FEBRUARY 2011 NA

Is the US antidumping law damaging US companies?

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FEBRUARY 2011BeBusiness Excellence Online

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A new year arrives with a new number, marking a defining moment in time. It’s when we like to round up what happened last year and look ahead at what’s in store for our business sector in the coming year. Editors therefore see a surge in industry surveys in the first few weeks of the New Year. We also see a surge in company reports, as the calendar year often marks the end of one accounting year and the start of another.

We can’t report them all, but I can tell you that the vast majority of surveys and reports I have seen recently point towards an improvement in the business climate this year. Optimism abounds.

In this issue, Dr Ivan Misner suggests that the recession has already released its death grip on small businesses. The organization he leads, BNI, conducted a survey of over 5000 business people around the world, asking them, among other things, “how is business for you today, compared with this time last year?” Almost 68 percent said that business was either growing, or growing substantially.

It’s growing for some of the world’s largest businesses, too. Several of them have reported end of year earnings for 2010 over the last couple of weeks, as the news section of our website reveals. Coca-Cola is celebrating 125 years in business with soaring profits and growth in every one of its business sectors and geographies. Ford Motor Co. reported its highest profit for over a decade.

Looking ahead, in this issue of the magazine we find Primero Mining, the Canadian-based precious metals producer that acquired the San Dimas mining properties from Goldcorp in August last year, expecting to almost double production by 2013.

How is 2011 shaping up for you? If you’d like to let me know, perhaps we can write about you, too.

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Contents

LEAD STORY Ever felt dumped on?The US antidumping law destroys US companies and jobs instead of protecting them, says William E. Perry.

OPERATIONSWhy lean programs failJeffrey Liker and Mike Rother, world renowned authorities on the Toyota Production System, on the essence of lean.

OPERATIONSThe best of the bestThe best companies build business value through systemized internal operations, says Bob O’Hara.

STRATEGY Small business recoveryDr. Ivan Misner thinks the recession has released its death grip, offering new survey evidence to support his view.

STRATEGY Driving M&A success in 2011 Despite the number of failed combinations, companies are still looking for acquisitions, says George F. Brown, Jr.

SUPPLY CHAIN Rental requirementsThomas R. Cutler reports on technology to help equipment rental dealers manage fleets, customers and supply chains.

SUSTAINABILITY The highly qualified hireIf your policy is to discard “overqualified” candidates, it’s time to rethink your strategy, says Maribeth Kuzmeski.

Putzmeister America A concrete solutionFrom humble beginnings in Germany as the “plaster master”, to a major facilitator of the Hoover Dam Bypass Project.

Marcotte Mining Machinery Riding the rollercoasterWith innovation a part of company DNA, customization and R&D help the company stay ahead in a volatile industry.

Manroc DevelopmentNarrow vein miningAs technically-challenging mining projects become attractive, specialty mining services are enjoying a boom.

Primero Mining Corp.Mining ambitionThe acquisition of Mexico’s San Dimas mining properties will help the company become a leading intermediate gold producer.

Bird Construction: CFS PleasantvilleA military historyThe consolidation of the Canadian Forces Station at St. John’s, Newfoundland into two modern facilities.

American Hospital DubaiWhere care matters mostA further expansion to the hospital that introduced the highest standards of American healthcare to the Middle East.

Taggart GlobalMoving mountainsBased at company headquarters in Pittsburgh, Dave Morris spends half his time in South Africa managing a portfolio of contracts.

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Everfeltdumped


On 3 January 2011 the Wall Street Journal, in an editorial article entitled Mugging Magnesium, illustrated the problem with the US antidumping law. Although the law is intended to protect US companies from “unfair” imports, its real impact is to destroy legitimate US companies, downstream industries and US jobs. As the Journal stated:

“Today, the US magnesium industry and its thousands of jobs are in desperate shape, thanks to Washington trade barriers. In 2005, at the behest of America’s monopolistic magnesium producer—US Magnesium of Utah—the Commerce Department imposed antidumping duties on magnesium from Russia and magnesium alloy from Russia and China. Five years later magnesium alloy is in short supply in the US, leading to much higher prices than in the rest of world and a crisis for die casters, alloy producers and recyclers . . . .

ondumped ?The US antidumping law is not working, says William E. Perry. It destroys US jobs instead of protecting them, while Trade Adjustment Assistance for Firms (TAAF) could be just what they need

Lead story

At recent ITC hearings, Senator Claire McCaskill (D. Mo.) described ‘one small area of rural Missouri’ where there are ‘over 1,000 jobs associated with companies that use magnesium. Their inability to compete with the price of magnesium internationally is causing these jobs to dry up, and that has a devastating impact on these communities.’ . . .

All of this has been done in the name of saving 400 jobs at US Magnesium, though there is no evidence that the sole American suppliers of the metal would have gone out of business without antidumping protection. Rather the duties have allowed the company to use monopoly pricing at home while expanding abroad.”

In other words, the US antidumping law has allowed US Magnesium to charge higher prices in the home market than its export price, which is classic dumping.

Although many average Americans may think that US Magnesium is just an exceptional case, antidumping orders are injuring numerous downstream industries. In the recent 301 petition, for example, that the United Steel Workers filed on Green Technology at the United States Trade Representative’s office, the USW complains about Chinese government export quotas on various

rare earth metals; antimony, tungsten, and various raw materials, such as bauxite, coke, magnesium, silicomanganese, silicon carbide, and silicon metal.

US industries, often single US companies, however, have brought numerous antidumping cases against metal products from China, including antimony, tungsten, magnesium, silicon carbide, silicon metal and silicomanganese. I successfully represented Chinese producers and US importers in the Antimony Trioxide and in the Silicon Carbide case when General Motors showed up on the Chinese side.

The Tungsten ore case, however, resulted in an antidumping order that excluded all Chinese tungsten ore from the United States for almost seven years. More importantly, antidumping orders are in place excluding all forms of magnesium and pure magnesium, silicomanganese, silicon metal, and foundry coke from the US market. In addition to these metals, US antidumping orders are in place excluding all electrolytic manganese dioxide (destroying many US battery producers), ferrovanadium (used in the steel industry), and refined brown aluminum oxide (used in US foundries). Yet the USW is screaming about Chinese export quotas when many of these Chinese metal products are excluded from the


Lead story

market because of US antidumping orders! In addition to metal products, there are

numerous antidumping orders excluding other raw materials, such as chemical products from China, including sulfanilic acid, citric acid, glycine, and potassium permanganate, the last of which has been excluded by an antidumping order from the US market since 1984, almost 30 years.

Many people may argue that the US antidumping law is “protecting” US industries from unfairly dumped imports. To win an antidumping case, a US industry (which can be a single company), needs to show dumping at the Commerce Department and injury to the US industry at the US International Trade Commission (ITC). Commerce, however, finds “dumping” in 95 percent of the cases. Since 1980, in more than 30 years work in this area, first in the government and later in private practice, the number of “no dumping” cases I found by the Commerce Department can be counted on one hand. Commerce has so defined “dumping” that any US company that imports a product into the US, especially from China, is guilty of dumping—and I do mean import.

In classic dumping cases against Japan, Taiwan, or the EC countries, dumping is defined as selling at prices in the United States lower than prices in

the home/foreign market or lower than the fully allocated cost of production. But Commerce has determined that since China is not a capitalist country and the Chinese government sets all the prices and costs, China is a nonmarket economy country (NME). Commerce, therefore, does not use actual prices and costs in China to determine whether a Chinese company is dumping. Instead, Commerce will compare the US price to a constructed cost of production for the Chinese company. To construct that cost, Commerce will use factors of production—that is how much raw materials, electricity and labor a Chinese company uses—valued by public published prices, often highly inflated above any reasonable value, in a surrogate country such as India.

An example of how Commerce exaggerates dumping margins was a review investigation done several years ago on Silicomanganese from China, which was an attempt to break open the antidumping order and bring silicomanganese from China into the US. To value the electricity, the critical raw material input, Commerce used electricity prices from India of almost 10 cents a kilowatt hour to value electricity in China, when the actual price in China is 3 cents a kilowatt hour and in the US 6 cents a kilowatt hour. By inflating the cost of electricity in China, all Chinese


silicomanganese was excluded and one can forget about calculating accurate antidumping rates for Chinese metal companies.

The problem is that the real damage of the antidumping orders is not to Chinese companies, but to US companies—importers, distributors and downstream producers. Chinese companies do not pay antidumping duties. US import companies by law are liable for antidumping duties, and the importers can be retroactively liable if those antidumping duties go up in subsequent review investigations. As indicated above, however, the Chinese company, never mind

the US importer, simply cannot know whether it is dumping because Commerce does not use actual prices and costs in China to determine whether the Chinese company is dumping.

Moreover, Commerce does not examine all the Chinese companies individually to determine whether they are dumping. In the ongoing Wood Flooring from China antidumping case, for example, out of more than 70 Chinese companies, Commerce will calculate individual dumping margins for only three. In the Wooden Bedroom Furniture case, over a hundred companies can be subject to the case but only two or three companies will get their own dumping margins.

Ninety percent of companies get the average dumping margin of the companies that are examined, so long as the individual companies do not get 0 or the highest dumping margin.

To fix these problems, three points should be considered by Congress and the US government. First, the US government should make China a

market economy under the US antidumping law, not to help Chinese companies, but to help US companies. Under the US-China WTO Agreement, Commerce must make China a market economy country in five years or by 2016. If China becomes classified as a market economy country, Commerce will use actual prices and costs to calculate dumping rates for Chinese companies, so by then, companies from both countries will know whether the Chinese companies are truly dumping.

Moreover, if Commerce were to use actual prices and costs in China, Chinese companies could monitor their US prices and make sure they are not dumping. Monitoring, however, is useless if Commerce uses

“Commerce finds ‘dumping’ in 95 percent of cases. Since 1980, in more than 30 years work in this area, first in the government and later in private practice, the number of ‘no dumping’ cases I found can be counted on one hand”


Lead story

arbitrary surrogate values in a third country, such as India, to construct a cost for Chinese companies.

For US importers, knowing whether their Chinese supplier is dumping is critical to their survival, because they are retroactively liable for additional antidumping duties in a review investigation. When US companies import under an antidumping duty order, the “dumping”/percentage rate they pay is not the dumping duty, but the cash deposit. The actual dumping duty can go higher in subsequent review investigations, and the importer will be retroactively liable for any increase in dumping duties over the cash deposit rate, plus interest.

In the Wooden Bedroom Furniture case, for example, estimates are that US importers have paid more than $500 million in retroactive antidumping duties from review investigations. This retroactive liability has wiped out US import companies throughout the United States. I have met with good old boys in North Carolina, who have had their entire $60 million company wiped because they had the temerity to import wooden bedroom furniture from China under an antidumping order. Another client has gone bankrupt because it imported ironing tables from a company with a 0 percent dumping rate that went to 157 percent in an antidumping

“Commerce finds ‘dumping’ in 95 percent of cases. Since 1980, in more than 30 years work in this area, first in the government and later in private practice, the number of ‘no dumping’ cases I found can be counted on one hand”


review investigation. A 157 percentage means that when a US importer imports $100 of product into the US, it must pay the US government $157. This retroactive ruling created millions of dollars in liability for this small US company, driving it into bankruptcy with the loss of US jobs into the bargain.

