offer these services to our clients PAN India, where we have 22 locations supported by 400 people offering forwarding by air freight, sea freight - export & import, brokerage, warehousing and distribution.

financial tracking to human resources.

“As we approached consolidation, we kept in mind the business strategy we were trying to accomplish with each acquisition,” MaGee comments. “There is always a larger business reason for it. There is the top-level value proposition around acquiring products and technology and diversifying a product line, but also a subset of skills that a company or entity brings to your operations. You may buy a company that makes filter products, but behind those products lie technical competence and market knowledge that are really the core of the competitive advantage they bring. You need to go about integrating in a way that protects that intellectual property and that brain power that made those companies acquisition targets in the first place.”

Cost-conscious sourcing strategy A major part of the integration strategy was to align the supply chain to take advantage of lowcost sourcing as much as possible. Engineering is largely concentrated in India, for instance, and suppliers are located around the world based on both quality and cost considerations.

“The site selections we consolidated to were guided to a significant degree by performance capability,” notes MaGee. “A big part of it from the production perspective is the supply chain.

We wanted to remain close to the customers we were gaining as a result of the acquisitions and keep those eyes and ears but also look at how

NOVEMBER 10 www.bus-ex.com

77

Powerwave Technologies Inc.

“We wanted to remain close to the customers we were gaining as a result of the acquisitions and keep those eyes and ears but also look at how we could gain a competitive advantage on the cost side as well” we could gain a competitive advantage on the cost side as well.”

The buying spree made it necessary to consolidate the supply chain, and through an extensive supplier selection process the supply chain was revamped to source from low-cost regions of the world whenever possible. “We wanted to protect the quality and value proposition we offer while also driving for low-cost execution capability at every turn,” MaGee says. “We feel very comfortable with the operating structure we have in place now, in terms of both cost and performance measures as well as our ability to scale.”

Powerwave uses a host of techniques to ensure its operations run smoothly and continue to improve over time, including lean—kaizen events are staged regularly at its production and assembly facilities—and six sigma.

Organic growth ahead Being able to scale quickly if necessary is critical because Powerwave believes it has itself positioned to enjoy a strong stretch of growth as consumer demand for wireless devices—and the bandwidth they demand—continues to grow in established economies such as North and South America, the Far East and Europe and as emerging nations begin to build telecommunications infrastructure that relies heavily on wireless technologies.

Powerwave, which was founded in 1985 and went public in 1996, not only helps carriers operate networks but helps address issues that are emerging as more people are adopting wireless as their first choice for telecommunications. For instance, amplifiers that help signals reach into and out of buildings are a major growth area in markets such as North America. Powerwave’s products address both traditional wireless networks as well as emerging and next-generation 4G technologies such as WiMAX and LTE. Powerwave addresses those markets with a workforce of 2,200 from 20 locations around the world, including main regional offices in

Hong Kong, Sweden and California and a direct presence in some 14 countries. It relies heavily on suppliers and contract manufacturers, performing mainly subassembly and finishing work, as well as some engineering and product design.

“Everybody in our company is excited by the wireless markets we serve, and the opportunities we find in such a fast-paced environment require a rapid response capability. We have lean pull systems in place and an integrated logistics system—all of which are critical for responding to week-by-week demand changes,” says MaGee. “Responding to growth also requires flexibility, and we spent a lot of time thinking about that when we designed our production and fulfillment network. We feel we have facilities we can scale, and we hand-picked supplier partners that can grow with us in a market that we anticipate will continue to expand for some time to come.”

Growing greener Powerwave is constantly working on new products as well as making improvements to existing technologies, using its sales and service force to return feedback that is funneled through productline-focused business units. The process starts with ongoing market analysis and an internal review that constantly seeks to balance where R&D funds are spent to maximize their value.

From there, the product development journey includes reaching out to the supplier community as well as internal manufacturing capabilities and then continues with concurrent engineering among all parties with the goal of arriving at a common platform. “From there we have what I think is a fairly standard process of tollgate checkpoints to evaluate how we are progressing through the development cycle,” MaGee says.

Alpha and beta modeling and prototyping work is done in development centers—concentrated in India—and then production ramp-up begins with pilot programs. “From a systems engineering and product requirements point of view, we really have

NOVEMBER 10 www.bus-ex.com

79

80

www.bus-ex.com NOVEMBER 10

Powerwave Technologies Inc.

tried to keep the experts with that knowledge base close to the different markets we’re trying to address. We try to make those product decisions as close to the markets as possible.”

Whenever possible, Powerwave will seek to have suppliers do the bulk of the production or enlist the help of contract manufacturers who can build specific components or platforms in a consistent way. Doing so enables the company to divert those dollars that would be spent building factory capacity into research and engineering, where the heart of its value proposition lies, according to MaGee. “In terms of investing our capital, our preference is to reserve it and expend it on higher-leverage

of our products, and that remains a constant emphasis for us at the product level.”

Dovetailing with that push for efficiency are efforts to make many of its products easily compatible with renewable energy sources, designing them to be easily integrated with supplemental energy sources, such as battery backup power, or even designing products with built-in solar panels or wind turbines to help complement main energy sources.

“We also have our own in-house green initiative that brings together all of our own efforts in the areas of building efficiencies, waste management and recycling, and our own social responsibility programs,” MaGee says. “Like most companies,

“We continue to see progressive and steady improvements in the energy efficiency of our products, and that remains a constant emphasis for us at the product level” value-added engineering and development,” MaGee says. “We’re a product and services company, and the core of our value proposition is that we have the engineering knowledge to enable customers to maximize what they are trying to do with their business by providing solutions that are best in class. Having operational excellence enables us to support that value-add by having responsive supply chain partners that can give us a technological and service leadership advantage.”

One innovation that customers crave—and Powerwave delivers—is to produce increasingly green or sustainable equipment. For instance, the company’s original main product line, power amplifiers, uses a significant amount of electricity to help boost the strength of wireless signals.

Over time, Powerwave has worked with suppliers to develop more efficient models, with power efficiency today more than double what it was a decade or so ago.

“Electricity is a large part of the expense profile and operating budget for wireless operators,” MaGee notes. “For that reason and because they all strive to be very responsible corporate citizens, they have very thoughtful green initiatives of their own in place. We continue to see progressive and steady improvements in the energy efficiency

we’re constantly evaluating how we’re running our business from that perspective.”

Thriving in a difficult year Top-line sales growth was the norm at the company as its expansion and diversification strategy dovetailed with the booming wireless space. But 2009 was a difficult year for many companies, and Powerwave was no exception. Sales fell from $890 million in 2008 to $567 million last year as recession and financial crises battered many of its customers in both the original equipment manufacturing space and network carriers themselves. Its exposure to emerging markets also meant it had to deal with significant issues such as currency devaluation as well.

“What was encouraging for us was that, given how much we had simplified and consolidated our business, we were able to reduce costs faster than revenues fell,” MaGee says. “So even though it was a very challenging year in terms of revenue, we were able to generate positive cash flow even in the face of a very tough economic environment.”

In fact, total operating expenses for 2009 were $144 million, a reduction of over 30 percent from the $212 million Powerwave spent the year before.

While the first half of 2010 has continued to face global economic issues, there have been signs of rebounding and a return of top-line revenue growth,

NOVEMBER 10 www.bus-ex.com

81

Powerwave Technologies Inc.

Stevens Global Logistics Stevens

Global

is

proud

to

provide

the

streamlined shipping and distribution services that are an integral part of Powerwave’s success.

A full service logistics company, Stevens is large enough to ship major domestic and international freight, yet small enough to create innovative Flex-Ship solutions.

Stevens Flex-Ship™ is an innovative approach to logistics that delivers customized bundling of our shipping and logistics services to solve problems and accomplish your goals. Whether you require one of our core freight services, one of our specialized services, or a customized FlexShip solution, count on us to reduce your costs, boost your efficiency, and take your business farther than ever.

as several major wireless carriers directed more of their own cash into their capital expenditure budgets for this year and going forward. Carriers such as Sprint, AT&T and Verizon, among others, are investing hundreds of millions to build nextgeneration networks capable of delivering content at even faster speeds, each seeking its own competitive advantage in the process.

“The magical user experience created by iPhones and BlackBerries drives insatiable data demands that have really put a huge strain on the capacity of network operators,” MaGee points out. “If you look at the top level indicators, it appears the capital spending budgets of network operating companies have the potential to return to their historical growth trajectories.”

Keeping suppliers on the same page Because its business model has it relying heavily on third parties to supply components and technology, Powerwave works hard to ensure that all are on the same page regarding not only current efforts but what lies ahead as well. Each year the company gathers a group of 50 to 60 of its top suppliers and key partners; this year’s event will take place in Singapore in December. “It’s a key part of our supplier strategy,” MaGee says. “We have representatives there from the semiconductor industry, electronic and mechanical equipment makers, and suppliers of logistics and inventory management services.

Those partners are a key part of our drive for market leadership and our strategy for execution.”

This year’s topics will include searching for ways to make greener products and keep costs down as well as a look ahead to the next-generation networks that carriers are seeking to build out across the globe, MaGee says. Powerwave will share its expectations for 2011, which in turn will help suppliers lay the groundwork for being able to align their own production efforts.

The opportunities abound. In emerging countries, wireless networks are often being built as a first-generation telecommunications infrastructure, with the ability to provide even far-flung and remote populations with not only voice but data services. And in locations such as North America, with 70 percent of wireless calls or data requests coming from inside buildings, stadiums and other structures today, carriers are seeking technologies to help boost signals to get them through thick walls and other structures to keep customers happy with their service, MaGee points out.

The explosion of mobile content—music, video, news and applications—is also helping to drive network operators to build capacity. With its long-term expansion and integration strategy, Powerwave is positioned to help carriers address those and other issues, and it will constantly seek to innovate to be ready for the next wave.

In addition to its products, Powerwave is aggressively growing the services side of its business as well in response to customer needs.

The company provides engineering support and design advice on how best to set up networks, including where on a network to best place equipment or how to design a network to maximize revenue generation. Post-installation work such as monitoring equipment performance and providing maintenance and upgrade support is another growth area. And before long, MaGee expects other opportunities will emerge that have yet to appear on anyone’s radar screen.

“It always seems that just as the industry gets adjusted to the current reality, another wave of technology comes along that people have a voracious appetite for,” MaGee says. “As a business we believe strongly in reinvesting the cash that we bring in. We continue to invest about 10 percent of our revenues into research and development, and we remain very excited about what we can do with that investment.” www.powerwave.com

NOVEMBER 10 www.bus-ex.com

83

Nuclear

opt

NuVision Engineering has over 40 years’ ex generation and waste cleanup, is familiar with sensitive field, and dev

84

www.bus-ex.com NOVEMBER 10

NuVision Engineering

tions

xperience in nuclear energy h problems that arise in this velops solutions to fix them

T

he United States produces nearly 20 percent of its energy from nuclear power plants and has 104 of them, mostly dating back to the 1970s and beyond. Although America produces more nuclear electricity than any other nation, three-quarters of power stations are located abroad.

China has 11 plants and a major program of construction; France generates 80 percent of its electricity needs from nuclear. This is a truly global industry.

NOVEMBER 10 www.bus-ex.com

85

“The unique thing about power fluidics is that the sludg so nothing in the system is contaminated”

86

www.bus-ex.com NOVEMBER 10

ge never touches a moving par t,

NuVision Engineering

Nuclear plants have to be not only robustly designed but also robustly maintained. NuVision Engineering was formed in 1971 as AEA Technology Engineering Services, Inc., and over the years it has delivered leading-edge technology solutions to a variety of customers including the US federal government, public utilities, international governments and a variety of domestic and international clients. In September 2006 AEA (with offices in Pittsburgh; Mooresville, North Carolina; Sterling, Virginia; and Oak Ridge, Tennessee) was acquired by London-based Vision Capital and renamed NuVision Engineering.

NuVision Engineering’s core business is to develop and deliver techniques for use at commercial nuclear power plants and or hazardous and radioactive waste retrieval and treatment. The work falls into three main segments: commercial nuclear power, government waste remediation, and the fabrication and delivery of systems. The fabrication capability was added in 2009 when NuVision acquired Mid Columbia Engineering, Inc. (MCE) of Richland, Washington, a company that over the years has diversified into an extensive range of products and services including engineering, design, fabrication, commissioning and technical staffing supporting the nuclear and other industries.

The commercial nuclear work falls into three segments, the first being new plant and qualifications. Within the plants that are being constructed around the world NuVision is contracted to do mechanical, civil, structure

NOVEMBER 10 www.bus-ex.com

87

design and engineering and component analysis needed to qualify components for manufacturing and installation.

The next segment focuses on operating plants, again involving a lot of engineering design and analysis. When a customer’s system fails they need to figure out why, so they contract with NuVision for that kind of work.

The third segment is the proprietary field services that NuVision provides for the plants.

Perhaps the biggest single problem that has faced the nuclear power industry over the last 30 years has been the degeneration of a material known as Alloy 600. When a pipe, reactor vessel head nozzle or steam generation tube is welded, industry standards demand that the weld is tested to ensure that it is sound at the time. However, as the plants operate many of these Alloy 600 locations start to crack.

NuVision developed and patented a process called MSIP (Mechanical Stress Improvement Process) as a crack mitigation solution that overcomes this intractable problem of stress

88

www.bus-ex.com NOVEMBER 10

corrosion cracking in welds. Since that time MSIP has been applied at almost every nuclear plant in the US and a great number overseas. MSIP has been applied to over 6,000 welds around the world. The process eliminates the possibility of stress corrosion cracking in welds. The best time to utilize MSIP is before a crack appears, although it can be applied successfully as long as the crack is under 30 percent of the pipe thickness.

When steam generators are replaced, protecting workers from radiation exposure and minimizing the length of the outage are twin drivers. The connecting pipes become highly radioactive, so when the steam generator is cut out, the pipes need to be decontaminated. NuVision has a proprietary technology called Sponge Abrasive Decontamination to reduce radiation levels, so that when they put in a new steam generator, the welders can work without respirators.

While the NRC oversees the commercial nuclear industry, government nuclear plants and nuclear weapons facilities have their own problems, frequently associated with old tanks that start

NuVision Engineering

Cutting Edge Services Corporation Cutting Edge Services Corporation is a specialty diamond wire cutting, drilling and specialty tool

contractor,

offering

unique

engineered

field services for concrete and metal cutting applications—both

on

land

and

undersea.

Our worldwide focus markets include nuclear customers such as NuVision Engineering as well as hydro, locks and dams, heavy industrial, decommissioning,

bridge

construction

and

undersea pipes and platforms.

to leak radioactive material into the ground.

NuVision has proprietary technologies that are

very effective at cleaning up those wastes. Power fluidics is a skid-mounted vortex amplifier system that slurries and removes the radioactive sludge for safe long-term storage. The unique thing about power fluidics is that the sludge never touches a moving part, so nothing in the system is contaminated.

The challenges NuVision Engineering faces are safety in aging nuclear plants, plant modernization and improvement, and new plant optimization.

Its solutions assess current condition, extend plant life, facilitate repairs, and validate and qualify the process. With more nuclear plants in the US a likelihood and global investment a certainty, the company is set to capitalize on its persistence in staying with its customers through a couple of decades when the nuclear industry contracted and competitors exited the business. www.nuvisioneng.com

NOVEMBER 10 www.bus-ex.com

89

Finding a

vein

90

www.bus-ex.com NOVEMBER 10

Endea to D moder old min

g

The president and COO of avour Silver Corp. explains David Hendricks how using rn exploration methods on ne properties can uncover new, undiscovered veins

Endeavour Silver Corp.

E

ndeavour Silver Corp. was founded in Vancouver, British Columbia, in 2003 by Bradford Cooke, chairman and CEO, and Godfrey Walton, president and chief operating officer, as a small-cap silver mining company. “There was a previous shell company that we re-named Endeavour,” says Walton. “We decided to go to Mexico to look for mining opportunities because at the time it was the largest silver-producing country in the world; since then it’s been overtaken by Peru.”

Both partners are exploration geologists, and they looked at several projects and set their sights on Guanacevi, the first project they picked up in November 2003. “We managed to consummate a deal in May 2004, started drilling in June 2004, and were mining by December 2004,” says Walton, “and what we like about it—and the business model we’re using—is finding properties with fully permitted plants and mills that were short of cash for upgrading, expertise and resources.

We were able to see the potential to increase those resources.”

NOVEMBER 10 www.bus-ex.com

91

They started drilling in June 2004, and by December they were driving a ramp and got into some ore in the first part of that drilling program.

“It went very quickly,” says Walton, “and that’s the crux of our business plan. It has to be able to go from discovery to production rapidly. And we’ve done that in Guanacevi three times, in other deposits that we found there.”

A recent example is Porvenir Cuatro, which they acquired a year ago; they started drilling in July 2009 and in September 2010 were mining there. In early 2007 they went down to Guanajuato, looking for another opportunity, and Walton found one in the Bolanitos and Cebada mines. “We acquired them and started drilling,” he says. “We continued mining for a while and realized that there was a major safety issue with the shafts at the mines.” They shut it down from late 2007 to early 2008 but kept drilling, and once they’d upgraded the shafts to make them safer, they found a previously undiscovered vein, called the Lucero, which has become one of Endeavour’s major production sites.

“We were demonstrating that although these were old mines on an old property—in this case with a young plant—and people had been mining there for more than 500 years, you can still find new veins that don’t come to the surface,” says Walton. “That’s why they were never discovered.

Bringing modern exploration expertise to older districts has really been the key to our success.

As well, we bring North American standards of safety and an environmental approach to mining.

We operate with the same care that we would take in the US. It is important to spend time on training our employees on safe ways to work that respect the environment. As a company, it’s critical to us that our workers are safe.”

Why go after silver? “We had been watching the gold and silver charts,” says Walton, “and gold took off in 2002, but silver was dragging along behind. What we were looking for was for silver to make a big pop, which it typically does when you look back through history. We watched the chart throughout 2003 and noticed that silver was staying down, but we knew that it was going to slingshot up very soon. There was no one else looking at silver at that time, and that’s why we decided to go into silver, as opposed to gold.”

He continues, “Today’s gold and silver prices mean that a lot of different mining properties around the world are economic, so some companies are pouring equipment and resources into mining lower-grade gold, because gold is

92

www.bus-ex.com NOVEMBER 10

“That’s the crux of our business plan: it and we’ve done that in Guanacevi three

Endeavour Silver Corp.

has to be able to go from discovery to production rapidly, times, in other deposits we found there�

NOVEMBER 10 www.bus-ex.com

93

94

www.bus-ex.com NOVEMBER 10

Endeavour Silver Corp.

currently so much higher priced. But silver is a small market with very few players, and most of it is a by-product of mining other minerals.

Currently there are a few primary silver producers, and we’re one of the highest leveraged to silver.”

