Canalec awarded contract for tunnel.

The need to diversify has led one North Bay company to the east coast, the west coast and under water.

Canelec Manufacturing and Development Inc. is presently involved with the construction of a new railway tunnel from southern Ontario to Michigan, under the St. Clair River.

The company was awarded a $200,000-plus contract last month by Lovat Tunnel Equipment Inc. of Toronto to manufacture and supply a 4NVA electrical substation for the boring machine which will dig the 30-foot-diameter tunnel.

Canelec co-owner Derek Pearce explains that the substation is required to step down 13,800 volts of power to the 600 volts required to power the motors of Lovat's boring machine, which he believes is the biggest ever built in Canada.

He reports that it will take Canelec 18 weeks to build the substation, which will measure 13 feet wide, six feet high and 27 feet long, and weigh 45,000 lbs.

"We've been hammering steadily with proposals for some time," says Pearce, "but we beat out our major competitors, and the unit will be built in Northern Ontario."

While the project is substantial, it is not the largest for the three-year-old North Bay firm.

Canelec previously completed a $300,000 custom-electrical contract for Alcan's Kemano Completion Project in northern British Columbia. It also completed a $100,000-plus contract for the Hibernia oil project.

Established in November 1989 by Pearce and his partner John Toner, Canelec's original business plan was to provide Northern Ontario's mining and lumber industries with a local supplier of industrial electrical equipment and service.

The company has designed, custom-built, commissioned and serviced electrical equipment for the Macassa, Holt McDermott and Kidd Creek mines, as well as for Tembec's operations in Mattawa and Alban.

"Traditionally, all manufacturing, installation and service was performed by southern Ontario firms," recalls Pearce.

However, by being based in the north, Canelec can offer these operations 24-hour, on-call service. According to Pearce, that translates to substantial savings in reduced downtime.

"The only way to build confidence in industry here is to provide service," adds Pearce, who supports Northern Ontario by affixing the "Built in Northern Ontario" label on all equipment manufactured by his firm.

Pearce believes that northern industries should make more effort to use local suppliers whenever possible.

"The capability is here, but we are being left behind because we are not standing up for ourselves and looking after ourselves," he says.

However, Pearce admits that Canelec has been forced to diversify into manufacturing and construction and to look beyond the region for business because of the current downturn in the north's mining and lumber sectors.

"We're doing quite unique things over and above electrical manufacturing work," comments Pearce.

He expresses confidence that filling the Lovat contract will lead to additional contracts.

"They (Lovat) were buying from Virginia and doing it cheaper, so we sharpened our pencils," he says. "We don't need 30-per-cent margins. We have been operating at six- to 10-per-cent profit."

Pearce says Canelec has decided to take the path of slow and controlled growth. The company had $800,000 in sales in its first year of operation, and expects to surpass the $1-million mark this year. It employs 10 people and has an additional seven electricians on contract.

'We've been walking before we run," says Pearce. "Our only success story is damn hard work. It wouldn't happen in a five-day week."

Canelec has most recently become involved in a joint-venture mine rehabilitation firm called M. Valley and Associates. M. Valley, which is also affiliated with Near North Laboratories of North Bay, is presently rehabilitating a small mine property 10 miles outside of Gowganda in northeastern Ontario.

Pearce says M. Valley is prepared to rehabilitate additional properties, but is concentrating on smaller sites which do not involve mine mills or tailings.