Thus the second proposal is that the United States should follow the rest of the world and make antidumping duties prospective, not retroactive. Only the United States has retroactive liability, but as indicated above, US importers cannot know whether the Chinese companies are dumping because of the surrogate value methodology. In a purely prospective AD/CVD duty system, such as in Canada, it is generally understood that once the investigation is complete and the measure is imposed, antidumping duties are assessed at the time of entry with no potential liability in the future.

In the rest of the world, but not the United States, importers can then import under an antidumping order with no fear of substantial additional liability in the future. But there is a more important problem. Antidumping cases do not work. They do not help the US companies that have been injured by imports. If an antidumping case is filed against China, for example, US import companies just go to Vietnam, India, Indonesia, and other countries to get the product. In the December

2010 ITC determination in the Wooden Bedroom Furniture from China Sunset Review investigation, ITC Commissioner Pearson gave an example of an antidumping order not helping the US industry:

“This investigation . . . raises some troubling questions. . . . This industry would have faced difficulties during the period of review under any circumstances, given the depth of the recession and its extensive effects on the housing market. But even before the recession began, the industry was not apparently gaining much benefit from the imposition of the order. The domestic industry’s market share continued to decline after the order, as did production, capacity utilization, and employment. In the long run the domestic industry might have been expected to struggle to retain any benefits from this order as importers and retailers sought supply in other, lower-cost markets outside China. But the record here suggests that the domestic industry gained little even before those adjustments began to be made. . . .I am mindful that the law does not require that an antidumping order or countervailing duty order be shown to benefit the domestic industry in order to reach an affirmative finding in a five-year review. . . .In this particular investigation, additional costs and distortions have been added by the use of the administrative review and settlement process,


Lead story

with little evidence that these distortions have yielded any benefits to the industry overall, the US consumer, or the US taxpayer.”

But if dumping/unfair trade cases do not help the US industry, what does work? The program that truly helps US companies that have been injured by imports is Trade Adjustment Assistance for Firms (TAAF). This $16 million dollar Federal Program in the Northwest has been able to save 80 percent of the companies that entered the

program since 1984. If the company is saved, then the jobs in that company are saved.

The poster child for what is wrong with the US antidumping law and what is right with the TAAF program is Cascade Coil Drapery in Portland, Oregon. In 1982 an antidumping case was filed against Fireplace Mesh Panels from Taiwan. Cascade Coil Drapery was one of about ten companies in that US industry. At the end of the case, only a few US companies were left standing. One of those companies was Cascade Coil, not because of the antidumping order but because of the TAAF program.

TAAF works because it does not restrict imports in any way. Instead it works with the company at the individual level to design a program so that the company can adjust to import competition. In Cascade Coil’s situation, the TAAF program was able to identify architectural mesh as a made to order product, not a commodity product vulnerable to import competition. Although architectural mesh was only three percent of Cascade Coil’s business, that is where it moved.

Today, Cascade Coil Drapery has discovered that this same architectural mesh is an antiterrorism tool, because it can be used to block flying glass and other objects in the event of a bomb blast and yet still let the light in. Recently, certified by

the Department of Defense, Guardian Coil is now being exported to countries around the world.

Although the amount of federal assistance is limited in the TAAF program to $75,000, which the company must match, just like Cascade Coil, it is the strategic planning and access to the industry experts that helps the company adjust to the import competition at the company level. This is the way for US companies to adjust to import competition, not through antidumping cases that distort the US

market and destroy downstream industries. In recent memory, the only president ideologically

committed to free trade was Ronald Reagan. As a young attorney at the ITC during the revolution in the fall of 1980, I watched as President Reagan turned down requests for trade relief and appointed the most free trade Commissioners in the history of the ITC. Reagan truly believed in the power of capitalism and the free market to solve the trade problem.

Recently on Fox News, Jim Rogers, a famous global investor, and Thomas Sowell, a famous economist, both indicated that China is becoming more capitalist than the United States. That’s a scary thought!

William E. Perry is an international trade law partner at the firm of Dorsey & Whitney. From 1980 to 1987, Mr. Perry was an attorney in the Office of General Counsel, US International Trade Commission and Office of Chief Counsel and Office of Antidumping Investigations, US Commerce Department. Since leaving the Government, Perry has won more than 40 antidumping cases for US importers and foreign exporters. He is also on the Board of Directors of the Northwest Trade Adjustment Assistance Center.

“In the rest of the world, but not the United States, importers can import under an antidumping order with no fear of substantial additional liability in the future”



Whyprograms lean


Toyota’s success has inspired tens of thousands of organizations to adopt some form of a lean program. The term was introduced in The Machine That Changed the World and later in Lean Thinking as a new paradigm that was as monumental as the shift from craft-style to mass production. The focus of lean is on the customer and the value stream. You can say

it is a pursuit of perfection by constantly eliminating waste through problem solving. Certainly an organization that is truly dedicated to becoming lean is on a path toward excellence.

An extensive survey conducted by Industry Week in 2007, however, found that only two percent of companies with a lean program actually achieved their anticipated results.1 More recently, the Shingo Prize committee, which gives awards for excellence in lean manufacturing, went back to past winners and found that many had not sustained their progress after winning the award. The award criteria were subsequently changed.2 Why is the pursuit of excellence through lean so difficult?

failprograms Jeffrey Liker and Mike Rother, world renowned authorities on the Toyota Production System, argue that lean is not just about using tools to improve operational processes, but more about perfecting the improvement process itself

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1 Everybody’s Jumping on the Lean Bandwagon, but Many are Being Taken for a Ride. Industry Week, May 1, 2008.

2 Robert Miller, executive director of the Shingo Prize, interviewed on radiolean.com, July, 2010. “About three years ago we felt we needed deep reflection. After 19 or 20 years we went back and did a significant study of the organizations that had received the Shingo Prize to determine which ones had sustained the level of excellence that they demonstrated at the time they were evaluated and which ones had not...We were quite surprised, even disappointed that a large percentage of those organizations that had been recognized had not been able to keep up and not been able to move forward and in fact lost ground ... We studied those companies and found that a very large percentage of those we had evaluated were experts at implementing tools of lean but had not deeply embedded them into their culture.”

fail

Where does improvement come from? When we look at a Toyota plant, we see many good ideas, and it appears that the company has a department of Toyota Production System (TPS) geniuses who design and implement all these lean innovations. We might ask whether these ideas are standardized and implemented in all Toyota plants in the exact same way. Are the TPS experts telling the plants what to do and auditing them to see if they are following the best practices?

The reality is that very little that you see at a Toyota site is the result of one person with a big idea that got standardized across plants. More often, what you see is today’s condition, which is the result of many small steps, some of which were discarded and others embraced. It was the result of many cycles of plan-do-check-act (PDCA), and it is different throughout Toyota because different organizations are on different learning cycles.

Mike Rother, who has spent years researching how Toyota does what it does and how to better teach companies that are on a quest for excellence, summarizes what he found in the concept of the improvement kata, which he suggests underlies striving to meet challenges at Toyota. A kata is a well-rehearsed routine that eventually becomes second nature. In this case, the routine is the process for making improvements.

We have both concluded from our different journeys and experiences with companies that people have had a fundamental misunderstanding of what the Toyota Production System is in practice. We mistook lean solutions for the process that leads to what we see in a Toyota plant. We need to look more deeply at the human thinking and processes that underlie specific practices that we observe.

For example, early in our understanding of TPS we thought of heijunka as a powerful tool to level the workload and reduce inventory. But what we found from our experiences with companies was that establishing the heijunka pattern itself changes little in most cases. What is more important is the behavior generated by viewing the heijunka pattern as a target condition and following the improvement kata in striving to achieve it. It’s the systematic, iterative working through the obstacles, step-by-step, that actually improves processes, and it takes practice to acquire the skills and mindset for how to do that.

“An antidote to the dilemma of resistance to change is to develop strong mental circuits not for solutions, but for how to develop solutions”


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“An antidote to the dilemma of resistance to change is to develop strong mental circuits not for solutions, but for how to develop solutions”



Similarly, the overt purpose of kanban is to provide a way of regulating production between two processes, so that the supplying process produces only what is needed when it is needed. The invisible purpose of kanban, which we missed, is to provide a target condition. Kanban is a predetermined pattern between a supplier and customer process that, with the right leadership and culture, is used to generate behavior to work through the obstacles to achieve that target condition.

The difference between the visible and invisible purposes of heijunka, kanban and other lean tools is the difference between attempts at implementation of tools, and using the tools as part of deliberately practicing a routine for continuous improvement.

A new way of thinking and acting Recent findings in neuropsychology demonstrate that people develop well-worn neural pathways that make it comfortable to do things the same way again and again. While humans derive a lot of their sense of security and confidence from this, the content of what we do will in fact be changing, whether intentionally or not, because conditions are always changing. An antidote to this dilemma of resistance to change is to develop strong mental circuits not for solutions, but for how to develop solutions.

The management task, then, is to have the organization’s members practice a behavior pattern, like the improvement kata, that achieves this. We need a routine not just for doing the

“A kata is a well-rehearsed routine that eventually becomes second nature. In this case, the routine is the process for making improvements”

Operations


Operations

work, but for continually improving the work. That routine is missing in organizations that use top-down management objectives, so managers have no choice but to blindly start cutting things.

The improvement kata is a way we can break down an abstract vision into a series of descriptive target conditions, and through striving to achieve them both develop and utilize the creative powers of people. It involves teaching people a standardized, conscious means of grasping the essence of situations and responding scientifically by working iteratively. The improvement kata is a routine to teach and learn that mobilizes people’s capability to achieve desired conditions. The improvement kata is a way to achieve things that


you don’t know how you are going to achieve. Toyota’s improvement kata has been taught

implicitly in some parts of Toyota for decades. The TPS mentor would do this by giving the student a challenge, such as to make a breakthrough in performance in a process (e.g., combine these two production cells into one mixed model cell that operates on two shifts with four people and can respond to changes in customer demand). Even if the mentor has a notion of how the challenge might be achieved, he does not share it with the student. His task is to lead the student into developing good habits for working through problems, via intensive questioning-based coaching on this problem.

We missed this underlying skill and mindset development focus of TPS. For example, in an organization Professor Liker observed the COO decided to hold plant managers accountable for running a certain number of kaizen events to achieve a certain level of productivity improvement. It became slash-and-burn lean with no sustainability and no continuous improvement, i.e., old school, outcome focused, carrot and stick motivation.

These days there is more structure to Toyota’s coaching process, but the relationship between mentor and student is at the core of how Toyota gets improvement to be a deeply embedded routine. To have enough coaches they are often the direct managers of the students, but the managers can always use training too and should themselves have a coach from inside or outside the organization.

There seems to be a strong belief in Western business that you select people with good innate work/management characteristics (habits), and then you give them outcome targets. In contrast, Toyota selects people for their openness to learning, and then develops the desired work/management characteristics (habits) through practice after they hire in. Neuroscience is showing us that the adult human brain is more plastic than we believed, and that’s what Toyota is taking advantage of in order to develop a deliberate culture. Challenge demands learning Research has repeatedly shown that when a task is relatively easy, i.e., when the path to the target condition is pretty clear, then managing by results and with extrinsic motivators can work

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well enough. The task is basically to get it done, and the organization’s leaders need not overly concern themselves with ensuring that people are employing a systematic, scientific approach to achieving the target condition.