Endeavour’s focus right now is to continue growing its production organically, which it has done for six consecutive years. Then it will look for its third and fourth operations, and it is pursuing different opportunities and targets for finding those. “We may be able to find them within our own exploration portfolio,” says Walton, “but it will take time. However, if we could acquire one or two more properties, it should speed up the possibility of having a third or fourth operation within the next year. That’s our primary focus at the moment.”

Endeavour recently made a bid for Vancouverbased Cream Minerals Ltd., which has the Nuevo Milenio silver property in Mexico, the Casierra Diamond Properties in Sierra Leone, the Goldsmith gold property and the Kaslo silver property, both in British Columbia, and the Wine nickel-copper property in Manitoba. “We’ll see how our bid turns out over the next little while,” Walton says.

A significant part of Endeavour’s investor base is in the United States. They do regular investor trips in Canada, US and Europe; at present they have a tour in Toronto where they are talking to mining analysts, and later in the fall they’ll be in the US on a different tour. “We spend a lot of time on the road,” says Walton, “making sure that we can meet brokers, analysts and investors.”

Endeavour has kept things growing financially— in terms of production, reserves and resources— over the last several years, and it expects growth in all those areas over the next two years. At that point, it hopes to have both its current operations in Mexico up to their maximum potential. Then it will continue to find resources and reserves, and its financial performance will be tied to the global market for gold and silver.

“Over the past 18 months we’ve looked at expanding through acquisitions, whether through private or public opportunities; we’re always very curious. We bring a Canadian and American understanding of mining and exploration operations to these old Mexican mining properties, and it’s proving to be successful, especially in finding new veins. So we’re very optimistic,” Walton concludes. www.edrsilver.com

NOVEMBER 10 www.bus-ex.com

95

giant

One

S

ometimes in business it’s necessary to take painful decisions that seem like a step backward but are taken for the development of a company. Such was the task that greeted Bill Biggar when he became president and chief executive officer at North American Palladium Ltd. (NAP).

It’s fair to say that the timing of Biggar’s appointment wasn’t great— October 2008, just as the global economic crisis began to bite and the price of palladium began to tumble.

Biggar was faced with a tough decision to lay off some 400 miners and place the company’s sole mining asset at Lac des Iles, Ontario, under care and maintenance for the foreseeable future.

96

www.bus-ex.com NOVEMBER 10

s forw

When the global econo leaving newly arrived p regarding the fate of N Andrew Pelis about the

North American Palladium Ltd.

step ward

omic crisis took hold, the price of palladium plummeted, president and CEO Bill Biggar with a tough decision North American Palladium Ltd. Two years later he tells e company’s rapidly changing status

NOVEMBER 10 www.bus-ex.com

97

98

www.bus-ex.com NOVEMBER 10

North American Palladium Ltd.

Two years later, the Toronto-based company has emerged from its dormant period a stronger, more focused, well-organized entity—with a mine expansion underway and on the crest of the soaring palladium market. NAP is in transition, becoming a long life, low cost producer with a renewed focus on exploration.

“We’re one of only two primary palladium mines in the world,” Biggar states, “and our Lac des Iles (LDI) mine remains our flagship project. One of our strengths as seasoned operators, and with fully permitted, under-utilized facilities, is that the execution risk behind our mine expansion project is significantly reduced, and we can move from exploration success to production and cash flow on an accelerated timeline. This gives investors significant leverage, particularly in a period of rising palladium prices.”

The care and maintenance period lasted over a year, but as Biggar explains, this was far from an inactive period for NAP. “The story goes back to 1993 when we began production of palladium in an open-pit mine, which is now exhausted,” says Biggar. “This was expanded in 2001, when a new mill was also built to process ore.

Further expansion took place in 2006 when the company commenced underground operations.

In October 2008 when we suspended operations, palladium prices had dropped from $400 per ounce to under $200, which was considerably less than our production costs. We therefore set about exploring ways to optimize production, and we paid retention bonuses to all our senior management team so that when we were ready to

NOVEMBER 10 www.bus-ex.com

99

North American Palladium Ltd.

Taurus Drilling Services Taurus Drilling Services supports the renewed underground Lac des Isles project by utilizing experience, modern equipment, and a devoted team of talented operators. Close cooperation and understanding of the project parameters, both immediate and future, will enable Taurus Drilling Services to greatly assist Lac des Isles Mines in the economic excavation of this important ore zone.

Canadian Bearings Ltd. Canadian Bearings has been a longstanding trusted

provider

of

industrial

maintenance

products and repair, delivering 24/7 technical support since the mine’s inception.

Being there from the initial development stages on through the expansion—flourishing times—we have developed a solid performance track record.

We are looking forward to widening our integrated relationship as the mine is now positioning to hit yet further unprecedented growth.

resume production we could do so quickly.

“At the same time,” Biggar continues, “we felt we needed to change the culture of the company, as our focus had mostly been as an operator to that point. We had begun underground operations in 2006 in the Roby Zone, but there was limited drilling below in what we labelled the Offset Zone.

So while on care and maintenance, we made a significant investment in extensional drilling to position NAP for future production.

“We had good exploration success in 2009, but I think we have only begun to show our potential.

We doubled our exploration budget in 2010 and now have 19 geologists on staff focused on drilling the Offset Zone, which we now know goes down to a depth of at least 1,300 meters while it still remains open in all directions.” While on care and maintenance, NAP’s geologists also discovered two new zones, the Cowboy and the Outlaw zones, which could further extend LDI’s

NOVEMBER 10 www.bus-ex.com

101

mine life beyond its current forecast of 10 years.

NAP’s superb rock conditions at the mine are conducive to the “super shrinkage” mining method for the Offset Zone, which will make NAP a very low cost producer of palladium while allowing the company to almost double its production to over 250,000 ounces per year. The company intends to raisebore a shaft to surface, and subsequently sink it to the bottom. The development work for the mine expansion is now well under way, and Biggar expects that the shaft will be fully operational by the third quarter of 2012, around the same time that the Roby Zone ore is scheduled to run out.

The LDI mine officially recommenced production in April 2010, in a very different price environment.

The cost of palladium rose above $500 per ounce, making production cost-effective again.

“The new method of mining for the Offset Zone will help us achieve our goal of becoming a low-cost producer of palladium as we are aiming to achieve a target of $130 per ounce cash cost,” Biggar says. “In mining, there are a lot of variables such as the price of metals and exchange rates that are beyond our control, so all we can do is focus on what is within our control—which is our cash costs. And I do believe that that we’re in a very good point in the palladium price cycle, which offers exciting potential.”

102 www.bus-ex.com NOVEMBER 10

That potential is fueled by the global drive to reduce automotive emissions, which has seen a surge in demand for catalytic converters at a time when automotive production in countries like China, India and across South America has soared. With so few producers of palladium, this puts availability at a premium, and therefore the price continues to rise as the commodity becomes increasingly scarce.

However, palladium is no longer the sole focus for NAP. In early 2009 the company had decided to spread its risk by acquiring gold assets, and it completed the purchase of the Sleeping Giant gold mine by buying junior mining company Cadiscor Resources Inc. “Along with the mine in the Abitibi region of Quebec, we acquired a 70-kilometer land package with a number of exploration projects within trucking distance to Sleeping Giant’s underutilized mill. Between Sleeping Giant and our other gold assets, we believe that we have significant organic growth, with the potential to produce in the range of 125,000 ounces of gold per year.”

NAP’s other gold projects are currently being scoped for development, and a mill expansion study is underway that could double the capacity of the Sleeping Giant mill, thereby allowing it to act as a regional hub for the processing of ore

North American Palladium Ltd.

“In mining, there are a lot of variables such as the price of metals and exchange rates that are beyond our control, so all we can do is focus on what is within our control—which is our cash costs” from NAP’s other gold assets.

NAP has been publicly listed both in New York (NYSE Amex: PAL) and Toronto (TSX: PDL) for many years. While at first glance the prospects for the company may have appeared bleak when the palladium mine went into care and maintenance, Biggar and his team were able to raise capital exceeding $175 million in just 12 months to fund their expansion plans.

The palladium mine expansion costs are reported to be approximately $270 million, but payback should be covered within three short

years—with the prospect of an even faster return should palladium prices continue to rise.

As a debt-free company with lower operating costs in a buoyant marketplace, the future looks very bright for NAP, and Biggar doesn’t rule out the possibility of further gold acquisitions further afield. “We would like to eventually get our gold production up to 250,000 ounces per year, and while our immediate aim is for organic growth for the next couple of years, we’ll also keep an eye open on acquisition opportunities in mining friendly jurisdictions.” www.napalladium.com

NOVEMBER 10 www.bus-ex.com 103

Ahe 104

www.bus-ex.com NOVEMBER 10

Osisko Mining Corp.

ead

of the

game Gay Sutton talks to Osisko Mining Corporation’s general manager, Denis Cimon, about the company’s plan to fast-track the development of the Malartic gold deposit in northern Quebec and take the risk out of the project by beginning town relocation work and purchasing equipment ahead of the feasibility study

T

he Malartic gold mine in the highly productive Abitibi Gold Belt of northwest Quebec is very different from those around it. Most mines are deep, exploiting high-grade gold deposits.

However, the Osisko Mining Corporation, a junior mining company, is in the process of developing an open-pit mine to exploit what it believes will become a truly world-class gold resource.

NOVEMBER 10 www.bus-ex.com 105

Osisko Mining Corp.

ME Elecmetal ME Elecmetal is the world leader in providing metallic impact and abrasion resistant liners for the global mineral processing industry. ME’s manufacturing platform is based from its own facilities located in the United States (Duluth, MN and Tempe, AZ) and in Chile (Santiago and Rancagua). This capacity is augmented through licensee relationships in Mexico and China.

Grinding mill and crushing operations can take advantage of ME’s “total grinding solution” by ordering mill liners and grinding media, plus crusher liners and environmentally friendly crusher backing material from one source. ME Elecmetal: the total grinding solution for mineral processors.

“When we realized that we had the acceptance of the town council and over 85 percent of the population, we started a program of drilling to define the area of the deposit,” explains general manager Denis Cimon. The drilling covered the entire area in a grid pattern every 25 meters. “In the town, people had drills in their backyards and in their driveways.”

This yielded more precise data on the size and value of the deposit. Based on these encouraging calculations, the company embarked on the prefeasibility, environmental and feasibility studies. At the same time, however, confident that the discoveries would yield a highly lucrative mine, the company began to ramp up its operations. Staff members were appointed to run the operation, one of whom was Cimon. A construction company

“We made a commitment that once we started the relocation we would complete it, regardless of the results of the feasibility study” The 230-square-kilometer property, 100 percent owned by Osisko, has been worked in the past. Between 1935 and 1983, deep mining of the high-grade Malartic and Barnat veins yielded over 5 million ounces of gold. But subsequent exploration efforts continued to search—fruitlessly—for further deep high-grade gold resources.

Convinced that there was another way to do things, Osisko acquired the property and began looking for lower-grade deposits close to the surface. Combining its own exploration data with that of previous explorations, the company found what it was looking for: a large area with the potential to become an extensive and highly profitable surface mine.

Part of the gold resource, however, was believed to stretch under the town of Malartic (population 3,600), about 550 kilometers northwest of Montreal.

So the first thing the company did was to initiate an outreach to the local community, communicating with the town council and the citizens, building relationships, exchanging information and forming a community consulting group.

and mining contractors were brought on board, and a $110 million relocation project got under way to move around 13 percent of the town to a new location on the northern side of town.

“One of the big local concerns was that we would start the relocation process, find the project was not as strong as we believed, and stop it.

And they would end up with half the population relocated,” Cimon says. “We therefore made a commitment that once we started the relocation we would complete it, regardless of the results of the feasibility study.”

The project entailed moving 205 homes and five institutions. In all, 140 new houses were built and more than 60 purchased. The southern boundary of the town is to be shielded from the open-cast mining operation by what the company calls a green wall: a wall of earth planted with trees and flowers, not only cutting out much of the noise and dust but also providing a leisure facility. Cimon says, “We’re working with the town’s mining museum to build a viewing center so that people can some to the pit and see the operations.”

In parallel with the relocation work, the company

NOVEMBER 10 www.bus-ex.com 107

108

www.bus-ex.com NOVEMBER 10

Osisko Mining Corp.

began procurement of the heavy equipment it would need. “For us, it was a way of de-risking the project,” Cimon points out. By June 2009, most of the equipment had been purchased and 75 percent of it had been delivered to the site, while the parts that needed special warehouse conditions, such as the motors, were stored in Toronto and Montreal.

Since beginning the relocation work and procurement, the company has successfully completed the feasibility studies and public hearings. “The process was very informative,” he admits. “Sometimes they were rough on us. But it’s a good democratic process, and it has been beneficial to both parties.”

The construction permits were received in August 2009, and work immediately began preparing the foundations for the mine buildings. These include an administration building and truck shop that would accommodate twelve 240-ton trucks, a warehouse, and a massive $400 million mill that will house a 55,000-ton SAG (semi-autogenous grinding) mill with a 26,000-horsepower motor and three further 16,000-hp ball mills.

The town of Malartic has benefited in many ways. The mine has created a large number of jobs and will continue to do so. Most of the contractors currently on site are local, and this has helped to cement good relationships, ensure quality and speed up the construction work. If everything continues to go according to schedule, milling should commence in the first quarter of 2011. www.osisko.com

NOVEMBER 10 www.bus-ex.com 109

Explori

Ni lik con the

110

www.bus-ex.com NOVEMBER 10

Goldbrook Ventures

ing

future

the

ickel resources remain scarce, yet demand continues to soar in countries ke China and India, putting a premium on the price of nickel. For those in ntrol of nickel assets, like Goldbrook Ventures through its participation in Nunavik Nickel Project, the potential is unlimited, Andrew Pelis discovers

G

oldbrook Ventures made the shrewd decision to buy up land for exploration many years ago and is today regarded as the largest property holder in the region, having rights to over 891,000 acres.

The investment strategy in the region began back in 2003 when the company recognized just how rich in mineral reserves the area was, and that set off a chain of aggressive acquisitions and joint ventures.

NOVEMBER 10 www.bus-ex.com

111

Goldbrook Ventures

Exploration Sans Frontières At

Exploration

Sans

Frontières

(Exploration

without borders), we have been involved in the Quebec (Canada) mining exploration industry for the last 12 years.

Our employees have a solid background in prospecting and some of our members have over 15 years of experience in mining exploration.

Tasks performed by Exploration Sans Frontières: • Prospecting • Line cutting • Staking • Boulder buster - Pionger (drill) • Blasting (Spring 2009) • Geochemistry (sampling) - sediment (streams and lakes), • Manual or water scraping • Drilling, anchoring or blasting • Trenching • Accompanying geologists for diamond drilling activities • Accompanying technicians on geophysical studies • Camp construction and logistics We have worked throughout the province: in Abitibi, Gaspésie, James Bay and Ungava Bay, on Anticosti Island, Ontario the North-Shore and even in the Nunavik, Northwest Territories (Manitoba, Saskatchewan).

We have always fulfilled our contracts within the required time periods and according to the highest quality standards, whatever the conditions or season.

The district occurs within the same belt of ancient rocks that hosts the prolific Thompson nickel deposits in Manitoba. The Raglan (or Cape Smith) belt is approximately 325 kilometers long by 60 kilometers wide and hosts Xstrata’s Raglan nickel-copper-platinum group metals (PGM) mine, which began commercial production in 1998.

Development in the area has resulted in widespread infrastructure improvements that have made it much more easily accessible thanks to improved port facilities, a network of roads,

NOVEMBER 10 www.bus-ex.com

113

www.me-elecmetal.com

Goldbrook Ventures

Matrix Unique in the exploration industry, Matrix provides a one-stop, turnkey service that includes all aspects of helicopter and fixed-wing transportation, as well as camp set-up, camp management, field logistics and fuel management.

Utilizing a wide range of experts and suppliers, Matrix meets the distinctive needs of clients such as Goldbrook, in any environment—including the special circumstances of the Arctic. With this unbiased approach and a strict due-diligence and safety process, Matrix provides professional expertise that routinely exceeds expectations.

Clients consistently report that Matrix gives them peace of mind and the ability to focus on exploration rather than logistics.

and daily air service to nearby communities.

In 2008 the Xstrata mine produced over 26,000 tonnes (metric tons) of nickel-in-concentrate, over 6,700 tonnes of copper-in-concentrate, and 523 tonnes of cobalt-in-concentrate, with significant quantities of palladium and platinum. The mine now accounts for approximately 10 percent of Canada’s annual nickel production and has about 30 years expected mine life.

But it isn’t just nickel that makes the area so attractive to prospective mining companies; there are also concentrated areas combining both quality and volume of lucrative minerals such as copper and PGMs—all markets that in recent times have remained fairly buoyant, making mining not just affordable but profitable too. Goldbrook has therefore continued to focus on these markets when looking at potential acquisitions and joint venture projects.

“Goldbrook Ventures made the shrewd decision to buy up land for exploration in the Raglan Nickel District many years ago and is today regarded as the largest property holder in the region, having rights to over 891,000 acres”

NOVEMBER 10 www.bus-ex.com

115

“It isn’t just nickel that makes the area so attractive to prospective mining companies; there are also concentrated areas combining both quality and volume of lucrative minerals such as copper and platinum group metals�

Diversity is a virtue in the current global economic climate, and by focusing on a number of metals Goldbrook has been able to mitigate the effects of individual metal price fluctuations while maintaining its focus on meeting long-term market demands.

Raglan is regarded as an emerging Ni-CuPGE district at an early stage of exploration and development, and the combination of the highvalue Raglan deposits found to date and the generally limited amount of exploration that has taken place in the region help to explain the lure of the Raglan belt.

Since 2003 a number of significant ore bodies have been discovered in the region: the Xstrata deposits occur as multiple ore bodies scattered along a 55km section of a laterally extensive geological trend known as the Raglan trend, or north trend.

Both Goldbrook and Anglo American made discoveries in 2003 that indicated that significant mineralization may also be found on this trend as far as 45 km east and 90 km west of the Xstrata deposits. Five years later, Knight Resources announced that it too had discovered nickel along

116 www.bus-ex.com NOVEMBER 10

the north trend, while Canadian Royalties Inc. made discoveries that established the potential of a second trend (the south trend) by the discovery of a series of deposits that are now being scrutinized through feasibility studies.

Goldbrook has invested heavily to develop a multidisciplinary approach to exploration in these vast landholdings, including airborne remote sensing surveys, prospecting, geological mapping, geochemistry and diamond drilling in addition to airborne and ground geophysical surveys to help detect potential nickel-bearing rocks.

A series of exploration programs took place between 2003 and 2008 that established NiCu-PGE sulphide targets, along the Belanger and related trends, as part of the longer-term exploration objectives of the company. Perhaps the most significant discovery during this period was the enigmatically named Mystery Zone, which was drilled extensively in 2008 and resulted in the find of significant Ni-Cu-PGE sulphide intersections.

In addition to this exploration work, Goldbrook has added to its portfolio through strategic acquisitions. In November 2009 the company,

Goldbrook Ventures

in a joint venture with Jien Canada Mining Ltd., a wholly owned subsidiary of Jilin Jien Nickel Industry Co., Ltd. of China, acquired Canadian Royalties and all its nickel-sulphide assets for $192 million.

