PLNT01_2010

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Volume 69, No. 01 January/February 2010

www.plant.ca

AUTOMOTIVE

RECOVERY

Global executives are optimistic, but there are issues‌ HIGHLIGHTS Are you ready to go global?

Capitalize on the HST NxtGen cleans up diesel burn 3 new ways to use CAD

12 13 20 22

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re efficiently and Microsoft Dynamics® ERP helps us work mo provide better customer service.”

Microsoft Dynamics® ERP fits your company and business processes, not the other way around.

It gives your people easier access to real-time actionable information for better decision-making, which can help improve ROI. To learn more about the efficiencies Microsoft Dynamics® ERP can create for your business, go to microsoft.ca/dynamics/manufacturing

Editorial

Addressing new realities

Y

ou have likely noticed something different about your copy of PLANT. Well, ta-da! It has undergone a reboot as we all begin 2010 facing all the changes and challenges that lie ahead. Welcome to Canadian PLANT. Manufacturers who have survived the glorious year that was 2009 are awakening to a new reality: the global economy has changed since the financial meltdown last fall ignited the recession that accelerated job losses and plant closures around the world.

On the home front, Statistics Canada pegs manufacturing job losses at 190,000, two thirds of the total job losses for the entire economy. The forestry industry has been hit hard by conditions that were exacerbated by the recession. So far, 50,000 jobs have been lost over the past few years. And the Canadian Auto Workers union, in a recent estimate, figures 23,000 automotive jobs were lost over the last 12 months as the automotive industry began a painful restructuring process.

All those smart analysts and economists tell us we are recovering but it will be slow-going and manufacturers can look forward to even fiercer competition for fewer opportunities in the marketplace.

Those of you who export will have to figure out a way to win with a loonie on or close to par with the US buck. Business will be slower with the US, our top customer, so you will have to look to other markets. And you’ll have to invest in new technologies, not only to become more innovative, productive and efficient, but to transform your operations into more environmentally responsible enterprises.

All of these factors and others prompted the PLANT team to rethink how it serves you, Canada’s manufacturers.

The publication began life as Plant Management and Engineering in 1941 when industry was so vital to the war effort. In 1988, the magazine became a tabloid-sized newspaper called PLANT, Canada’s Industry Newspaper, coming out 20 times a year with a heavy focus on news.

Like the broader world of manufacturing, the publishing industry is undergoing seismic changes brought about by technologies tied to the internet, the way people access and consume information and the timeliness of its delivery. At the same time, your content needs are changing. The challenges you face require a sharper focus on certain management issues. So, as you change your companies to address the new realties of your marketplaces, we are changing with you.

PLANT, Canada’s Industry Newspaper is now Canadian PLANT to reflect our national mandate as a business publication for senior executives and operations management, and the emphasis will be “Insights and strategies for industry leaders,” which just happens to be our new tag line.

The print version will focus on six main themes: Management, Trends, Operations, Innovation, Sustainability and Technology. You’ll see profiles of successful Canadian businesses, case studies, application stories, and new products, all with more spin on taking action.

You still trust print publications and spend a lot of time with them. They are wonderfully portable, organized for easy access and provide an easy to read format. But there are some things the online world can do better, and one of them is deliver the news.

As a result, we are shifting the bulk of our news coverage to online channels. There will be news available daily at www.plant.ca, but we urge you, if you haven’t done so already, to sign up for the PLANT e-Newsblast. It will deliver via e-mail about five news stories weekly, plus a couple of industry reports and other valuable features.

Turn to page 4 for instructions on how to subscribe online.

Hope you like the familiar but revitalized format. And please: we want to hear from you about what you’d like to see in your industry publication.

Send us your comments and suggestions.

Joe Terrett, Editor E-mail joe.terrett@plant.rogers.com.

Vol. 69, No. 01, January/February, 2010 Editor: Joe Terrett 416-764-1546 joe.terrett@plant.rogers.com Senior Editor: Corinne Lynds 416-764-1531 corinne.lynds@rci.rogers.com Features Editor: Noelle Stapinsky 416-764-1449 noelle.stapinsky@rci.rogers.com Contributing Editors: Ron Richardson, Steve Gahbauer Art Director: Kathy Smith 416-764-1542 kathy.smith@rci.rogers.com Director of Sales, Marketing and Customer Service: Laura Goodwin 416-764-1492 laura.goodwin@rci.rogers.com District Sales Manager: Dean Walter 416-764-1776 dean.walter@rci.rogers.com Advertising Representative: Jason Lofkrantz 416-764-1521 jason.lofkrantz@rci.rogers.com

Canadian PLANT Fax: 416-764-1742 Circulation Manager: Celia Ramnarine 416-764-1451 deokie.ramnarine@rci.rogers.com Production Manager: Jennifer Reinhardt 416-764-3919 jennifer.reinhardt@rci.rogers.com Executive Publisher of the Industrial Group, BPPG: Tim Dimopoulos 416-764-1499 tim.dimopoulos@rci.rogers.com Rogers Media Inc. President and CEO: Anthony P. Viner Rogers Publishing Limited President and CEO: Brian Segal Senior Vice-President Business & Professional Publishing: John Milne Senior Vice-Presidents: Marc Blondeau, Michael Fox Vice-Presidents: Immee Chee Wah, Patrick Renard Editorial Advisory Board: Robert Hattin, Edson Packaging Machinery • Jayson Myers, Canadian Manufacturers and Exporters • Ron Harper, Cogent Power • Greg MacDonald, Wentworth International Services • Roy Verstraete, Anchor Danly Subscription Department: For subscriptions services e-mail: rogers@cstonecanada.com 416-932-5071 Fax 416-932-1620 Outside Toronto 1-866-236-0608

10

21

Contents TRENDS

10 Automotive Prospects for the global automotive industry are looking up.

11 Energy Focus on every link of the energy supply chain to reduce emissions.

12 Exporting Planning to go global? Six tips to get you there.

MANAGEMENT

13 Tax Planning Get more value from the HST. 14 Cutting Costs Rationalize your product line-up to improve profits.

OPERATIONS

15 Think Lean A solid capacity and staffing plan will help you avoid variances.

Tech Tip Achieve steady state air compression.

16 Maintenance Strategic asset insights from IMEC 2009.

17 Materials Handling How to avoid forklift abuse, and some new-model news.

SUSTAINABILITY

18 Reducing Emissions NxtGen technology cleans up diesel emissions.

Clean Tech Iogen doubles ethanol production, Ballard increases transport traction, Cleanfield and WePOWER merge, and Clean techs pursue joint projects.

Green Manufacturing Quick wins for sustainability gains.

INNOVATION

21 Nanotechnology Health Canada is working toward nano regulations.

TECHNOLOGY

22 Industrial IT Leverage CAD software for productivity, marketing and sustainability.

Plantware 3D automation vision and laser feedback software.

Departments 4 Industry View 6 Events 7 PLANT Pulse

Mail: Canadian PLANT, Circulation Dept. 7th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5 Subscriber Services: To subscribe, renew your subscription or to change your address or information, please visit us at www.rogersb2bmedia.com/plnt. Mail Preferences: Occasionally we make our subscriber list available to reputable companies whose products or services may be of interest to you. If you do not want your name to be made available, please contact us at rogers@cstonecanada.com or update your profile at www. rogersb2bmedia.com/plnt.

Canadian PLANT—established 1941, is published by Rogers Publishing Limited, a division of Rogers Media Inc., One Mount Pleasant Road, Toronto, Ontario, M4Y 2Y5. Montreal Office: 1200 avenue McGill College, Bureau 800, Montreal, Quebec, H3B 4G7. Subscription Price: Canada $69.00 per year, Outside Canada $141.00 US per year, Single Copy Canada $5.50. Plant is published 8 times per year except for occasional combined, expanded or premium issues, which count as two subscription issues. Printed in Canada, contents of this publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher. Publications Mail Agreement #40070230 R10814. Return undeliverable items to: Canadian PLANT Circulation department., 8th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5. U.S. periodicals registration no.

0010-881 at Lewiston, N.Y. US Postmaster: Send address changes to Rogers Media, PO Box 4541,

8 Labour Relations 25 Product Showcase 26 Postscript

Buffalo, New York, 14240, USA Performance claims for products listed in this issue are made by contributing manufacturers and agencies. No responsibility for the accuracy of these performance claims can be assumed on the part of Canadian PLANT or Rogers Media and its agents or distributors. Contents copyright© 2010 by Rogers Publishing Limited, may not be reprinted without permission.

Canadian PLANT receives unsolicited materials (including letters to the editor, press releases, promotional items and images) from time to time. Canadian PLANT, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. This statement does not apply to materials/pitches submitted by freelance writers, photographers or illustrators in accordance with known industry practices. Our environmental policy is available at www. rogerspublishing.ca/environment. We acknowledge the financial support of the Government of Canada through the Publications Assistance Program (PAP) towards our mailing costs.

TM

ISSN 0845-4213

Canadian PLANT January/February 2010 3

Industry View

>> PLANT ONLINE

>> New Developments

SUNERGY gets CSA OK

RESEARCH HIGHLIGHTS Target markets 2010 Companies responding to PLANT’s Canadian Manufacturing Outlook: 2010 survey plan to open up new markets in the following countries: • South America 26% (12% of that in Brazil) • India 14% • Western Europe 19% • Eastern Europe (including Russia) 16% • China 11% Next Generation Manufacturing Study: Overview and Findings A US report on strategies and business actions necessary for world-class performance.

For copies of these studies, visit www.plant.ca, COMMUNITY, Research.

A Stryker 8x8 unloading for action.

Rutter strikes $4.75M Stryker contract ST. JOHN’S, NL: Rutter Inc. has been awarded contracts worth US$4.75 million to supply assemblies to General Dynamics Land Systems Canada for use in Stryker 8x8 vehicles sold to the US Army.

The engineering and “innovative technologies” company based in St. John’s, NL manufactures chassis electronic and electromechanical assemblies for defence systems providers.

This contract involves components and spare parts for use on vehicle platforms currently deployed in Afghanistan and Iraq.

Orders are to be completed

by June 2011.

Rutter was also awarded additional contracts valued at a $1.25 million for spare parts and related components for a total of $6 million.

The beverage manufacturer said the new bottle is part of an ongoing commitment to reduce plastic consumption across its brands.

Averaging just 9.16 grams, this bottle contains 27% less plastic than its Eco-Shape predecessor introduced in 2007, and 60% less than its pre-Eco-Shape PET bottle introduced in 2000.

Pure Life and Montclair will be its first brands to use the new bottle.

Nestle said the PET beverage containers are 100% recyclable for use in products such as carpeting, automotive parts, toys and clothing. They’re manufactured at each of the company’s bottling facilities in the Township of Puslinch, Ont. and Hope, BC.

New water bottle is plastic-lite PUSLINCH, Ont.: Nestlé Waters Canada has unveiled what it describes as one of the lightest such containers in the Canadian beverage industry: its next-generation 500-millilitre Eco-Shape bottle.

PHOTO: NESTLE

In addition to a new name (Canadian PLANT), you’ll notice there have been some changes to the content of this magazine.

The internet and our e-news capability means we can deliver important manufacturing news to you in a more timely fashion, so we are moving it online. Tune in by signing up for PLANT’s weekly e-newsletter. It’s a quick read: there will be about five fresh news items, including national coverage provided by The Canadian Press, some industry reports and a poll question that will give you an opportunity to sound off about the weekly topic.

• Go to www.plant.ca • ABOUT US/Print Subscription • Scroll down to the PLANT logo • Click on the mouse icon • Select register/check Online Access And be sure to go to www. plant.ca throughout the week for daily news updates.

PHOTO: GDLS

NEWS ALERT!