On the other hand, if the task is a challenge, i.e., the path to the target condition is unclear and has to be discovered via iterative learning, then managing by results and extrinsic carrot and stick motivators does not compete so well. In that case, how people go about striving for their target conditions becomes important, and, in competitive markets, is something with which leaders will need to concern themselves.

When we look at lean in this way it is not only a set of techniques for eliminating waste, but a process by which managers as leaders develop people so that desired results can be achieved, again and again. That means coaching people in practicing an improvement kata every day.

What is your company’s improvement kata?

Credit: This article was first published in the 2 February weekly newsletter of the Lean Enterprise Institute www.lean.org/newsletters/02_02_11_newsletter.html.

It is reproduced here with the permission of the authors and the Institute. www.lean.org

About the authors Jeffrey Liker, Ph.D., is professor of Industrial and Operations Engineering at the University of Michigan and principal of Optiprise, Inc. Dr. Liker has authored or co-authored over 70 articles and book chapters and eight books. He is author of the international best-seller, The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, which speaks to the underlying philosophy and principles that drive Toyota’s quality and efficiency-obsessed culture. The companion (with David Meier) Toyota Way Fieldbook, details how companies can learn from the Toyota Way principles.

Mike Rother is a researcher, an engineer, and a teacher on the subjects of management, leadership, improvement, adaptiveness, and change. He is co-author of Learning to See, Creating Continuous Flow and the Training to See kit. His latest book, Toyota Kata, is based on six years of research into Toyota’s management practices.



File this under the “so basic it’s often overlooked category,” but a common denominator of top companies lies in their ability to perform tasks in the same way, every day. In other words they systemize each and every internal operation and in so doing build

a business that enjoys success today and also develops the core value qualities that potential future buyers will find appealing.

To some business owners, the number of operations that can be classified as internal may seem mind-boggling; management can become overwhelmed and fail to address any at all. But having systemized internal operations in place is not as daunting as it appears; in fact, by breaking it apart and taking a step-by-step approach you can stabilize your business, and build its value for the future.

best

Thebest

The best companies achieve success through consistency, which is why they build business value

through systemized internal operations, says Bob O’Hara

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the of


“Quick-fix solutions may work once or even twice, but in the absence of a tried and true system, the same problems will rear

their ugly heads time and again”

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It’s all about consistency for the “best of the best” companies and consistency is the exact definition of a business system—a repeatable process that is understood throughout the organization and used to achieve a desired purpose. That desired purpose is to create a successful business that functions to highest performance both today and tomorrow…and independently of who is running it.

The philosophy of systemized internal operations is basic—a grouping of various systems that when integrated form a business that functions successfully as a whole. To go the distance, these systems must be vetted. Quick-fix solutions to problems may work once or even twice, but in the absence of a tried and true system, the same problems will rear their ugly heads time and again.

In order for a business system to operate successfully, it must possess four prime characteristics:1. Clear purpose: Define the desired result, such as marketing, sales or lead generation—and this cannot be overemphasized—communicate your systems intentions to employees. Systems may run a business, but people run the systems. 2. Accountability: Determine who within your organization will be responsible for executing each step of the system; this determination should be based not only on individual abilities,

“Quick-fix solutions may work once or even twice, but in the absence of a tried and true system, the same problems will rear

their ugly heads time and again”



“Systems may run a business, but people run the systems”

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but also on where those skills will be put to best use. The end result should be employees who find satisfaction in performing their duties. 3. Documentation: A system must be written down if it is to succeed; otherwise it may become nebulous in the minds of employees and open to an endless variety of interpretations. If it’s not “on paper”, employees can’t be expected to follow a system, nor will a future buyer know it actually exists.4. Repeatability: If a business system works only if the business owner is there to execute it, the standard of repeatability has not been achieved. Some owners may need to remind themselves that they have created a business, not a job for themselves. To illustrate how best to achieve systemized internal operations, let’s focus on a couple of specific areas—creating systems to collect/use customer feedback and to diversify vendor and supplier relationships.

Customer feedback is pivotal to the success of a business; in the absence of an internal system that collects and uses it appropriately, you may be in the dark about what customers like and/or dislike about your organization.

How customer complaints are addressed can speak volumes about your company. Is there a well-thought out protocol or are complaints responded to on a case-by-case basis? Let’s not be disingenuous; it is well understood that at times certain customers will be higher on your priority list than others, based on the overall percentage of revenue they may bring to your organization, their willingness to recommend your services to others or any number of other legitimate reasons.

That said, praise or criticism (whether from your largest or smallest account) should be addressed consistently and instantly. Do not overlook the age of instant communication in which we live. Should a customer have a problem that is not swiftly addressed by your team, his vitriol could go viral!

This underscores the importance of having an internal system in place that directly speaks to customer complaints or concerns. Keep in mind, if your company uses customer feedback effectively, it can create competitive advantage. If not, your

organization may be pulled in too many directions, causing you and your entire team to lose focus. Strategic use of customers’ ideas, suggestions, requests and expectations generates and builds strength, stability and inherent value in your business.

Creating a system to diversify vendor and supplier relationships is also at the heart of a successful business operation. Can you name the vendors or suppliers who are essential to your ability to provide your most important products or services? If one or more of your primary vendors or suppliers switches its relationship from you to a competitor, goes out of business, changes its payment requirements, alters its quality standards or ceases to offer the products or services that your business depends on, would your company experience either a short-term or long-term negative impact? Do you have a plan to mitigate that impact? A business can be stabilized and its value built by reducing the risk associated with unpredictable vendors and suppliers.

If you’re unsure whether installing these systems within your company is worth the time or effort, then consider the view from the perspective of a future buyer. If he/she compares your company to another that actively and consistently uses internal systems, chances are that the competing company will be purchased…and likely at a higher price.

A company owner may have creatively and effectively built a business with intuition and intelligence, but should he/she be out of the picture once a buyer takes over the reins, that long road toward prosperity may stop short. However, a company that relies on systems that are written and communicated clearly, are adhered to by all employees, produce consistent results and will be in place long after the owner departs has the legs to go the distance.

Systemizing internal operations is a critical value driver. As a business owner, creating systems that work for your company should be the foundation of each and every day. If not, your company may never achieve the success it’s capable of…and you will work much harder and longer than you wish.

Bob O’Hara is president/CEO of O’Hara & Company, founded in 1995 to address the growing need for entrepreneurs to create a comprehensive exit strategy for their businesses. Based in Chelmsford, Massachusetts, the company hosts an educational website for business owners at www.exitplanning-edu.com. See also www.oharaco.com.

“Systems may run a business, but people run the systems”


success M&A Driving

Despite the high percentage of failed combinations, companies remain on the lookout for acquisition opportunities. George F. Brown, Jr. offers expert strategic advice for potential purchasers


The increased pace of merger and acquisition activity late in 2010, including some huge deals, suggests that 2011 will be an active year. Low interest rates, significant cash on many firms’ balance sheets, and stock prices that are low enough to attract buyers but high enough to move sellers off the sidelines all reinforce that possibility.

success inM&A 2011

Despite the high percentage of failed combinations, companies remain on the lookout for acquisition opportunities. George F. Brown, Jr. offers expert strategic advice for potential purchasers

Strategy


Decisions on acquisitions are always a challenge. There is extensive literature that documents the too-high percentage of failed combinations, ones that failed to reward shareholders with a positive return on their investment. Yet most firms are motivated to consider acquisitions as an element of their growth strategy, citing the potential contributions from acquired firms, including ones targeted to fill gaps in a firm’s portfolio and ones seen as having the potential to help create a game-changing position. And often it is the case that an acquisition can bring assets and competencies that are otherwise either unavailable or that would take years to develop.

The hardest acquisitions to evaluate are those that involve a decision to enter a new line of business and new markets. “Bolt-on acquisitions” are far simpler, involving familiar business environments with known characteristics and risks. Often, the acquisition target in such situations is quite familiar to the acquiring firm as one of the well-known players operating in the same market. But when the acquisition option involves a new and unfamiliar situation, the need to ask the right questions becomes paramount.

Most corporations have established solid processes of due diligence to evaluate acquisition candidates, spanning a wide spectrum of economic, legal, and other factors. In the implementation of these processes, there is an intense focus on the firm targeted to ensure that its market position is solid, its assets secure, and its financial structure sound. Such assessments are critical to decisions likely to yield success in the end.

In analyzing acquisitions that succeeded and ones that failed, one insight that has emerged is that this strategic due diligence process should also focus on the overall market in which the acquisition candidate operates and link insights that emerge to the capabilities of the acquiring firm itself. Quite a few of the problems of failed acquisitions had nothing to do with the firm that was acquired. Rather, they could be traced to

“An acquisition can bring assets and competencies that are otherwise either unavailable or that would take years to develop”



Strategy

“An acquisition can bring assets and competencies that are otherwise either unavailable or that would take years to develop”

Strategy

changes taking place in the broader business environment that the acquiring firm was ill-prepared to address.

The starting point for this assessment is a set of questions that are already part of the due diligence process for most firms. Is this a good business to be in? Do the firms in this business make money, and does the forecast point to a positive future outlook? Does the business create legitimate value for its customers, and is this value recognized? Are the firms in this industry that create value for their customers rewarded for their contributions, or is the business characterized by aggressive price-buying?

Adverse answers to such questions trigger the caution flags, and appropriately so. But even when the answers are positive and the future outlook appears rosy, it makes sense to develop scenarios that are disruptive. A starting point is to ask the acquisition team and available experts the question “If five years from now, this industry looked totally different, can you give me a scenario as to how that might have happened?” In quite a few cases, that question has triggered ideas about opportunities that exist for a “game

changing” strategy that will generate value and rewards for the firm that implements it.

Sometimes the scenario involves changes that are taking place in the business environment (e.g., technology innovations, new regulations, changes in demand patterns, distress situations involving current players in the market, etc.). Other times the scenario involves a firm implementing a strategy that creates value in a new way (e.g., through rolling up smaller firms and creating economies of scale, through some technology foundation that provides an advantage, etc.). Sometimes the scenario involves changes that undermine the current foundations for industry profitability (e.g., new competitors that overcome barriers to entry). And sometimes the scenario involves growth through the industry’s expansion into new global markets or adjacency businesses. In all of these cases, when it is possible to identify a disruptive strategy

that creates a “leadership position” that can be sustained, it has to be taken as a serious possibility.

Whether the disruptive scenario is one involving a great upside or a significant downside risk, it has to be included in the acquisition evaluation and plan. That evaluation and plan must start with self-examination on the part of the acquiring firm. The acquiring firm must ask if it is the “right firm” to implement such a strategy. It must ask whether there are reasons why it is better positioned for success than are others (e.g., expertise in the market, synergy through existing operations, core competencies that are transferrable, assets that can be leveraged). It must ask if the business model changes that will be required are practical in terms of their demands on resources (financial resources, human resources, etc.). It must assume that competitors will react, and decide if their reactions can be thwarted in order to ensure that the pro forma forecasts associated with the strategy are realized. Far too often, the acquisition decisions and business case assume a “steady-on-course” future for the acquired company, when the reality in fact involves significant change, disruption, and requirements for investment of time, money, and expertise.