Goldbrook owns 25 percent of the voting shares of Jien Canada Mining Ltd., the owner of the nickelcopper-cobalt-platinum-palladium-gold deposits in the Raglan mining district that collectively form the Nunavik Nickel Project. The past 12 months has seen the partnership working in the pre-planning stage toward the construction and mine development phase, which will make the partnership one of Canada’s major nickel producers.

At the time, David Baker, chairman and CEO of Goldbrook Ventures, said, “We look forward to making a significant investment in the development of the large-scale Nunavik Nickel

Project. We firmly believe that many stakeholders will benefit from this transaction, not only the Canadian Royalties security holders, who will realize substantial and immediate premium.”

The agreement in place means that once Goldbrook has repaid its committed share of the acquisition and construction costs, it will earn a quarter of all cash flow derived from the Nunavik Nickel Project.

Throughout this past summer the organization has embarked upon an ambitious exploration program encompassing a regional mapping program, geochemical surveys and ground geophysical surveys.

At the time of writing, however, Goldbrook is presently in dispute with its joint venture partner Jilin Jien Nickel Industry Co, over a share issue which is beyond the scope of this article. www.goldbrookventures.com

NOVEMBER 10 www.bus-ex.com

117

No harbor

for ol

For 15 years St. John’s, Newfoundland, has been working upgrading its sewerage system—some of which dates back modernizing its wastewater treatment. Now phase two is es the challenges presented by the hist

118

www.bus-ex.com NOVEMBER 10

St. John’s Harbour Cleanup Project

pipe

ld

g on cleaning up its harbor, k to the 18th century—and ssentially complete despite torically significant location

S

t. John’s, Newfoundland, is one of the oldest cities in North America, dating back to the mid-1500s, when the sheltered outlet of the Waterford River provided a safe refuge for shipping. As a result, a city grew up alongside the harbor, providing supplies and services and a comfortable toehold on the continent. The St. John’s of today is a modern, vibrant and expanding city. Lying on the northern side of the harbor, it is the provincial capital of Newfoundland and Labrador, home to some 110,000 residents, and North America’s most easterly community.

NOVEMBER 10 www.bus-ex.com

119

“Some areas around the harb Sir Humphrey Gilbert claimed

120 www.bus-ex.com NOVEMBER 10

St. John’s Harbour Cleanup Project

Over the past 15 years the city has been engaged in a long-term project to clean up the harbor, upgrade the sewerage system—parts of which date back to the 1700s—and provide the latest in wastewater treatment. Until now, the sewerage system, which services the cities of St. John’s and Mount Pearl and part of the town of Paradise (comprising some 130,000 people), has discharged its waste directly into the harbor. But with the population expected to grow to 150,000 over the next 20 years, addressing the issue of water pollution is now imperative.

The St. John’s Harbour Cleanup Project is being managed in three phases. The first phase, completed in 2001 and costing around $12 million, put in place various elements of preliminary

do, so they were able to deal with it quickly and efficiently,” explains project director John Barry.

“In the end the delay was probably only a week.”

Extensive environmental assessments for the work were relatively straightforward, but St. John’s history rapidly made an impact. “One area of the treatment plant site used to house an Anglican Church and dates back to 1760, when it was a British naval hospital. Also, Shanawdithit—the last of the Beothuk people in Newfoundland— died here in 1829 and was buried in a graveyard a little farther to the west,” Barry says. “Some areas around the harbor go back to the 16th century, too.

In fact, one of the areas we crossed is where Sir Humphrey Gilbert claimed the first bit of land for the British Empire in 1583.” As a result, considerable

bor go back to the 16th century. In fact, one of the areas we crossed is where d the first bit of land for the British Empire in 1583”

infrastructure, including a new pump station, an extension of the Waterford Valley Relief Trunk Sewer to the new pump station, and a new harbor outfall and diffuser that would eventually take all the sewage from the entire service area.

The second phase is by far the largest. It includes the construction of a conventional wastewater treatment plant, a deep pump station, and two kilometers of sewer—the Harbour Interceptor Sewer—around the northern side of the harbor, routing away from the existing outfalls for the sewerage to the new treatment plant. Phase III, which is unlikely to commence for at least five years, will consist of upgrading the treatment plant to an enhanced treatment facility.

The project has posed some interesting challenges, many of them linked to the city’s history, and has not been without its moments of drama. While excavating for phase I, the diggers unearthed some old World War II munitions, and work was instantly halted until experts could be brought in to deal with the stash of shells. “Luckily, the engineers we called in had previous experience with old munitions and knew exactly what to

archaeological work has had to be completed at locations around the harbor and at the treatment plant site before work could commence.

The $93 million funding for the second phase of the project was agreed in November 2003, with the Federal and Provincial governments contributing around $31 million each. The remainder of the costs would be met by the local municipalities: St. John’s contributing around 90 percent, Mount Pearl and Paradise contributing the last 10 percent. “Right now the cost for phase II stands at about $155 million,” Barry says.

The first task that faced Barry was to excavate the side of the hill on the southern margin of the harbor and level the site for the new treatment plant and pump station. “That task alone took us almost two years,” he explains, “and during that time we removed approximately 900,000 cubic meters of rock.”

Dealing with that volume of rock in an environmentally acceptable way required considerable planning. A relief road was constructed to link the site with the main trunk road to take trucks away from the city roads

NOVEMBER 10 www.bus-ex.com 121

St. John’s Harbour Cleanup Project

John Meunier Inc. Creating water solutions John Meunier Inc., a subsidiary of Veolia Water Solutions & Technologies, has been serving North American municipalities and industries since 1948 by offering them complete water and wastewater treatment solutions. With our stateof-the-art technologies, efficient products and a team of seasoned professionals, we design and manufacture tailor-made solutions that meet our clients’ specific requirements.

John Meunier Inc. also offers a complete line of wet-weather technologies for: • Flow control for stormwater runoff • Flow control for combined and sanitary flows • Level control in collection systems • Off-line or in-line retention tank design and cleaning • Floatables screening

Work began on the Harbour Interceptor Sewer in 2004 and followed a route that paralleled the harbor’s edge, crossing land that had previously been reclaimed from the harbor and therefore consisted of rock and rubble. “This created some difficult conditions for us to work in. About half the sewer work had to be laid with divers working in zero visibility.”

The pipe itself is a massive 5.5 feet in diameter with a very shallow gradient and required a trench as deep and wide as 6 meters in places, requiring traffic to be diverted and methods to be devised to provide access for businesses in the area so they could continue operating.

The city has experienced considerable upheaval during this period, but the upheaval has provided valuable opportunities to deliver improvements.

“Much of the existing sewer infrastructure was over 150 years old, so we decided to replace every bit of it. In some places we could see the old system and then the really old one. In one case we came across some Doulton sewer pipe, made by the people who used to make Royal Doulton. And they stopped making pipe in about 1853,” Barry comments.

“Much of the existing sewer infrastructure was over 150 years old. In some places we could see the old system and then the really old one. In one case we came across some Doulton sewer pipe, and they stopped making pipe in about 1853” and shorten the distances they had to travel.

Recycling uses were also found for the waste material. Around 15 percent of it has been used by the Port Authority to infill harbor space and create level ground around its property. The rest has been removed by the contractor and recycled as road-building materials.

“Stabilizing the new 65-meter-high rock face behind the treatment plant has also been quite a challenge,” Barry continues. “As a civil engineer I found that fascinating. The stabilization required rock bolting and large amounts of rock-fall netting to protect the treatment plant located 10 meters from the face. We have now planted some vegetation up there and are waiting to see how well it will hold.” Altogether the excavation and stabilization work cost around $25 million.

The opportunity for improvement has also been taken up by the city’s electricity provider, which has installed a complete new power conduit system to service the downtown area.

Commissioned in 2007, the treatment plant went operational in September 2009, processing around half the sewage it will eventually be required to handle. The remaining half was connected this past summer when work on three combined sewer overflows was completed. The treatment plant has been working like a Swiss clock, a result of solid design and inspection by consultants Newfoundland Design Associates Ltd. and CH2M Hill Canada Ltd., quality construction by local contractors Olympic Construction Ltd. and G.J. Cahill Ltd., and quality equipment and materials. www.stjohns.ca

NOVEMBER 10 www.bus-ex.com 123

Seismic

change

124

www.bus-ex.com NOVEMBER 10

c

e

Transbay Joint Powers Authority: Transbay Transit Center

When completed, the Transbay Transit Center promises to modernize the Bay Area’s public transportation system, revitalize a neighborhood and transform San Francisco’s iconic skyline, Andrew Pelis learns

O

ver ten years in the making, with costs running into billions of dollars, San Francisco is now gearing up for the construction of a new multi-modal transit hub that has been described as the “Grand Central Station of the West.”

When it is built, the new Transit Center (replacing the original site that was opened in 1939) will cater to over 100,000 passengers each weekday and more than 45 million people each year, at the same time making public transportation a viable, convenient choice for everyone in the San Francisco Bay Area.

NOVEMBER 10 www.bus-ex.com 125

126

www.bus-ex.com NOVEMBER 10

Transbay Joint Powers Authority: Transbay Transit Center

With initial planning reports and designs stretching back to the beginning of the century, it was in December 2007 that the California Transportation Commission unanimously voted to authorize the transfer of state-owned land to the City and County of San Francisco and the Transbay Joint Powers Authority (TJPA), a move that kick-started the prospect of a modernized public transportation system.

“The Transbay Transit Center Project is an important part of San Francisco’s future. It will solidify our place as the leader in public transportation and sustainable, transportation-oriented development, as well as revitalize one of our neighborhoods,” commented Mayor Gavin Newsom.

The land was previously home to the Embarcadero Freeway on-ramps that collapsed during the 1989 Loma Prieta earthquake. Upon completion of the TJPA’s $4 billion project, the city will have replaced and redeveloped the Transbay Terminal into a multi-modal transit hub that will provide transportation service to more than 100,000 passengers per day and feature an adjacent retail and office Transit Tower poised to redefine the city’s skyline.

The redevelopment project plans to revitalize the South of Market (SoMa) district with a transit-

NOVEMBER 10 www.bus-ex.com

127

128

www.bus-ex.com NOVEMBER 10

Transbay Joint Powers Authority: Transbay Transit Center

friendly neighborhood, including a project to build up to 3,400 new homes (35 percent of which will be affordable to working families), and will feature new parks and a retail main street.

The TJPA came to fruition in 2001 with the specific purpose to design, build and operate the new Transbay Transit Center Program. The new Transbay Transit Center at First and Mission streets will centralize the region’s transportation network by accommodating 11 transportation systems under one roof, including AC Transit, Caltrain, MUNI, Golden Gate Transit, SamTrans, Greyhound, BART, WestCAT and future California High-Speed Rail. The area surrounding the Transit Center will be redeveloped to include housing, retail and an adjacent tower that will be the tallest on the West Coast.

The first phase of the project will see the creation of a new five-story Transit Center with one abovegrade bus level, ground-floor, concourse, and two below-grade rail levels serving Caltrain and future California High-Speed Rail. This first phase will also create new bus ramps connecting the new center to a brand-new off-site bus storage facility and the San Francisco–Oakland Bay Bridge.

The designers of new Transit Center, Pelli Clarke Pelli Architects (PCPA), have incorporated a number of environmental aspects to the new Transit Center, including a 5.4-acre park that will be built on the roof of the bus and rail station. The “green roof” will feature a number of environmentally friendly building features, including climate-appropriate plants and efficient irrigation and drainage systems. It will shade much of the ground-level sidewalk when the sun is strongest and will help to capture and filter the exhaust in the area, thus contributing to better air quality in the neighborhood.

Further environmental consideration in the design means that the new Transit Center will take advantage of natural daylight to offset the need for electric lighting during daylight hours, while light columns will bring natural light into the internal areas of the station.

The site will also support San Francisco’s aggressive recycling goal of reaching 75 percent diversion (and eventually zero waste) through a three-stream waste separation process that includes compost, recyclables and trash receptacles inside the facilities.

The project also aims to meet the LEED

requirements for construction waste management, while the new Transit Center is being built and has been designed to reduce stormwater runoff, conserving water through building uses, irrigation systems and water reuse.

A complementary Transit Tower designed

by PCPA and developed by Hines will be built adjacent to the Transit Center and will provide additional financing for the project.

One of the project’s biggest challenges has been to work while maintaining a business-asusual approach that minimizes disruption for San Francisco’s commuters. Part of that solution has been the construction of a temporary bus terminal that will cater to transit riders until the new Transit Center has been built (scheduled for 2017), and the project to build a temporary site broke ground in December 2008.

The original Transbay Terminal was closed on August 6, by which date all bus activity had relocated to the temporary site. The demolition of the terminal was due to commence on October 16 and continue for approximately a month, during which time workers will work 24 hours a day at the site. Overall demolition activities on the old site are expected to last up to eight months and will occur in four phases.

Progress continues apace, and in August, federal, state and local officials joined together with the TJPA to officially break ground on the Transbay Transit Center. “Today, in breaking ground on the Transbay Transit Center, we are opening a new chapter in that history of progress,” Speaker of the House Nancy Pelosi said. “We are coming together to create jobs and revitalize our economy, and we are laying the first building blocks of a new ‘Grand Central Station of the West.’ ” It is thought that the first phase of construction alone will create more than 48,000 jobs for the following seven years and overall it will create in excess of 125,000 jobs during the life of the project.

Little wonder then that US Secretary of Transportation Ray LaHood summarized the project by stating, “This is one of the most important and transformational public transportation projects in America. Once the dust has settled, San Francisco’s skyline will be transformed—as will transportation, housing and employment choices for people across the Bay Area and beyond.” http://transbaycenter.org/

NOVEMBER 10 www.bus-ex.com 129

130

www.bus-ex.com NOVEMBER 10

Albert C. Kobayashi, Inc.: Trump Tower Waikiki

Another diamond on

Waikiki Albert C. Kobayashi, Inc., the fifth-largest building contractor in the 50th state, has completed construction of the Trump Tower Waikiki, the first luxury high-rise project to be built on world-famous Waikiki Beach in 25 years

T

he name Waikiki Beach conjures up the image of a tropical paradise: fabulous white sandy beaches pounded by wave upon wave of warm Pacific Ocean water, the peak of a volcano on the skyline in the distance. Surfing had its birthplace here, invented by the Hawaiian royal family during the 1800s—a time when the area was their exclusive retreat.

Today Waikiki is an exclusive suburb of Honolulu, a haven for holiday makers, the rich and the famous. And after the hotel building boom of the 1980s, its skyline is suitably clean, modern and luxurious, with tall hotels, leisure facilities, clubs and restaurants overlooking the beach and Ala Moana Park.

NOVEMBER 10 www.bus-ex.com 131

Albert C. Kobayashi, Inc.: Trump Tower Waikiki

Center Glass Company Established in 1962 and serving Hawaii since 1991,

Center

complete

Glass

range

of

Company glazing

provides

products

a

and

services. Founded and operated by a field experienced team, we work to assure our projects result in fulfilling our clients’ highest expectations throughout the design, budget, and construction phases. Center Glass Company specializes in multi-story curtain wall, composite aluminum panels, and custom glazing envelope applications. We are proud to have worked closely with many of Hawaii’s top builders and developers, and we look forward to continuing these valuable relationships. Allow us to bring our experience and resources to your team.

One construction company that has played a major role in the development of Waikiki, Honolulu, and indeed the whole of Hawaii is Albert C. Kobayashi (ACK). The company was founded back in 1948— before Hawaii became the 50th state. Upon his retirement in 1985, the founder’s three sons took over the day-to-day running of the company, and in 1986 they sold 51 percent of the company to their employees through an employee stock ownership plan that continues in operation today.

Large and prestigious contracts for both private and government projects were entrusted to Kobayashi, including the renovation in 1986 of the Hilton Hawaiian Village and the Moana Surfrider Hotel during the hotel building and renovation boom. Later, responding to the needs of the time, the company moved its focus to constructing affordable housing.

Today the company continues to hold to the original founding principles of versatility, community involvement and hard work, and its ranking in Hawaii Business magazine’s Top 250 has been improving year after year, reaching 32nd last year. According to the Building Industry Association, the company is the fifth-largest building contractor in Hawaii and provides a wide range of services from pre-construction budgeting and feasibility studies to construction

and full project management. It operates across a wide range of construction sectors including hotel, residential, school, healthcare, restaurant, recreational facilities, cultural center and commercial building construction.

Among its many achievements is the construction of the Hawaii Medical Service Association Center, an energy-efficient building featuring vertical concrete fins and horizontal shelves that reduce total air conditioning and lighting demand by 25 percent. With a total floor area of 111,000 square feet, the center was opened in July 1995.

Another project of national importance was the Luce Pavilion at the Honolulu Academy of the Arts, a project that included a gift shop, outdoor cafe and two 4,000-square-foot art galleries.

Opened to the public in 2001, the pavilion was connected to the original Academy via a perforated wall on the stairway.

Moving forward to the present, the company completed an 115,846-square-foot single-story retail complex in Kapolei in 2009. The complex was built using tile-up construction methods and fitted out for the Sports Authority, Office Max, Petco, and Ross Dress for Less retail chains.

Also recently completed was the Maryknoll Community Center at the Maryknoll Elementary School campus in Honolulu. The center includes a gymnasium, underground parking, athletic locker rooms, classrooms, meeting rooms and administrative offices.

The gem in the company’s portfolio of recent developments, however, is the new Trump Tower Waikiki. It is not only a fitting addition to the area’s exclusive skyline, but it’s the only new high-rise tower and five-star project to be built on the world-famous beach in 25 years.

The Trump Tower is the cornerstone of a $1 billion redevelopment of the Waikiki Beach Walk area. Covering some eight acres of prime space, the Waikiki Beach Walk Project is the largest hotel, retail and entertainment complex ever built in the history of the area and includes an outdoor entertainment plaza, 40 retail outlets, six restaurants and four hotels.

Set upon a five-story pedestal housing a 232-space parking facility along with dining facilities and retail space, Trump Tower rises to a height of 350 feet, looking down on the properties that surround it and comprising the Trump

NOVEMBER 10 www.bus-ex.com 133

134

www.bus-ex.com NOVEMBER 10

Albert C. Kobayashi, Inc.: Trump Tower Waikiki

International Hotel and condominiums. A total of 464 units have been built, ranging from singlebedroom studios to two- and three-bedroom apartments, the largest of which has a massive 3,000 square feet of floor space.

Very much aimed at the luxury end of the market, the tower features an extravagant two-story lobby, a full-service spa, signature restaurants and pools with cabanas. Breathtaking outdoor glass elevators carry residents to their rooms, while the sixth floor features an unusual cascading waterfall.

Each of the condo and hotel units has a panoramic view of the ocean and nearby Fort DeRussy Park.