Nestle’s new plastic reduced 500-millilitre Eco-Shape bottle.

TORONTO: Sustainable Energy Technologies Ltd.’s SUNERGY low and extra-low voltage inverters are now commercially available for sale and installation across North America.

The Calgary-based designer and manufacturer of power inverters for grid-connected solar photo voltaic systems said the products are now certified and listed by the Canadian Standards Association (CSA) to UL 1741 and CSA C22.2 No.107.1-01 standards.

The inverters target the North American commercial market with a 208-volt AC output, peak conversion efficiencies in excess of 96%, and a nominal 5,000-watt power output.

Follow-on products will include different power ratings and a 240-volt AC output for residential applications.

Plants get federal funding boost ORILLIA, Ont.: The federal government was busy in January handing out Southern Ontario Development Program (SODP) funds to eligible manufacturers.

Sheridan Seating Inc. in Orillia, Ont. will use a $312,500 investment to expand its manufacturing operations to manufacture seat cushions for platform seating.

The expansion project, expected to create 15 new jobs, will involve acquiring a separate building to hold foam padding and covering materials, as well as purchasing and installing equipment.

Hammond Power Solutions Inc. in Guelph, Ont. has received almost $1.5 million to expand its operations and add a research and development test laboratory.

The company manufactures dry-type magnetics for global markets.

CRS Electronics Inc., a contract manufacturer of light-

emitting diode (LED) technologies in Welland, Ont., is getting up to $825,595 to advance the research and development of high-efficiency LEDs. For information about the program visit http://southernontario.gc.ca.

JOIN THE PROFIT 100 If your company is among the hardy manufacturers who have experienced impressive growth (100% or more) over the past five years, you may belong among the PROFIT 100.

The annual ranking of Canada’s fastest growing companies compiled each year by PROFIT magazine (a Rogers Media publication), turns successful entrepreneurs into the heroes of Canadian business.

Last year’s 100 grew their revenue by an average 2,262% over the previous five years. No company on the list grew by less than 899 per cent! And not to be left out, the up and coming Next 100 (101-200) are also ranked.

If you make the list, your company will be included in PROFIT’s June 2010 coverage and online at PROFITguide. com. You’ll also receive an exclusive invitation to the PROFIT 100 CEO Summit, an elite conference for entrepreneurial achievers. The top five manufacturers will also be profiled in Canadian PLANT. The entry deadline is March 31, 2010. Apply now at www. profit100.com or visit www. profitguide.com/events for more information.

>> Plant off-site

Real Savard, manager of engineering, Quebec area, Wood Products, for AbitibiBowater inc., joined by a guide, takes PLANT along while trekking in the bush in Cuyabeno National Park in Amazonia, Ecuador.

Appear in PLANT Off-Site and win $50! Have a photo taken of you reading PLANT in a remote, interesting or exotic location. Send photos with name, title, company, address and phone number to Off-Site, Canadian PLANT, One Mount Pleasant Rd., Toronto, Ont. M4Y 2Y5. Sorry, we can’t return them. Digital photos should be 5x7 inches and 300 dpi. Send them to joe.terrett@plant.rogers.com.

4 January/February 2010 Canadian PLANT

It’s good to recycle.

It’s time to reduce.

www.kcpreducetoday.com/us/ca ®/*Trademarks of Kimberly-Clark Worldwide, Inc. or its affiliates. Marques deposees de Kimberly-Clark Worldwide, Inc. ou de ses filiales. ©2010 KCWW. K01562 K3852-09-01

Industry View >> Bulletins

>> CAREER FS K Pulp Fund has appointed Jean-Pierre Benoit vice-president, operations. He will oversee the company’s three virgin and recycled pulp mills, located in Saint-Félicien, Que., Fairmont, W.Va., and Menominee, Mich. Prior to joining SKF Pulp, he was general manager of Fraser Papers’ East Paper Division.

Nextraction Energy Corp. in Vancouver has appointed Karmen Jade Birss to manage the oil and gas developer’s corporate development initiatives. Birss has been actively involved in corporate communications since 2003, and has developed investor relations and marketing plans for several public companies in the mining and oil and gas industries.

Dimitrios (Jim) Leonidas has resigned as chief financial officer of Resin Systems Inc. a Calgary-based manufacturer of advanced composite products for infrastructure markets. Joel Tennison, director of corporate development, has assumed the responsibilities of this position until a replacement is named.

Westport Innovations Inc., a Vancouver developer and manufacturer of alternative fuel and low-emissions transportation technologies, has announced Michael Gallagher, president COO is transitioning to a new role as senior adviser. He will continue as chairman of the board of Cummins Westport Inc., and as a member of Westport’s board. Bill Larkin joins the company as CFO. Previously he was CFO of Fuel Systems Solutions, Inc.

Teknion Corp. is constructing a new 70,000-square-foot logistics and customer service centre in Lévis, Que. David Feldberg, president and CEO of the Torontobased manufacturer of office furniture systems, said it will sharply improve the company’s flexibility, production capacity and speed to market. The centre is scheduled to open in March.

Brick Brewing Co. Ltd. has renewed its contract manufacturing and sales agent agreements currently in place with Canada Dry Motts Inc. to Dec. 31, 2014. Under the manufacturing agreement, the Waterloo, Ont. beer brewer produces 355 ml bottles of the Mott’s Clamato Caesar and acts as its sales agent in Ontario.

Tranzeo Wireless Technologies Inc., a manufacturer of wireless broadband

and WiMAX communication systems in Pitt Meadows, BC, has been selected by Nth Air, a San Jose, Calif. broadband wireless services provider, as its equipment partner for the build-out of a nationwide network. The contract is valued at US$4.5 million.

SNC-Lavalin, a Montreal-based global engineering firm, and Vnesheconombank in Russia are forming VEB Engineering LLC, a Russian company that will perform technical and budget audits on infrastructure and industrial projects financed by the bank.

Heath Tecna of Bellingham, Wash. has selected MTI PolyFab Inc., a Mississauga-based manufacturer of custom-engineered silicone and other cellular materials, to supply thermal and acoustic insulation systems for the new Japanese Mitsubishi Regional Jet program.

>> Events Opportunity 2010 Health & Safety Day Of Workshops IAPA, OSSA, FSA March 9, Kitchener, Ont. Presented by the Ontario Service Safety Alliance (OSSA), Industrial Accident Prevention Association (IAPA) and Farm Safety Association (FSA). Learn about changing legislation, emerging issues affecting your workplace and new and innovative solutions to reduce injuries in the workplace.

Keynote: Influencing People to Achieve Safety Success, Marjorie Baxter, EHS Manager, SunLife. Visit www.iapa.ca or call (800) 406-4272.

Best Practices in Action Tours Innovation Insights March 10-30, several locations How does your performance compare to what innovation leaders are doing? Join an Innovation Insights plant tour, presented by Canadian Manufacturers & Exporters (CME) and the National Research Council of Canada—Industrial Research Assistance Program (NRC-IRAP). March 4, Maple Leaf Consumer Foods, Brandon, Man.; March 10, Optima Manufacturing Inc., Calgary; March 24, IMW Industries Ltd., Chilliwack, BC; March 30, Brandt Engineered Products Ltd., Regina, Sask.

Visit www.tvp-ii.org.

2010 International Chemical Recovery Conference

Central or Decentralized?

TAPPI and PAPTAC March 29-April 1, Williamsburg, Va. Technical Association of the Pulp and Paper Industry (TAPPI) and the Pulp and Paper Technical Association of Canada (PAPTAC) will host this conference on environmental quality, improving recovery operations, the benefits of new technology and reviews of successful solutions. Contact Shauna Rice at (770) 209-7237 or e-mail srice@tappi.org.

You decide which installation concept is right for you. Our flexible CPX

Micromanufacturing & Nanomanufacturing Conference

system allows you to optimize your I/O and valve terminal requirements.

Festo Inc. Tel: 1 877 GO FESTO Fax: 1 877 FX FESTO festo.canada@ca.festo.com www.festo.ca/cpx

SME April 14-15, Phoenix Hosted by the Society of Manufacturing Engineers (SME), this conference provides ideas for the improvement of micromanufacturing. Nanomanufacturing will look at the latest applications and trends in topdown fabrication and bottom-up assembly techniques. Visit www.sme.org/micro and www.sme.org/nanomanufacturing.

6 January/February 2010 Canadian PLANT

Economy MANUFACTURING SALES billions 56 54 52 50 48 46 SOURCE: STATISTICS CANADA

44 42 40

Economic developments and trends

N J 2005

J

J

2006

J

2007

2008

N 2009

Source: Statistics Canada

Another factor propelling the Canadian dollar is Canada’s fiscal position.

“We just heard about a month ago that Russia is going to increase reserves of the Canadian dollar. So when you have foreign investors looking to Canada because of our sound fiscal position, that will also propel the dollar up.”

Her report notes energy prices should remain relatively high and international competition, much of it from China, will be fierce. And with the escalating dollar, the US is becoming much more of a competitive factor. She cites, as an example, GM’s decision to real­locate some production of the next Chevrolet Impala from Oshawa, Ont. to Michigan, because it will be more cost efficient with the currencies at par.

All industries are ex­pected to expand over the next two years except aerospace (in 2010), which she notes was last to fall victim to the recession “and should continue to pare back output this year.”

She says a 45% drop in output over the last two years and depleted inventories should propel the automotive industry to the top of the leader board with a 17.5% jump in production. However, once stockpiles are replenished by mid-year, production will slow against weaker demand.

Manufacturing sales were up in 12 of 21 manufacturing industries resulting in 0.1% growth in November for a total of $2.6 billion. Most of the gain came from chemicals, and petroleum and coal products.

INVENTORY LEVELS billions 70 68 66 64 SOURCE: STATISTICS CANADA

M

anufacturing is on the rebound and can even look forward to some welcome growth, but it will be some time before the sector returns to the more glorious years of a decade ago.

Signs the sector was on the mend were evident in November when, according to Statistics Canada’s monthly manufacturing report, sales edged up in 12 of 21 industries by 0.1% to $42.6 billion.

Most of the gains were in non-durable goods industries, which advanced 1% compared with October.

Chemicals sales were up 5.3%, about one-third of the gain was the result of rising pharmaceutical and medicine manufacturing sales. And petroleum/coal products increased 2.9%, pushed up by a 4.7% rise in prices from the previous month. But transportation equipment offset most of the month’s sales gains, declining 4.3 per cent. Production in the aerospace product and parts industry declined 15.4% after a 48.2% jump the previous month. Motor vehicle sales were also down 4.5% after two months of gains.

What’s the view looking ahead?

The TD Economics Industrial Outlook forecasts real output to rebound but it will lack some vigor. TD economist Dina Cover, author of the report, says real gross domestic product (GDP) at basic prices should grow by only 3.3% this year, but manufacturing growth will double that of the overall economy in 2010-11.

“We expect manufacturing as a share of real GDP to rise to 13.5% by the end of 2011, about 5% lower than the peak seen a decade ago.”

But she says growth will pale in comparison to the rate production was slashed during the downturn.

That means by 2011 production will be below its prerecession level and about 8% lower than the levels seen a decade ago.

The rebound will be offset somewhat by the “tepid” US economic recovery and the high-flying loonie.

“The days of the $0.60 or $0.70 Canadian dollar are not coming back any time soon,” she says. “We only have it falling to $0.92 by the end of 2011, which is still really elevated for exporters.”

2002 Constant dollars

62 60 58

N J 2005

J 2006

J

J

2007

2008

N 2009

Source: Statistics Canada

Manufacturing inventory levels declined 0.3% in November to $59.7 billion, moving inventories 12.2% lower than November 2008.

With files from Canadian Metalworking.