The business environment of 2011 and beyond is one in which this guidance is likely to be of even greater importance than normal. There are significant changes taking place in many markets, as they recover from the recession, as the forces of globalization introduce new competitors and sources of innovation, and as slow-moving trends in the economy motivate decisions to implement new business models. Evaluating the potential for disruption and determining if your own firm is in a solid position to gain during such times can allow decisions on acquisitions to result in success stories that strengthen your prospects for sustained profitable growth.

George F. Brown, Jr., along with Atlee Valentine Pope, is the author of CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs, published in 2010 by Greenleaf Book Group Press of Austin, TX. See www.CoDestinyBook.com for more details. He is also the CEO and cofounder of Blue Canyon Partners, Inc., a strategy consulting firm working with leading business suppliers on growth strategy.


The end is near! No, not the end of the world, I’m talking about the end of the recession. According to a survey of over 5,000 business people released in January at BNIBusinessIndex.com, business is starting to look up. The survey involved businesses all around the world and included people from every populated continent.

The survey found that almost 68 percent of the respondents said that business is growing or growing substantially compared to this time a year ago. Preliminary results for the first quarter of 2011 indicate that roughly 58 percent of businesses say they plan on hiring over the next few months. Both of these findings indicate that small businesses are finally growing again. What the survey doesn’t explain is why those businesses are growing.

Based on personal interviews with business people around the world I may be able to shed some light on how businesses are building their companies during these trying times and also provide insight into how you can grow your business:It all starts with attitudeA product sales company in the UK was about to execute layoffs in order to meet payroll. When this was announced to the employees, one of the sales reps wrote on the whiteboard – “We absolutely refuse to participate in the recession.” Everyone in that branch office signed below the statement on the whiteboard. They all then met to strategize about ways to seriously generate more business. As a result, they ended up with their best month all year and no one was laid off from that office!

business

recoverySmall

Has the recession released its death grip? Dr. Ivan Misner thinks it has, and offers

some survey evidence to support his view, along with a few personal accounts of

innovative survival strategies



Strategy

Innovation in adversity is a key factorI know a commercial real estate broker in Southern California who said that he had his best year ever in 2010 (he’s been in business for 26 years). He cited the fact that he did dozens and dozens of one-to-ones during the year to find ways to work together with other businesses. His opening approach was to help them. However, at the same time, it built his business in the process. This is counter-intuitive to most commercial real estate people, he told me.Look for new or emerging opportunitiesI met a residential real estate agent on the East Coast of the US who told me he had his best year ever last year. He said he went to investors he’s worked with in the past and told them that “real estate is on sale!” He said to them, “don’t be one of those people who come to me in a few years and say, ‘I was crazy not to look at these opportunities. I should have bought property back in 2010 when it was cheap!’” He told me this strategy has helped him sell more real estate than any time during all his years in business.Be creative with your offersI recently met a business coach in the mid-west of the US who created a guarantee for his coaching. He told prospective clients, “If you follow my weekly coaching program and you don’t raise your income to at least six figures, I’ll continue to coach you for free until you do.” He said it has dramatically increased his sales and he has not had to provide anyone with free coaching yet.

The BNI Business Index survey looked at retail, service, and manufacturing businesses. All three areas had very similar results across the board with service and retail being incrementally stronger than manufacturing. In addition, business appears to be looking up consistently around the globe. Solid growth was claimed in all parts of the world. Australia/New Zealand and Asia showed the strongest results with 74 percent and 79 percent respectively stating that business was growing or growing substantially.

Although the trend looks good, there are some things that business people seem to still be struggling with. One respondent to the current

Strategy

survey says that while “business is growing the comfort zone for retaining clients is non-existent.” He went on to state that there is a “continuous feel of uncertainty for what is going to happen in the next quarter.”

Another respondent said that “there are many opportunities, but there is still not enough cash reserves or financing from the banks to take advantage of these opportunities.”

Despite the lingering concerns, the numbers seem to indicate that things are changing for the better. One respondent summed it up best when he said: “I’ve changed my target market to one that has both a greater need and a willingness to do something different.” These kinds of changes along with having the right attitude, being innovative, looking for emerging opportunities, and being creative are the ways businesses around the world are pulling out of this long and difficult recession.

Called the “father of modern networking” by CNN, Dr. Ivan Misner is a New York Times bestselling author. He is the founder and chairman of BNI, the world’s largest business networking organization and the Sr. Partner for the Referral Institute. His latest book, Networking Like a Pro, can be viewed at www.IvanMisner.com



requirements Rental


When a customer calls an equipment rental company, nothing is more important than the ability to provide accurate information regarding availability and scheduling. It is equally critical to manage effectively the utilization of the rental fleet in order to maintain profitability.

requirements Rental Equipment rental dealers need

technology solutions to manage their fleet, their customers and their supply chains. Thomas R. Cutler examines the requirements of this complex industry

Supply chain

Equipment dealers and distributors realize the increasingly competitive nature of their business, making it far more difficult to differentiate from other dealers. Many equipment distributors are looking to improve their bottom line through improved business efficiency; specifically, finding better ways to deal with vendors. Others are looking to grow their business by adopting additional product lines, or new geographies.

Equipment rentals cross many different industries including material handling, agricultural equipment, pumps, power generation, office automation, construction equipment, medical equipment, audio visual equipment, electronic payment devices and likely many more you could name yourself.

According to Grant Skinner, vice president of Equip-Soft, “Rental equipment firms must manage their operations through complete management of short term and long term rentals, consolidated

fleet management, instant availability of rentable equipment, easy setup of rental contracts and complete integration with fixed assets and service management. For efficiencies it is also important that technology solutions for rental equipment firms provide easy handling of re-rents, exchanges, and returns.”Service: A critical component in the rental equipment businessService is all about being responsive to your customer. Superior service earns a competitive edge, building customer loyalty, fuelling profitability. “Technology solutions must allow equipment rental firms to effectively manage service operations through work order management, service contract maintenance, field service dispatch, meter/counter reading management, scheduled maintenance, warranty tracking and invoicing, as well as mobile service capabilities,” said Skinner.


Supply chain

The key issue with fleet maintenance is keeping an optimum sized fleet of assets running at the lowest possible cost for any given customer. Accurate up to date information about fleet operations and utilization provides a control mechanism for fleet costs as well as simplifying fleet maintenance. Ultimately, technology solutions must provide a deep understanding of fleet usage/utilization while minimizing or even eliminating paper work, a fundamental lean process.

Selling a piece of equipment must be made less complicated in part by avoiding duplicate data entry. Real-time, accurate information regarding

contacts allows for better decisions. “With the right technology solutions, equipment rental and sales professionals are able to effectively work with customers and prospects through opportunity management, campaign management, new equipment sales, as well as industry specific equipment configurators,” said Skinner.Parts: following the profitBeyond equipment sales, rentals, and leasing, the profitability often is in the ability to provide replacement parts in a timely manner. To better service customers, equipment rental firms must have the right parts at the right time. Effectively

“In our search for a new ERP system, we wanted a system that was leading edge, supported by a viable long-term supplier, with specific knowledge and experience in our industry”



“Often equipment dealerships are seeing no financial gain on the sales of equipment and must look to service contracts for margins and profitability. Having technology solutions that can address these supplier driven demands is the only way these businesses can thrive and in some cases, the only way to survive”

Supply chain

managing parts operations is accomplished with easy parts order entry, the ability to track inventory in real-time by branch/location, as well as track cross-references, substitutions, and supersedes. As part of continued process improvement, it is critical to identify dead stock, minimize on-hand inventory, optimize parts replenishment, and increase warehouse efficiencies.

For over seventy years, Southern California Material Handling (SCMH) has been a leading material handling supplier in the Los Angeles area. The company has grown from a basic equipment dealership to a full service, solutions-based material handling provider that offers analysis and product solutions that maximize productivity and cost efficiency based upon their customers’ unique application and business needs. Tim Cleary, CEO of SCMH, explained their technology selection process. “In our search for a new ERP system, we wanted a system that was leading edge, supported by a viable long-term supplier, with specific knowledge and experience in our industry. Equip-Soft, based on Microsoft Dynamics, fit the bill perfectly. It features high functionality allowing us to manage all the aspects of our complex business, in a user friendly manner.”

There are remarkably few software solutions specifically designed for equipment dealers. “By leveraging the integrated Microsoft stack of technologies (Dynamics NAV, Dynamics CRM and Dynamics Mobile) combined with the dealer-specific enhancements that Equip-Soft has made to these products, SCMH is able to remove costs out of their operations, without having to worry whether or not the technologies can work together,” said Skinner. “With the addition of Dynamics CRM and Dynamics Mobile to the Equip-Soft product line, the efficiencies between the sales/service operations with the traditional dealer back office operations are seamless.”

The CRM component is essentialIn few industries does the management of customer communication, workflow, and opportunity management mean more than in equipment rental firms. Fully integrated solutions instantaneously familiar to employees and used with ease, drive increased sales and profitability. The ability to quickly access account history and contact information offline, integrate contact information to smart phones (Blackberry, Windows Mobile, or iPhone) automatically is crucial. Managing relationships with customers by developing sales force automation (SFA), opportunity management (OM) and campaign management (CM), must be quantifiable. Opportunity management is a great way to ensure sales teams are spending time with key customers, and that a sales forecast is accurate.

Managing the equipment life cycle through its useful life in the new and used fleet as well as the rental fleet is key in ensuring the dealership receives the maximum financial benefit of every asset. “With automated workflows and easily customized views to access this information the equipment life cycle aids in maximizing profitability,” Skinner noted.

The fastest way that many equipment dealers are experiencing growth, particularly in expanding geographic reach, is via acquisition. While capturing market share in this manner seems ideal (if the price is right), the ability to integrate the technology solution of one operation into another has often presented special challenges. A scalable implementation process is the only way to ensure that large, mid-size, and small equipment dealers are able to implement technology solutions without taking an eye off the business.

Squeezing the supply chain is not unique to equipment dealers; the increasing demand within the industry to eliminate costs throughout the supply chain is seen as cost stripping and is having a direct impact on profitability. “Often equipment dealerships are seeing no financial gain on the sales of equipment and must look to service contracts for margins and profitability,” observes Skinner. “Having technology solutions that can address these supplier driven demands is the only way these businesses can thrive and in some cases, the only way to survive.”

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

“Often equipment dealerships are seeing no financial gain on the sales of equipment and must look to service contracts for margins and profitability. Having technology solutions that can address these supplier driven demands is the only way these businesses can thrive and in some cases, the only way to survive”


highly The

qualified These days, any position that becomes available generates a deluge of résumés. If your policy is to automatically discard those belonging to candidates you deem as “overqualified,” it’s time to rethink your strategy. Maribeth Kuzmeski explains why


When a job opens up in today’s economy, it receives a lot of attention. And no wonder: Over 15 million Americans need work. And if you’re a hiring manager, you may have found that the best way to shrink that pile of résumés on your desk is to weed out the seemingly “overqualified”

workers first. After all, you reason, those candidates will want too much money and will jump ship the minute they find a better offer. Right?

hire highly

qualified These days, any position that becomes available generates a deluge of résumés. If your policy is to automatically discard those belonging to candidates you deem as “overqualified,” it’s time to rethink your strategy. Maribeth Kuzmeski explains why

Sustainability


Not necessarily, says Maribeth Kuzmeski. In fact, she adds, a recent Harvard Business Review article suggests that when you ignore these candidates you’re missing out on the opportunity to add highly qualified talent to your organization.