The units come fully furnished, and the condos were offered with a choice of koa wood, granite or marble finish. The kitchen in each apartment is fully equipped and boasts top-of-the-line SubZero and Wolf appliances. To complete the picture,

a range of luxury services are provided including round-the-clock concierge service, 24-hour room service, and valet and porter services.

The $350 million, 38-story building was constructed as a joint venture between ACK and Kiewit Building Group. Ground was broken on the project in April 2007, and the hotel opened to its first guests in November 2009 accompanied by a traditional Hawaiian blessing that took place on the sixth-floor lobby. The tower has already proven a good investment for its owners and for companies like ACK. The high specifications and quality of the building combined with the enviable location on legendary Waikiki Beach and the close proximity of superb leisure facilities attracted a great amount of interest, and as a result nearly all the units were sold out on the first day they were released. www.ack-inc.com

NOVEMBER 10 www.bus-ex.com 135

Sho

t

A joint venture of Clark Construction Group and Balfour construction of a sprawling, multi-faceted project for the National Agency and is on track to complete it in less than four y

136

www.bus-ex.com NOVEMBER 10

Clark Construction / Balfour Beatty: NGA East Campus Project

owing way

the

Beatty is overseeing the l Geo-Spatial Intelligence years, Keith Regan learns

T

he National Geo-Spatial Intelligence Agency (NGA) may be one of the least visible of the agencies that help protect national security, but its mission to “know the earth and show the way� makes it a key partner to other intelligence agencies and the Department of Defense. As it has grown over the years, the NGA took whatever space was available, and when the Base Realignment and Closure (BRAC) legislation was written in 2005, the agency was the recipient of one of the largest construction projects to create a new, consolidated home for its employees and the technology that supports them.

NOVEMBER 10 www.bus-ex.com

137

138

www.bus-ex.com NOVEMBER 10

Clark Construction / Balfour Beatty: NGA East Campus Project

The $1.7 billion, four-year project will create a new 2.1-million-square-foot office tower complex and a 150,000-square-foot data center, along with 1.6 million square feet of surface and garage parking and a 100,000-square-foot central utility plant.

Overseeing the massive construction project is a joint venture of Clark Construction Group and Balfour Beatty, which teamed up due to the sheer size and scope of the work, which at its peak is producing some $2 million to $3 million a day of work. The joint venture will self-perform a relatively small percentage of the work, instead relying heavily on subcontractors to perform the bulk of the activity.

The new facility is rising on the former Engineer Proving Ground at Fort Belvoir in Springfield, Virginia, where the NGA already had a presence prior to the decision to consolidate.

Some of the work has already been turned over to the agency, with a rolling move-in planned leading up to final turnover in the spring of 2011.

When completed, the facility will consolidate a number of existing locations in Reston, Westfields and Newington, Virginia, as well as Washington DC; Bethesda, Maryland; and elsewhere on the Fort Belvoir property.

According to Keith Couch, senior vice president with Clark Construction, the work began with infrastructure improvements designed to create easier access to the site from nearby highways, and to create parking and staging areas for the many various work components and a 40,000-square-foot temporary office facility to house project management teams. “Getting the infrastructure in place to support a 1,800-person construction operation was one of the early challenges,� Couch says, adding that work required coordination with numerous federal

NOVEMBER 10 www.bus-ex.com 139

Clark Construction / Balfour Beatty: NGA East Campus Project

Pierce Associates Pierce Associates has been successfully providing mechanical construction services to the greater metropolitan Washington, DC area since 1961.

Unlike most others in the industry, Pierce Associates performs the full range of mechanical construction functions with our own union forces including sheet metal, steam fitting, plumbing, air & water balancing and commissioning for HVAC and plumbing systems. As a result, we offer both owners and general contractors one source for comprehensive performance of mechanical work.

Pierce Associates has earned the highest reputation for quality, integrity and reliable performance.

When completed, the project will be seeking a Silver-level certification from the US Green Building Council’s LEED program, with both design and construction elements contributing to the overall sustainability of the project. “That has gone very well,” says Couch. “We’re on track to meet that goal. LEED is getting to be standard practice on our projects, and the entire construction team is well versed in doing our part.”

The joint venture was hired while design was still under way and quickly brought in key subcontractors to help bring drawings to completion. “There was a significant pre-construction effort that had those key subs working with the NGA, the Army Corps of Engineers and the design team to help find savings and construction improvements where possible,” notes Couch. Although the construction market in the Washington DC area was still relatively busy

“Everyone got onto the same page early on. We had to get right to work, and I think that helped us focus on the task at hand.

It’s been a great team effort from top to bottom” and state agencies, including the US Army Corps of Engineers, the NGA, Fairfax County and the Virginia Department of Transportation.

Among other challenges facing the construction team have been the aggressive schedule and the need to perform work in a choreographed sequence, with teams of subcontractors moving among the various parts of the project when needed. “We started prior to the design being complete,” notes Mike Phillips, Couch’s counterpart and senior vice president representing Balfour Beatty. “This has been a fast-tracked job right from the start.” The office tower work in particular lends itself to sequencing of work, with teams of contractors able to follow one another through each of the eight towers making up the central office facility, part of a campus that will include a fitness facility, a credit union and other employee amenities. The NGA has been ranked among the top 50 places—and one of the top five government agencies—at which to work in the Washington DC area by Washingtonian magazine.

when the work began, the project was one of the first BRAC jobs to be approved for completion, helping it get ahead of a large wave of similar work on bases in and around the nation’s capital. “Being a big job, it really lent itself to capturing stronger and larger subs in key areas,” says Phillips.

To make the overall project more manageable, it was broken down into components with teams responsible for managing specific aspects of the work. “We tried to break it down so it was more in the range of the size of projects that we would normally encounter,” Couch says.

Clark and Balfour Beatty are also working together in a joint venture at the new Walter Reed National Military Medical Center in Bethesda. The two firms are similar in size and culture and were able to quickly work side by side. “Everyone got onto the same page early on,” Couch says. “We had to get right to work, and I think that helped us focus on the task at hand. It’s been a great team effort from top to bottom.” www.clarkconstruction. com, www.balfourbeatty.com

NOVEMBER 10 www.bus-ex.com 141

Risin 142

www.bus-ex.com NOVEMBER 10

Woodward Design+Build

ng the

to challenge

Woodward Design+Build is an excellent example of a company devoted to the needs of its clients and in every sense a leader, as it contributes to the restoration of New Orleans both by its expertise in helping rebuild the city and by adhering to its civic responsibilities, as Ric Larson discovers

“N

othing can be reasonable or beautiful unless it’s made by one central idea, and the idea sets every detail.” —Howard Roark, The Fountainhead.

The germ of an idea is the spark that ignites the engine of invention, driving Woodward Design+Build to be one of the very best design and build teams available in a crowded field of talented competitors. The company ranks number 72 on a list of 100 of the nation’s top design and build firms compiled in 2009, with annual revenues of $160 million.

NOVEMBER 10 www.bus-ex.com 143

144

www.bus-ex.com NOVEMBER 10

Woodward Design+Build

When architect Carl E. Woodward established Woodward Design+Build 86 years ago in New Orleans, he did it with a vision of a partnership among client, architect and builder to bring forth a new and exciting way to provide added value to the company’s construction projects and create meaningful relationships with clients. With high quality and excellent safety performance, Woodward provides commercial, institutional, industrial and multi-family design and construction services including in-house custom millwork and structural steel capabilities, along with a methodology that integrates planning, design, engineering and construction activities into a comprehensive project management approach.

The company works on a wide-ranging array of projects from auto dealerships to hotels, to military and government facilities, to historic restorations, and several more varied projects in between.

In August 2010 it completed a comprehensive renovation for the athletic facilities at the Eleanor McMain Secondary School on South Claiborne Avenue in New Orleans.

The McMain School was the first public school to open in the aftermath of Hurricane Katrina, almost four months after the devastation in August 2005, which had virtually washed away the public school system in New Orleans. The McMain facility was woeful indeed. There were rats scurrying around the gymnasium, or what was left of it. The athletic equipment was in disrepair or destroyed, and there were no showers for the athletes due to there being no running water. The weight room was riddled with asbestos and covered in mold.

Bridgette Frick, the school principal, said that the school was in bad shape even before the hurricane hit. “The walls needed to be painted, and the lockers were in such deplorable condition that they weren’t usable even before the storm.”

The returning students were robot-like and in shock, suffering from what some have called the “thousand-yard stare,” a term used to describe the unfocused gaze of a combat-weary soldier, as a result of the aftereffects of the storm.

“We had a lot of kids with post-traumatic stress disorder,” Frick said. “A lot of students lost loved ones.” Frick attended to the obvious academic issues for the school after the storm, and after a school cleanup was completed, she quickly focused on athletics to boost the morale of her

NOVEMBER 10 www.bus-ex.com 145

146

www.bus-ex.com NOVEMBER 10

Woodward Design+Build

students. The school basketball team played well enough to be in the hunt for a playoff spot that postKatrina season. “Sports helped boost morale and made the students feel good about themselves; it gave them a sense of normalcy,” Frick said.

The $5.2 million budget included the rebuilding of structural roof trusses, the reconstruction of the steeple with a new steel-framed skeleton, sheathing the roof and the application of slate tiles, as well as new millwork for the windows

“We had a lot of kids with post-traumatic stress disorder. A lot of students lost loved ones. Sports helped boost morale and made the students feel good about themselves; it gave them a sense of normalcy” Woodward, along with Moses Engineers, Inc. and the architectural firm of St. Brown and Associates, together with many magnanimous volunteers, combined to team up and fix the problems. This was a story that was truly inspiring and aroused the interest of sports cable giant ESPN. After consulting with the New Orleans Saints football team, a long-time client of Woodward, ESPN chose the McMain School as the subject of an hour-long documentary called “Rise Up: New Orleans” that was featured on the network on September 21, 2010, and is part of an ongoing series by ESPN known as “Rise,” the network’s initiative for high school athletics.

As an added bonus, the students were allowed to practice with the Saints players and coaches at the Super Bowl champions’ state-of-the-art practice facility in Metairie, Louisiana, also built

by Woodward. Principal Frick thinks the result of “Rise Up: New Orleans” will have a long-lasting and positive effect upon the students for years to come. “What this will do for our school is analogous to what winning the Super Bowl did for the city of New Orleans,” said Frick.

Another of Woodward’s restoration projects in New Orleans after the storm was the Rayne Memorial United Methodist Church, a lovely Gothic Revival structure built in 1875. Hurricane Katrina caused extensive damage to the church. The bell tower collapsed on top of the roof, exposing the inside of the church to the elements. Bricks and debris from the tower crashed through the ceiling, and in the process, severely damaged the air conditioning ductwork, antique chandeliers, the exquisite wood flooring, and the 135-year-old wooden pews.

and louvers. The bricks for the masonry work had to be made of a specific color clay to match the originals and were manufactured in North Carolina of clay that was a blend of five different shades. Using remnants of the old bricks, special molds were made to accommodate the shapes of 14 different sizes, and where they were needed, new ones were fabricated. The pews had to be sent to a woodworking expert in North Carolina to be duplicated and refinished.

The wood floors were refinished as well as new chandeliers installed, along with repainting the interior, replastering the walls, and a new air conditioning system. As with every project Woodward is involved with, the company took special pride in contributing its expertise and craftsmanship to this project.

Safety is of the utmost importance to the company. “Through partnership agreements, employers learn that OSHA [Occupational Safety and Health Administration], NSC [National Safety Council], AGC [Associated General Contractors of America] and similar organizations are valuable allies in working cooperatively to address critical safety and health issues,” said Woodward vice president of operations Donnie Johnston. “This approach is a very effective tool for reducing fatalities, injuries and illnesses in the construction industry,” he said.

In January 2007 the company reached a key milestone by logging more than 1 million man-hours with no lost time due to injuries. To date, the company has logged over a million and a half man-hours with no lost-time injuries. www.woodwarddesignbuild.com

NOVEMBER 10 www.bus-ex.com 147

One-s part 148

www.bus-ex.com NOVEMBER 10

VAS Aero Services

stop ts shop

One of the world’s largest airline parts distributors is poised for take-off to a whole new level, as senior vice president of asset management and operations Alain Berube tells Pamela Derringer

V

AS Aero Services (formerly Volvo Aero Services), now has the freedom and the financial backing to become a one-stop-shop for surplus new and used airplane parts, just as the airline industry has come to recognize the value of what the company has to offer.

“A decade ago, airlines were afraid of buying used parts,” recalls Alain Berube, VAS’ senior vice president of asset management and operations. “Now they are under rising cost pressures and have gotten smarter about buying good used parts when it makes sense in the later years of a plane’s life expectancy,” he says.

VAS has been growing strong partnerships with airlines, OEMs and MROs (maintenance and repair operators) for many years, but its parent company Volvo Aero halted a complementary engine repair venture and then realized that VAS’ aftermarket business did not fit with its revised focus.

NOVEMBER 10 www.bus-ex.com 149

VAS Aero Services

All that has now changed. H.I.G. Capital LLC, an $8 billion Miami-based global investment firm, recently bought VAS from Volvo Aero, with ambitious plans to expand the company. “VAS is the industry leader,” says Bret Wiener, an H.I.G. managing director. “Aftermarket aviation component services is an attractive market. This is an opportune time in the industry cycle to invest,” he says, and an opportunity to help VAS’ “outstanding management team” in its next phase of growth.

four regional warehouses from Tulsa to Kansas, consolidating two supply programs in larger, less expensive space with room for expansion, and yet still located close to major customers. The company has also optimized business processes by implementing SAP Enterprise Resource Management software and it continues to optimize logistics by subcontracting transportation services from a division of its former corporate owner.

One of VAS’ first astute moves was a decision to

“A decade ago, airlines were afraid of buying used parts.

Now they are under rising cost pressures and have gotten smarter about buying good used parts when it makes sense in the later years of a plane’s life expectancy” Berube concurred. “H.I.G. sees us as a very strong player—one of the top five—with an extremely good network of large partners/customers, experienced management, good employees and robust internal operational processes.”

The timing couldn’t be better. VAS has bounced back from its lackluster performance in 2009 with a 25 percent boost in revenues this year, an indicator that the $250 million company is growing market share.

Underlying VAS’ growth is a series of astute business decisions over the past few years.

Not only did management grow the company while minimizing risk but it recruited customers as partners in acquiring and selling used parts, sharing the work and the profits. Now VAS is further optimizing operations by striving to reduce the number of its suppliers to a quarter of its former levels (previously as high as 80) to improve quality, delivery and warranty guarantees.

And, finally, VAS recently launched a new e-commerce website APO.aero with its complete inventory of some 500,000 part numbers, containing the history and documentation of each one. Customers can get a quote with a single click and have the part delivered the next day. The website will not only give global exposure to VAS’ inventory but will also enable it to focus on its major customers and spend less time processing low-value orders, Berube says.

The company also recently moved one of its

run its four geographically dispersed warehouses, each located near its aircraft customers, like consignment shops. VAS provided centralized warehousing but let the airlines and MROs own the planes they were stripping for parts instead of owning them itself, Berube explains.

By owning only 25 percent of the warehoused inventory, VAS reduced its exposure and risk, especially as the value of parts often tends to depreciate over five years, he says. What VAS offered its customers under this arrangement was its strong expertise in asset management, infrastructure and customers network, which collectively helped achieve higher prices for its parts, he explains. “We see ourselves more as a service provider, that brings the best solutions and part values for our customers and develops long term relationships.

“We have an excellent reputation and we strive to become the best partners,” he adds. “That’s why we win deals.”

More recently, VAS began taking collaboration to another level, enlisting customers as partners in disassembling jet engines for parts (while still not owning the engines) and then sharing the profits, Berube says. Sometimes the parts were sold to the customers doing the work, while other times the parts were sold to a third party and the profits shared. The whole asset sale process is therefore accelerated greatly.

NOVEMBER 10 www.bus-ex.com

151

152

www.bus-ex.com NOVEMBER 10

VAS Aero Services

Throughout VAS’ growth, its close partnerships with major airlines, OEMs and MROs has been key.

Boeing, for example, has an exclusive contract with VAS for the sale of new surplus parts. VAS also has a close partnership with MTU, Germany’s largest commercial engine manufacturer and MRO group—Berube headed their North America Operations until coming to VAS in 2008. VAS’ other major customers include all the big airlines such as American, United, Delta, Air France, KLM and British Airways.

Typically, VAS is one of three to five vendors competing for airlines’ spare parts, Berube adds.

“We’re in a unique position,” he says. “Because we are so close to these large companies and serve them well, they trust that we are very professional with our used parts distribution process. They know we make sure the parts meet the highest traceability and quality requirements required by the industry.”

In addition VAS is accredited by AFRA (Aircraft Fleet Recycling Association) which is recognized as the leading global industry association dedicated to pursuing and promoting environmental best practice, regulatory excellence and sustainable developments in aircraft disassembly, as well as the salvaging and recycling of aircraft parts and materials. Berube (not coincidently) is also a member of the Board of AFRA. Now that VAS is on its own and has strong financial backing, the company has ambitious plans to grow, both organically and through acquisitions, Berube says. “We see a lot of development opportunities with our existing customers such as Boeing, GE and Embraer in addition to expansion of our new military division,” he says. “It’s not impossible to double the size of the company in the next two to three years as we analyze all opportunities.” www.apo.aero

NOVEMBER 10 www.bus-ex.com 153

Oilin production

Som hydrocarb Arctic C to place extracting C

154

www.bus-ex.com NOVEMBER 10

Technip Canada

n the North

me say that the last great bon deposits lie within the Circle, and if so, it’s going e extra demands on those g them, such as Technip in Canada, Alan Swaby learns

T

echnip has built a reputation for technological advancement in a challenging environment and for creating and developing employment and business opportunities for the people of Atlantic Canada. Sam Allen, president of Technip in Canada helped open the Technip office in St. John’s 13 years ago, when the Terra Nova oil field was being developed 350 kilometers off the coast of Newfoundland. “Technip was part of the Grand Banks Alliance,” he explains, “which at the time was the most comprehensive Alliance of its kind ever put together.”

NOVEMBER 10 www.bus-ex.com 155

Technip Canada

Nord Marine Services Limited Nord Marine Services Limited is an Atlantic Canadian owned and operated business based in Mount Pearl, Newfoundland and Labrador.

Its main product lines are marine life-saving equipment and oil spill containment, recovery and cleanup equipment.

Our business is ISO 9000 registered and is managed with strict quality control standards set by ISO as well as Transport Canada, IMO, DNV, Lloyd’s Register of Shipping, and with the rigorous operations and training standards set in place by our various equipment manufacturers.

DOF Subsea Canada DOF Subsea Canada is proud to have provided survey and positioning services to Technip Canada Ltd. during the complex Whiterose and North Amethyst offshore field developments in Newfoundland and Labrador. Our relationship with them goes far beyond projects in Canada, and indeed we have provided a wide range of services to Technip on a worldwide basis. We look forward to continuing this success by providing our world-class services on future Technip projects.