CANADIAN INDUSTRIAL OUTPUT

SHARE OF TOTAL OUTPUT BY INDUSTRY Q4/Q4 % change

per cent 75

60

2000

Services industries

2009

Utilities

2009 2010

2010 45

30

15

0 Services

Manufacturing

Construction

Goods

Construction

SOURCE: STATISTICS CANADA/TD ECONOMICS

PLANT STAFF

Current dollars

36 34

SOURCE: STATISTICS CANADA/TD ECONOMICS

Manufacturing picks up the pace

38

Manufacturing Primary industries Goods industry Total economy -14 -12 -10 -8

-6

-4

-2

-0

2

4

6

8

10

Source: Statistics Canada

Source: Statistics Canada

Manufacturing’s share of real GDP is forecast to be 13.5% by the end of 2011, about 5% lower than 10 years ago. Some of this lost share has been picked up by and services, which hit a record 73% in 2009.

Manufacturing is expected to grow 7.3% through 2010-2011, more than twice the growth of the overall economy but, 8% lower than 10 years ago.

Labour Relations

Looking beyond the numbers game Monthly labour statistics doN't ACCURATELY reflect the employment

By Ken Lewenza

E

ach month, Statistics Canada’s Labour Force Survey delivers a report card on our nation’s labour market and economy in a series of charts and graphs. Economists, opinion makers, journalists, business and labour leaders end up framing the job gains and losses according to the interests of their own constituents, but their efforts usually ignore the bigger economic picture experienced so acutely in the homes and workplaces of people across the country.

This monthly dose of encouragement (or discouragement) is divorced from most Canadians’ day-to-day realities, economic policies, sector-based industrial strategies and trade deals.

status of all workers, or the bigger economic picture Since the recession officially began in October 2008, employment figures have even sparked the interest of people who rarely follow economic trends and statistics. It’s as though the monthly job numbers are the magic eight ball, responding to the question: “Is it getting any better?”

Relying too heavily on these numbers is a mistake. The figures are gathered by a massive survey of households across the country. Interviews are conducted by phone or in person, but not everyone is included in the sample. Aboriginal people on reserves, for example, are

excluded due to “serious challenges” in logistics, yet typically have an unemployment rate of double the national average.

Our youngest workers (under the age of 15) are also unaccounted for, despite minimum age laws of 14 years in most jurisdictions (12 in BC and Alberta).

And these monthly numbers are not absolute. Statistics Canada considers a change in national employment of less than 28,000 not statistically significant.

This monthly service is an important one, but looking at the numbers without deeper analysis is not the right approach to understanding the economy.

Attention All Ontario Manufacturers: EMC‐MEDT Lean Training Initiative

MEDT Funding: 50% Off Lean Training!

NOW is the Time to Increase Your Manufacturing Competitiveness Ontario’s Ministry of Economic Development and Trade ‐ MEDT (Communities in Transition) and Excellence in Manufacturing Consortium (EMC) are continuing to help manufacturers increase competitiveness and become more efficient, through the rapid deployment of much needed productivity skills training.

Announced recently, all Ontario manufacturers are eligible to receive 50% off the cost of Lean training, at more than 50 hands‐on Lean training sessions being hosted by EMC across the province. Over 2,600 manufacturing leaders benefited from the EMC‐MEDT funded Lean training during the first round of this initiative.

Why Lean?

Lean Thinking is the philosophy of continuous improvement that quickly identifies and eliminates workplace wastes and ineffectiveness. Lean has become the most effective vehicle to world‐class performance.

EMC is Canada’s largest manufacturing consortium and is recognized as the first organization in Canada to develop and launch an advanced Lean program for industry, with the ability to certify your manufacturing employees in Lean!

COURSE

DURATION

COURSE

DURATION

Lean Management Program ‐ NEW COURSE!

1 Day

Lean Supervisor

2 Days

Changeover Reduction (SMED) ‐ NEW COURSE!

½ Day

Total Productive Maintenance

½ Day

Creating Continuous Flow ‐ NEW COURSE!

½ Day

Developing Pull Systems (Kanban)

½ Day

Value Stream Mapping for Manufacturing

2 Days

Value Stream Mapping for the Office

1 Day

5S for Manufacturing

½ Day

Visual Management

½ Day

5S for the Office

1 Day

Effective Problem Solving

2 Days

Financial Applications for Non Financial Managers

2 Days

Strategies for Lean Purchasing

2 Days

Applications of Lean in Accounting & Administration ‐ NEW COURSE!

1 Day

Lean Accounting

1 Day

For a limited time, EMC is extending our discounted member rates to all Ontario manufacturers for this special initiative, representing significant savings, in additional to the 50% funding!

Who Should Attend?

Key leaders from your management team including: Plant, Production and Operations management, CFO’s, Controllers and Managers/Supervisors in Continuous Improvement, Environmental, Health & Safety, etc.

For more information or assistance with your registration, please contact EMC:



Phone: 866-323-4362



E-Mail: info@emccanada.org

www.emccanada.org



Fax: (866) 298-5732

Last year, the numbers were up and down like a rollercoaster, in many cases defying the expectations of even the most informed of economists. In November, we experienced a surprising growth of 79,100 new jobs, a sign of what economists and politicians alike referred to as “green shoots” back in the spring when the job numbers briefly pointed to a recovery.

Some economists were cautiously optimistic while others were more conclusive.

“Our economy is in recovery mode,” BMO Capital Markets Economist Jennifer Lee told the National Post (despite the fact that private sector employment was down more than 360,000 jobs over the previous 12 months). “The Canadian dollar jumped on the news that Canadian employment rose by 79,100 in November, retracing all of October’s 43,200 losses and then some.”

Fast forward to December, when the economy shrank again, shedding approximately 17,000 more jobs, a figure that came as a surprise to economists who expected to see a growth of between 20,000 to 40,000 new jobs.

Statistical distractions

This obsession with Statistics Canada’s monthly numbers distracts us from seeing the economy as a whole. It lulls us into complacency and prevents us from demanding a long-term plan based on the kind of economy we want; and we’re not accurately assessing our economy’s root problems. Worst of all, these misleading statistics helped our national government justify ending the last session of parliament to “recalibrate” because the economy is looking so much stronger than expected, thus creating a breeding ground for political opportunism and partisan spin-doctoring that does more to confuse than inform the public.

Since the onset of the recession, we’ve wrongly assumed that any job growth is good job growth. Consider the number of Canadian workers who are part of the growing underemployment class, and those forced to work in far less stable and highly precarious jobs. Their standard of living deteriorates, creating hardships for their families and communities.

When their experiences are overlooked, we limit our understanding of how the labour market really works.

When the next batch of unemployment figures are released, here are some questions worth considering: What kind of jobs are available to the unemployed? Do they allow people to raise a family, pay rent or carry a mortgage? How many of the new jobs fall under the self-employed category— sometimes the last resort for people long out of work. How have our trade policies eroded Canada’s industrial base and value-added sectors? What will be the long-term impact of this de-industrialization?

Some food for thought as we prepare for Statistics Canada’s next update on labour market figures—when the numbers game begins again.

Ken Lewenza is the president of the Canadian Auto Workers Union, which represents 225,000 workers. E-mail cawcomm@caw.ca.

Comments? E-mail joe.terrett@plant. rogers.com.

8 January/February 2010 Canadian PLANT

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Trends

>> Automotive Industry

Global auto execs see industry stabilization ahead

regulations and stimulus programs.

Profits will also be a significant issue this year for 36% of the executives who expect a decline. More than one quarter of them predict profits will increase and 42% say they’ll be stable.

Nearly 75% of the respondents believe there will be more vehicle manufacturer alliances, mergers and acquisitions (M&As) over the next five years, as there will be for tier one suppliers (according to 70%), tier two suppliers (56%) and dealers (52%). Specific drivers include too much debt and risk of bankruptcy, access to new technologies and products, potential for product synergies, and access to new markets and customers.

“If you look at the lower end of the tier one and tier two suppliers, volumes are starting to increase fairly significantly [but] there are financial constraints to ramping up production for many of those companies,” says Dawdy, who notes the majority of respondents think there’s between 10% and 30% overcapacity still in the system.

PHOTO: FORD

Challenges for suppliers

An operator at Ford’s Bridgend, UK engine plant monitors progress on a flexible assembly line.

The focus shifts to new innovations and products, emerging markets

By Joe Terrett, Editor

advisory services practice in Windsor, Ont. “If you look at the stats for the past year, it was a horrendous producfter a very tough 2009 for the global automotion year, but inventory has been corrected—probably tive industry, senior executives see stabilization overcorrected. This time last year we had over 100-day over the next five years. There’s growth and new sales for most product lines...currently it’s just over 60.” investment on the horizon, but there are still challenges The 200 senior executives representing vehicle manuahead, among them significant overcapacity, according facturers and suppliers worldwide identified ongoing to KPMG’s 2010 Global Auto Executive Survey. challenges as high unemployment rates (particularly “The survey results give us cause for cautious optiin the US), better but still constrained credit markets mism,” says Doug Dawdy, partner in KPMG’s transaction lack 1101-306_PlantCan_Industry:Transport 10/9/09 4:21 PM and Page 1 of clarity about the impact of new government

A

He says the challenge for automotive suppliers will be to focus on new innovations and new products. “To do that, you’ve got to invest further capital and one of the challenges that comes through that is the capital markets are still not holding auto parts companies in great favour.” Ironically, they’ll be balancing a need for innovation investment with poor operating results and available capital. The challenge for assemblers will be to ensure they are allocated the proper mix of successful platforms for the future.

There will also be opportunities for automotive suppliers in the growth markets. Many of the respondents are looking at M&A opportunities in the BRIC countries.

“That’s really the number one way to tap into [growing markets]. Follow your customer into the new market.”

Dawdy says much of the overcapacity will be addressed through distress mergers and acquisitions (which he expects to pick up this year), restructuring, continuing plant closures and downsizing at the assembly and supplier levels. “A lot of it will be directed to issues of debt, profitability and restructuring.”

But on the traditional M&A side, he says there are financially healthy groups looking at great buying opportunities. “Valuation multiples are low and those with cash...cash is king. They can pick up additional products, markets or technologies at relatively attractive pricing.”

Although not in the survey, he notes private equity firms are still fairly bullish on the sector. “These folks typically buy out-of-favour sectors in opportunistic times and try to turn them around and hold them until times are better.”

Low cost country sourcing of certain components is still a high priority, but he says cost savings will be Project1 7/9/09 12:40 PM Page 1 focused on innovation. Wages and health care have

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Energy << Trends

• The most important issues over the next 12 months are developing new technologies and products, and reducing costs.

• Nine of 10 executives expect vehicle manufacturers to increase their investment over the next two years in new technologies and new models/products while just fewer than 30% expect investment in new plants.

• 91% expect suppliers to increase investment in new technologies and 78% identify new models/products, but only 28% anticipate investment in new plants.

• Despite the deep cuts during the past few years, almost 90% of executives are still concerned about overcapacity. Just over one third say there is 11% to 20% overcapacity in the US, but another third say it’s in the 21% to 30% range. Only 7% see overcapacity as a serious issue in China, but 33% have concerns in three to five years and 31% in the next six to 10 years.

For a copy of the report visit www.kpmg.ca/en/news/ documents/GlobalAutoSurvey2010.pdf.

moved to “the back of the bus.”

“Now the focus is changing to more innovative materials or alternate means of production, engineering and re-engineering, to take cost out of parts,” he says.

“That’s being pushed all the way down the supply chain. tier one and two suppliers are spending a lot more on technology and innovation.”

Steve Rodgers, president of the Automotive Parts Manufacturers’ Association (APMA), sees a slow recovery for Canadian parts companies.