“The article points out that ‘overqualified’ candidates tend to show a better work ethic, stay, on average, longer than less qualified candidates, and as long as they are empowered are actually happy workers,” says Kuzmeski. To back up these assertions, the HBR article cites studies from folks at the University of Connecticut, the University of South Carolina, St. Ambrose University, and Portland State University, respectively, which show that overqualified workers are high performers, less likely to quit, and value autonomy.

“Saying someone is ‘overqualified’ is basically saying he or she is too skilled or too experienced,” says Kuzmeski. “The truth is, candidates with well-developed skills, a lot of working world experience, and the right attitude are exactly what you should want. When you ignore candidates based on your own assumptions or perceptions

about what you see on their résumés, you run the risk of missing out on great employees.

“Instead, take the time to connect with these candidates,” she suggests. “Invite them in and learn what motivates them.”

Kuzmeski is an expert at helping companies and individuals create strong business relationships that will help them get ahead regardless of their professions. She teaches her clients how to connect with their customers in order to win business and build loyalty. These same relationship-building skills can help hiring managers connect with the candidates who are the right fit for their companies.

Below Kuzmeski offers advice on how best to approach the highly qualified hire:Be open and honest about your concerns. If you have concerns about certain elements of the candidate’s experience, ask about it. If you see that a candidate has an impressive list of achievements, acknowledge them.

“Don’t chuck someone in your ‘no’ pile simply because you might be a little intimidated by his achievements,” stresses Kuzmeski. “Ask the

“Don’t chuck someone in your ‘no’ pile simply because you might be a little intimidated by his achievements”


Sustainability

candidate how he plans to use the skills that led him to his past achievements in the position you’re offering, but don’t focus too much on the past. Instead, find out about his current motivations and the goals he has for the position.” Connect with the candidate’s why. Your worries about a highly qualified candidate can be decreased when you connect with her why. Most candidates are not applying for jobs they seem more than qualified for because they are simply desperate for work—but many hiring managers never find this out because they discard these candidates’ résumés rather than invite them to come for an interview.

“By connecting with the candidate’s why, you can learn her motivations for wanting a position,” notes Kuzmeski. “Even if a person was downsized, maybe she was burned out on what she was doing and wants to jump-start a new career. Or she may want to give up a higher level position in order to get back to something she enjoyed doing earlier in her career. You’ll be able to tell when she is explaining her reasoning and her motivations whether or not she truly has a passion for the job in question or whether she is simply willing to take the first job that is offered to her.”Recognize that highly qualified people require less training. If a job candidate has been around the block a few times, his adaptability to new situations and responsibilities will be better. That’s good news, because you and your managers will spend less of your own valuable time training him.

“Plus, once you have him on board, it’s likely that you’ll find he is a great help to your other employees,” says Kuzmeski. “Highly qualified candidates bring with them more life experience to pull from when challenging situations arise with clients or other coworkers. You will probably also find that you have added peace of mind knowing that someone who is highly skilled and experienced is hard at work for you.”Hire based on attitude. This might be the best piece of advice to heed with any hiring decision. As long as a candidate has the basic skills and knowledge required to get the job done, don’t spend time wringing your hands over whether or not she might be too qualified. If the person has a great attitude and is highly motivated, then you might want to give her a chance, especially if the other candidates are

less qualified and don’t seem like they will fit in with the company culture.

“Hiring is a tricky business,” notes Kuzmeski. “Sometimes it’s okay to go with the person you like the most. If that person also happens to be highly qualified, then it will only benefit you and your company in the long run.”Once you have them, empower them. As touched on above, the study from Portland State University found that overqualified employees who are given decision making power tend to be more satisfied with their jobs. The study performed by assistant professors from the University of Connecticut, the University of South Carolina, and St. Ambrose University examined data on more than 5,000 Americans. Those examined, according to the Harvard Business Review article, were high-intelligence workers in jobs such as washing cars and collecting garbage. With those studied, high performance was the norm.

“By giving these employees autonomy, you show them that you have confidence in their abilities and respect the skills and qualifications they bring to the table,” says Kuzmeski. “As a result, they stay with the company and often outperform their fellow employees.

“The best thing you can do is ignore the myths about ‘overqualified’ job seekers,” says Kuzmeski. “Think about it: These people became highly qualified for a reason—for the most part, they make fantastic employees. You want to hire the right person for the job, not the person you assume, sight unseen, is less likely to leave. By taking the time to connect with candidates and discuss their motivations and goals, you’ll be able to make that judgment for yourself.”

Maribeth Kuzmeski, MBA, is the author of five books, including …And the Clients Went Wild! How Savvy Professionals Win All the Business They Want and The Connectors: How the World’s Most Successful Businesspeople Build Relationships and Win Clients for Life. She is the founder of Red Zone Marketing, LLC, which consults with businesses from entrepreneurial firms to Fortune 500 corporations on strategic marketing planning and business growth. An internationally recognized speaker, she shares the tactics that businesspeople use today to create more sustainable business relationships, sales, and marketing successes. www.RedZoneMarketing.com


Specializing in concrete and material placing equipment for the construction industry, Putzmeister America is the North American division of one of the world’s most recognized and respected heavy equipment manufacturers, Putzmeister Concrete Pumps GmbH.

Founded in 1958 in Germany by Karl Schlecht, who used his experience in his father’s plastering business to make machines to ease the physically demanding work of a plasterer, the company name was chosen to represent “plaster master.”

Fifty years on, Putzmeister now offers a broad product line including boom pumps, placing booms, trailer pumps, shotcrete equipment, mortar machines, industrial pumps, mining and tunneling equipment, pump mixers and water technology equipment, and is known and respected worldwide for quality and durability as well as pioneering technological innovation.

From humble beginnings in Germany as the “plaster master”, to a major facilitator of the Hoover Dam Bypass Project, Putzmeister America has had an eventful fifty years

concrete

solution A



Putzmeister America


Putzmeister America

After initially exploring North America in the 1970s through a relationship with crane giant, American Pecco of New York, Putzmeister entered the market full on in 1982 with the acquisition of California-based Thomsen, Inc, the nation’s top boom pump manufacturer at the time.

Thomsen had roots in the mortar machine business that closely mirrored Putzmeister’s own beginnings. As Putzmeister took advantage of Thomsen’s dealer network, the two brands merged under the Putzmeister name. The growing organization also undertook sales and distribution responsibilities for the German division’s industrial pumps and tunneling machines in North America.

By 1993, customer demand and increasing market opportunities meant that Putzmeister required a larger North American facility and the company was attracted to Sturtevant in southeastern Wisconsin, for its centralized Midwest location, close proximity to suppliers and an exceptional work ethic similar to what its parent company enjoyed in Germany.

Strategic acquisitions have characterized the company’s development since then. Recognizing that its expertise in the placement of concrete could be used in the placement of other materials, Putzmeister acquired a truck-mounted telescopic belt conveyor line from Rotec Industries in 1997. Originally called Super Swingers, the brand was renamed and registered as Telebelt and a new 36,000 square foot manufacturing facility was added at the Sturtevant site in 1998. Telebelt’s success led to the acquisition of another complementary line—Clark Industries’ truck-mounted 50 foot portable/towable conveyors. Putzmeister introduced the world’s largest truck-mounted concrete boom pump, the 63Z-meter at the 2005 ConExpo/ConAGG trade show.

In July 2007, Putzmeister completed what was perhaps its most significant acquisition to date, that of Allentown Equipment, the century old Pennsylvania-based manufacturer of wet- and dry-process shotcrete equipment serving the refractory, underground, civil and mortar industries. The acquired company was then renamed Allentown Shotcrete Technology, Inc.

The Allentown company soon doubled in size after the acquisition, so the decision was made last year to relocate its manufacturing facilities to the Putzmeister America headquarters in Sturtevant. “Allentown will still operate as an independent business but with the added benefits of the production and logistics capacity here in Sturtevant,” said Dave Adams, president and CEO of Putzmeister America, at the time. “We’re celebrating our 100th anniversary and it is our goal to continue to expand Allentown worldwide so we can be influential in the next 100 years of shotcrete, mortar and concrete placing technology advancements,” said Patrick Bridger, president of Allentown, about the move. “Being located at Putzmeister America will help us achieve that goal.” The move is expected to be complete by early 2011.

Allentown’s technology was first developed in the early 1900s when its originator Carl Akeley, a hunter and professor, devised a method for spraying plaster onto a wire frame for taxidermy purposes. Using compressed air, dry material was pushed through the nozzle of a gun-like device, where it was wet with water as it was blown onto a frame. The outcome was a strong, thick plaster coating that didn’t slump from the frame or set before being fully placed.

The equipment was subsequently used to patch deteriorated concrete using a dry mixture of sand and cement. The results were excellent and the dry-process technique was used for the next 40 years, until a new process was developed in the 1950s that involved the use of pressure tanks to force stiff mortar through a hose. This new wet-process is what we now call shotcrete.

Putzmeister America has contributed to many prestigious construction projects over the last 50 years, but none more iconic than the Colorado River Bridge. US Highway 93 is a designated North American Free Trade Agreement (NAFTA) route linking Mexico and Canada, but its passage over the Hoover Dam has been a traffic bottleneck for years. With 14,000 vehicles a day using the dam to cross the Colorado River between Arizona and Nevada, traffic congestion became a serious economic burden, not to mention the safety issues for visitors to the dam.

The Hoover Dam Bypass Project was begun in early 2005—a 3.5-mile corridor beginning at approximately milepost 2.2 in Clark County, Nevada, crossing the Colorado River approximately 1,500 feet downstream of the Hoover Dam, then terminating in Mohave County, Arizona near milepost 1.7 on US 93. A joint venture of Obayashi Corporation and PSM Construction USA was given responsibility for the Colorado River Bridge—said to be the most technically challenging bridge ever built in North America.

Before starting the job, the general contractor contacted Putzmeister for help in determining how and where to mount the placing booms and position the trailer pumps for all portions of the project. “We called Putzmeister right away to discuss the complicated project, and what our possible concrete placing solutions would be,” said Wes Pollnow, construction manager for Obayashi/PSM JV. “We felt more confident preparing for this by


Putzmeister America

utilizing their complete systems approach.”“The general contractor worked diligently with

us and the concrete pump sub-contractor to determine the exact calculations, balances, picking points, and appropriate counterweights to ensure everything went off smoothly and safely,” said Alan Woods, Putzmeister field service technician.

By April 2010, most of the bridge was finished: the bridge approaches to the arch in Nevada and Arizona were complete, the concrete twin arches had been joined together, the precast columns on the arch had been set, and the steel girders were erected. It was time to start work on the 11 separate deck pours, each of which would be 88 feet wide and approximately 120 feet long. It would be no easy task, but the Putzmeister equipment was up for the challenge.