As one of the world’s leading suppliers to the oil and gas industry, Technip has been involved with most major developments in one capacity or another.

Last financial year it generated around €6.5 billion worldwide. Technip operates in three segments of the world oil and gas market: Subsea, Offshore and Onshore. Onshore, Technip builds petroleum processing—it’s the world’s largest designer of liquefied natural gas plants, for example—and offshore it engineers production platforms. In Canada, Technip’s principal interest is subsea components.

Listed on the Paris Stock Exchange, Technip is a truly global company with nearly half of its workforce in Europe, 22 percent in Asia Pacific, 21 percent in the Americas, 7 percent in the

NOVEMBER 10 www.bus-ex.com 157

Technip Canada

AOMS Headquartered in St. John’s, NL, AOMS is Atlantic Canada’s leading provider of occupational health and emergency medical services to the oil and gas industry, with integrated operations from Alberta’s oil sands, to Newfoundland’s Grand Banks. For over thirty years AOMS has been providing its clients with the advantage of having a workforce that is healthy, safe, and meeting their full potential.

BJ Services BJ

Services,

a

Baker

Hughes

company,

can solve the world’s most difficult oilfield problems including

with umbilical,

fit-for-purpose flowline,

solutions

pipeline

and

process pre-commissioning, maintenance and related services. From field planning through well construction, stimulation and extended recovery, our world-class engineered solutions are custom-designed to meet customers’ job requirements with strong focus on technical and operational excellence, economics and safety.

Middle East and 3 percent in Africa. Canada falls under the North Sea and Canada sector, which also includes the United Kingdom and Norway.

As project managers and engineers, the normal mode of operation is to decentralize and open an office as close as possible to the project. In Canada’s case, the current offshore oil fields are some 350 kilometers out into the Atlantic. The next generation will be even farther out and at water depths of 2,000 meters, but at the moment Technip is working on the Grand Banks, where the seas are not particularly deep (around 100 meters). But this in itself creates another set of problems. Such vast amounts of water compressed into relatively shallow areas can generate waves of 30 meters at times of bad weather—of which there are plenty.

Shallow seas combined with extreme environmental conditions of low temperatures and

high winds make the design of the subsea equipment that Technip supplies a particular challenge.

Icebergs are also a real threat in that area. In the same way that platforms have to be capable of being disconnected and shut down in times of hurricanes, so too with icebergs. Smaller chunks of ice can be deflected by water cannons, but larger masses often have to be lassoed and towed to where the currents miss the workings.

Wellhead equipment often has to be located below the level of the sea bed, out of the reach of icebergs in what are commonly referred to as glory holes—purpose-built 10-meter-deep depressions the size of a football field. One, on the White Rose field, measured 58 meters by 50 meters—a significant undertaking below 110 meters of water and in boulder-strewn, rock-hard substrate.

In Canadian waters, Technip has been involved to some degree with every project to-date.

Technip will typically supply the pipelines that transport the hydrocarbons from the wellhead to the production facility and the umbilicals that control the wellhead equipment. Technip will also perform all the associated offshore construction works including, for example, the installation of the associated manifold equipment and the mooring system for the production facility.

It’s worth reminding ourselves what is being asked.

Oil can leave the well at 5,000 pounds per square inch pressure and 100°C temperature. The flowlines can measure hundreds or thousands of meters in length, but in all cases they must provide a working life of at least 20 years in very onerous conditions.

Take a cross-section through a typical 8-inch internal diameter flow-line and you’ll find 4-inch-thick walls made from layers of stainless steel, plastic, insulation and reinforcement, none of which can be allowed to fail. Take a cross-section through an umbilical line and you’ll find hydraulic hoses, power cables and signal wires aplenty. In Technip’s case, it has plants in France, Brazil, the UK, the USA, West Africa and Malaysia dedicated to manufacturing these high technology products. The Group’s subsea flexible pipe R&D center is based in France.

“Obviously,” says Allen, “there are other suppliers who can produce individual items, but the advantage we have at Technip is our vertical integration. Not only do we have the engineering skills and proven functional components and systems; we also have the infrastructure and

NOVEMBER 10 www.bus-ex.com 159

Technip Canada

resources to handle installation and commissioning as well as supply.”

In Canada, the other source of petroleum is from the oil sands, where Technip also has a presence.

“Activity has been slow for a few years,” Allen says, “after it overheated in 2007, but there are signs that demand is on the rise once more.”

But it’s in Newfoundland in particular that the oil and gas industry has transformed the province.

Thirteen years ago it was the poor relative, with a gross domestic product of just 89 percent of the Canadian average; these days it’s running at 110 percent of the average. And as one of the few contractors that have been there continuously for the whole period, Technip has played a significant role in raising prosperity and shifting attitudes.

“On the next major project, for example,” says Allen, “40 percent of the project management and engineering team will be female.”

All players in the oil and gas industry will continue to be highly conscious of the responsibility they have to safeguard the environment and exercise due diligence as health and safety of their workers and the environment is, and will always be, the number one priority. www.technip.com/en/locations/canada

NOVEMBER 10 www.bus-ex.com

161

Smartn

As phase II of the Queenston plaza redesign between the US and Canada is set to become a w talks to Lew Holloway, general manager of the Niagar about the challenges of doing construction work a 162

www.bus-ex.com NOVEMBER 10

Niagara Falls Bridge Commission

new customs

nears completion, traveling whole lot easier. Gay Sutton ra Falls Bridge Commission, at an active border crossing

T

ravelers wishing to cross the US-Canadian border via the most direct route between Toronto, Ontario, and the state of New York have four options. Either they cross the Niagara River—the natural boundary between Canada and the US—via one of the three bridges managed by the Niagara Falls Bridge Commission, or they travel some 16 miles further south to cross between Buffalo and Fort Erie. Since 9/11, however, increased security at the border crossings has caused significant delays.

NOVEMBER 10 www.bus-ex.com 163

“One of our biggest challenges with this project was having sufficient land to

164

www.bus-ex.com NOVEMBER 10

Niagara Falls Bridge Commission

“Prior to 9/11, the average primary processing time for a car at the Lewiston-Queenston Bridge was around 30 seconds,” explained Lew Holloway, general manager of the Niagara Falls Bridge Commission. “During this time the officer had to determine the nationality of the occupants of the vehicle and whether they had anything to declare, and generally did this verbally. Now, the average processing time is over a minute, and the officer is required to scan documents and verify the identity of the occupants.”

A minute may sound insignificant, but that represents a doubling of processing time and this has caused considerable congestion on both sides of the border. “Long delays at Queenston on the Canadian side of the border resulted in several fatalities caused by passenger vehicles driving into the back of stopped transport trucks,” Holloway said. This was remedied by expansion of Highway 405 and the construction of a separate lane for transport trucks funded jointly by Canada, Ontario and the Niagara Falls Bridge Commission.

The Commission has also undertaken work to upgrade the bridge to today’s standards.

To address all these issues the Commission developed a plan to improve and upgrade the bridge, the plazas on both sides of the river, and the connecting road networks. Now with work on the Canadian side to be completed shortly, there will be some relief for long suffering travelers transiting between the two countries. “Our biggest challenge on a go-forward basis is that we will have a state-of-the-art facility on the Canadian side and a 1960s facility on the US side,” Holloway said. But until the funding can be found for the upgrades on the US side, CBP (US Customs and Border Protection) and the Commission will have to do the best they can with outdated facilities.

Established in 1938, the Commission is a binational not-for-profit corporation that manages all three bridges in the region of Niagara Falls.

The Lewiston-Queenston Bridge is the designated commercial traffic bridge and carries passenger vehicles, coaches, recreational vehicles and

o accommodate the expanded facilities”

transport trucks. Last year alone, some 675,000 commercial transport trucks crossed the bridge.

Just north of the falls the Rainbow Bridge carries passenger vehicles, coaches and recreational vehicles only, the majority of them being tourists.

Meanwhile, the Whirlpool Rapids Bridge, just a little further north, is the only bridge in Canada and the US to be exclusively for Nexus card holders. Run as a joint venture between the US and Canada, Nexus is a customs and immigration program for frequent travelers that expedites the transition of trusted travelers through border control.

The program of work on the Queenston plaza has been divided into in three phases. But before work began on the plaza the Commission, in conjunction with the Province of Ontario and the Canadian Government, invested some $44.9 million to reconfigure and upgrade provincial highway 405 leading to the bridge. This addressed the accident hazard by separating the trucks and cars into different lanes. The bridge was also strengthened and upgraded to meet today’s seismic requirements. The old deck which provided two lanes in each direction separated by a median was replaced with a five lane flexible direction highway that could be configured to any combination of flow patterns as required.

“One of our biggest challenges with this project was having sufficient land to accommodate the expanded facilities,” Holloway said. “The new Customs Border Services Agency (CBSA) building and the Canadian Food Inspection Agency (CFIA) building which are part of phase II, will be three times the size of the existing buildings.

“So in phase I space was created by building a two storey parking garage to replace the previous parking which had been on-site. The old toll lanes and maintenance garage were demolished and six new toll lanes, a new toll house and a maintenance garage were constructed. Following a new route, five new commercial inspection lanes for trucks were also constructed to separate commercial traffic from passenger vehicle traffic.” Costing a total of $49 million, this phase was completed early in 2009.

The second and largest phase of construction includes the impressive 110,000 sq ft CBSA building housing state-of-the-art car, truck and bus processing facilities, a 6,100 sq ft CFIA building and 10 new primary inspection lanes

NOVEMBER 10 www.bus-ex.com 165

Niagara Falls Bridge Commission

for cars. Construction began in spring 2009 but has not been without its challenges. One of the biggest headaches for the construction team has been maintaining the through flow of traffic on this busy border crossing, while managing public safety on what is essentially a construction site. To manage this effectively, the Commission engaged a traffic engineering firm to work with Project Management to route the traffic according to the phases of construction.

The work on phase II is almost at an end now.

“We’re expecting that the new Customs and Food Inspection Agency buildings will be fully operational by late January. Once that has happened we can start tearing down the old buildings and routing the traffic through the site as required while that is in progress. It’s going to be interesting.”

That leaves just the final phase of the project which will begin next year. Estimated at $7.5 million, it will include a new duty free shop, currency exchange and public washrooms.

A strong element throughout this project has been its design, firstly to minimize the environmental

impact through the use of environmentally friendly materials and practices such as triple paned glass and green roofs, and secondly to ensure that the plaza sat comfortably with its surroundings. Over $1 million, for example, has gone into landscaping to minimize the visual impact of acres of concrete.

“When the architects were designing the CBSA building, they became familiar with and took photos of the surrounding farmland, the greenhouses, vineyards, Niagara Gorge and the bridges. They then completed their design with the surroundings in mind.” And their success has been recognized. The town of Niagara-On-TheLake was so impressed by the first phase that it awarded it a certificate for contemporary design.

Once the project is completed it will not only fulfill its function of easing congestion and cutting the accident rate, it will also be an attractive public space. “The new plaza will be the first thing travelers see after crossing the bridge. It makes a huge statement, and will be a very compelling entrance into Canada,” Holloway concluded. www.niagarafallsbridges.com

NOVEMBER 10 www.bus-ex.com 167

Rebuildin

tru

Nyrstar has long been one of the world’s top itself facing the prospect of future supply an prompted a move upstream into direct zinc o Keith Regan learns also involves rebuildin communities

168

www.bus-ex.com NOVEMBER 10

Nyrstar Tennessee Mines

ng

ust W

p zinc smelters, but found nd margin pressures. That ore mining, a process that ng the trust of employees, s, partners and regulators

ith interests in Australia, Belgium, the Netherlands, France, Finland, Greenland, Peru and the United States that handle primarily zinc and lead, but also copper, gold and silver, Nyrstar is a significant mining and processing player in a number of markets, but is considered a global leader in the production of zinc.

The listed Belgian company’s portfolio of properties and processing facilities is constantly being reviewed for strategic opportunities and one of Nyrstar’s latest strategic moves involves positioning itself further upstream in the zinc market in the United States.

With the only zinc smelting operation in the US in Tennessee, Nyrstar is no stranger to the zinc market, long serving as a finishing and processing partner to mining companies. Recent market developments, however, prompted Nyrstar to re-enter the direct mining business in Tennessee, says Stuart Gula, general manager of two recently acquired mines.

NOVEMBER 10 www.bus-ex.com 169

Nyrstar Tennessee Mines

Heartland Pump Rental and Sales, Inc. Heartland Pump Rental and Sales is proud to be the complete pump supplier and contractor for Nyrstar’s Middle Tennessee mines. We supply, install, and service Nyrstar’s dewatering pumps from over 1,300 feet underground, mill supply water, process water, seal supply and booster water, slurry pumps, and chemical feed pumps.

Heartland Pump Rental and Sales provides unmatched 24/7 service for planned projects as well as covering any of Nyrstar’s emergency needs with over 500 pumps in our rental fleet.

Heartland Pump’s MSHA-certified engineering staff, pump installation crews, and trained mechanics provide the support Nyrstar needs to keep the mine running.

Gula, an Australian mining engineer, is responsible for overseeing Nyrstar operations at East Tennessee and Middle Tennessee mines, where ore is processed into zinc concentrate that will then be finished at the company’s existing Clarksville smelting facility. East Tennessee is located near Knoxville, and less than 250 miles from Nyrstar’s Clarksville smelter, while Middle Tennessee is closer to Nashville and about 100 miles from the Clarksville smelter.

When at full production, the two mines will produce enough zinc concentrate to keep the Clarksville smelter running at full capacity. “We currently have a strategy of upstream integration where smelting and mining will both provide valuable contributions to our earnings,” Gula says.

“The acquisition of the Tennessee mines in 2009 is part of our strategy to move upstream into mining.”

Nyrstar has experience in mining zinc, with active operations in Peru, and interests in exploration activities in Greenland, Gula notes. “The company used to be more closely linked to the mining end but the decision was made to move away from that.

As often happens, this business moves in cycles and we are back to a point where the benefits of controlling the supply are significant.”

As it brings the existing mines back into full production (the mine at Middle Tennessee had been in bankruptcy) Nyrstar is working hard to rebuild confidence among various constituents,

NOVEMBER 10 www.bus-ex.com

171

Nyrstar Tennessee Mines

including employees, suppliers, key partners and the communities that host and rely on the mines.

“There have been a number of operators of these mines and their business styles have varied in terms of how committed they were to doing things right,” says Gula. “We have taken a lot of steps to ensure we are giving across a professional and no-nonsense style and approach to our operations right from the outset.”

When fully operational, the two mines will be capable of moving around 5 million tonnes of ore annually, with relatively low grades of 3 to 3.5 percent. “It’s a low-margin, high-volume business, so we want to make sure we set it up right. We have to establish a culture where everybody is involved in the business and everybody is looking at every aspect of the business at all times, so we can find ways to improve those margins,” Gula says.

NOVEMBER 10 www.bus-ex.com 173

Nyrstar Tennessee Mines

To support those efforts and its corporate philosophy of “preventing harm,” Nyrstar has brought a number of systems and procedures to the mines, including the use of a Risk Information Management System that enables it to track all safety and environmental incidents or issues.

“There are a number of dimensions around safety, including the behavioral as well as systems and procedures and having a handle on the data is an important foundation for all of it,” Gula says. “As much as we don’t want injuries at all, this can be a hazardous business, and being able to put those that do happen into a database allows us to interrogate when they happened, what shift, what type of work; we can see patterns and get ideas for how to make things better when we can see all that in front of us.”

Safety, he adds, is a company core value, a message that has been driven home to employees and partners alike, many of whom worked with previous mine owners and operators, who may not have had the same level of commitment. The RIMS system also enables Nyrstar to track environmental compliance and work more smoothly and cooperatively with regulators in Tennessee. “We see those regulations as a minimum standard and we want to far exceed them.”

The data collected with the system will also aid Nyrstar’s efforts to become ISO-compliant. “Our goal is to get ISO 14001 certified and this helps get us started down that path,” Gula says.

The Middle Tennessee mine was operating in bankruptcy, and will be back at full capacity by year’s end. Eastern Tennessee was on care and maintenance by previous owners Glencore, which sold the mine to Nyrstar in 2009 for $126 million, and is now operating close to full capacity.

The mines have different dynamics in place, with only about 20 percent of the Nyrstar workers at Middle Tennessee having previously worked there, as previous owners had relied on contractors, while 80 percent of those at Eastern Tennessee—which is located in an area that has been mining zinc since the 19th century—have direct experience in the same mine.

While finding experienced miners has been a challenge, the bigger objective of Nyrstar is to overcome a lack of confidence in the local community. “Past owners have been here today and gone tomorrow,” Gula says. “We have to build confidence that we’re in this for the long-term. One

of the things we have aimed to do is stand aside and position ourselves differently from how the mines were previously operated.” That happens by constantly emphasizing the Nyrstar way. “We want people to get involved with the business and we want to give them the comfort and certainty they need to give us their commitment in return.

The most important thing for us right now is to rebuild credibility.”

To emphasize its long-term view, Nyrstar assembled a group of two dozen key leaders to develop a five-year strategic plan that starts with the company’s prevent harm policy and builds a picture of the mines’ financial and operational futures. “One of the things that came out that we didn’t realize would happen was that employees could see we were thinking about our strategy out to 2015. We hadn’t fully realized to that point just how much of a stress the up-and-down nature of the business in the past had been on people.

Putting that plan on paper really accreted a lot of confidence in and around the place and we want to build on that.” www.nyrstar.com

NOVEMBER 10 www.bus-ex.com 175

A

glitterin opportuni

c

North Americ on becoming a in Kentucky. through a rare the product pa 176 www.bus-ex.com NOVEMBER 10

North American Gem

ng I ityin

coal

can Gem is setting its sights major coal mining presence . The path to that door leads e type of coal that is used in tion of silicon chips and solar anels, as Keith Regan learns

ts name may suggest high-end jewelry, but North American Gem is actually a company striving to become a major coal producer, with a unique approach that focuses on reclaiming past-producing mines and searching for and mining a rare type of coal that isn’t destined to be burned for steam production.

After some early exploration efforts focused on coal in the Saskatchewan province of Canada, the Vancouver-based company has begun acquiring and restarting coal mines in Kentucky, targeting those with seams of Blue Gem Coal. Blue Gem is used in industrial production processes, including the production of silicon chips and materials found in solar panels. It’s a grade of coal that possesses certain elemental characteristics that make it uniquely suitable for production of silicon metals and is in high demand, says Jeff Desjardins, marketing manager at North American Gem. “Demand for Blue Gem Coal is up 15 percent in 2011 and is estimated to increase another 13 percent in 2011,” Desjardins says.

“We expect this trend to continue as the production of silicon chips for computers and other devices continues to increase.”

Because of its scarcity—the overall market for Blue Gem is about 3 million tons per year—Blue Gem garners a premium price as well, typically selling for as much as 200 percent more per ton than even the highest grade of steam coal, providing the margins the company needs to recoup its investment in its mines.

