Alberta Inventors and Inventions

Innovation and anticipating customers' needs are the tools of trade for precision manufacturers.

When Brian Klimack left Imperial Oil in the mid-'90s after working at the company for 12 years, he had an exciting idea for a new machine for the oil and gas exploration industry. An automated pipe slotting machine, it incorporated some revolutionary aspects. First, Klimack's machine would be long enough to do a full 44-foot pipe in one rotation. Up until then, the longest pipe any machines could handle was 13-and-a-half feet long.

"I wanted to be able to finish a joint in one rotation versus cutting a third of the joint and moving the pipe, cutting another third and moving the pipe again (and again) because the equipment wasn't long enough," he explains. The second revolutionary aspect was that the length of Klimacks machine cuts or slots wasn't determined by the diameter of the blade. "All the existing equipment just pushes the blade down and then it comes out. On my equipment, I can put the blade down and then I can actually run the blade in the pipe. Doing that, I can get more open area of slots in a pipe without really diminishing the strength. You never had that option," he says. Slotted pipes are instrumental in the control of sand when drilling oil or gas wells.

It was a good idea but how could he make it happen? "Nobody had expertise in building these things," explains Klimack. He needed someone to make his invention a reality. An intermediary hooked him up with a precision manufacturer, Almac Machine Works in Edmonton. After many discussions, the machine was built. Last November, Almac built the second generation of the machine for Klimack’s company, Slotwell Ltd., a machine Almacs co-founder, Rollie Marcotte, calls the most sophisticated his company has produced. "Different people from around the country came by to see, " says Marcotte, "and were blown away."

Cutting slots in pipes used in oil and gas exploration is all Slotwell does. Klimack has the second machine online and running at capacity already. "Business is good. I could probably use another machine," says Klimack, adding he's had to turn down work.

The new automated pipe slotting machine contains 80 spindles enabling the machine to make 80 slots on a pipe at once. The technology on both these machines is unmatched in the world. It took a tremendous amount of innovation to design and build them, something found in abundance in the precision manufacturing industry, which has grown substantially in Alberta in the last 15 years or so.

"From 1985 to 1995, the growth (in precision manufacturing) was phenomenal," contends Brian McCready, vice-president, Alberta, of Canadian Manufacturers and Exporters. "There were some downturns in there for the oil and gas industry but the actual manufacturing stayed through those downturns very well."

Despite periods of low oil prices, the precision manufacturing industry was able to maintain growth because of a healthy reliance on exports and, according to McCready, "we were working with other companies that needed precision manufacturing to export their goods."

Statistics aren't available on precision manufacturing itself. Alberta Economic Development does state that metals and machinery exports (under which precision manufacturing would be classified) totalled $1.3 billion in 1999, making it the province's eighth largest export product category. More revealing, however, is the percentage manufacturing contributes to the province's gross domestic product. In 1985, manufacturing accounted for 6.3% of a $61.3 billion GDP in Alberta. Thirteen years later, manufacturing's share grew to 10.3% but on a substantially larger GDP of $95.8 billion.

"A lot of the manufacturing industry in Alberta developed alongside the oil and gas industry," says McCready. "But with the increase in pulp and paper and in the tar sands, which are more of a mining activity, we're seeing a different generation of manufacturing grow in Alberta."

McCready contends the growth in manufacturing in Alberta, especially in precision manufacturing, has to do with the tremendous economic development the province has undergone. "There's nowhere else in North America that's had that kind of development of requirements," he says. While the industry is mostly focused on Red Deer and Edmonton, which act as the northern supply centres for the forestry and oil sands activity in northern Alberta, Calgary is catching up.

The underlying principle in precision manufacturing is to enable companies to become more efficient with the machinery and equipment they use. In the last few years, the Alberta industry as a whole has addressed issues such as what’s the best way to harvest the forest, extract oil from tar sands or get mineral from a mine. Innovation is paramount to the sector. Precision manufacturers can call on the combined skills of engineers, machinists, welders and millwrights to come up with their products.

Slotwell, according to Almac's Marcotte, is a fairly typical customer in the sense that the customer has an idea and seeks out his company's expertise to make the idea a reality. But as with any business, you have to go looking for opportunity. Almac gets the majority of its customers by looking for productivity improvements in other companies' operations then convincing those companies that Almac can produce a machine that will help them be more productive. "You have to know your market," asserts Marcotte. And his market has expanded beyond the oil and gas industry to include all resource-based companies and general industry. "We took that direction about eight to 10 years ago," says Marcotte. "You have to diversify if you're going to be successful. You can't be dependent solely on the ups and downs of the energy sector." For Marcotte, the decision paid off handsomely as Almac, which currently employs just under 200 people, has grown on average 25 to 28% annually during that time.