A Putzmeister 52Z-Meter semi-trailer-mounted concrete boom pump was chosen for the job for its

impressive 170 foot (52m) vertical and 158 foot (48m) horizontal reach. The pump had to be flown into position, some 900 feet above the Colorado River.

To ensure everything stayed balanced, one deck section was poured on one side of the boom pump, then the boom pump was lifted and turned, and another deck section was poured on the other side. The boom pump was then lifted and turned again to continue the pour in this manner, going back and forth throughout all 11 pours. The boom pump had to be lifted and turned for pouring on the other side because the pipeline leading from the trailer pump to the hopper of the 52Z-Meter would have been in the way of placing the concrete.

Construction of the Colorado River Bridge is now complete, and traffic began using the Hoover Dam Bypass on October 19, 2010. No through or truck traffic is allowed on the original roadway, apart from Hoover Dam visitors. www.putzmeister.com


www.krietegroup.com


Innovation is part of company DNA at Marcotte Mining Machinery. General manager Denis Rienguette tells Gay Sutton how customization and R&D

help the company stay ahead in this volatile industry

Riding

rollercoaster


Take the Minejack, the vehicle base upon which most of today’s rugged mining utility vehicles are built, and you’re looking at one of the first innovations from Marcotte Mining Machinery. Started in 1979 as a family business providing services for

the mining industry, the company moved swiftly into designing and manufacturing innovative parts and equipment for underground use.

At an early stage of company development, during the early 1980s, Marcotte engineers recognized the capabilities of the Timberjack Skidder—a massive four wheeled tractor vehicle used by the forestry industry to lift and remove entire felled tree trunks—and they saw its potential for underground use. Initially buying-in the Timberjack vehicle bases, the company began modifying them and adding a variety

Innovation is part of company DNA at Marcotte Mining Machinery. General manager Denis Rienguette tells Gay Sutton how customization and R&D

help the company stay ahead in this volatile industry

Marcotte Mining Machinery

Riding

rollercoaster


of its own engineered products for use in mine applications. Eventually in 1997 Marcotte became the OEM, taking over the manufacture of the complete vehicle and developing it into a range of sizes and applications.

Today, Marcotte is part of the Timberland Group and employs some 60 people across engineering, sales, manufacturing, and field services, operating from a 35,000 sq ft manufacturing and engineering centre in Sudbury, Ontario. The company specializes in the design and manufacture of a wide range of utility vehicles for underground mining applications, and creativity and flexibility continue to be its driving principles.

“We can customize and modify all our products,” said general manager Denis

Rienguette. “After all, our equipment will be asked to perform well under extreme conditions underground, and therefore needs to be adapted to specific mine situations. We have one product in the shop right now—a dry shotcrete sprayer—that is destined for the Kinross Kupol mine in Russia, where the underground temperatures there are typically -15 Celsius throughout the year. Similar conditions occur at the Rio Tinto Diavik diamond mine here in Canada, and we’re working on equipment for that destination too. Meanwhile, we have another wet shotcrete sprayer which we have developed in conjunction with Kinross, which is a self contained unit and holds its own cement. This has gone into operation in the Buckhorn silver mine in Washington State.”

This flexibility is certainly sought after by the

customer, but it imposes constraints on the factory by reducing the volume of standard parts and increasing the incidence of one-offs. Combined with the increased engineering design time, this can add to the cost of the end product. “However, if the customer is procuring, say, ten of these vehicles, the development and production costs are spread across all the products, and we are often able to absorb most of it ourselves.”

In addition to customization the company continues to innovate, developing new products to solve existing issues, and to significantly improve the current range of products. “We must spend something in the region of $0.5 million each year on R&D over and above the amount our customers contribute. Some new products arise from our own ideas, but the majority of them come

“We can customize and modify all our products. After all, our equipment will be asked to perform well under extreme conditions underground, and therefore needs to be adapted to specific mine situations”



from customers who approach us with requests for equipment capable of doing something new or different. We then solve that problem for them.”

Marcotte also receives Canadian Government R&D funding through IRAP (Industrial Research Assistance Program), which is granted for specific projects that conform to a strict range of criteria. “We’re currently working on a new design of wet shotcrete sprayer, with money from IRAP for the engineering work. The sprayer solves many of the problems that currently occur in the field, and uses a robotic arm rather than a straight boom.”

Traditional boom-style sprayers have always been prone to damage from rebounding rock or operator generated accidents. The new arm solves this by being highly maneuverable and having fewer vulnerable external parts. Encrustation with cement during operation was also a significant problem as it made it very difficult to grease the old style boom. The hydraulic design of the new arm means it doesn’t require greasing. “As a result, there will be huge savings in downtime and maintenance with this new system,” Rienguette said. “The project is complete now, and we have a number of potential customers bidding for the first one. So now it’s just a waiting game.” Once the bidding is complete the factory will swing into action and the first model will be built within 24 to 28 weeks.

The design of this new product has benefitted from one of the company’s more recent investments—AutoCAD Inventor. Acquired and implemented just two years ago and boasting many sophisticated features, it has revolutionized Marcotte’s engineering and design capabilities. “In this instance, we have been able to apply stress analysis on a variety of places along the robotic boom, and to simulate its use over a period of time,” Rienguette said. The results of

the simulations have informed many engineering decisions. “It was a big investment at the time, but it’s certainly turned out to be worthwhile.”

One of the real challenges of operating in the mining industry is it unpredictability. “The market is a rollercoaster, going up and down in cycles with the stock market. It crashed after 9/11 and crashed again during this recession,” Rienguette said. “We have a lot of knowledgeable people in the company who have also been investing in us by remaining with us. And of course I didn’t want to lose any them.”

His strategy to avoid redundancies was to discuss how to reduce expenditure across the company. “We then put the money we saved into building stock equipment so that we could retain our employees during the downturn and we would be ready when things began to pick up,” he explained. “That decision could have gone either way, of course. And we could have been stuck with stock for a very long time. But that hasn’t happened. We’re well on the way to offloading it.”

Now that the global economy is picking up, Rienguette is examining the markets for opportunities for growth. “We’re looking for opportunities to diversity into products and industries that are not affected by mining, to cover ourselves when the industry dips down again. We’re also always looking for new ideas to introduce into the mining industry.” But that is not always easy.

In a competitive market, however, innovation does not remain fresh for very long. “Once a new product is introduced, everybody picks it up and begins to produce it,” says Rienguette. But with innovation built into the fabric of the company, Marcotte is well placed to ride the rollercoaster. http://www.marcotte-inc.on.ca

“We can customize and modify all our products. After all, our equipment will be asked to perform well under extreme conditions underground, and therefore needs to be adapted to specific mine situations”



As Canadian mining companies continue to prosper from high mineral prices, more technically-challenging mining projects

have become attractive. Andy Keough at Manroc Developments tells Andrew Pelis how the Ontario-based contractor is enjoying

its own boom as a result of its specialty mining services

Narrow

mining vein


The continued buoyancy of the metals markets is great news for Canadian mining companies, although mining particular ores can still present a major challenge. When the only way to reach the ore is vertically upwards, Manroc Developments delivers

technology that can make a project safer and more cost-effective.“We are a mining contract company and excel at specialty mining

for vertical development,” says Andy Keough, General Manager at the Ontario-based company. “Our main service is Alimak mining through raising and narrow vein mining.”

Manroc has built its reputation through partnerships with some of the world’s largest mining companies, including Goldcorp and Barrick Gold, extracting narrow ore bodies in Peru, Ghana and the United

As Canadian mining companies continue to prosper from high mineral prices, more technically-challenging mining projects

have become attractive. Andy Keough at Manroc Developments tells Andrew Pelis how the Ontario-based contractor is enjoying

its own boom as a result of its specialty mining services

Manroc Development

Narrow

mining


“While the whole mining sector is competitive in Canada at the moment, we are the leaders when it comes to narrow vein mining”

Manroc Development

States. At present the company is working on four projects in Canada, including a diamond mine for DeBeers, although most of its business is on gold mines like the David Bell Mine and the Williams Mine for Barrick Gold.

“We like to call ourselves the partner of choice,” says Keough. “The majority of our narrow vein mining has been with Barrick and we have worked extremely closely with them over the years to understand the ore body and ground control challenges. They have been so receptive to our input and it has been a mutually beneficial relationship.”

Headquartered in Manitouwadge, Manroc was founded in 1985 by Don Simoneau; since then it has been actively involved in underground contract mining, an area he has extensive experience in. “Don had been involved in Alimak mining for several years and when he bought the business our focus became Alimak raises,” says Keough. “Then in early 2001 the company really took off as a result of our narrow vein mining capabilities at the David Bell Mine and the Williams Mine, where we became a part of their budget.”

The Alimak is a type of raise climber vehicle which transports up to three people (usually two on Manroc projects) down to the ore face using raised climbers. The mining is then carried out on a type of platform, using hand-held tools. “The unit is rail-driven and used for vertical mining,” Keough explains. “As the miner advances up the raise he supports the Alimak raise with standard bolting patterns. It is a very safe way of mining and is best suited to tabular narrow vein ore bodies where it is most cost-effective.

“We own thirty Alimaks, including several which are ten to fifteen years old; and we buy units from Wilson Mining Products. Each one is made from steel and we modify every unit to build up the rails, improve the braking and to beef-up some of the welding to Manroc standards.”

Raise mining is a method that allows drilling, loading and blasting from the safety of the platform on a raise climber; it is a “longhole” method of bulk mining tabular narrow vein ore bodies where the main ore access is gained by driving a raise up dip. The process gives underground access to create a variety of essential escape ways, ventilation shafts, waste passages and ore passes underground, by raising between levels in a controlled fashion.

“While the whole mining sector is competitive in Canada at the moment, we are the leaders when it comes to narrow vein mining”


Manroc Development

However, it is narrow vein mining that has built Manroc’s reputation, as Keough explains. “We have worked for the past twenty years on continuously improving our Alimak narrow vein mining process and while the whole mining sector is competitive in Canada at the moment (and I would consider us a mid-sized company), we are the leaders when it comes to narrow vein mining. We can safely put in a vertical raise in the ore body and drill and blast out a long length.”

The process involves mining narrow ore bodies in geologically challenging environments and Keough says there are a number of advantages to Manroc’s approach. “You are just drilling and blasting ore rather than drilling long holes. We add deep support cable bolts which hold the wall in place so that when the blasting takes place the waste rock is held in place resulting in less dilution—that in turn results in more ore and less waste, which is a huge cost saving.”

The work is highly technical and a lack of Alimak-specific skilled labour has seen Manroc develop its own on the job training. “We have around 120 miners and each one has to meet stringent training qualifications to work in Ontario—but our own standards exceed those,” Keough explains. “A good Alimak miner takes five years to develop

and will work with a leader, following the standards and procedures within Manroc.

“Our in-house training covers the whole gamut of activities including safety, mechanics, blasting, setting up the long-hole machine and the procedures that have to be carried out each day, such as check lists, and we have trained our experienced miners to become trainers and sign-off other miners,” he continues.