Blue Gem Coal can be processed to have low enough ash levels at the hardness required by silicon metals manufacturers. This type of coal is only mined in Kentucky and parts of neighboring Tennessee, West Virginia, and parts of Colombia in South America.

NOVEMBER 10 www.bus-ex.com 177

178

www.bus-ex.com NOVEMBER 10

North American Gem

That approach—and the fact that the company has disavowed the mountaintop-removal approach to coal mining that has fallen out of favor with regulators—has helped the company turn mining and environmental agencies into cooperative partners.

As it mines the Blue Gem, the company will also encounter seams of Jellico coal in its mines. That high-grade steam coal will be mined and sold, most often locally. “One of the benefits of mining in Kentucky,” says Desjardins, “is that there is an extensive network of end users that need coal, so there are many different coal buyers within a short drive from our processing facility.”

Moreover, because Blue Gem Coal is used in industrial production and not burned, and because sustainable power production equipment such as solar panels are among the end products of the Blue Gem, the coal is seen as much more greenfriendly than traditional steam coal production.

“Coal has gotten a reputation as an environmentally unfriendly type of industry. But this coal is used for green power; it’s very much the opposite of that.”

Among the factors creating the opportunities for North American Gem is the Surface Mining and Reclamation Act of 1977, a federal law that particularly impacted Kentucky and laid out strict rules for reclaiming mine sites. The result is a slew of older mine sites that are sitting idle but with new technology can be cleaned up and brought back into active production, Desjardins notes. While permitting new mine operations can present a multitude of regulatory hurdles to clear, North American Gem is working with regulators to reclaim older mines that have been sitting unremediated from earlier production efforts.

“There’s a lot of coal left on sites that were mined and closed down before 1977. These were areas where the operators took advantage of easily accessible coal with little regard to restoration of the land to its original condition. We’re using new augering technology and other methods that enable us to get into a lot of spots where producers could not before,” Desjardins says.

To date, North American Gem has developed three active mine operations in Kentucky. The first was intended to be a trial of its approach. Located in Whitley County and known as Demp’s Hollow, it came online in November 2009, was mined for 9 months and is now in reclamation. “It was meant to be a learning process for us,” Desjardins says.

NOVEMBER 10 www.bus-ex.com 179

A second mine, in Knox County, is now in active mining after permits were obtained in the summer of 2010. Known as Gilliam Hill North, the mine is expected to ramp up production as process kinks are worked out. The mine is expected to produce up to 10,000 tons monthly at peak production.

The third mine, the largest being worked on so far, is known as Swan Pond and is expected to be up and running by the end of 2010, once permitting issues and final details on roadway layouts and other items are finalized.

Lying in wait is a project that the company is particularly excited about because it’s the first it will attack that contains only Blue Gem coal.

Known as Granny Rose, that mine is expected to come online in the spring of 2011, shortly after all permits are in place.

Bringing the mines back into production has been the task of a North American Gem team as well as key third-party suppliers and partners.

Most of the mining operations, for instance, are being handled by Kentucky Mining Partners, which is responsible for mining as well as for onsite safety and environmental compliance.

The in-house team moving the projects forward includes general manager Dean Schafer with the help of engineering consultant Deborah Moses, as well as other mining experts. The company gained significant expertise and on-the-ground credibility recently in Kentucky when it added William J. Grable to its board of advisors. Grable is the former commissioner of the Kentucky Department for Surface Mining Reclamation and Enforcement, under Governor Wilkinson of Kentucky, and an architect of the state’s long-term energy plan and mining safety standards. “He worked in the industry for 35 years

180 www.bus-ex.com NOVEMBER 10

and oversaw the department that regulates coal mining permits,” Desjardins says. “Having him on our team has been a huge boost to us.”

North American Gem is committed to not engaging in the mountaintop-removal style of mining, a process that has been decried by environmental groups and is being clamped down on by both state regulators and the regional office of the Environmental Protection Agency (EPA). “They’re really clamping down on mountaintop removals and valley fills, and all our projects are contour mining projects. We don’t have to deal with that whole issue.”

Future opportunities to repeat the reopeningreclamation process will abound, with many small mines scattered around the hills of Kentucky and neighboring states, many owned by private landowners and many in economically depressed areas where mining activity is a welcome boost.

“Even those mines that have been in operation have been cash-strapped, and operations are not as optimal as they could be,” Desjardins says. “We’re able to go in and find opportunities where we can acquire properties by negotiating leases that are mutually beneficial to both North American Gem and the landowners. In Kentucky, relationships with private landowners are very important. Once a company proves itself to be a solid, reliable partner to do business with, it makes it easier to find and complete other deals down the road.”

“Our goal is to be a large mining company,” Desjardins concludes. “We’re looking at operating up to 10 mines in total, but that’s just the beginning.

We want to go further than that. In all, we’re looking at 10 to 20 years of mining and becoming a big player in the Blue Gem Coal market.” www.northamericangem.com

North American Gem

“Coal has gotten a reputation as an environmentally unfriendly type of industr y. But this coal is used for green power; it’s ver y much the opposite of that” NOVEMBER 10 www.bus-ex.com

181

Reinven

pas

the

Gold prices remain at high levels, which is great news fo production. But mines are fundamentally a depleting resourc at one mine, another must be found to take its place. And Minerals Corporation tells Andrew Pelis how his company has d closure of its flagship operation, the Kemess South Mine i building a new cornerstone, the Young-Davidson 182

www.bus-ex.com NOVEMBER 10

Northgate Minerals Corporation

nting

st

or mining companies in full ce and as reserves decline drew Cormier at Northgate dealt with the forthcoming in British Columbia, and is n Mine in northern Ontario

G

old mining continues to attract favorable returns and remains a burgeoning industry, with Canada remaining a prime location.

One of the big challenges for mining companies is to identify new opportunities as reserves as existing mines dwindle.

It’s a scenario that Northgate Minerals Corporation is only too well aware of as it works toward production at its newest mine, YoungDavidson, which is actually a reinvention of two historical mines near the town of Matachewan, Ontario.

Young-Davidson is located three kilometres from Matachewan, some 65 kilometres west of Kirkland Lake in northern Ontario and “is almost as old as Northgate Minerals itself,” explains project manager Andrew Cormier.

“More specifically, the mine is located on the historic Abitibi greenstone belt, on a brownfield site where two former mines had previously produced one million ounces of gold between the mid 1930s and 1950s,” said Cormier.

Northgate Minerals was founded in Ontario when it was incorporated as Kirkland–Hudson Bay Gold Mines, Ltd. in January 1919. The company changed its name to Northgate Exploration in 1959 and finally to Northgate Minerals Corporation not long after acquiring the Kemess South Mine in north-central British Columbia. Given Northgate’s roots, the development of the Young-Davidson mine in Ontario represents a homecoming of sorts for the organization.

NOVEMBER 10 www.bus-ex.com 183

Northgate Minerals Corporation

Dumas Dumas’ ability to find the common ground in every project requires an extraordinary depth of commitment, expertise and, importantly, an ability to form strong partnerships with our clients.

Dumas’ work at Northgate Minerals Corporation’s Young-Davidson Mining Project is testament to our commitment to forming lasting partnerships.

Dumas started working for Northgate at the Young-Davidson Project in 2006. In 2008, we collaborated to help Northgate achieve a National Exploration Safety Award and in 2010, Dumas is celebrating more than three years and no lost time Injuries on site.

Dumas is one of Canada’s leading full-service underground mining contractors. We specialize in technically challenging underground mining projects in mine construction, mine development, mine services and engineering.

Northgate Minerals is listed on the Toronto and NYSE-Amex Exchanges with its executive offices located in Toronto. Northgate currently operates three mines, the Kemess South openpit copper-gold mine in British Columbia and two underground gold mines, Fosterville and Stawell, located in the state of Victoria in Australia.

“Northgate will produce roughly 270,000 ounces of gold in 2010, and once the Young-Davidson mine begins production in 2012, we estimate total production will rise to over 300,000 ounces per year,” Cormier says. “Northgate has always prided itself on its ability to take on challenging, underperforming assets and turn them into efficient and profitable operations. We first demonstrated this in 2000 at Kemess South, where we acquired a distressed operation out of the bankruptcy of Royal Oak and turned it around in the space of two years into an extraordinarily efficient operation that has produced operating cash flow of over $900 million over the past 10 years.”

In November 2005, Northgate acquired the Young-Davidson property for $18 million, which represented Northgate’s first significant diversification beyond the Kemess camp and

another example of its ability to identify a “diamond in the rough.” Since acquiring Young-Davidson five years ago, Northgate has delineated over four million ounces of gold resources on the property through diamond drilling, and has completed a feasibility study outlining a 180,000-ounce-peryear gold mine with an initial 15-year life.

On 10 September, 2010, Northgate entered into a dynamic new stage of development for its YoungDavidson gold mine after a groundbreaking ceremony was held onsite to mark the start of construction.

“The groundbreaking marked the achievement of a key milestone in the development of the YoungDavidson mine. Our first gold pour is scheduled for early 2012, and in its first 15 years of production, the Young-Davidson mine will produce over 2.5 million ounces of gold,” said Ken Stowe, president and CEO of Northgate. “Young-Davidson represents a long-life, low-cost operation located in one of the best mining jurisdictions in the world.

NOVEMBER 10 www.bus-ex.com 185

Northgate Minerals Corporation

“Northgate has always prided itself on its ability to take on challenging, under-performing assets and turn them into efficient and profitable operations” We are extremely proud to be here today, five years after Northgate first set foot on the property, as we realize our vision of building this mine.”

“The total pre-production capital cost of the Young-Davidson mine is projected to be $340 million,” Cormier states, “and during the height of the construction, in 2011, there will be approximately 600 construction workers on site.

We are now fully funded after recently raising $170 million through a convertible debentures issue that closed in early October.”

Development activities over the next 18 to 30 months will include the construction of a 6,000-mt/ day mill, raise boring of a 1,500-meter ore-hoisting shaft, deepening of an existing shaft and driving of an access ramp to ferry men and materials to the underground, upgrading of a 47-kilometer transmission line to the property, and construction of a modern tailings impoundment area. Cormier comments, “The existing infrastructure on the site has given us a great head start and has allowed us to develop the mine in a very short period of time at a cost that is significantly less than what we would have had to spend on a greenfield site.”

When the Young-Davidson mine begins producing gold in early 2012, ore will be sourced from a small open pit on the property for the first two years while the underground mine that will supply ore to the mill for the remaining 13 years of the mine life is being completed.

Cormier says that when the Young-Davidson mine reaches full production, it will employ approximately 300 people and he anticipates that most of the mine’s employees will come from the local area. “Young-Davidson is located in a very prominent district for mining in Canada, and we have forged close links with the local communities and the nearby Matachewan First Nation, which will be beneficial as we staff up our mine,” he said.

An excellent example of the close, collaborative relationship that Northgate enjoys with the local community is an innovative First Nations training program, Matachewan Aboriginal Access to Mining Jobs Training Strategy (MAATS). The program allows members of various First Nations to receive access

to education, upgrading and training in the field of mining. As part of this provincially funded program, Northgate provides students with the opportunity for hands-on training at Young-Davidson with the hope that those who graduate from the program will become full-time employees at the mine. Thus far, the program has been a tremendous success as the first five graduates were all hired to work as underground miners at Young-Davidson, bringing total First Nations employment at the mine to approximately 15 percent.

Northgate’s strong relationship with local communities was vital to the project and became an important factor as the company initiated the permit application process for Young-Davidson.

The tremendous support provided by the towns of Matachewan, Kirkland Lake, Elk Lake and Timiskaming Shores along with the support of the Matachewan First Nation, with whom Northgate has signed an Impacts and Benefits Agreement, facilitated the timely granting of the various permits necessary to start building the Young-Davidson mine.

The current mineral reserve on the YoungDavidson property provides Northgate with 15 years of mine life, however, many of the surrounding exploration claims continue to hold a high prospective for additional reserves that could extend the mine life well past this mark. “We have explored between the two original mines at a onekilometer width and 1,500-meter depth,” comments Cormier “and we know that the mineralization is still open beyond that depth. Additional targets to the east and west have given us confidence that there are more reserves to be found on the property.”

Once the initial construction is completed over the next 18 months, Young-Davidson will take its place as the new cornerstone of Northgate Minerals, replacing the venerable Kemess South mine, which has held this position for the past decade. The development of new mines and the closure of old ones is a fundamental part of the mining industry, and, in this instance, that natural life cycle is bringing Northgate back to its roots in Ontario where the future looks very bright. www.northgateminerals.com

NOVEMBER 10 www.bus-ex.com 187

Th

SEMS Exploration h on a unique busine Gay Sutton about t

188

www.bus-ex.com NOVEMBER 10

SEMS Exploration

hrough thick thin and

has built its reputation as a mineral exploration service consultancy ess model. Managing director Simon Meadows Smith talks to the secrets of retaining staff through good times and bad

I

n the nine years since Simon Meadows Smith established SEMS Exploration as a geological consultancy for the gold mining industry in Ghana, the company has grown to lead the field in West Africa, providing a full range of geological, mining and engineering services that span from grassroots early stage reconnaissance exploration through to the completion of feasibility studies and mine design—and all the steps between.

NOVEMBER 10 www.bus-ex.com 189

“We started in gold,” explains Meadows Smith, SEMS’s managing director. “But as our business and reputation grew, we were asked to get involved with other minerals, so lateral growth has been very much a logical progression.” Today, the company works with a wide range of minerals including manganese, iron ore, bauxite, kaolin and even water. And it provides everything from full turnkey exploration operations to specialised technical services.

The company’s headquarters are still in Accra, Ghana, but offices have also been opened in Abidjan, Ivory Coast and Ouagadougou, Burkina Faso. Now boasting almost 100 employees, SEMS has field crews and teams working in all corners of West Africa, from Mauritania and Senegal to Cameroon.

“All our staff are permanent employees,” Meadows Smith says—and this is one of the true secrets of the company’s success. “In the mining industry staff tend to be quite transient. But we believe you can’t provide a reliable and consistent consultancy service if you’re constantly hiring new people for each job. Our business model is therefore different from many other consultancy groups who tend to employ staff on short term contracts.”

Continuity has played an important role in many of the long-term contracts the company has worked on. Between 2002 and 2008, for example, SEMS provided a complete turnkey service for Adamus Resources, an Australian diamond exploration company based in Perth that acquired a gold exploration licence in Ghana. “We managed Adamus Resources from the first acquisition of the licence through to granting of the mining lease. We built up their landholding, performed all the technical ground work, established a large resource, completed the feasibility study and went through the application for a mining lease.

Then we handed over everything to them. Right now they’re building the mine and should pour their first gold next year.”

In a similar way, the company has been working with Gryphon Minerals in Burkina Faso, and recently enabled Gryphon to announce a 1.5 million ounce resource on their Banfor Gold Project.

Another unique feature of the SEMS business model is that the majority of its staff are West African, supplemented by a small number of expats who supply specialist skills the company has been unable to source locally. Countries such as

190 www.bus-ex.com NOVEMBER 10

SEMS Exploration

NOVEMBER 10 www.bus-ex.com

191

SEMS Exploration

Midlands Minerals Midlands is a growth oriented and value based gold exploration company operating in Ghana and Tanzania, two stable countries with a history of gold mining.

Midlands’ top priority project is the fully permitted Sian gold project in Ghana, which contains Esaase and Ampeha, two previously producing open pit mines with a resource with significant growth potential.

Midlands’ second priority project is the highly prospective Kaniago gold project, contiguous to two past open pit gold producers.

Midlands also holds highly prospective licences for gold and diamonds in the Lake Victoria Goldfields in Tanzania, including its advanced Itilima Gold Project.

The company has a highly qualified management and technical team with extensive experience in the countries in which it operates. www.midlandsminerals.com.

Ghana have a well established mining culture, and are endowed with mining schools and universities providing high quality training in subjects such as geology and mining engineering. The region therefore produces well qualified people with all the necessary knowledge and experience.

There are many benefits to employing staff in the long term, and West African staff in particular.

Not only do they not require the investment in international travel, visas and accommodation that expats do, but they also bring an in-depth knowledge of community relations and cultural customs, which tends to vary from country to country.

“This is almost as important as technical knowledge, especially in the exploration industry where you’re at the forefront of meeting the communities and introducing them to the idea of what we’re trying to achieve,” says Meadows Smith. “And that is much better coming from someone who can speak the local language and understands the cultural effects of our actions.”

Over the past nine years, SEMS has also accumulated an in-depth knowledge of the political landscape and industry marketplace in each of the countries in which it operates, and this is put to good use for many clients, helping and advising them as they enter the exploration field in West Africa.

With such a strong focus on continuity and long-term service, staff retention is of paramount importance to SEMS, which can be very difficult in an industry as inherently volatile as mining.

“The mining industry is very cyclical, so when we’re in a boom period as we are at the moment, some companies will offer high salaries. We can’t compete with that. What we can do is offer security and stability,” Meadows Smith says.

Interestingly, Meadows Smith has been able to retain all his staff, even through the downturns.

This is largely due to the wide range of clients and projects on the company’s books; but it’s also due to the fact that during boom times—as now—mining companies flow into the region from around the world, setting up offices and deploying large workforces. “Then during the downturns in the cycle, they’ll let go of their offices and staff.

However the last thing they want to let go of are their mineral assets. We have picked up a considerable amount of work during the lean periods doing a range of care and maintenance work, completing

NOVEMBER 10 www.bus-ex.com 193

194

www.bus-ex.com NOVEMBER 10

SEMS Exploration

reports and doing basic field expansion work.”

Training forms an integral part of SEMS’s company culture, and it offers both internal and external training programmes, along with on-thejob monitoring and mentoring. In recent years, many of the West African staff have been sent to Pitney Bowes in the UK for GIS (geographic information systems) training, leading to formal accreditation. Having formed a strong relationship with Pitney Bowes, SEMS has become the first accredited training centre for MapInfo and Discover software in Africa, and operates training centres in both Burkina Faso and Ghana.

Looking to the future, Meadows Smith sees two areas for expansion. Firstly, he is keen to extend the company’s geographical spread. Having achieved considerable success in the Ivory Coast after setting up an office there just 18 months ago, he sees significant opportunities in mineral-

rich Guinea. His other area of focus is to attract some top-end technical staff in areas such as GIS, database management and mineral resource estimation. “It’s not always easy to attract people at the top end of the market because of the conditions they expect. But we’ve just about attained a size where we can offer the volume of work and remuneration they’re looking for.”

It must have been very tempting, over the last few years, to migrate from consultancy into exploration and mining, but the lure has not attracted Meadows Smith. “The rewards can be very great,” he concedes, “but it’s not the life for me. We pride ourselves on being an independent group of consultants and we don’t involve ourselves in licence ownership. If we are able to build good relationships within the mining industry and help other companies achieve a good exploration result, then that will provide security for us.” www.sems-exploration.com

NOVEMBER 10 www.bus-ex.com 195

TheÂ

art

of

gold mining

196

www.bus-ex.com NOVEMBER 10

g

OceanaGold

Mining operations need to think ahead and have plans in place for when the ore runs out, as Jeff Daniels discovers

I

n many aspects of life, New Zealand has to struggle not to be overshadowed by its larger neighbour. Think Antipodean gold mining and naturally the first thing to spring to mind is Australia. But following the Victorian gold rush in the 1850s, New Zealand had something similar a decade later when gold was discovered in the Otago region, at the bottom of the South Island.