Another company that found its raison d'etre in servicing the resource-based economy is Risley Equipment out of Grande Prairie. Reg Isley originally started out in business with a partner in a fabrication shop. Clients would arrive with equipment for him to repair. If he couldn't fix it, he would build it. In the early '80s, he sold his share of the business and went into hydraulics. It was a savvy move at the time because Grande Prairie didn't have a hydraulics repair shop. Isley was repairing all kinds of vehicles and designing systems. One day, a contractor with Canfor, a forestry company, came in the shop. He needed some hydraulics expertise to help him with the mechanical sawhead attached to a converted excavator. Isley fixed the problem and saw an opportunity to build a better product. After investing $750,000 at the height of the recession, Isley came out of it with two patents, one for the feeding mechanism and another for the cutting element.

"That was really the beginning of what we would call manufacturing," explains his son Dean, a vice-president with the company. "Primarily, when we started out, we were an attachment manufacturer. We followed that up with a machine that could process those trees after they were skidded on the roadside, then we developed an attachment to pick up trees and load them onto the truck-the grapple."

Almost every piece of equipment Risley Equipment manufactures for the forest industry began with a contractor needing help with his equipment or having an idea to improve his own productivity. (Its a standard practice in the forest industry to hire private contractors to harvest the forest and carry the logs back to the mill.) "The input comes from the field and the dealership and the mill," explains Dean Isley. "The contractor is usually the one who is squeezed the hardest, so he sees ways of doing things differently and he comes to the dealership or ourselves and says 'What can we do; solve my problem.' That's the business we're in."

For a period of time, contractors can capitalize on greater efficiency until their success is noticed by their peers, who then normally follow by incorporating the innovation in their own business. "Sometimes it's dictated that they (other contractors) have to follow that same success," explains Isley. For Risley Equipment's part, helping private contractors become more productive has led to the company having, according to Isley, the most complete line of forestry equipment attachments of any manufacturer.

But the forest industry has come upon some hard times lately as the price of dimensional lumber has plummeted. Just as Almac is diversified and services many industries, so too does Risley. "We also produce products for the mining and oil and gas sectors," says Isley, who adds the company still maintains its service business, hydraulics machining and welding operations.

The biggest concern on the horizon for precision manufacturing, as in most manufacturing in Alberta, is the recent hike in power costs. It's already causing some manufacturers to shelve plans for expansion until the situation clarifies itself. "You're already creating a downturn because you're choking expansion," says the CMEs McCready. "[National] companies that are putting together the costs across the country are switching production to operations out of the province of Alberta because they can produce them more cheaply there. [The power issue] could detract from the whole economic growth and all of the programs that have been developed and all of the energy that has been created in this province," says McCready.

In 2000, power costs averaged around five cents/kWh. Estimates for the default rate in 2001 ranged anywhere between 20 and 30 cents/kWh. The provincial government stepped in, initially offering rebates of 1.8 cents/kWh to large consumers. It doubled the rebate to 3.6 cents/kWh a few days before Christmas. On January 8, Edmonton-based Epcor unveiled five- and 10-year contract options to commercial customers whose annual power usage is between 250,000 kWh and 150 kVA. The five-year rate is 11.6 cents/kWh while the 10-year rate stands at 9.6 cents/kWh. When the provincial government's rebate is factored in, the price declines to eight and six cents/kWh, respectively, for 2001. (As at print time, Enmax had yet to offer any similar commercial contract options.)

Yet, by mid-January, thousands of businesses hadn't signed a contract and the government responded once again to power price concerns by unveiling a "market transition credit", an additional rebate worth up to four cents/kWh for businesses on default rates. Despite the assistance, the increase is still very substantial. The default rate from Epcor for small businesses is 20.1 cents/kWh. With a potential 7.6 cents/kWh total rebate, some customers may still find themselves paying 12.5 cents/kWh, one of the more significant rates in North America.

McCready expects most companies will sign on to one of the contract options. The question for precision manufacturers is whether those power rates will enable them to continue to be competitive in a very tight global market. And that, only time will tell.

"Precise Ideas"