With a limited pool of Alimak-experienced miners in Canada, employee retention is paramount to Manroc, and the company’s safety and performance incentive schemes have helped to keep its team together, along with a raft of ideas. A prime example has been the creation of a two-post canopy (Alimaks

generally use four-post canopies) which has improved safety, while Manroc has also developed better retrieval systems (in case somebody falls off a platform) as a result of employee ideas.

Despite its success, recent investments indicate that the company is starting to broaden its services by thinking laterally, as Keough confirms: “In the last twelve months we have invested roughly $5 million on capital equipment. We have bought a couple of jumbos (big drills) and two scoop trams, which increases our capacity to work on lateral development projects. We recently completed a 2,700 meter lateral project at Goldcorp’s Musselwhite Mine and have taken the opportunity to further enhance our fleet.”

Looking to the more immediate future, he says that Manroc’s existing relationships may yield opportunities outside of Canada. “We are now waiting to hear whether we have been successful on a new contract with Barrick to work in Tanzania, somewhere we have successfully mined before.”

Meanwhile, reputation is also a key to opening new territories. “We have nine people from Kazakhstan visiting our headquarters over the next couple of days to look at what we do and that is a developing region of the world which also offers exciting business possibilities,” Keough concludes. www.manroc.com

“In the last twelve months we have invested roughly $5 million on capital equipment”


Primero Mining Corp. is a Canadian-based precious metals producer with every intention of becoming a leading intermediate gold producer, as attested by its acquisition from Goldcorp of the San Dimas gold/silver mine in Mexico

last year, for a total consideration of $500 million.Originally known as Mala Noche Resources, the company was

renamed Primero Mining on completion of the acquisition in August 2010. As part of the acquisition, Primero assumed an amended silver purchase agreement with Silver Wheaton Corp.

Also coincident with the acquisition was the appointment of Joseph Conway as chief executive officer. As former CEO of Iamgold, Conway oversaw the growth of that company into one of Canada’s leading intermediate gold producers. “Today marks an auspicious beginning for Primero,” he said at the time. “We have now transformed the company into a low-cost gold and silver producer in Mexico. Primero

After the acquisition of Mexico’s San Dimas mining properties from Goldcorp, the company is well on the way to achieving its ambition to become a leading intermediate gold producer

Mining

ambition 68 www.bus-ex.com FEBRUARY 11

Primero Mining Corp.

Mining

ambition 69FEBRUARY 11 www.bus-ex.com

is well positioned as a self-funding, precious metals growth vehicle.

“With the completion of the San Dimas acquisition we will immediately focus on optimizing the mine and consider expansion opportunities,” he added. “In addition we will assess accretive acquisitions in the Americas to create the next intermediate gold producer.”

The San Dimas gold-silver deposit is one of the most significant precious metal deposits in Mexico, consisting of three underground gold-silver mines in Mexico’s San Dimas district, on the border of Durango and Sinaloa states some 125 kilometers northeast of Mazatlan in central west Mexico. The district was first mined in 1757 by the Spanish, with historical production estimated at 11 million ounces of gold and 582 million ounces of silver—and it’s still producing.

Announcing its 2010 results in January this year, Primero reported mine production of 24,700 gold equivalent ounces1for the fourth quarter, representing an increase of 14 percent over the previous quarter, and annual production of 100,500 gold equivalent ounces for the full year, (37,300 gold equivalent ounces attributable to Primero). Mill throughput increased by 15 percent over the third quarter, averaging 1,830 tonnes per day.

“We were encouraged by our operating results during the fourth quarter,” said Eduardo Luna, Primero’s EVP & President for Mexico. “The mill has a 2,100 tonne per day capacity, which was

achieved on several days during November and December. Now we have established that the mill can successfully operate at capacity it allows us to concentrate on increasing underground development at the mine.”

The 2010 results prompted Primero to revise its outlook for 2011. It now expects gold equivalent production at San Dimas to increase in 2011 and nearly double from current levels by the end of 2013. Mine development plans have been aggressively increased to achieve growth objectives and justify a mill expansion in 2012.

“We are pleased with the company’s operating performance in the fourth quarter,” said Conway. “We were able to increase throughput significantly over the third quarter and achieved our revised production guidance for the year. We have also recently completed a thorough review of operations and revised the mine’s three-year plan. We have determined that there is a significant opportunity for Primero by aggressively advancing underground development and exploration drilling. Given continued positive results from the high grade Sinaloa Graben, the company plans to expand the mill from 2,100 tonnes per day to 2,500 tonnes per day during 2012. We expect 2011 to be a year of transition as we increase development spending by 50 percent and double exploration spending. Higher grades are anticipated in 2011, resulting in a 15 percent increase in gold equivalent production. The full impact of the Sinaloa Graben discovery will not be seen until 2012 and 2013. The company’s goal is to increase production at San Dimas to approximately 200,000 gold equivalent ounces per year by the end of 2013, up nearly 100 percent from 2010 levels.”

San Dimas consists of five ore zones or blocks: San Antonio West, Sinaloa Graben, Central Block, Tayoltita and Arana Hanging Wall block. All mine production is processed through the Tayoltita mill.

All of the mines are underground operations using mechanized cut-and-fill mining methods. After milling, cyanidation, precipitation and smelting, 1000 ounce doré bars (a semi-pure alloy of gold and silver) are poured and then transported to refineries in the United States. Over the last ten years previous owners invested in a major capital program that has significantly upgraded tailings management, will increase production and achieve a lower cost structure in the future.

1 “Gold equivalent ounces” is a term used where a mine produces another metal other than gold. The figure is calculated from actual sales, and in this case includes silver ounces converted to a gold equivalent, based on a ratio of the average commodity prices received for each period.


Primero Mining Corp.

As well as gold, San Dimas is also a significant low-cost producer of silver. Under Goldcorp’s ownership, 100 percent of the mine’s silver production went to Silver Wheaton for around $4 an ounce. Primero has renegotiated the purchase agreement so it can benefit from selling some of its silver at spot prices. The revised agreement includes the first 3.5 million ounces plus 50 percent of the excess silver produced until 2014, and then the first 6 million ounces plus 50 percent of the excess produced thereafter, based on the anniversary of the acquisition (August 6), not the calendar year. With an estimated average 7.1 million ounces of silver being produced at San Dimas between 2011 and 2014, this gives Primero an estimated 1.8 million ounces of silver to sell at spot prices, potentially $20 million in extra cash flow per year.

On its journey to become a leading mid-tier gold producer, Primero has embraced a commitment to responsible mining, which means providing a safe and healthy workplace for its employees and contractors,

protecting the environment and sharing a mutually beneficial relationship with local communities.

The mine’s previous owner, Goldcorp, has well established sustainability reporting processes and has left a legacy that Primero intends to continue. “Our operations will be judged against the three pillars of sustainability—economic achievement, community engagement and environmental stewardship,” the company says.

Economic achievement will result from providing quality competitive products, maximizing earnings and reducing operating costs, but also by investing in the economic and social development of the communities in which the company operates. Primero is actively engaged with local communities to identify economic, training, social and development priorities. Its objectives are to minimize the impact its operations may cause to the environment and practice the progressive rehabilitation of areas impacted by its activities. www.primeromining.com


www.lmls.com


Bird Construction, established in Canada in 1920, has experience in most construction market sectors, but having built a reputation in military construction projects during World War II, it retains a special foothold and expertise in projects for the Canadian Department of National Defence (DND).

The company founded by H.J. Bird as a small partnership in Moose Jaw, Saskatchewan 90 years ago is now headquartered in Halifax, Nova Scotia, and has become one of Canada’s long-time top 10 national general contractors. Bird Construction Company has completed billions of dollars of work as a general contractor since its foundation and now operates nationally with eight offices from Vancouver to Halifax.

military A


Bird Construction: CFS Pleasantville Consolidation

military history

Having worked with all levels of government and associated agencies, Bird personnel have developed expertise in understanding the unique requirements of construction in a public sector environment. Much of the company’s work has been awarded on the basis of its reputation and ability to deliver projects under tight budget and time constraints, or where quality concerns are paramount. Over the years, Bird has integrated and fine-tuned its internal control systems and procedures to ensure strict compliance with quality requirements.

Its latest defence project is the consolidation of the Canadian Forces Station at St. John’s, Newfoundland, under a $117 million fixed price contract to replace 16 buildings located across the St. John’s neighborhood of Pleasantville.

It’s a job that’s long overdue. CFS St. John’s plays a crucial role supporting Canadian Navy personnel and also supports land operations in the province and the training of the Royal Canadian Army, Sea and Air Cadets, but the original buildings are spread across a wide area and are now crumbling with age.

Because of its strategic location and its largely ice-free deep harbor, the city of St. John’s was selected in the early 1940s by American military planners to house Fort Pepperrell. The US base closed in 1960 and was taken over by

the Canadian Government, but the buildings have since deteriorated badly and have become inadequate to meet the current operational needs of CFS St. John’s.

Bird Construction now has the task of consolidating the widespread aging facilities into two new buildings—a main building for lodger units and a smaller standalone building for the Military Family Resource Centre—as well as a large military vehicle pool.

The four-storey main building will comprise approximately 24,000 square meters of floor area, with portions of the building being designed for the construction of additional floors to meet future requirements. The Military Family Resource Centre will be smaller, with a floor area of approximately 825 square meters.

The four-storey facility, scheduled to be completed by 2013, will be used to provide the training, operational and family resource support to military personnel stationed in Newfoundland and Labrador, and is estimated to create over 600 direct employment opportunities over the course of the project.

Both buildings will be designed to achieve a LEED Canada Silver Rating (Leadership in Energy and Environmental Design, a green building construction standard endorsed by the US and Canadian governments).

“Bird Construction Company has completed billions of dollars of work as a general contractor since its foundation and now operates nationally with eight offices from Vancouver to Halifax”


area,” Williams said. “However after years of use, the properties and buildings are now old and decrepit and badly in need of replacement.” Williams said 45 years ago he paraded as a cadet in the building where the announcement was made. The cost of the new building, he said, is a clear signal of Ottawa’s commitment to CFS St. John’s. Demolition of existing buildings began immediately after the ceremony.

Bird Construction’s pedigree includes many awards and citations, a highlight of which is a Gold Award for Infrastructure for the Alberta Schools Alternative Procurement Phase I in November 2010, from the Canadian Council for Public-Private Partnerships. Also in 2010 Bird received a design-build award of excellence for the Doug Mitchell Thunderbird Sports Centre, Vancouver, British Columbia, from the Canadian Design-Build Institute (CDBI). www.bird.ca

Bird Construction: CFS Pleasantville Consolidation

The new CFS St. John’s facility will include specialized operational training spaces, offices and classrooms, vehicle maintenance facilities, special medical and dental facilities, storage and quartermasters’ facilities, fitness facilities, galley and dining space and messes for military personnel. The consolidation of the facilities will give local military units the work environment needed to support efficient and streamlined operations.

The Pleasantville consolidation project was originally announced in April 2007 as part of a wider strategy to modernize the Canadian Forces. Prime Minister Stephen Harper attended the ground breaking ceremony in October last year.