Today, Macraes Gold Mine is New Zealand’s largest gold producing operation, with over two million ounces of gold extracted since current mining operations began in 1990. The bulk of the operation consists of a large scale open cut mine but in January 2008, Frasers Underground pit was commissioned with an adjacent processing plant serving the two mines located in the historic Macraes Goldfield, approximately 100 km by road, north of Dunedin.

Macraes is run by OceanaGold. It’s a company that evolved out of the gold assets of GRD Limited, an engineering and development firm with a diverse portfolio of operating, development and exploration assets in the South Island of New Zealand and a strategy to grow not only organically but through acquisition. Following a merger with Climax Mining in 2006 it acquired a 20 percent interest in the Australian Junction Reefs Joint Venture which has a number of exploration and mining licenses adjacent to the world-class Cadia Valley copper and gold mining operations in central New South Wales, but its actual mining operations are confined to New Zealand and the Philippines.

Macraes Goldfield went into production in 1990 and since then it has produced over three million ounces of gold. When the total output of Frasers Underground is added to the open cast operation, the mine averages approximately 210,000 - 220,000 ounces of gold a year.

NOVEMBER 10 www.bus-ex.com

197

OceanaGold

STRACON STRACON is proud to partner with and support OceanaGold Corporation, providing mining and construction services to the Globe Progress and Macraes operations. The values of OceanaGold and STRACON are closely aligned, with the two organisations possessing a strong sense of operational efficiency and corporate social responsibility.

Perhaps the key challenge the Macraes mine faces is whether is can continue to extend its life of mine. They have been operating Macraes for 20 years and currently have reserves sufficient to support a current mine life of at least five years at a production rate of approximately 200,000 ounces of gold per annum. But as defined mineralisation at Macraes extends over a strike length of 40

kilometres, of which only 20 km have been explored to date, OceanaGold has high hopes for further discoveries on land where it owns mining and exploration permits over the entire length and freehold title to the majority of tenements.

In the meantime, at the other end of the South Island, we find OceanaGold’s second operating mine at Reefton, which was commissioned in 2007. Reefton is another historical gold mining area on the west coast. In the 19th and early 20th centuries, more than two million ounces were mined from hard rock operations. Now, though, the mine is open cut and consists of four imperially named pits; Globe Progress, General Gordon, Empress and Souvenir, developed along the Oriental mineral trend.

The plant which has a design capacity of 1 mtpa, majestically exceeded that capacity by 19 percent in 2008. It produces a concentrate that is then rail shipped 800 kilometres south to Palmerston before being trucked another 50 km or so to the

NOVEMBER 10 www.bus-ex.com 199

OceanaGold

Macraes operation for final processing through the autoclave. Reefton is only a third of the size of Macraes but in 2008 it contributed over 75,000 ounces of gold.

But at the same time as Reefton was getting off the ground, the Didipio Gold and Copper Project in the Philippines was going into mothballs. The business, which is located approximately 270 km north of Manila in Luzon Island and 100 km east of the country’s largest gold-copper mining operations in the Baguio area, was acquired through the Climax Mining merger in 2006. In December 2008 the project became a victim of the financial crisis and was put on care and maintenance pending an improvement in the credit markets. The project had been given the goahead to proceed to construction and operation by the Department of Environment and Natural Resources in 2005. The proposed development comprised four years of open cut mining, followed by at least 11 years of subsequent underground sub-level caving operations, totalling an expected minimum 15 years of processing operations.

OceanaGold has recently completed an internal economic and technical re-optimization study for the project and put financing in place to complete development. The latest estimation is that construction will be resumed in the near future with a view to having the first full year of production in 2013.

As responsible business managers, the policy at OceanaGold is to be an industry leader in terms of mitigating environmental impact and achieving

a net environmental gain. As well as rehabilitating the mine sites to a stable landscape which poses no unacceptable risk to the environment, it promises to develop an end-of-mine-life land use that will leave a positive legacy.

In keeping with this policy, the Macraes Heritage & Art Park located on the goldfield is an innovative example of post mining land use.

Developed around what were previously waste rock stacks, the area has become home to large scale artworks by some of New Zealand’s most well regarded artists. Gavin Hipkins has installed a series of nine 6m x 3m billboards depicting mining life while John Reynolds has created a couple of pieces out of the native vegetation on the site.

To increase the tourist potential of the 356 hectares that have already been rehabilitated, adjacent to the artworks are interpreted historical mining and farm relics and artefacts, with all attractions linked by walkways which join the various facets of the park.

The South Island is sparse at the best of times and not necessarily the most ideal job location for single men and women. But at least OceanaGold doesn’t compete with Australia for the harshness of the living conditions. In comparison it has fewer creatures that can kill you and no problems with drought! Once staff members get over the first couple of years, OceanaGold finds they tend to stay, particularly family men and women looking for a peaceful, clean environment in which to bring up children. www.oceanagold.com

NOVEMBER 10 www.bus-ex.com 201

In

pursuit of excellence Goldcorp’s Musselwhite mine complex has long been seen as an example of how mining operations can peacefully co-exist with First Nations peoples. Keith Regan learns from the mine’s general manager how the foundation is being laid for production expansion to feed the continued high demand for gold

G

oldcorp’s Musselwhite Mine in north-western Ontario is one of the most remote mining operations in the Goldcorp portfolio, but continues to feed a hungry market while its owners explore opportunities for maximizing output as the operation continues up to and possibly even beyond the current expected mine life target date of 2018.

The Musselwhite Mine has evolved over the dozen-plus years since it opened, with trucking to the surface being augmented in 2003 by a conveyor system as the mine moved to everdeeper parts of the ore deposit. And now Goldcorp is looking ahead to its next major infrastructure improvements that will pave the way for extending the mine.

“We are using this year to continue to do our exploration and understand what we have, and get even more confidence on what we have ahead of ourselves so we can make that right decision,” says mine general manager Gil Lawson, who worked for former mine owner Placer Dome when it brought the project through the feasibility process and helped bring it into production in the mid-1990s. “We’re studying different options on what the next 10-year material handling approach will be, whether that’s a new shaft, continued trucking or an expanded conveyor system.”

202 www.bus-ex.com NOVEMBER 10

Goldcorp: Musselwhite Mine

NOVEMBER 10 www.bus-ex.com 203

204

www.bus-ex.com NOVEMBER 10

Goldcorp: Musselwhite Mine

Musselwhite is one of almost 20 active gold and silver properties in the Goldcorp portfolio worldwide and one of three active operations, along with mines at Red Lake and Porcupine.

Goldcorp also has a fourth Canadian mine under development at the Éléonore Property, where extensive exploratory drilling took place during 2008 and 2009, as well as operations or projects in development in the United States, the Dominican Republic, Argentina, Mexico and Honduras.

Musselwhite, located on the southern shore of Opapimiskan Lake, more than 180 kilometers from the nearest town of Pickle Lake, Ontario—which has a population of less than 500 people—and almost 500 kilometers north of Thunder Bay, has long been seen as a model for its First Nations relations. The Musselwhite Agreement, forged in

the mid-1990s as the mine was being planned, places priority for Goldcorp to employ First Nations from signatory communities and support business development. The mine currently contracts with a local First Nation-owned business that provides catering and cleaning services.

In addition, the main air charter service used to move employees and cargo in and out of the mine—an all-season road is used solely for large, truck-based deliveries of mine equipment and supplies—is a First Nation-owned firm. “In terms of those relations and agreements, this mine has pretty much set the standard on how to do things properly,” says Lawson. The agreement also includes environmental remediation and monitoring of the lake and other waterways surrounding the mine site. “We take a lot of pride in the cooperation

NOVEMBER 10 www.bus-ex.com 205

we have earned from our host communities.”

The resource at Musselwhite is not as high in grade as some other Goldcorp mines, meaning there is pressure to increase overall throughput of ore while keeping costs in check. Ongoing programs focus on energy management and reducing the use of consumables. “This resource requires that we focus on throughput and production rates. Moving rock is not for free, and we have to guard that bottom line and try to do things efficiently,” Lawson says. “Our mantra is always about operational excellence. We know we can never change the cost structure unless we make changes to what we do. We’re constantly examining what we do and trying to engineer ways to do things better and cheaper.”

Partnerships with suppliers are another key element of keeping costs stable and low. “We’re always negotiating with suppliers for best pricing and forging partnerships that take the long view,” Lawson says. “We plan to be around for a while, and our suppliers know and appreciate that.”

Alliances with heavy equipment providers help keep fleets young and costs down.

The mining approaches have changed over the years that Musselwhite has been in operation, but no major technique changes are anticipated

206 www.bus-ex.com NOVEMBER 10

going forward. One area of possible future mining activity may require backfilling with cement-like fill to support ore removal. “We’ve perfected the processes we need to follow to mine this property,” Lawson says. “It’s just a question of matching the best approach to get the most out of the resource while keeping our cost profile as low as possible.”

While the resource is large, the most valuable asset at Musselwhite may well be the people who operate the mine and related operations. Most of the workforce works at the remote location on a two-week-in, two-week-out schedule. The workforce is a blend of First Nations peoples and miners from elsewhere in Ontario as well as more distant provinces such as Newfoundland and British Columbia. “Those people are our greatest strength,” Lawson says. “It’s just an incredible team.” He credits Goldcorp’s solid reputation as a great place to work and the investment that Goldcorp has made in both mine infrastructure and training and workforce development.

“We’re the lowest cash-cost gold company out there, so we have that capacity for the large-scale investment that’s required to make a facility a safe, clean and positive place to work,” he adds.

“Miners know we have the stability and resources,

Goldcorp: Musselwhite Mine

MacMor Industries Ltd. MacMor Industries Ltd. is your one-stop-shop for all of your industrial, safety and rigging needs.

We offer a large product selection along with custom manufacturing of wire rope, chain and web assemblies. MacMor is in its 85th year of operation and is Canadian owned and operated.

and that’s appealing in an industry where they otherwise might have to move more often to chase the work. They know if they come to work here, they will know where they’ll be working for a good number of years.”

As it looks to plan the right infrastructure going forward, the mine is looking to move into several new zones of gold-bearing ore. The highlight

of exploration activities in 2010 has been the discovery of the new Lynx zone, located above the cornerstone PQ Deeps mineralization near existing underground infrastructure. The Lynx zone has significantly higher grade than the historical Musselwhite ore bodies and offers serious potential for production expansion.

The Lynx zone could now be central to the justification of a shaft to facilitate elevated production levels and operating cost reduction for the long term.

“For the past 12 years we’ve been working in our core resource, and now we’re starting to look beyond that and see where some new opportunities might be available to us as we look to keep the mine producing at the highest levels possible,” Lawson notes. “We know the mine is going to be around a number of years more.” www.goldcorp.com

NOVEMBER 10 www.bus-ex.com 207

Wean away from

hyd

North America might be reluctant to end its love affair with gasoline, Canadian venture is ready for when it inevitably happens, as Alan Swa 208 www.bus-ex.com NOVEMBER 10

Canada Lithium

ning

drocarbons

but a new aby learns

L

ithium, apparently, is one of the most abundant minerals on earth. It has a role to play in the manufacture of ceramics and glass as a flux, in the foundry business as a casting aid, and as the core ingredient of lithium grease. But before the advent of mobile phones and laptop computers, not one in a hundred people would have heard of it.

NOVEMBER 10 www.bus-ex.com 209

Canada Lithium

Golder Making business decisions knowing the facts supports

solid

performance.

Since

1960

Golder has been providing solutions in ground engineering

and

environmental

services

to

clients around the world. Today, we are evolving naturally to provide services to help address the energy challenges of the future. We understand your business, are committed to service and technical excellence, and bring global experience to address your local concerns.

When you need professionals who can help make the right decisions….

JUST ASK GOLDER.

research grants, but still Detroit is reluctant to be weaned off gasoline.

Nevertheless, Canada Lithium is proceeding with its plans to open the first hard-rock lithium mine in the Americas. The location, in the Val d’Or area of Quebec, already has a history with lithium. In the 1950s it was mining the mineral as part of the US strategic metals plan, but when support was stopped in 1960 the mine struggled due to low demand and low prices. When a strike shut the mine in 1965, it never opened again for business, though Sullivan Mines kept the pumps going for another 20 years thanks to a (before its time) belief that one day lithium batteries would prevail.

Over the years the mine changed hands several times, always to gold mining interests, until 2008 when the directors of Canada Lithium made a strategic decision to get into lithium and acquired the leases. The Quebec Lithium Project consists

Now, though, we’re all aware that lithium is the foremost battery material we currently know of. It has superior energy density and power-to-weight ratio—around three times greater than its nickel counterpart. It lasts longer and recharges quicker.

Nor does it have a “memory” effect, meaning it can be charged up at any time, no matter the level of the current charge. It also carries on working at temperatures down to –60°C (–76°F).

All this is good news, but it’s the potential for automotive use that’s the real treasure chest.

“China is buying lithium by the tanker load,” says Mitchell Lavery, director of Canada Lithium. “The two largest mines in the world— both in Australia—ship exclusively to China.

Two years ago the Chinese were reported to be making 20 million electric scooters a year.”

But while Asia is galloping toward electricpowered vehicles and Europe is following behind at a fair canter, North America seems reluctant to embrace the technology with the same fervor. The US government has made $4 billion available in

NOVEMBER 10 www.bus-ex.com

211

of 12 claims covering 405 hectares (1,000 acres).

There is a measured and indicated mineral resource of 31.6 million tonnes (metric tons) grading 1.11 percent Li2 and another 38.9 million tonnes in the inferred mineral resource category.

The company has completed a pre-feasibility study for the development of the project and anticipates production of up to 19,300 tonnes of 99.5 percent lithium carbonate product annually, coming on stream as early as the end of 2012. Currently, the final stage of a full bankable feasibility study is under way and will be released in January.

Unlike the 1950s and ‘60s, the mine will no longer rely on the original 150-meter deep shaft to access the ore. Instead it plans to use openpit mining. “It involves larger amounts of waste material,” admits Lavery, “but it also removes any restrictions on volumes that a shaft would impose, and the economies of scale give us a better bottom line and an inherently safer mining operation.”

To get the 19,300 tonnes of lithium, the mine will process 1 million tonnes of ore a year. It’s a figure that could be ramped up very quickly should demand warrant it by adding to the fleet of

212 www.bus-ex.com NOVEMBER 10

150-tonne dump trucks and excavators that will be down the hole.

The chemistry behind the refining hasn’t changed much since the 1950s. Once the mineral-bearing ore has been separated from the spoil, it is milled and then, in a flotation process, collected in a 7 percent concentration. From there it is roasted at 1,100°C (2,012°F) to convert the molecules before being leached with sulfuric acid and dosed with soda ash until eventually the white powdered lithium carbonate is produced.

The major challenge is to control the process sufficiently to produce battery-grade levels of purity—at least 99.5 percent. Laboratory studies and a small-scale pilot plant have both indicated that Val d’Or will satisfy this need.

Canada Lithium already has a five-year deal with Mitsui Metals, which will market the finished product in the Far East while the company itself will handle sales in North America and Europe. “Our location couldn’t be better for this,” says Lavery. “Val d’Or is an established mining area with excellent infrastructure. We’re served by good roads and rail links that puts US customers within 14-hour travel,

Canada Lithium

Superior Propane We wish Canada Lithium Corp. success in their future business ventures; in particular, the Quebec Lithium Project. Superior Propane has been fueling industries for years with a total energy solution that maximizes their operation’s planning, exploration, and production. From worksite heating and equipment operation to maintenance and safety programs, Superior is there with a strong distribution and service network that reaches coast to coast.

and within seven hours product could be on the St. Lawrence River heading for Europe by sea.”

Even Quebec’s low-cost electricity works in the

project’s favor, energy-hungry as it is, which is something of an irony since one of the future uses for lithium could be in house-size storage banks for off-peak wind or hydro electricity that then could be called on in high-peak periods.

All financial calculations have been made at a selling price of $2.70 per pound, though Lavery expects to do better than this. However, the business has been careful to assess the viability of the mine even if electric vehicles are beaten out by some other alternative to gasoline—hydrogen, for example.

Either way, Canada Lithium should get no hassle from environmentalists. The process is remarkably clean, with just quartz being deposited in the tailings dam. “When the mine was decommissioned after closing down,” says Lavery, “it went back to nature with little or no impact on the terrain—a clean process for one of the world’s cleanest fuels.” www.canadalithium.com

NOVEMBER 10 www.bus-ex.com 213

Gettin

Ledcor Industrial Divi marketplace realities and custom itself internally to capture a 214

www.bus-ex.com NOVEMBER 10

Ledcor Industrial Division

ngready

ision is adapting to changing mer expectations by aligning a 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.

NOVEMBER 10 www.bus-ex.com

215

Ledcor Industrial Division

Priority One Transport Inc Priority One Transport Inc. provides the Ledcor Group of Companies with logistic solutions for their projects in the mining and oil sands sectors of Ft.McMurray. Our mission is to provide on time, error free, accurately invoiced transportation services to our customers while servicing the construction and oil field industries in Northern Alberta since 2006. A wide variety of equipment is available including; crane trailers (35 ton capability), winch tractors, scissor neck with live roll, hydraulic equipment trailers, hiboys, drop decks and vans.

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 North America and Hawaii.

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/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/ day Shell Albian oil sands 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 drainage) oil facility, also in Fort McMurray.

As the next wave of work approaches, many clients are changing the way they approach largescale projects, notes Al Beaudry, chief operating officer of Ledcor’s Industrial Division, with an eye toward mitigating risk by sharing it with the teams that engineer and build the 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’s best when risk is taken by the party that controls it or has the best ability to manage and influence it—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

NOVEMBER 10 www.bus-ex.com 217

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 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 offthe-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

218 www.bus-ex.com NOVEMBER 10

Ledcor Industrial Division

“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” NOVEMBER 10 www.bus-ex.com

219

Automa A

for the

T&T needed to equip four distribution centers quickly for a major product rollout. Aeroquip Corp. needed to merge several storage facilities, improve automation and increase inventory visibility. And a Tier 1 auto supplier needed to supply more wheel styles, faster, and update records in real time for Chrysler.

These are only a few of the business challenges that Bastian Material Handling has solved, helping large corporations optimize their manufacturing and distribution operations. Bastian’s sweet spot is the design and installation of turnkey materials handling systems and software applications to maximize automation and efficient operations.

A third generation, family-owned firm of systems integrators and engineers, Bastian prides itself on its early adoption of advanced conveyor systems and automation technologies, such as mobile robotics, RFID, PC-based controls, 3-D human machine interfaces and browser-based software systems.