“The news is much better since September-October last year. We’re not back to 2007 levels but there will be a positive recovery over the long term.”

He likened the restructuring of General Motors, Chrysler and several tier one suppliers to hitting the re-set button. With the companies in better shape, immigration levels, a growing driving age population, and the vehicle scrappage rate, he sees a return of pre-2007 volumes within five years.

But he agrees there are still some mergers, consolidations and closings to come. “We’re not out of the woods.”

Ongoing challenges

Indeed, 2009 production was down 6.5 million units from a 17 million average. The Canadian Auto Workers (CAW) union equates that to total production from roughly 23 assembly plants. Getting back on track won’t be easy.

One of the ongoing challenges parts suppliers must face is a high-value loonie, which cuts into exporters’ already thin margins, and auto suppliers send more than 60% of their production to the US. “Looking at energy and other factors, we’re going to see a really strong dollar over the next 12 months,” says Rodgers. “But the message is: expect an at-par dollar for some time to come.”

He says to be successful “at par” automotive parts companies must strive for production efficiencies and to be more innovative. Opportunities lie in light-weighting, new components, composite structures, hybrids and alternate propulsion systems.

Ken Lewenza, president of the CAW, says things are looking up for the Canadian industry. Highlighting new models on the horizon such as the Buick Regal in Oshawa plus another (to be announced), and a $90 million investment in the Cami plant in Ingersol, Ont., he noted plants are nicely positioned at the beginning of new product cycles. “We’re excited about the next two or three years. Our objective is, what comes next?”

Moving forward, he says each automaker must strive to run every plant on three shifts. “You pay the same taxes, lighting and other costs for two shifts as you would for three. In the future, plants should be fully utilized for a quicker return on investment.”

And with a renewed emphasis on developing alternatives to the standard internal combustion engine, Lewenza says it’s time for some new thinking. Research and development (R&D) is too costly for companies to do on their own. Instead of viewing each other as competitors, he says automakers should be combining their R&D. “And there’s no infrastructure for electric vehicles.

Every country is doing their own thing.” He says governments should be coordinating their efforts to create an infrastructure for the vehicles of the future.

Comments? E-mail joe.terrett@plant.rogers.com.

Canadian PLANT January/February 2010 11

Oil sands not as dirty as some assert Focus on every link of the energy

PHOTO: GLOBAL FOREST WATCH CANADA

>> Survey highlights

supply chain: Conference Board PLANT STAFF

D

on’t blame Alberta’s oil sands for the lion’s share of Canada’s rising greenhouse gas emissions (GHG). A Conference Board of Canada report says there’s a need for improvement in every link of the energy value chain, and that includes vehicles.

In 2007, road transportation in Canada accounted for 137 million tonnes (Mt) of emissions or 18% of Canada’s total. Oil sands production accounted for 40 Mt or 5 per cent.

Getting the Balance Right: The Oil Sands, Exporting and Sustainability offers a detailed look at the oil sands and its various environmental impacts, and recommends that a comprehensive climate change plan must strike a balance between energy producers and consumers.

“The perceived Achilles heel of the oil sands is its higher levels of greenhouse gas emissions. But on a wells-to-wheels basis, oil sands are not significantly dirtier than oil from many other global sources,” says Calgary-based Len Coad, director, environment, energy and transportation policy, and co-author of the report.

Don Thompson, head of the industry-funded Oil Sands Developers Group, says US and Canadian

demand will be satisfied from somewhere. “The reality is right now the carbon footprint of crudes delivered from the oil sands are about the same as the average crude oil imported and consumed by the US.” But Simon Dyer, oil sands program director for the Pembina Institute, an Edmonton-based environmental think-tank, says there are other environmental issues that pose a greater threat in the short term, such as the huge tailing ponds that hold the toxic wastewater that comes from oil sands processing plants.

Production to double

“Most of the people interested in dealing with greenhouse gases aren’t seeking to single out the oil sands,” he says. “They’re just asking the oil sands to do their fair share, and currently that’s not happening.”

The report says GHGs per barrel from oil sands crude are between 7% and 21% higher than the lowestemitting crude oil refined in the US. Coad told PLANT even with the uncertainty of the economic downturn, current industry and governments forecast oil sands production to double over the next 10 years. “[The oil sands industry] has actually reduced emissions intensity over the past 20 years, but total emissions continue to grow. That’s part of the environmental price paid

Muskeg River and Shell Albian tailing pond.

for using energy in our society.”

He says Canada and the US will continue to rely on oil products for the foreseeable future, and the oil sands offer advantages as a preferred supplier for North America.

“That being said, sustainable development of the oil sands requires a more measured pace of growth than we have seen in recent years, which would ease the labour, material and environmental pressures.”

The report emphasizes oil sands producers must continue to develop new technologies and processes that reduce emissions during extraction. But at the same time, efforts need to be made to reduce long-term global demand for oil products—and vehicles are an important part of that consumption.

“Improvements are needed in every step of the energy value chain, and reducing emissions from vehicles must be a part of any climate change plan,” says Coad.

For a copy of the report visit www.conferenceboard.ca/documents.aspx?DID=3379.

With files from Canadian Press.

Comments? E-mail joe.terrett@ plant.rogers.com.

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Trends

>> Exporting

It’s time to go global, but are you ready?

By Mark Drake

F

or years the Canadian federal and provincial governments, not to mention all those armchair experts, have been urging manufacturers to move their export focus beyond the North American market. Small and medium-sized businesses, with some notable exceptions, have largely ignored their advice, but they may not be able to do so much longer.

The well-served Canadian market promises limited growth, and US market expansion is threatened by increasing protectionism, extraordinary trade and budget deficits, and unsustainable debt.

Worldwide market options are daunting, and “going global” involves preparing a detailed international business plan, to

Specialized niche products and new technology will help, but The best solution for future growth and profit is to seek out new export markets include, among other things, a choice of target markets, preliminary market research, proposed market entry strategies, an assessment of cultural challenges and an analysis of expected costs and profitability. The Forum for International Trade Training (visit FITT at www.fitt. ca) provides a good export readiness assessment. Here are some of the main points to consider.

Management commitment. Will exporting fit with your objectives? Does management fully support exporting and is there an appropriate budget? Does the board have the vision, passion and en-

thusiasm to champion an export drive?

Are there senior executives on the staff who have international business experience? If the answer is no, the plan must take account of the time and cost to recruit and train the necessary people.

Operational commitment. Will the same emphasis be given to international operations as is given to domestic ones, such as processing orders efficiently and providing speedy contact with representatives and customers? Do current support staffers know about international documentation, brokers and customs agents, letters of credit, transportation,

Big decisions follow you around.

insurance and the legal ramifications of international trade such as the protection of intellectual property? Is there sufficient production capacity for a long-term export commitment? Is the company ready to modify products and packaging to meet international requirements?

Financial commitment. Is the company financially stable? Will management accept a reasonably long term payback?

Does the company have experience in managing international currency fluctuations? International business is significantly more expensive than domestic (and even North American) business.

Apart from the obvious travel and subsistence costs, there will probably be extensive language-related costs (technical literature, promotional material, packaging and labelling), plus market research and subsequent launch and on-going promotional costs in a new market. Are the financial resources in place, including allowance for contingencies and if not, can they be obtained reasonably easily and economically?

International networks. Does the company have contacts in the markets likely to be considered and relationships with export service companies? Experience in the importing business? Contact with international suppliers?

Technology. Is the corporate website internationally focussed and up-to-date?

Is the internet used regularly to check on industrial trends and competitive intelligence? Does your company maintain an intranet for internal management or an extranet for contacts with suppliers and customers? Are supply chains managed using electronic data interchange systems?

Sustainability. Is the company prepared to balance international growth with adequate environmental protection measures and socially responsible behaviour?

Export ready

Negative answers do not necessarily indicate unsuitability for international business, but they do suggest there are some issues to be addressed before your company is “export ready.”

An on-line export readiness diagnostic run by TradeStart of Vancouver is available at www.tradestart.ca or www. exportdiagnostic.ca. Instructions are given on how to proceed with a range of scenarios and markets and the assessment exercise begins after a simple registration process. Each of the nine topics take about five minutes.

If you are considering investment in developing markets such as China, Mexico, Thailand and Malaysia, the federal government has just announced a $20-million Investment Cooperation Program (INC) with the welcome assurance that it will not have too many bureaucratic hoops to jump through.

With North American markets in the doldrums and positive signs of recovery and growth elsewhere, this is surely an ideal time to go global. Just be sure you are ready.

The big decisions you have to make are sometimes difficult, often finely balanced, always with you. Let us help you with your big decisions.

Mark Drake is former president of Electrovert Ltd. and the Canadian Exporters’ Association. E-mail corsley@ videotron.ca.

www.GrantThornton.ca Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd

Audit • Tax • Advisory

Comments? E-mail joe.terrett@plant. rogers.com.

12 January/February 2010 Canadian PLANT

Tax Planning << Management

Get a jump on the PHOTO: ISTOCKPHOTO

The HST will allow manufacturers to claim the sales tax they pay on most inputs.

7 ways to get more out of the new value-added tax

By Rino Bellavia

W

hile addressing taxes likely isn’t high on the 2010 priority list for many of Canada’s manufacturers, those of you in BC and Ontario might want to start planning how to get the most value from your provincial sales taxes, soon to be harmonized with the federal goods and services tax (GST). As of July 1, the harmonized sales tax (HST) will be 12% in BC and 13% in Ontario.

Like the GST, this value-added tax ensures only the value contributed by each manufacturer is taxed by allowing the business to claim what it pays on most inputs. The tax will only be an added cost on the final sale of a manufacturer’s goods to a consumer who is not entitled to either

an input tax credit (ITC) or rebate.

Since more than 130 countries have a value-added tax system similar to Canada’s HST, the competitiveness of manufacturers in these and the Atlantic provinces (except PEI) should strengthen many of their export markets.

The principal reason? Production materials and equipment are exempt from provincial sales tax, but manufacturers in the nonharmonized provinces pay for many non-manufacturing expenses they can’t recover. These include furniture, fixtures, office equipment, certain software and hardware, promotion materials, delivery vehicles and more. Although you’ll have to pay higher HST on these items, entitlement to ITCs should allow for the recovery of most, if not all tax payments,

resulting in lower overall costs. And there are other benefits. Purchase exemption certificates will no longer be required, and you won’t have to file two sales tax returns: only the Canada Revenue Agency (CRA) will administer and collect the HST and audit taxpayers.

Of course, along with the added value of lower production costs and fewer compliance requirements, there will be new challenges. Here are some tips to help your company realize the most value from the transition to the new tax system.

1. Special planning considerations for mid-size to large manufacturers.

Those with annual taxable sales above $10 million will not reap all of the benefits of ITCs for several years because of a temporary restriction on recovering the provincial component of the HST for certain expenditures. A five-year restriction followed by a three-year phase-in period covers energy not directly used in the manufacturing process, telecommunication services (other than internet and toll-free numbers), road vehicles less than 3,000 kilograms, vehicle parts and fuel.

Since energy is currently exempt from provincial sales tax in Ontario, this could be a significant added cost for some manufacturers who will have to track the portion of energy use attributed to the non-production areas of their operations.

2. Update projections and budgets. Determine the potential savings by identifying the expenses subject to PST. For large businesses, project the

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cost of the restricted ITCs. Integrate the calculations of savings and added costs, including implementation costs, on cash flow projections, budgets and pricing.

3. Update accounting systems.

Determine what’s involved in converting accounting systems to ensure compliance (such as charging and remitting appropriate HST and claiming appropriate ITCs). Be sure to investigate what modifications may be required for invoices, sales receipts, purchase orders and expense reports.