Harper was joined by Premier Danny Williams, Senator Fabian Manning and CFS St. John’s commanding officer Larry Jones for the announcement at the station’s drill hall. “These historic facilities were once the pride of this


mailto:williammurphylandscaping%40hotmail.com?subject=


Following its recent expansion, the American Hospital Dubai has consolidated its position as the foremost facility of its kind in the Middle East. Thomas John Murray, CEO, talks to Jayne Alverca

matters most

care Where


The American Hospital Dubai was created with a simple mission: the overriding aim of its founders, a private Emirate family, was to introduce the highest standards of American healthcare to a region which had traditionally offered poor or indifferent levels of medical care, usually compelling the

sick to travel overseas for treatment. Years of committed work and dedication led to the American Hospital becoming the

first healthcare facility in the Middle East to be accredited by the Joint Commission International Accreditation (JCIA) in 2000. This body sets rigorous international quality standards that focus on the areas which most directly affect patients. Accreditation demonstrates that the hospital has been evaluated for its access to care, assessment of patients, infection control, patient and family rights, and education. Other standards addressed include facility management and safety, staff qualifications, quality improvement, hospital leadership and information management.

Following its recent expansion, the American Hospital Dubai has consolidated its position as the foremost facility of its kind in the Middle East. Thomas John Murray, CEO, talks to Jayne Alverca

American Hospital Dubai

matters most

care

www.gulfdrug.com

In another first, the hospital’s medical laboratory was also the first private laboratory in the Middle East to become accredited by the College of American Pathologists (CAP). This is the United States’ largest association for American Board-certified laboratory pathologists and the recognised world leader in laboratory quality assurance.

“From a professional perspective, these accreditations, which are reviewed every three years, show how committed we are to achieving and preserving the highest international standards in the services we offer. These are very stringent benchmarks which we take seriously,” states CEO Thomas Murray.

Since the original hospital was built, it has undergone several major expansions, most notably the addition of a new patient out-care facility in 2006. Attention is now focused on the latest development—the largest in the hospital’s history—which is a 240-bed inpatient bed tower. The new seven-storey tower creates an additional 50,000 square metres of space and has been designed by international architects Ellerbe Becket, with the building work executed by Dhafir Construction. Both companies have an extensive international track record on complex projects of this type.

“Great care has been taken over details such as the view from rooms and the availability of natural sunlight which we think is very important to the healing process”



“A very important feature we continue to serve our patients is that all of these new rooms are private,” Murray explains. “We strongly believe that offering privacy is a better way to care for patients and their families. Family is a very important concept here and we wanted to create an environment as comfortable and appealing as possible.”

As one of the world’s leading healthcare designers, Ellerbe Becket was commissioned to plan and design the tower’s state-of-the-art facilities. Their approach is inspired by the belief that the design of healthcare environments can impact on clinical outcomes as well as the overall experience of patients, their families and care givers.

“We wanted to create an environment of light and space,” Murray continues. “Some of our rooms are actually suites and all are at least 30 per cent bigger than the norm. Great care has been taken over details such as the view from rooms and the availability of natural sunlight which we think is very important to the healing process.”

Another facet of the hospital’s current expansion phase includes the addition of facilities related to the oncology departments. “We are on the point

of commissioning a linear accelerator which will greatly enhance the treatment we can offer to cancer patients; and we are also in the process of upgrading our breast imaging centre for early detection,” he explains.

Murray is also very proud of the hospital’s pioneering Joint Replacement Programme. The newly designed and refurbished Total Joint Replacement Regional Center of Excellence is the first unit to be relocated to the fifth floor of the new building. It features 44 inpatient rooms, as well as medical/surgical units and supporting areas.

“People travel from neighbouring countries specifically for this service which has a track record of achieving exceptional results,” states Murray. “Our Cochlear Implant Programme is also set to expand and this again is another area where we can point to outstanding results.”

The Total Joint Replacement Center at the hospital is unique in the Middle East and is one of only four in the world, along with similar centres in Holland, Spain and the UK. Dr. Samih Tarabichi, the Center’s medical director, has performed over 4,000 joint replacements and is ranked as one of


the world’s leading experts in this field. “All of our physicians are outstanding and

Board-certified in either Western Europe or the US, which is a standard we will always preserve. We have very fine primary care physicians through to outstanding cardiac and open heart surgery experts,” Murray states.

For example, Professor Dr Uwe Klima, who is based at the Heart Center within the hospital, has pioneered a new and highly promising surgical technique. In October 2010 he became the first surgeon in the world to perform a new technique in coronary artery bypass graft surgery (CABG). The surgical procedure is based on a medical device called an external saphenous vein stent (eSVS), which dramatically reduces the high failure rate of traditional grafts—50 per cent of which will have failed after 10 years. Dr Klima holds exclusive rights for the medical device and treatment in the Middle East.

Another recent breakthrough has seen

Professor Michael Weber, director of the Center for Limb Lengthening and Limb Reconstruction, receive exclusive rights in the UAE to the Fitbone limb lengthening procedure. This is the latest technology related to limb strengthening and involves using a motorised ‘nail’ which is surgically inserted inside the bone. The aim is to facilitate new bone growth through a minimally invasive technique.

“The combination of our range of facilities and some of the finest doctors in the world means that we can offer a very comprehensive range of services,” asserts Murray. “We are extremely proud of this institution and its achievements. The services we offer are second to none as a result of the dedication of an exceptional team of people. For a number of years we have had a leadership position in this part of the world and we are determined to preserve and build upon this reputation,” he concludes. www.ahdubai.com




2011 will see Taggart South Africa emerging as a one-stop-shop for bulk materials handling projects for

all southern Africa’s mining projects, plus the ability to offer full EPC and EPCM services to its clients

Moving


With 40 years of mining experience behind him, Dave Morris has a unique understanding of an industry that is without any shadow of doubt going to continue to drive the economies of southern Africa for decades. Morris

is based at Taggart Global’s headquarters in Pittsburgh, USA; but as chief operations officer for Taggart South Africa, spends half his time in South Africa managing a portfolio of contracts related to national power supplier Eskom’s strategic new coal plants and to new installations and plant upgrades for major private mining companies such as Anglo American, BHP Billiton, Exxaro and Xstrata Coal.

2011 will see Taggart South Africa emerging as a one-stop-shop for bulk materials handling projects for

all southern Africa’s mining projects, plus the ability to offer full EPC and EPCM services to its clients

Taggart Global

Moving

mountains


“We have recently done a screen for one of the platinum mines, and we are looking at a gold project that involves mostly materials handling”

Taggart Global

Taggart Global is a well-established international engineering and construction company with expertise in the design, construction and commissioning of coal preparation plants and materials handling systems in the US, China, Australia, Canada, Russia and Brazil. Before becoming COO for both Australia and South Africa in 2008, Morris was instrumental in developing Taggart’s business in Russia. As the Australian business developed, he relinquished that part of his job to focus on operations in South Africa. “We are already branding Taggart JHDA and Taggart LSL/Tekpro as Taggart South Africa, and that will happen gradually over the course of 2011,” he says.

Taggart South Africa will draw together two established entities, each with its own unique network, into one of the most capable mining services companies in the region. Taggart Global has a controlling interest in both Taggart JHDA and Taggart LSL/Tekpro—the former managed by Jim Harrison, the latter by Dimitri Simigiannis. Consolidation was always the intention when Taggart acquired a majority interest in Jim Harrison Design Associates (JHDA) in 2008 and LSL/Tekpro in 2010; however, it was important to bring all the stakeholders into the process, says Morris. “We had to reach agreement on value and ensure the minority shareholders were satisfied. We have developed a formula to merge the companies by the end of 2011.”

This formula includes personal development and training, recruitment and the enhancement of the amalgamated company’s B-BBEE rating through a review of its procurement policies and community development programmes. Another important objective is to continue bringing together the different projects that both companies have with common customers.

As Morris explains, both Taggart JHDA and Taggart LSL/Tekpro have separate contracts with Anglo American relating to the New Largo open cast deposit which is being developed to feed Eskom’s Kusile power station located in Mpumalanga. It’s expected to become one of the world’s largest coal-fired power plants once it is completed in 2018. “Taggart LSL/Tekpro has the largest share of

“We have recently done a screen for one of the platinum mines, and we are looking at a gold project that involves mostly materials handling”



the work because that project involves substantial materials handling—long conveyors, tips, crushers and the like,” says Morris. “Taggart JHDA has a separate agreement with Anglo Coal to do the feasibility and engineering on the processing plant. It will now be easier for Anglo to talk to just one entity, rather than two.”

Eskom’s new generation power stations, of which Kusile is just one, will boost coal demand for a generation. But coal is not the only resource being mined in South Africa. “Materials handling presents much the same challenges whatever the commodity,” Morris says. “For example, we have been keeping busy constructing a R200 million manganese plant for United Manganese of Kalahari [UMK]. We have done a good job for this client, and have been gaining additional work as a result both from UMK and from some of the other companies that are mining and exploring manganese in the Northern Cape.”

In the past JHDA was more closely associated with coal projects, while LSL/Tekpro had long term relations with Kumba Iron Ore, specifically the operation at Sishen in the Northern Cape, as well as excellent coal experience. “Its expertise in coal has been a key strength for JHDA, but we are taking these strengths into other markets now,” says Morris. “We have recently done a screen for one of the platinum mines, and we are looking at a gold project that involves mostly materials handling. In cases like these, it doesn’t matter what the commodity is.”

While Taggart South Africa will continue to concentrate on its long-standing domestic clients following consolidation, it would be impossible for it to ignore the potential just across the border. Mozambique has the potential to become an important exporter of coal, being singularly well-placed to ship coal to India, whose demand for coal is insatiable.

Shipping coal from Mozambique will become more feasible once the 575 kilometre Moatize to Beira rail link has been upgraded, the port improved and a completely new rail line constructed from the Tete coalfields to the northern deepwater port of Nacala by the Brazilian company Vale. “We have been talking to a variety of companies that are already investing in or are thinking of investing in Mozambique, and we intend during this year to set up a representative office in Maputo,” says Morris.

Taggart Global

Behind all this activity is a strategic move towards capturing EPCM (engineering, procurement, construction management) contracts in southern Africa, something that has hitherto been difficult for the two entities. “On some projects where the clients want to deal with a one-stop-shop we tend to team up with other entities in South Africa.” An example would be where a project includes shaft sinking as well as above-ground work—LSL/Tekpro is used to installing slope conveyors as part of the materials handling requirement; but neither company is into mining as such. Taggart South Africa will continue to work with the large construction companies to supplement its in-house team of construction specialists.

Most projects to date have been undertaken on an EPC or fixed price, turnkey basis. “We have not really got into large EPCM projects,” admits Morris, who adds that the skills associated with

coal preparation plant don’t always include those nurtured by the largest contractors (though these contractors lack the specialised skills that Taggart JHDA has).

However, Taggart Global has plenty of experience in large-scale EPCM type work. In 2008 the company announced its joint venture with Ausenco Limited to pursue coal preparation plant engineering opportunities in excess of $10 billion worldwide, with the exception of North America and China.

“As we get into more EPCM type work, in addition to local engineering and construction companies, we may bring in Ausenco, which employs 2,500 people in 26 offices across the world. It will be a powerful partner once we get into major projects in Mozambique, but could be extremely helpful in implementing EPCM contracts in South Africa too,” Morris concludes. www.taggartglobal.com


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