220

www.bus-ex.com NOVEMBER 10

pe

Bastian Material Handling o modular conveyors, and log

Bastian Material Handling

atic

eople

optimizes operations with robotics, gistics, finds Pam Derringer

NOVEMBER 10 www.bus-ex.com 221

Bastian Material Handling

STOBER STOBER provides superior gearing solutions which consistently deliver lower total cost of ownership. We accomplish this by rapidly serving our clients’ needs and optimizing their total operational performance through unsurpassed: • Solution designs that build quality around every requirement • Product durability that enhances the reliability and life of every application • Service support that is empowered to meet and exceed expectations.

Rockwell Automation Rockwell Automation is a leading global provider of industrial automation power, control and information

solutions.

The

customers

like

Robotics

BMH

company

helps

achieve

a

competitive advantage in their business through leading technologies and a comprehensive portfolio of products, software and services.

Focusing on customers first, anywhere in the world, Rockwell Automation helps manufacturers meet their productivity objectives.

Bastian strives for strong productivity gains, a quick return on investment, faster order fulfillment and lower costs, all translating to a major competitive advantage through optimized materials handling and supply chain logistics.

Another key Bastian advantage is independence.

Not tied to any vendor, Bastian Material Handling is free to recommend best-of-breed solutions that best fit the specific needs of each customer. The $81 million, Indianapolis, Indiana-based company, which has offices in more than 15 locations, also touts its excellent customer service record and points to its enviable record of repeat business as proof of its ability to please customers.

“We are proud to say that 80 percent of our business comes from repeat clients,” says Bill Bastian II, president of Bastian Material Solutions. “We constantly

strive to deliver excellent customer service.”

Indeed, in its 58 years, Bastian has acquired a stellar client list, including CVS, the US Postal Service (Indianapolis), Starbucks (Nevada and Washington state), Shaklee Corp, Pepsi Bottling Group (Virginia), Johnson Controls, Aventis and Astra Logistics.

AT&T, for example, hired Bastian to equip distribution centers with warehouse controls and pick-to-container systems. The centers were designed to handle a product launch expected to generate up to 19 million customers. The fully automated centers are meeting customer demand with less staffing than a conventional distribution center and are accurately recording serial numbers with each shipped product.

Aeroquip Corp’s challenge was to consolidate 13 centers into two and handle the increased volume with automation, including storage carousels, automatic inserters/extractors, a highspeed sortation conveyor and Windows-based diagnostics. The new system has slashed order fulfillment time by 40 percent.

Finally, Astra Logistics was tasked to deliver wheel assemblies to Chrysler, reducing floor space and inventory levels while cutting cycle times and staffing and creating a paperless product history.

Using ASAP’s ExactaLink software, Bastian helped Astra Logistics meet Chrysler’s requirements.

Bastian also offers a comprehensive suite of automation equipment, including modular conveyor systems, automated storage and retrieval systems, automated guided vehicles, industrial controls, pick to voice, light and display technologies, automated case flow for building mixed pallets, in addition to storage carousels, automated palletizing and RFID technologies.

From Bastian’s stable of automation technologies, however, robotics has by far the most sizzle. Bastian developed the first robotic automated storage and retrieval system in the world for store-ready pallets.

These AS/RS systems are very cost-effective, packing mixed pallets in the exact product mix and sequence ordered by the customer and, in turn, eliminating secondary product handling.

Not only do robots reduce labor costs but they reduce the need for workers in hazardous environments. They also improve product and process quality and increase flexibility in manufacturing and distribution operations.

NOVEMBER 10 www.bus-ex.com 223

While robot use in manufacturing is nothing new, robot use in distribution is more recent, but growing. Robots can pick, pack, palletize and ship products with accuracy. And ancillary advances in vision systems, end-of-arm tooling and robot mobility are increasing robots’ value and, in turn, their use in distribution.

Filling mixed pallets, for example, is a stressful job that results in a high volume of order errors, high employee turnover and high worker compensation claims. But robots equipped with end-of-arm tools and vision systems do this quickly and easily, converting a pick pallet directly to a build pallet, all within a small footprint at a competitive cost.

High speed pick and place robots can pack from 90 to 120 pieces per minute per robot. They are used in conjunction with vision systems which see the product as it advances down the line and place the robot in the correct position. In addition, robots can be used productively with individual or so-called “eaches” product picking, which is labor intensive and error-prone, even with pick-to-voice and pick-to-light systems. Robots, however, can double the output of human operators and work continuously, achieving a high return on investment.

In addition to robotics, Bastian has also performed advanced work in conveyor design, opting for modular designs that can be adapted for a broad variety of customers at lower cost vs. choosing from among hundreds of more expensive, customized offerings.

Another advantage of modular conveyors is flexibility. Unlike conventional systems, modular conveyors can be easily adapted for different models of the same product and/or different materials handling systems. In another innovation, Bastian worked with Blue Arc Engineering to create an adjustable ZiPline conveyor with flexible zones that can handle a combination of small and large objects and/or heavy and light objects.

Bastian is also experienced in implementing RFID (Radio Frequency Identification) technology to improve inventory management, reduce manual data entry and eliminate paperwork. RFID technology can increase the benefits of an automated storage and retrieval system and can be useful in cold environments where bar codes are difficult to read.

Finally, with the current push for cost savings and reduced power consumption, Bastian can advise customers on “green technologies” that help to save energy. Sometimes the solution can be as simple as switching to more efficient light fixtures but other times, companies can cut energy costs by using motion sensors to turn off equipment when no one is present or using modular conveyor systems that revert to sleep mode when not in use.

“Our team of sales professionals and engineers are experienced, knowledgeable and ready to work with you in defining the best solutions for your needs,” Bastian says. www.bastiansolutions.com

224 www.bus-ex.com NOVEMBER 10

“We are proud to say tha strive to deliver excellen

Bastian Material Handling

at 80 percent of our business comes from repeat clients. We constantly nt customer service�

NOVEMBER 10 www.bus-ex.com 225

Sa wo

Hunter Roberts’ Incident & In safety program encour the workplace as a partn dictatorship. Instead of being ne for unsafe behavior, subcontr feedback and input, Ke 226

www.bus-ex.com NOVEMBER 10

Hunter Roberts Construction Group

afe orkplace

njury Free workplace rages the concept of nership rather than a negatively sanctioned ractors are asked for eith Regan discovers

forthe

T

he founders of Hunter Roberts Construction Group all gained highlevel experience while working for a large, local company and shared a common vision: to apply their knowledge in a flexible, more clientfocused 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.”

NOVEMBER 10 www.bus-ex.com 227

Hunter Roberts Construction Group

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.

“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 three years, the firm has implemented an Incident & Injury Free (IIF) workplace 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

NOVEMBER 10 www.bus-ex.com 229

“We saw a need in the marketplace for another mid-sized 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�

230

www.bus-ex.com NOVEMBER 10

Hunter Roberts Construction Group

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 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 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.

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

NOVEMBER 10 www.bus-ex.com 231

Back on

trac

A $285 million investment at Yonkers Raceway has equipped t Ben Sansom reports on an expansion program which has enab where many others have suffered in 232 www.bus-ex.com NOVEMBER 10

k

ck

the venue for the 21st century. bled the historic venue to thrive the recent economic slowdown

Yonkers Raceway

N

othing quite matches the sight, the smell and the sound of a harness racing event. There is the dust and the drumming of the hooves, but more importantly there’s the skill of the drivers, guiding their animals over the course of the race, constantly jockeying for position on the track and then finally the sheer thrill of the race to the finish.

One of North America’s top harness racing venues is the one-half-mile Yonkers Raceway. Considered to be a distinctive New York City landmark, the raceway is conveniently located on 97 acres at the intersection of Central Park Avenue and Yonkers Avenue, easily accessible from exit 2 off the New York State Thruway (I-87). With a population of some 20 million people living within a 50 mile radius of the raceway, it is well placed to attract the crowds.

Over the years, Yonkers has developed an enviable reputation for standard bred racing. Its history dates back to1899 when it began life as the Empire City Trotting Club—but it has been through a number of changes during its long lifetime. Between 1907 and 1942 it was used as a thoroughbred race course, and among the notable thoroughbreds to grace its track is Seabiscuit, who won the Scarsdale Handicap there in 1936.

Today, the raceway is in the capable hands of the Rooney family of Pittsburgh, who made the acquisition in 1972 and secured the future of harness racing for New York. Always fond of racing and a significant sportsman in his own right, family head Art Rooney had already achieved legendary status for his role as the founder of the Pittsburgh Steelers. Even that, however, had a horseracing flavour. The story goes that when Rooney purchased the NFL franchise in 1933 for the Pittsburgh Pirates (as they were then called), he did so with money gained from a winning bet on the horses.

Yonkers is a thriving race course, and it’s one of the few in the United States that operates all the year round. It has a busy schedule, playing host to world class racing five nights out of every seven. A wide variety of races are staged here throughout the year, but the raceway is home to three major national harness events; the Art Rooney Pace for three year olds which was inaugurated in 1989, one year after Rooney’s death; the Yonkers Trot, and Messenger Stakes. The Yonkers Trot is part of the Trotting Triple Crown while Messenger Stakes is part of the Pacing Triple Crown, making Yonkers the only track to host legs of both Triple Crowns. The track then went on to secure its place in racing history on November 25, 2006, by becoming the first track to host both Triple Crown races on the same day.

NOVEMBER 10 www.bus-ex.com 233

Yonkers Raceway

Hudson Valley Bank Hudson

Valley

Bank

congratulates

Yonkers

Raceway on its “Business Excellence.� The Raceway and Hudson Valley Bank have grown alongside each other from their earliest days in Yonkers. We are proud of our longstanding relationship and look forward to continuing to meet their banking needs, as well as the banking needs of other businesses and professionals in New York and Connecticut.

The turn of the 21st century has ushered in an exciting period of change and expansion for the Yonkers Raceway. For many years prior to this, horse racing in New York State had been in decline.

The lack of alternative gaming facilities at the race tracks had resulted in customers choosing to travel to the big gaming venues in Atlantic City and south eastern Connecticut, abandoning their interest in harness racing.

New legislation, passed in 2001 in New York State, offered a reprieve for those willing to invest. The use of video gaming machines was approved at eight tracks across the state, one of

them being Yonkers. And the Rooney family saw this as a great opportunity to achieve a significant turnaround in fortunes at the raceway.

The family initiated a program of renovation and expansion, investing some $285 million in the future of the property and ensuring that it would be optimised for success in the 21st century—a move that has seen the raceway come through the recent economic downturn with relative comfort.

With the design handled by architect EwingCole, and Tishman acting as general contractor, the doors of Yonkers Raceway were officially closed to the public in June 2005 for construction work

to begin. For almost two years, the races had to find alternative homes. But in March 2007 the venue reopened. And even though this was done quietly, with no major advertising or promotional campaigns, Yonkers significantly outdid its nearest competitor, sealing the success of the business.

Today the new gaming complex which operates alongside the harness racing provides some 140,000 square feet of gaming space equipped with video game machines from the likes of Bally, IGT and Speilco. A strong link has also been created between the gaming and the raceway. The original 1899 racetrack name has been resurrected and

NOVEMBER 10 www.bus-ex.com 235

reinstated, and the gaming venue is now known as The Empire City at Yonkers Raceway.

The improvements are impressive. The first two floors of the original six storey club house have been renovated and adapted to create the spectacular Grand Victorian Hall, which accommodates over 2,000 video gaming machines as well as a restaurant.

Meanwhile, a new one storey building has been constructed to house a further 3,000 video gaming machines along with an international food court,

236 www.bus-ex.com NOVEMBER 10

Yonkers Raceway

bars, an entertainment lounge and more. Named the Gotham Palace, this venue has been designed with an art deco theme reminiscent of the Empire State Building and Radio City Music Hall.

Eating out at the Empire City complex can be quite a luxurious affair. For a complete meal experience there is the Empire Terrace Restaurant which looks out over the harness racing track and provides a standard set menu in an elegant setting. The Lillian Russell Cafe offers a buffet with carving station that serves specialities that are changed on a weekly basis. The International Food Court, meanwhile, is open from 10am until 1am and offers a wide variety of foods from around the world including pizza, pasta, sausage & peppers, deli sandwiches, lo mein, chicken, dumplings, hamburgers, hot dogs, salads, fruit, and desserts.

To complete the all round experience there is an entertainment lounge which is located in the

Gotham Palace, and provides a program of live music and great shows all through the week.

The advent of the gaming facilities at Yonkers has had a positive effect on the racing events. Not only has attendance increased significantly, but Yonkers has been able to increase its investment in the sport by offering some of the biggest purses in the industry. Today, overnight races can range from $7,000 for bottom level claimers to $36,000 for open and open handicap events.

It wasn’t until the recent economic downturn, though, that the full benefit of the investment in Empire City has really been felt. With its close proximity to New York City, it has enjoyed a considerable advantage over its gaming rivals further afield, and customers have chosen to spend their hard earned dollars locally rather than squander them on gas and lodgings. www.yonkersraceway.com

NOVEMBER 10 www.bus-ex.com 237

Mine futu ofthe

Y

ou might wonder why an Australian mining company has chosen a Dutch name that is not the name of its founder, but in Australia Heemskirk is as redolent with meaning as ‘Mayflower’ in America.

It was the name of the ship that led Capt Abel Tasman’s expedition when he happened upon the eastern coast of Australia in 1672.

It’s a powerful symbol of discovery. It is also the name Tasman gave to a mountain on Tasmania that hosts a lot of metal bearing rock, so it was a good name for a new mining enterprise.

Heemskirk Consolidated listed on the Australian Stock Exchange in October 2004, raising A$20 million, upon which it set out on an acquisition trail, looking for profitable businesses not just in Australia but all over the world, as well as assets that its experienced management thought a good prospect for development. Heemskirk Canada Limited (HCA) was its first asset and is still the jewel in the group’s crown.

238

www.bus-ex.com NOVEMBER 10

Heemskirk Consolidate minerals for industry a resources of gypsum, be familiar only to the many new applications

Heemskirk Consolidated

erals ure

ed is interested in specialized and in Canada is developing barite and zeolite: these may e people that use them but s are being found

NOVEMBER 10 www.bus-ex.com 239

HCA was an industrial minerals business producing commodities principally for the oil, oil sands and gas sectors. It has been producing products for the oil and gas sector in Canada for 60 years and directly employs around 40 people. The business has a small administrative office in Calgary and two operating sites. Having established itself in Canada Heemskirk moved on to Spain where it had identified an important tungsten opportunity and has been developing it with an investment of around $50 million. The Los Santos tungsten mine in the Salamanca region is a very significant and strategic source of the hardest and heaviest known noble metal with many unique applications. The Spanish mine went through a challenging period, however its performance stabilized in 2010, and in the quarter that ended in September it treated 118,650 tonnes of ore, compared to 55,665 tonnes in the same period of 2009.

the most diverse and the most active, having a well established customer base and selling specialized minerals under a number of well trusted brand names. The Moberly flint grade silica sand mine and processing facility near Golden is on a massive quartzite resource (estimated at over 32 million tonnes) that has been yielding high grade silica sand for glass making and other industries since 1980. The quartzite trucked to Heemskirk’s processing plant is crushed, dried and processed to produce either silica sand for immediate sale or to provide feed for the silica flour plant.

Silica flour is a component product used in oil, gas and oil sand high temperature well cements. From time to time sand plant waste pond fines are also used to produce silica flour. During 2008/09 approximately 25,000 tonnes of broken quartzite was hauled to the plant. In the second quarter of this year the company

“The robotic bagger is a relatively inexpensive way to double the current rate of production, but more importantly it can handle surge demand much more readily than the current setup” Tungsten is used extensively in ballistics and military applications as well as for cutting and machine tools. Industrial nations have begun stockpiling tungsten because of its military applications; the military demand for tungsten has begun to force prices up on the international metal exchanges. It also has uses in lighting and in mobile phone technology. Once fully ramped up, Heemskirk Los Santos will produce about 1,000 tons of tungsten every year, or about ten percent of the global market.

The third strategic asset was located back home in Australia. Heemskirk acquired a 40 percent interest in the Pajingo Gold Mine. This was a promising business and a considerable sum was spent developing it before it was realized that progress was disappointing and Heemskirk sold its share in the joint venture to Conquest Mining in September 2010 for nearly A$40 million. The group also has a small business development arm located in the UK and established to investigate ongoing opportunities in the European region.

The Canadian operations, located at Lethbridge in Alberta and Golden in British Columbia are still

240 www.bus-ex.com NOVEMBER 10

completed initial testing of its Moberly silica sand for its potential use in the Hydraulic Fracturing (frac sand) market in Western Canada. Fracturing is a process the oil companies use to improve the flow of hydrocarbons to the wellbore. They apply pressure to crack open the rock: to keep these fractures open, sand is pumped into them.

But it has to be the right sort of sand. This is a growing market globally, and Heemskirk is currently testing its product to see if it can achieve the grain size and flow performance the market wants. If it looks good the company will consider building a plant to process at least 100,000 tonnes of frac sand. That investment will be decided on later this year.

The Lethbridge processing facility in Alberta produces bulk and packaged barite, zeolite and gypsum for supply into the oil & gas and agricultural industries. Raw material is either sourced from HCA’s zeolite open pit mines at Cache Creek and Princeton in British Columbia, or purchased from third parties. Barite and other drilling mud consumables play a dominant role in the Canadian business. Powdered gypsum

Heemskirk Consolidated

is used in agriculture for soil enhancement and water treatment as well as for manure treatment and for horticulture, where it helps release sulfur and calcium. It also promotes the formation of natural nitrate nutrients in soil, and is therefore suitable for organic growers.

Barite, or barium sulfate, is used in the oil and gas drilling industry. Heemskirk’s Sparton brand is drilling mud grade barite certified by the American Petroleum Institute (API) and well known in the global oil industry. Zeolite is a naturally occurring mineral that was formed when ash from volcanoes was deposited in saline lakes millions of years ago. It is an amazing crystalline mineral capable of adsorbing many different types of gases, moisture, petrochemicals, heavy metals, low-level radioactive elements. Used in concrete it gives excellent thermal and acoustic properties and protects against acid deterioration and frost damage.

This year Heemskirk decided to install a robotic

bagging arm and conveyor system to replace the current manual system at Lethbridge. The decision was driven by safety and productivity.

The removal of manual labor from this part of the process flow sheet offers many safety benefits, the company says. At around C$320,000 the robotic bagger is a relatively inexpensive way to double the current rate of production, but more importantly it can handle surge demand much more readily than the current setup. Installation is expected to be completed by early February 2011 with no disruption expected to current operations.

The latter part of this year has seen strong mineral production driven by solid demand for barite from the oil and gas services industry. The company expects this to be maintained well into the North American winter period—however Heemskirk’s diversity both in products and markets looks like being its best asset as its key markets emerge from the recession. www.heemskirk.com

NOVEMBER 10 www.bus-ex.com 241