4. Review agreements. Assess the impact of harmonization on current and planned contracts and other agreements, including leases, credit notes and discounts. Suppliers may be required to begin collecting the HST as early as May 1 on transactions that relate to the postJuly 1 period. Making purchases earlier than May 1 will not likely reduce HST costs because certain businesses may be required to self-assess the proportionate amount of HST that relates to the postimplementation period.

5. Review payment terms. Since purchase exemption certificates will be eliminated, manufacturers must collect HST from customers, including previously GST-exempt provincial government entities. When this is a “cash on delivery” arrangement, manufacturers will collect HST on the requisite portion of the payment. HST payments may become a cash flow issue as you wait for invoice payments after remitting the HST portion to the CRA. Review payment terms and invoice timing to ensure cash flow is not strained.

6. Time major expenditures. It may be worthwhile delaying planned capital

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Management

>> Cutting Costs

Get more value from the HST

Product SKUs that are prime for elimination eat up a lot of warehouse space and complicate the production schedule.

Continued from page 13

Rino Bellavia is a partner of BDO Canada LLP (www.bdo.ca) and the leader of the firm’s large market region indirect tax practice. Contact him at BDO’s Burlington, Ont. office, (905) 633-4905 or rbellavia@bdo.ca.

Comments? E-mail joe.terrett@ plant.rogers.com.

quent line and machinery changes, plus costs attached to warehousing space.

What kind of savings can you look forward to?

Starting with the low hanging fruit, 10% to 15% right off the top, says Toronto-based Vivek Kalwani, results manager, productivity improvement with Grant Thornton in Canada and one of the authors of the white paper. “And there’s probably another 10% in there but you’d have to get into the numbers.”

For example, one area to look at for savings is the warehouse and carrying costs. “Another would be direct labour costs,” says Kalwani. “Look at the SKU. What are the activities involved in getting it produced? If you eliminate it, what impact would it have on labour costs?”

Another area to consider is energy use. You may be using a piece of machinery to produce a product that isn’t particularly energy efficient.

Also consider the time spent producing that line: he says it may be better spent on something else.

Focus on variable and fixed costs.

Determine the key activities involved in making a product. And gauge how it’s selling, where it’s being sold and to whom. Kalwani says rationalization may not be the issue: it could be a matter of revitalization by repositioning the product or changing the pricing.

Here are some key points: • Re-evaluate your business strategy. Understand the types of business, consumers and niche markets you are going to target.

• Determine which products are untouchable. They may be in the top-performing 20%, or they may not be, but have some future value.

• Identify the true cost of each SKU using process mapping and analysis of the value added by each activity within the value chain.

• Get a clearer picture of the cradle-to-grave costs of a specific product by consulting your employees. They know which ones take the most administrative, set up and marketing efforts; and the ones that generate the most warranty work and hidden costs, such as injury claims.

• An underperforming SKU may be priced incorrectly. A slight price increase might save it from elimination.

• Candidates for elimination use a lot of warehouse space, complicate the production schedule or use a specific type of machinery that isn’t required for other products.

Communication is very important, starting on the inside. Rationalization may signal a reduction in business value. Kalwani says the immediate impact could be employees thinking about all kinds of negative things, including lay offs.

Customers will be affected by the changes, so assess why they are buying the soon-to-be-rationalized product. You may have a suitable replacement in the remaining product line. “It’s a great opportunity for the sales team to go to the customer and talk about existing products,” he adds.

There may be an issue with suppliers, especially if you’re getting unit cost savings based on a certain volume. Gauge the impact removing a SKU will have on purchasing costs.

Kalwani suggests looking at the frequency of purchase. “If you are reducing the overall amount of use, would it make sense to maintain current purchase levels or buy more at once and sit on it?”

Product rationalization is all about mindset. Wrap your head around the idea that you can dump the laggards, have fewer SKUs and potentially increase profits.

Download a copy of Survival of the Fittest, Uncovering the benefits of product rationalization at www. grantthornton.ca/insights/white_papers.

PHOTO: ISTOCKPHOTO

acquisitions or major expenditures until after July 1 to ensure the provincial portion of the tax paid qualifies for ITCs. Since your company will be required to pay the higher HST on non-manufacturing expenses rather than the 5% GST currently paid, it will be important to balance the timing of payables and the filing of HST returns.

7. Review the tax impact of interprovincial sales and purchases. If you sell inter-provincially, assess the tax implications of these transactions. We are still waiting for the government to issue the “place of supply” rules that will apply when goods are sold inter-provincially. If the existing rules for the HST provinces continue to apply, their portion of the HST would need to be collected if the goods are delivered to BC or Ontario.

Suppliers to the BC, Ontario or federal governments will have to charge and collect HST. The federal government doesn’t currently pay PST on taxable supplies and neither the BC nor Ontario governments pay GST on supplies, but this immunity will change as of July 1. Manufacturers selling to these governments will have to charge and remit GST and the provincial component of the HST. According to a September 2009 Special Report (www.td.com/economics/special/dp0909_hst.pdf), TD Economics estimates the move to the harmonized sales tax will reduce the amount of taxes businesses in BC and Ontario pay on inputs by $6.9 billion, and there will be an additional $650 million saved in compliance costs. This can be a big value provided you begin planning now to adapt your systems, processes and policies.

Cut laggard SKUs, boost margins

Start trimming if 20% of your offerings drive 80% of profits

By Joe Terrett, Editor

I

n these post economic-apocalyptic times, mid-size manufacturers looking for more creative ways to cut costs without crippling the business should think product rationalization.

That’s the advice offered in a Grant Thornton white paper titled Survival of the Fittest, Uncovering the benefits of product rationalization.

Even thinking about cutting products out of the line-up may make some in the senior management ranks and members of the sales team blanch, but if the Pareto principle—80% of your profits are coming from 20% of your offerings—applies to your business, it’s likely time to start trimming. The global tax and advisory firm suggests a sound rationalization program will help you identify the slow movers and less profitable lines, and potentially increase the margins on the products that remain.

Too many stock-keeping units (SKUs) rack up administration and purchasing costs that don’t show up in the sales data, says the consulting firm. There are also production costs from fre-

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14 January/February 2010 Canadian PLANT

Think Lean << Operations

The beauty of a well-executed plan

By Richard Kunst

M

eeting a plan is a thing of beauty and should not be accomplished by accident. Too much energy is wasted reflecting on failed executions rather than moving forward. A solid capacity and staffing plan (CSP) will help you avoid becoming a professional variance manager.

A CSP is your first cut at converting dollars into units (what makes sense to the organization). Create it outside of the system in an Excel spreadsheet showing all of the sales forecasts and breakdowns of available manpower and requirements for various value streams.

Looking forward three months accommodates planning for human capital

PHOTO: ABB

>> TECH TIP

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Save with steady-state air consumption

A

ll process and power industries use air compressors; their number and size vary depending on the air demand of each plant area.

Air compressors are costly to run and maintain, so any reduction of air usage will result in significant cost savings in both running and maintaining them.

Most plants use pneumatically operated control valves and actuators that require positioners for modulating actuation of these final control elements. Pneumatic positioners constantly use air to position the final control element. This takes place during the up or down travel of the linear control actuator, or during the clockwise and counter-clockwise travel of rotary actuators.

During the period the actuator is stationary—at the process control set point—the positioner no longer needs to use air. However, virtually all positioners bleed a small amount of air during this time. The specification for this value is typically called air consumption at steady state or at stable state. Air consumption of positioners is specified in several engineering units, such as scfm; usgpm; kg/h or Nm3/h.

The amount of compressed air the positioner consumes at steady state is important. Low air consumption means the positioner is more economical from an operating standpoint with higher energy savings. In many control loops with correct PID tuning, the control actuator may move only small amounts during the control cycle when the percentage of time at the steadystate position is high.

Source: ABB Instrumentation

Canadian PLANT January/February 2010 15

adjustments, re-assignments and cross training, and allows you to make calculated decisions about overtime requirements. Looking back at the prior month’s performance will help you plan to define your demonstrated output.

The CSP is a very powerful document from several perspectives. Completing it within the first week of the month for review with the leadership team allows you to examine the following: • Accuracy of forecast to actual • Calculation of demonstrated takt time versus plan • Pro-active manpower planning • Impact of new product/program introductions • Improvement strategies • Promotional opportunities

Associated support systems that can either feed or be fed by your CSP include: • Plan for every part (PFEP), to recalculate your kanban and storage requirements.

• Plan for every machine (PFEM): machines should undergo productive maintenance, and if there is a constraint, look for opportunities to enhance capacity.

• Plan for every employee (PFEE), to gauge the impact of scheduled training.

• Product/program realization, to determine development is progressing through a gated process that covers commercial viability, product definition, process definition, validation, continuous improvement and feedback.

Targets require granular definition for communication to the organization through daily report-outs. This distributes accountability to the folks tasked to help make and meet your plan.

Although report-outs deliver many benefits—both tangible and intangible— another important element is the use of run charts that track the same items measured within the CSP. Developing your initial CSP requires some effort, but once established you’ll find it’s a great planning and review tool.

Richard Kunst is president and CEO of Kunst Solutions Corp., publisher of the Lean Thoughts e-newsletter.E-mail rkunst@kunstartofsolutions.com.

>> Maintenance

Operations

Maximize

your assets’ value Global maintenance experts provide strategic

By Steve Gahbauer

M

aintaining equipment is always a challenge, especially when your assets are 200 million kilometres away, as is the case with the Galileo mars probe. This equipment must be able to withstand 230 G forces and enormous temperature fluctuations. All maintenance must be done by remote control, bearing in mind that one-way communication with equipment takes 20 minutes to reach. Any component failure can cause cascading problems. Robust design is a must, tolerance of a high level of risk is a given, and autonomous operation under severe conditions must be achievable as much as possible.

Luckily, conditions on earth are not quite so demanding. Nevertheless, effective maintenance can still be a challenge.

Fortunately, experts from academia, science and plant professionals from around the world who attended this fall’s 2009 International Maintenance Excellence Conference (IMEC) shared some valuable strategic insights.

Value-driven asset management.

Guy Delahay says this is where you’ll find hidden values. The industrial engineer, founder of the Mainnovation consulting firm in the Netherlands and past chairman of the Dutch Maintenance Association, recommends setting a benchmark to see where you are today and what can be realistically achieved in

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insights at IMEC 2009

the next few years; developing a practical set of key performance indicators (KPIs) to make it possible; and devising a mechanism to prioritize all the potential improvement actions.

To hasten success, set the right priorities and stick to them; be realistic, don’t reinvent the wheel; and go for sustainable results. He says the most valuable maintenance organization treats improvement as a yearly planning and control cycle; sets targets based on creating value; has clear and prioritized improvement actions; and enforces an annual plan of a do-check-act culture.

Hidden values revealed by this approach include extended equipment life and larger turnaround intervals.

Maintenance reliability. R.A. Platfoot, managing director of Covaris Pty. Ltd. in Bankstown Square, Australia, whose primary expertise is in maintenance engineering, high level company asset management strategy, and equipment life assessment, says maintenance needs feedback on work priorities and what is expected to go wrong in the foreseeable future. Reliability efforts must be supported by timely information and actions based on recommendations.

Excellence in work management reduces breakdown rates and realizes the design capacity of the installed equipment base.

Robert Williamson, a reliability consultant and trainer with Strategic Work Systems in Columbus, NC, defines reliability as “doing what equipment and processes are supposed to do, first time, every time.” He recommends having a business reliability policy to guide decisions and achieve rational outcomes. It communicates how a company expects its employees to respond to equipment maintenance and reliability problems, opportunities and improvements.

IMEC 2010 You will have an opportunity to learn more about evidence-based asset management this year during the 6th IMEC event to be held in Toronto Sept. 22-24.

