Canadian market on the rise
By Hal Lundgren19 May 2017
While their headquarters are in separate provinces and they serve customers with entirely different needs, Groupe Bellemare and Oxford Builders Supply share a bullish view of the crane and transport market today and for 2018.
Almost everything in Jean-Luc Bellemare’s looking glass appears positive.
“Oil and gas is beginning to look a little stronger,” said Quebec-based Bellemare. “We’re seeing lots of mining activity in northern Quebec. Mining of nickel, diamonds and iron ore picked up this year. It will continue strong in 2018.”
Bellemare, whose company employs about 600, identified wind power as a Canadian soft segment.
“We had tax credits from 2003 to 2016,” he said. “Without those credits, wind power is dying a little bit.”
The result? The company now does about 80 percent of its oversize wind-power equipment hauls in the U.S.
“We’re down to about 20 percent of our wind business in Canada,” he said.
Groupe Bellemare’s services include oversize transport, containers, crane work and demolition
Mike Demelo, vice president of equipment operations for Oxford Builders Supply, characterized the company’s tower cranes as, “busy.”
“We do business from coast to coast in Canada,” said Demelo of the London, Ontario-based company. “Our business looks good for this year and 2018. I have a positive outlook for the next four or five years.”
Relying primarily on Terex tower cranes, Oxford thrives in the Toronto area’s dynamic growth.
“What used to be Toronto’s suburbs are becoming more of the city every day,” Demelo said.
Crowded living conditions mean that more people who want to stay in the city need to be in condos.
“For our company, that means more infrastructure work,” he said.
Though Alberta’s demand for energy projects has flattened, Demelo said “it has started to rebound a little. We’re also doing infrastructure work in Calgary.”
Oxford operates derrick cranes to place its tower cranes on buildings and elsewhere.
“Our work is turnkey,” he said. “Designing jobs. Erecting. Dismantling. Servicing.”
Tower crane projects account for about half of Oxford’s business. The company also offers hoist services operating from two Ontario sites and one in Alberta. Oxford will soon open a third Ontario site and a second in Alberta.
Asked about challenges in 2018, Bellemare replied, “The same one we face this year. A shortage of drivers. We have plenty of applicants to drive, but I’m talking about qualified drivers. They’re hard to find. I might not have my finger on the problem, but I think it’s because so many young people don’t find our business attractive. Driver salaries are high. Even for a good salary, driving a truck is not the passion of many young people.”
Bellemare speculated that a stronger Canadian economy will worsen the shortage.
“A better economy will mean more jobs in other fields,” he said. “People now driving trucks might want to try another career.”
Mammoet Canada continues its adjustment to oil’s price crunch.
“We are still adapting to the new reality of oil,” said Joery van Vierden, Mammoet Canada’s managing director. “In the western provinces, capital expenditures for oil and gas are at a minimum. The eastern provinces are less dependent on oil price, but there’s some impact of the oil situation there, too.
Van Vierden said the majority of his company’s clients don’t pay much attention to day-to-day changes in the price of oil.”
“They won’t get excited when the price rises a little or discouraged when it goes down a little,” he said. “Oil might be warming up a bit, but nothing’s really close in that segment. Any large projects for us would be preceded by 12 to 18 months of engineering before we would get to a turning point.”
That would push Mammoet Canada’s oil patch turnaround into late 2018 or beyond. But his company won’t sit and wait. It stays busy with other heavy transport projects, plant turnarounds, modular construction, relocation and decommission.
“Canada is experiencing a shift to cleaner energy, and our company is prepared for that opportunity,” he said. “We are seeing more wind projects. And there’s a lot of coal plant conversion to natural gas.”
The country will not experience a U.S. pro-coal movement taking place in West Virginia, Pennsylvania and elsewhere.
“Both our federal and provincial governments are steering away from coal,” van Vierden said.
He pointed out that despite the retreat in oil prices, a second segment in that business sustains a steady demand for Mammoet services.
“Even with almost no demand for capital expenditure projects, we’re doing lots of business in that second segment – maintenance,” he said. “Nobody’s closing plants, and they have to be maintained. Smaller cranes do that maintenance work all year. When plants shut down in the fall and spring, they need much bigger cranes.”
Were Ted Redmond steering a sailboat into Canada’s upcoming year, NCSG’s president and CEO would anticipate a smooth trip. He sees only calm seas and favoring winds.
“I’m optimistic because everything seems to be getting slowly better,” Redmond said. “Both in commercial and industrial. There’s a little improvement in refining and the petrochemical business. The (oil) rig count is climbing. I think 2016 was the bottom for oil prices. Wind energy’s installed base also continues to grow.”
Redmond watches closely as energy companies merge and make other cost-cutting decisions.
“They’ve all been under a lot of price pressure,” he said.
Long term, tighter cost controls might make the energy business more stable. That’s Redmond’s hope since about three-fourths of NCSG’s business is energy-related.
His company has also adjusted to oil price weakness.
“We’ve done things like not replace people who leave and renegotiate rentals when they come due,” he said. “I’ve been through three of these oil price cycles. We’ll have more of them. It’s hard to know when the next down cycle will come. Right now, the oil price is trending up. Demand is up, too. That’s good. But as far as knowing where oil’s supply and demand will be in 2018, I don’t.”
Bill Christensen, president of Supreme Structural Transport, had a different take on the oil setback.
“Business definitely dropped here in Vancouver because of it,” he said. “We’re not in oil country, yet it still put at least a little fear into all of us here. There seemed to be a shortage of money for new projects. Even the ones that weren’t oil-related.”
Christensen’s company does 60 percent of its work moving transformers and bridge panels as well as other commercial tasks. It performs maritime heavy hauling. Company facilities include a barge with mechanical services. At Vancouver’s port, the company’s projects included placing a large gantry crane in place, working with 150 components.
House moving dominates the other 40 percent of projects. Christensen’s company has been doing that work since 1945.
“Vancouver is a land-locked city,” he said. “The British Columbia economy is in a holding pattern. So our company is doing well.”
At Pioneer Heavy Haul, Mel Jones makes the best of diminished opportunity at the company his father founded in 1929.
Welland, Ontario-based Pioneer has watched many producers of transformers, cars, petrochemicals, steel, rubber and all other heavy industries depart to other nations.
“We’re in a depressed area,” Jones said. “We don’t have as many young families here as we used to have. So we have to be ready to serve anybody who calls us. Like Boy Scouts, we always tell ourselves, ‘Be prepared.’”
He said if a client calls to have some oilfield pipes moved by its Alberta location, they are prepared.
“If a company wants some car press stamping material hauled in Ontario, we’re prepared,” he said. “If an elderly lady wants her large piano moved, we’re prepared. In fact, we did that once and never charged the lady.”
In addition to Ontario and Alberta offices, Pioneer diversifies by operating out of Buffalo, NY. With its Ontario headquarters 75 miles from Toronto, Pioneer participates in a little of the infrastructure work performed there.
“We might haul some steel or concrete beams for a bridge, or some construction equipment” he said. “We’re too far away to participate in much there.”
The big challenge is in Alberta, where Jones described the oil business as “dead” but then said, “We’ll always have a little work in Alberta, like hauling oilfield pipes.”
As for the oil sands business, it’s complicated.
“In the Middle East, somebody can stick a fork in the ground, and oil spurts out,” he said. “Extraction from Alberta’s oil sands is much different. After extraction, you have to transport the oil a long way to where it needs to be. It’s a very expensive process.”