16 January/February 2010 Canadian PLANT

Many manufacturers manage maintenance costs rather than improve cost drivers.

Ed Stanek, president of LAI Reliability Systems in Chicago, believes that you can get greater reliability through efficiency. It’s about avoiding downtime and improving productivity by improving work management processes, and by doing the right work, with the right skill, at the right time, and at minimum cost.

Measuring performance is, of course, an accepted way of assessing maintenance effectiveness. But Michel Theriault, principal of Strategic Advisor, FM&PM Consulting and Advisory Services, in Guelph, Ont. says, “Don’t just measure it, add another dimension to it by managing performance.”

Measuring performance gives you data; managing performance gives you results. Simply measuring can drive bad behaviour and focus attention on the wrong things. Measures that look good on the surface may not meet objectives.

The management approach builds on measures but requires a higher level of involvement and relationships. It prevents failure and is results-oriented.

Best practices. It’s all about process integration, whole-life planning and optimization, says John Woodhouse, managing director of the Woodhouse Partnership Ltd. in Kingsclere, England, which is a pool of 40 leading authorities in risk, maintenance, reliability and asset management. Every organization has unique assets and circumstances, so every road map is different; however, it helps when the whole organization is driving in the RousseauJ same direction.

Maintenance and reliability expert Christer Idhammar, founder and executive vice-president of IDCON Inc. in Raleigh, NC, says the biggest threats to success are the lack of current best practices directives and the wrong people driving implementation. If upper management says that reliability is top priority but insists on cutting costs first, it doesn’t help best practices or imple-

P8000-P12000 pneumatic tire lift trucks.

PHOTO: MITSUBISHI

New lift trucks from Cat

Operator application causes most forklift downtime.

Don’t abuse your forklifts Forklifts take a lot of abuse. The best way to avoid downtime is to recognize and avoid common problems and implement simple day-today measures. Mitsubishi Forklift Trucks offers the following tips: • Replace worn or chunked tires that cause jarring impacts to the wheel, axle components, load and operator. Use the appropriate tires for demanding applications.

• Operating a forklift with worn tires causes premature wear to the fork bottoms, which jeopardizes the truck’s ability to lift and creates an unsafe work environment. Routine fork inspections by operators and in-house technicians ensure your trucks are operating with safe forks.

• Riding the inching pedal can cause costly damage to the transmission system. To prevent major failures, use the inching pedal only when approaching a rack and when you want

Steve Gahbauer is an engineer and the former engineering editor of PLANT. E-mail gahbauer@rogers.com.

Comments? E-mail joe.terrett@plant. rogers.com

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to apply the brakes while revving the engine (allowing the hydraulics to work at full speed).

Use the brake pedal for regular stopping when hydraulics are not in use.

• Tires, wheels, body panels, forks, attachments and backrests suffer when forklift trucks run into things at high travel speeds. Assigning equipment to an operator can help track who is responsible for the abuse. Installing an impact monitor, vehicle speed limiter or keyless access system as options also helps reduce impact damage.

• Regular and ongoing operator training ensures equipment is properly maintained and operators are in step with proper safety and maintenance applications. Train all new operators on how to perform the required daily inspections and properly operate the equipment prior to use.

• Have the proper maintenance program in place based on the type of application.

Cat Lift Trucks has boosted its Class 4 and 5 lift truck product lines. The Houston-based manufacturer and distributor has added the following new forklifts: • 2ET2500-2ET4000 three-wheel 2,5004,000 lb. and EPC3000-EP4000, four-wheel 3,000-4,000 lb. electric counterbalanced tire lift trucks. They deliver longer battery life and feature standard fingertip controls for precise load handling. The cowl-mounted display panel is easy to read and a five-level pre-programmed performance mode selector allows the operator to adapt to various applications.

• EPC5000-EP6000 (5,000-6,000 lb.) and EP7000-EP10000 (7,000-10,000 lb.) reduce shock and vibration with full-suspension seats and fully floating cabs. Anti-rollback features for both loaded and unloaded conditions help the operator retain full speed control on ramps.

• P8000-P12000/PD8000-PD12000 (8,00012,000 lb.) internal combustion pneumatic tire lift trucks have two-speed forward and one-speed reverse transmission. An intuitive premium instrument panel monitors diagnostics and maintenance needs. www.cat-lift.com

Adding power eases steering effort

PHOTO: RAYMOND

mentation. He says many manufacturers manage maintenance by cost instead of improving cost drivers. The difference between how good you are and how good you can become often reveals a big gap. Closing it requires a clear idea of what excellence looks like and how you are going to achieve it.

Hugh Blackwood, corporate maintenance and reliability manager of ALCOA’s Mt. Holly plant in Goose Creek, SC, says best practices must start in the storeroom. If they emanate from the showroom or the boardroom, they’re doomed to fail. Blackwood, who leads the company’s worldwide implementation of the Primary Metals Global Reliability Excellence Strategy, insists best practices must be key elements of a business strategy, a win-win for both maintenance and operation, and linked to a reliability and maintenance strategic plan.

The successful implementation of best practices requires guidance, training and IT support, including tracking and reporting of progress benefits. Clear and effective communications, a library of updated best practices, a clear definition of expectations, requirements, processes, accountabilities, and consequences of non-compliance are musts.

Ali Zuashkiani, director of education programs, Centre of Maintenance Optimization and Reliability Engineering (C-MORE) at the University of Toronto, points to an often overlooked asset: the role of tacit knowledge in equipment management decisions. He proved that combining it with hard data from condition-based maintenance software leads to better decision-making. Likewise, the optimization of joint maintenance tactics and lifecycle costing decisions leads to improved maintenance and can result in huge savings.

Empowering maintenance people, improving work processes, and leveraging tools lead to best practices. Many effective strategies were noted at IMEC 2009, now is the time to put them to work.

PHOTO: CAT LIFT TRUCKS

Materials Handling << Operations

Canadian PLANT January/February 2010 17

1/29/10 10:53:30 AM

The PowerSteer option on Raymond Corp.’s 8000 Series rider pallet trucks significantly reduces manoeuvring effort even at higher speeds.

An AC-powered motor and controls provides consistent, responsive steering among multiple pallet trucks regardless of fleet size and the ACR System reduces maintenance with no wearable parts or brushes, delivers more run-time per battery charge and provides enhanced response to operator commands.

The motor doesn’t intrude into the platform space: it’s contained within the tractor compartment.

An adjustable handle accommodates a wide range of operator heights and preferred operating positions.

Additionally, centre rider and tugger trucks automatically slow down when turning corners for smoother, controlled operation. PowerSteer is available on Model 8400, 8500 and 8600 trucks.

The Raymond Corp. is a Greene, NY-based provider of material handling products. www.raymondcorp.com

Sustainability

>> Reducing Emissions

PHOTO: IOGEN

>> Clean Tech

NxtGen

Cleaning up diesel burn

Scientist scrutinizes Iogen enzymes.

Iogen doubles ethanol production

PHOTOS: NXTGEN

OTTAWA: Iogen Corp.’s 2009 cellulosic ethanol production topped 581,000 litres, more than doubling its 2008 fuel production, and surpassing one-million litres of total production since 2004.

Cellulosic ethanol is processed from the non-food portion of renewable feedstocks such as cereal straws and corn stover into a renewable, advanced biofuel that can be used in today’s cars.

Iogen uses a combination of thermal, chemical and biochemical processes to make more than 340 litres of ethanol per tonne of fibre. Lignin in the plant fibre is used to drive the process by generating steam and electricity, thus eliminating the need for fossil carbon dioxide sources such as coal or natural gas.

The Ottawa-based company has been producing cellulosic ethanol at its demonstration plant since 2004. The fuel reduces green house gas emissions by up to 90% compared to gasoline.

Ballard increases transport traction VANCOUVER: Ballard Power Systems’ fuel cell-based power solutions have gained some additional traction in the global mass transit marketplace. It has a new order for five FCvelocity-HD6 power modules from Advanced Public Transportation Systems bv (APTS), a specialty bus manufacturer in the Netherlands.

The 150-kilowatt power modules will be installed and integrated with hybrid electric drive systems in 18-metre (60foot) articulated Phileas buses manufactured by APTS. Phileas is a new concept for passenger transport on high frequency dedicated bus lanes. Equipped with magnetic markers for electronic lane assistance and precision docking, they offer the advantages of rapid rail transport.

Ballard’s power module incorporates sub-system components addressing humidification, hydrogen pressure regulation, hydrogen recirculation, water management, ventilation and controls. The Vancouver-based hydrogen fuel cell technology developer says since these sub-system components and fuel cell stacks are optimized within a power module, they can be more readily integrated with the bus hybrid electric drive system.

Power modules are also being used by BC Transit and Transport for London.

Cleanfield and WePOWER merge HAMILTON: Cleanfield Alternative Energy Inc. has signed a letter of intent for a merger with WePOWER LLC to create a global player in vertical axis wind turbines and other renewable energy systems.

Cleanfield, based in Hamilton, develops renewable energy technologies such as small wind, solar and inverters.

WePOWER, based in Aliso Viejo, Calif., develops and manufactures small wind energy systems globally, specializing in vertical axis wind turbines.

Combining the two companies will give Cleanfield a global base and WePOWER will benefit from Cleanfield’s heavy investment in research and development, patents and intellectual property.

Cleantechs pursue joint projects CALGARY: BioteQ Environmental Technologies Inc. and Newalta Corp. are pursuing joint waste treatment projects.

Newalta, a Calgary-based industrial waste management and environmental services provider, and BioteQ, a water treatment company, will identify and commercialize projects that recover, recycle, or treat industrial waste and manage related by-products.

The agreement involves Newalta completing a $4 million private placement with BioteQ.

18 January/February 2010 Canadian PLANT

Erik Johannes (left), vice-president of product engineering, and president and CEO Jeremy Holt holding a component from NxtGen’s syngas diesel particulate filter system, designed for retrofits or installation on new vehicles during assembly.

Filter system reduces NOx and particulates from diesel emissions

By Noelle Stapinsky, Features Editor

T

he catalytic converter was introduced in automobiles fuelled by unleaded gasoline in the 1970s when government regulations forced automakers to reduce emissions. Now the same regulations are being applied to diesel engines. Both the US and Canadian environmental regulators required the use of catalytic particulate filters for all diesel engines in 2007 and nitrogen oxide (NOx) emission systems are to be added this year. Ultra-low-sulphur diesel must also be available across North America. Since diesel emissions have to be reduced by 10 times their previous levels, catalytic particulate filters are needed for retrofits and diesel engine manufacturing.

NxtGen Emission Controls Inc. intends to fill this need. Its innovative technology makes existing and new internal combustion engines cleaner and more efficient.

The Richmond, BC-based company, founded in 2004 by former employees of Ballard Power Systems and QuestAir Technologies, started working on a NOx exhaust filter in 2005. But when the first diesel particulate regulation was implemented in 2007, NxtGen didn’t jump into the development of reduced particulate technology. “We thought the power train industry already had a good solution,” says Brian Kahnert, NxtGen’s vice-president of marketing and government relations.

But the company discovered that although catalytic

systems worked well for diesel engines that reached 275 degrees C, trucks often idle, stop and go and make various stops for deliveries in city environments. As a result, the diesel fuel was not getting hot enough to regenerate, so the converter systems were plugging up and stalling the engine.

NxtGen found injecting synthesis gas (syngas) into lean NOx traps (LNT) converted the pollution into nitrogen and water.

“What we wanted to contribute was not so much a pollution control system that moves the pollution in engines around, but a solution to the problem,” says Kahnert. “Basically, [with the LNT] you’ve taken a harmful substance that contributes to ground level ozone and lung disease and turned it into [substances] that are benign.”

The company’s proprietary technology has miniaturized the production of syngas from hydrocarbon-based fuels such as diesel and gasoline, and it can also produce syngas from biofuels and natural gas.

“We have shrunk something that was tens of metres tall and made it small enough to fit under the hood of an automobile or along side the exhaust system of a truck,” says Kahnert, who notes this is a major contribution to mobile syngas applications, because it produces syngas on demand and only as the vehicle requires it.

NxtGen’s interest grew as retrofit and original equipment manufacturers came calling, looking for a syngas solution.

“Syngas is better than diesel fuel because it can initiate the combustion and regeneration of a diesel particulate filter at 200 degrees C, a temperature more frequently found in urban diesel trucks,” says Kahnert.

NxtGen developed a syngas diesel particulate filter (DPF) for medium-duty trucks that requires daily catalytic particulate filter regeneration while operating at low temperatures. It can be retrofitted to existing trucks without changing the engine or controls, and the syngas LNT unit uses the same components as the DPF system to decrease manufacturing and maintenance costs.

Engine manufacturers can make improvements to the engine controls for anywhere between a 2% and 10% improvement in fuel economy. He says that’s a significant improvement over the current attempts for a 1% gain in Continued on page 20

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Sustainability

>> Reducing Emissions

>> Green Manufacturing

Quick wins for greening the bottom line

Breaking out in the eco-tech sector Continued from page 18

efficiency.

“The filter that can be installed on a diesel

By Brett Wills engine will reduce particulate matter emissions by 85% or more,” says Kahnert. “NOx ome manufacturers see going green as a financial drag. Others emissions can be reduced by 70% to 75% with see the benefits but believe cost savings from green projects a retrofit system and by 80% with an new require large investments with long-term paybacks. Yet there are original equipment system.” companies that are quickly posting results to the bottom line with One of NxtGen’s greatest challenges was little to no investment. One of the best ways to gain quick wins in its choice to not use platinum catalysts. any area is to learn from the best practices of others. Here are five “In the petrochemical industry, the manuways to harvest some of the low hanging fruit. facturing of syngas is always done using 1. Lighting. Retrofitting existing low efficiency lights catalytic systems,” says Kahnert. provides great savings but requires an initial investment and But when you’re working with trucks and paybacks can be two years or more. Instead, walk around construction equipment, the risk of contamiA NxtGen syngas DPF system installed on a diesel-powered truck. the plant and look for bulbs or fixtures that can be removed nants in the fuel supply is much higher than or disconnected. Lights illuminating the box on the top shelf it is in industrial and petrochemical applicaare providing no value to the floor. tions. It’s difficult to tell where people are “We have shrunk something that was tens of 2. Air compressors. A leak in an air compressor line reprebuying their fuel and its quality. If the fuel’s sulphur sents hundreds or even thousands of dollars of wasted energy. content is high, it can damage a catalytic system. And metres tall and made it small enough to fit Have a walk around the facility when no machinery is running NxtGen found that about 7% of diesel fuel in North and listen for the unmistakeable hissing sound of a leak.

America is illegally blended. under the hood of an automobile or along side 3. Peak shaving. A close examination of your electric bill will It took several years of detailed engineering analysis reveal a hidden peak demand charge, based on the one time to create a syngas generator that would produce a high the exhaust system of a truck.” largest draw of energy over a 15-minute window. For example, quality syngas stream without using a catalyst. turning on all the lights, motors, equipment and computers in the The second challenge was installing and integrating building at the same time will draw a large amount of energy for the equipment with diesel trucks that operate in a varia short period of time. With a peak demand charge anywhere ety of extreme conditions. the Japanese company’s silicon carbide (SiC) diesel from $5 plus per kilowatt, you can save a great deal of money by “We spent a year and a half working our way systemparticulate filter (DPF), produced by its ceramics busisimply staggering start-ups. Electricity providers will help with atically through the challenges we’ve encountered in ness, and NxtGen’s syngas generator (SGG), improved this project at no cost. vehicle and engine integration,” says Kahnert. fuel economy by up to 3% when paired together in an 4. Recycling. Throwing items in recycling bins instead of Field trials exhaust after-treatment system. garbage bins saves hundreds, even thousands of dollars with This technology was in field trials last year using a The test objectives and associated procedure were very little effort. Depending on your location, savings can be medium-duty truck at its Manufacturing and Applicadeveloped to show the potential benefits and value of as high as 25% for picking up a recycling bin compared to tion Engineering Center in a suburb of Detroit. It will be using a SiC filter being regenerated by syngas versus picking up a garbage bin. available for commercial sale later this year. post-injection dosing of diesel fuel (hydrocarbon). Test5. Side skirts. For transport and logistics companies or those “From here, we’ll move down in size to light-duty ing compared both the fuel consumption during actual with fleets of trucks, there is a simple way to dramatically vehicles, off-road equipment, construction vehicles, DPF regeneration and total engine lifetime fuel conincrease fuel consumption, with very little investment. Side skirts reefers and portable generation sets,” says Kahnert. sumption based on simulation. for tractor-trailers greatly reduce drag and increase fuel savings “Our product is more amenable to engines in the one- to NxtGen says results show that IBIDEN’s SiC DPF by as much as 15 per cent.

15-litre size, but we have done designs for engines as Concentrating on harvesting the low hanging fruit can and NxtGen’s SGG are well matched to take advantage large as 90 litres.” result in tremendous savings with little investment and it of each other’s design strengths to enable faster and NxtGen is also looking at gasoline engines. The may just whet your appetite for more comprehensive green more fuel-efficient DPF regeneration. During these company says research shows hydrogen fumigation in measures that will reduce costs associated with your carbon tests, NxtGen’s SGG combined with IBIDEN’s SiC filgasoline engines enables lower temperature combustion footprint, and lead to more business. ters showed 30% diesel fuel savings during DPF regenand higher exhaust gas recirculation resulting in 5% to eration. The SGG was capable of regenerating the SiC 25% gains in fuel economy, and similar reductions in Brett Wills is the director of the Green Enterprise Movement DPF in nearly half the time needed using in-cylinder carbon dioxide emissions. and a senior consultant with High Performance Solutions in post-injection.

Kahnert says this application could also be used in Cambridge, Ont. He is also the author of Green Intentions: The SGG combined with the SiC filters also showed a Creating a Green Value Stream to Compete and Win, published larger stationary applications. potential 1% improvement in total engine lifetime fuel

by Productivity Press. E-mail bwills@hpsinc.ca.

Last September, NxtGen announced it had completed consumption. And total fuel consumption was improved an engine bench test with IBIDEN Co. Ltd. It showed by an additional 2% using IBIDEN’s advanced SiC DPF, which has the same soot mass limit, but lower backpressure compared to IBIDEN’s conventional SiC DPF products.

“The test program allowed us to establish a strong technical collaboration with IBIDEN that extended both our knowledge base and accomplished meaningful results in fuel economy improvement,” said Jeremy Holt, NxtGen’s president and CEO. “This has added to the value proposition for syngas, which already includes very low exhaust temperature capability and system cost optimization. The results also confirm our simulaFind your way to the NEW Canadian Manufacturing Week. tion model predictions, which further boost NxtGen’s Canada’s Premier Forum for All Things Manufacturing ability to integrate syngas and optimize exhaust afterNew Technologies. New Location. New Format. treatment system performance on a simulation basis.”

NxtGen has been talking with a variety of OEMs in Attend or exhibit: www.cmwshow.ca or 888.322.7333 Asia, North America and Europe who are evaluating the technology for integration in future engines and vehicles, starting in 2012. And it has established a distribution agreeOctober 5-7, 2010 | Toronto Congress Centre | Toronto, Ontario ment with Itochu Corp., a Japanese trading conglomerate.

“We’re its first clean tech investment and they’re looking to assist us with sales in Asia,” says Kahnert.

With engineering customers in the US and potential automotive customers in Europe, NxtGen is breaking out in the eco-technology sector as an international player that just may make a difference in the quest to reduce growing levels of greenhouse gas and other emissions generated from our daily use of vehicles.

S

E-mail noelle.stapinsky@rci.rogers.com.

Comments? E-mail joe.terrett@plant.rogers.com.

20 January/February 2010 Canadian PLANT

Keeping an

eye

Nanotechnology << Innovation

on the nanos

Health Canada builds toward regulations for

ILLUSTRATION: KARL G. NYMAN, UNIVERSITY OF OXFORD

nanotechnology

By Noelle Stapinsky, Features Editor

N

anotechnology, the almost mythical science that manipulates atomic and molecular-sized matter, has so far generated more than 600 nanotechnology-based consumer products, but little is known about the material’s tiny particles or how they affect health and the environment. As the development and use of nanomaterials grows rapidly worldwide, so do concerns about worker and user safety.

Manufacturers who make or use nanomaterials are not subject to regulations yet, but the Canadian government is moving in that direction, albeit cautiously.

To gain a better perspective on the world of nanos, Industry Canada, Health Canada and Environment Canada recruited the Council of Canadian Academies (CCA) to review any scientific evidence of safety and risks around nanomaterials. The CCA pulled together a multi-disciplinary panel of scientists, lawyers, philosophers and sociologists from Canada and the US to create a science-based assessment of known risks and it submitted a report in the summer of 2008.

The report concludes more detailed data is needed from industry about which nanomaterials are going where, how they affect the environment and their impact on the health of people exposed to them. The panel had little faith voluntary measures would be effective, but it also acknowledged enforcing regulations would be a challenge.

More than a year after the report was submitted, Health Canada continues to “build its capacity to regulate nanonmaterials.”

In an e-mail response to a query from Canadian PLANT on the status of nano-regulations, Health Canada spokesman Gary Holub said, “The CCA’s report was a catalyst for discussion within Health Canada, which has led the department to adopt a broad policy approach to nanomaterials, one which will take an incremental approach to address regulatory, science and policy needs while allowing for the integration of new scientific evidence as it becomes available.”

translate in a direct way to what you think you can infer about the nano particles.”

Titanium dioxide particles, for example, create the intense whiteness in many paints and toothpastes. Added to sunscreen, the ointment becomes translucent when applied to skin. The different results between the two materials are what make the nanoscale material useful; however this difference also could result in unexpected behaviours in biological and environmental systems.

The report, Small is Different: A Science Perspective on the Regulatory Challenges of the Nanoscale, includes details on how and why nano particles might behave differently in a variety of ways. But since industry isn’t required to report nano use and there isn’t a lot of nano work being done in Canada, the data is limited.

Sheremeta says although the report shows scientific information is limited, what is known justifies certain concerns.

Unaware of potential risks

“We’re trying to promote nano technology as a way to improve our industrial practices and make better material, but simultaneously we don’t know a lot about what these materials might do,” says Sheremeta. “We’re in this Catch 22 situation very early in the game. We really need to proactively direct our efforts to figuring out these questions around nanomaterial safety.”

Certainly any company working with materials that might pose environmental risks is required to report them under Canadian environmental laws. The problem

"Government doesn’t want to step in too soon because there’s a real risk that if it regulates in a way that's really costly or prohibitive for industry, you can knock out a lot of economic benefits.”

To give you an idea just how tiny nanoparticles are, they have one or more dimension on a nanoscale measured in nanometres (nm). One nm is about 100,000 times smaller than the diameter of a human hair.

The particles are developed from a variety of materials for industry applications that include medicine, food, cosmetics, clothing, energy, electronics, automotive coatings and aerospace.

“There’s data out there saying there’s potential risks associated with certain materials that you would not expect just by looking at the bulk materials,” says Lorraine Sheremeta, a research officer for the National Institute for Nanotechnology and one of the expert lawyers on the CCA panel. “If you look at carbon black versus carbon nanotubes or carbon bucky balls, or titanium dioxide versus titanium dioxide nano particles…scientifically, what we know about the bulk material doesn’t

is many companies don’t realize there’s potential risk associated with nanomaterials.

“What we need to do is get this information to the companies and explain why additional information is needed: why they may be required to do safety testing that goes beyond what they may have been required to do with previous iterations of their products that didn’t use nano-scale materials,” says Sheremeta.

“There’s a communication problem across the board.

Government doesn’t want to step in too soon because there’s a real risk that if it regulates in a way that’s really costly or prohibitive for industry, you can knock out a lot of economic benefits.”

Since accepting the report, Health Canada has taken steps to address “critical needs.”

Holub said the department is among the first regulatory communities globally working on a broad definition

The creation of carbon peapod nanotubes, an experiment performed by the Materials Department at the University of Oxford in the UK.

of nanomaterials.

“The adoption of a working definition of nanomaterials as an interim policy will provide Health Canada and our close domestic partners with a consistent approach and a trigger to request important information from manufacturers and other stakeholders as international norms develop,” he said.

A nanotechnology research agenda will identify the potential health and environmental risks, including the occupational health and safety aspects and he said independent assessments by the scientific community and stakeholder views are being actively assessed to ensure decision-making is “well-informed.”

Work continues with Health Canada’s domestic and international partners on regulatory and policy commitments, which will allow for the integration of new scientific evidence as it becomes available. And it’s working with Environment Canada to develop a survey requiring manufacturers and importers to report their use of nanomaterials.

“The survey, to be released in the coming months, will help to identify what substances and commodity groups contain nanomaterials in the Canadian marketplace,” said Holub.

Health Canada is also developing a virtual centre of expertise on a central, virtual nanotechnology hub that will bring together scientists, policy makers and regulators to address specific nanotechnology areas or issues.

A report by RNCOS, a global market research and information analysis company based out of Delhi, India, states that products based on nanotechnology will impact almost all industrial sectors and enter the consumer markets in large quantities. By 2013 the global market for nanotechnologies is expected to grow at a compound annual growth rate of about 20 per cent.

It’s one thing to know what’s going on in Canada, but what about nano goods being shipped from abroad?

Canadians could still be exposed to potentially risky materials.

Sheremeta hopes the outcome will be an international community reporting on all the materials being used.

For a copy of Small is Different: A Science Perspective on the Regulatory Challenges of the Nanoscale, visit www.plant.ca, COMMUNITY, Research.

E-mail noelle.stapinsky@rci.rogers.com.

Comments? E-mail joe.terrett@plant.rogers.com.

Canadian PLANT January/February 2010 21

Technology

>> Industrial IT

PHOTO: COGNEX

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PHOTO: BOMBARDIER

3D automation vision

An example of Bombardier Aerospace's use of CAD software to develop marketing materials for the CSeries CS100.

Three new ways

to think about CAD software Use it for streamlining production, marketing and improving sustainability efforts

By Corinne Lynds

C

omputer automated design (CAD) software has long played an important role in manufacturing, primarily to design simple parts. But this complex tool now streamlines production, improves your carbon footprint and boosts marketing initiatives.

That said, many manufacturers are not taking advantage of CAD’s full-range of capabilities. Here are three new ways to get more ‘bang’ for your CAD buck.

Marketing. Digital prototyping software that digitally designs, visualizes and simulates how a product will work under real-world conditions is not new, but using it for marketing is.

Autodesk’s 3ds Max helps Quebecbased Bombardier Aerospace customize its private and business aircraft.

“It’s really part of the marketing process for the business jets,” explains Ed Martin, industry manager, transportation for Autodesk, the global design and engineering software developer. “When somebody is buying a business jet, they’re spending a lot of money, so they need to be sure of what exactly they’re

22 January/February 2010 Canadian PLANT

getting up front.”

Once the customer has selected an aircraft, whether it’s a Learjet 60 XR (seats eight), a Challenger 850 (seats 14), or a Global Express XRS (seats 19), they will then want to customize it with the company brand or personal style.

“We do mainly the interior visualization work,” says David Rees, lead 3D digital artist for Bombardier’s Global aircraft line at Bombardier’s advanced visualization and media centre in Montreal. “We visualize some of the exterior paint work, but our major work comes with the interior floor plans and décor.

In the past, we only used 3ds Max Design visualizations to confirm the customer’s choices, which used to be limited. These days, we’re involved much earlier in the design process and create many more iterations in much less time.”

And, according to Martin, Bombardier is not the only company taking advantage of CAD software’s marketing capabilities. He says many manufacturers, especially automotive companies, are using Autodesk Showcase to market their products more effectively. “They take the CAD data and come up with some really good visuals and use those for web, print or whatever form of communication they have.”

Lean manufacturing. The world’s most successful manufacturers understand that identifying and eliminating waste in their production processes allows them to focus on improving quality and streamlining production. It only makes sense that they would apply this strategy to their design processes too.

“Manufacturers recognize the need to be leaner, not just once everything is on the floor, but also in the process of getting everything to that point,” says Martin.

Continued on page 24

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Technology

>> Industrial IT

Use CAD to transform lean manufacturing Continued from page 22

“Right now I would say the biggest offering we have is the ability to bring all the data together in a 3D layout and provide good quality visualization of what’s there.”

In other words, instead of looking at design in terms of creating one part, the software enables designers and plant managers to look at the entire layout of a shop floor with all its various machines to optimize the production process. This kind of production mapping is ideal for new-builds or retrofits.

Sport Systems Unlimited, a Waterloo, Ont.-based manufacturer of rink board systems, used SolidWorks CAD software as part of its lean manufacturing transformation. The software automatically

“Manufacturers recognize the need to be leaner, not just once everything is on the floor, but also in the process of getting everything to that point.” generates robotics and CNC code from 3D solid models. Applying this manufacturing approach has slashed the production time of custom rinks from approximately 1,200 staff-hours per rink in 2006 to 450 staff-hours in 2009.

“Prior to embracing SolidWorks and 3D, the knowledge for producing a set of boards was in shop floor drawing templates and with manufacturing employees, requiring arduous fabrication steps and intensive training. Now the knowledge is inside the engineering office,” says David Staines, Sport Systems’ director of sales and marketing. “The software

streams data out to robots and CNC machines via its Visual Basic for Applications interface. Line workers simply set up raw stock, punch in the part code, and watch the panel, part or aluminum member be machined in a fraction of the previous time.”

Sustainable design. Manufacturers are looking for ways to make their operations more sustainable. What better way than to design sustainability right into products and processes.

“We talk to customers who are focussed on ‘how do I reduce the energy consumption in my plant?’” says Martin. “Well,

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the question flows directly down to how much energy does this machine use?”

Historically manufacturers looked at green initiatives as an expense, but more of them are seeing sustainability as a potential profit centre. After all, using less energy in production processes lowers overhead and product costs, leaving more money to invest in R&D and plant upgrades.

The Sustainability Xpress add-on module for SolidWorks is another example of how CAD software is integrating sustainability into its design applications. Rick Chin, director of product innovation at SolidWorks, says it will allow designers to quantify, in real time, the projected environmental impacts of the parts and assemblies they create.

Adding sustainability

It’s built on PE International’s GaBi software and database, a tool for quantifying the environmental performance of materials, processes, products and infrastructure.

SolidWorks’ Sustainability software is available in two product forms with SolidWorks 2010: an “Xpress” version and a Professional version. Both products will display a dashboard at the bottom of the SolidWorks user interface that illustrates a design’s prospective carbon footprint, air impact, water impact and energy consumed throughout the design’s lifecycle. These impacts will automatically update as the user modifies the design. The Professional version will roll up the impacts of all parts within a product design and add details regarding energy consumption during the product’s use phase.

CAD software isn’t just a design tool: it’s now helping sales teams demonstrate products before they’re built, plant managers improve throughput and environmental teams achieve compliance. Take a second look at your design software and make sure you’re taking advantage of its full range of capabilities.

Corinne Lynds, a former senior editor of PLANT, is the editorial director of the Construction Group and editor of On-Site magazine, a Rogers Media publication. E-mail corinne.lynds@rci. rogers.com.

Comments? E-mail joe.terrett@plant. rogers.com.

24 January/February 2010 Canadian PLANT

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11:24:28 AM

Postscript

Biting the hand that equalizes Ontario and Quebec’s criticism of the oil sands on the international stage

By Roger Gibbins

C

outraged ALbertans and ignores energy's importance to the economy 2) People who live in provinces that are less well off also pay into the program through their federal taxes, but their governments receive equalization payments in return.

While we may habitually mutter about this wealth transfer, we accept some reasonable measure of wealth redistribution among provinces just as we accept some reasonable measure of wealth redistribution across income groups. It’s how Canada works.

That’s why when Ontario, Canada’s largest province and traditionally its wealthiest, joined the ranks of the “have

not” provinces, the public services Ontarians have always enjoyed continue.

Last year, Ontario received equalization payments of $31 per capita, a paltry amount compared to other recipient provinces to be sure, but it represents a huge change in Canada: a shift of the economy’s centre to the West.

In ways that are likely to endure, chronic economic weakness in Ontario is being offset by economic growth in the West. From now on, the western Canadian economy will carry even more of the fiscal load for the federation. That’s why opinions held across Canada about

PHOTO: SUNCOR ENERGY

anadians are quick to complain about—and even quicker to forget—one of the reasons this is a great country. The federal government tries to ensure that no matter where Canadians choose to live, they receive roughly the same level of public services thanks to wealth transfers among the provinces.

While most Canadians have little understanding of the arcane mechanisms that drive the equalization program, most of us get these basics: 1) People who live in provinces that are doing well pay into the program through their federal taxes, but their governments get nothing in return.

the West matter a great deal.

The capacity of the regional economy to generate wealth is overlooked in gratuitous attacks on the West’s economic champions.

During the recent United Nations climate conference in Copenhagen, politicians from Ontario and Quebec criticized the oil sands, to the outrage of many Albertans. They were outraged both by the unprecedented attack on an international stage by fellow Canadians and by the fact that it ignored the contribution of the oil sands to Alberta’s economy, the same economy that helps ensure equality of public service across Canada.

Bloc Quebecois Leader Gilles Duceppe recently argued the federal government was supporting the oil sands at

Open pit mining using shovel and buckets that hold 100 tonnes.

the expense of Quebec’s economy, a remark that was not only misleading and malicious, but ignored what are in effect substantial fiscal flows from Alberta’s energy industry to social programming in Quebec.

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Attacks on Alberta are not helpful. Such criticism of the West’s energy-driven economy is fuelling pushback from Albertans about equalization payments.

It’s partly because Alberta is not doing as well, and generosity to others is harder to defend in the face of a significant deficit and the likelihood of program cuts; and partly because of habit, lashing out at the federal government when things are tough at home.

The result is that Alberta Premier Ed Stelmach has expressed concern about the magnitude of Alberta’s financial contribution to the rest of Canada, and Ted Morton, Alberta’s new finance minister, has been charged with addressing the perceived inequities of equalization.

Neither the attacks nor the response from Albertans and their government are helpful to sustaining the country. If the western Canadian economy is to carry more of the fiscal load for the federation, opinions in this region about equalization matter a great deal. So too does the capacity of the regional economy to generate wealth, a capacity that is overlooked in gratuitous attacks on the energy industry.

Biting the energy hand that helps feed recipient provinces with equalization payments is not a sustainable strategy.

Roger Gibbins is the president and CEO of the Calgary-based Canada West Foundation, which conducts public policy research of importance to the four western provinces. E-mail rgibbins@cwf.ca.

Comments? E-mail joe.terrett@plant. rogers.com.

26 January/February 2010 Canadian PLANT

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