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Opportunities exist for machine shops to serve auto industry.

Opportunities exist for machine shops to serve auto industry

When there is a major industrial complex in town, it can be the best of times for machine shops.

Good times for the larger industry, such as Algoma Steel in Sault Ste. Marie, are good times for the smaller operations.

Then there are the bad times, such as the uncertain times now facing Algoma Steel and all of the Sault.

What should a machine shop, or any company do for that matter, when it faces the possibility of a large loss in business?

For most, it means seeking new business elsewhere.

An international industrial development consultant in Sault Ste. Marie, Mich. believes there are opportunities for Sault, Ont. machine shops to service the auto industry of the Detroit area.

Jim Borque of H. James Bourque and Associates said that Sault, Ont. machine shops could become feeder plants or sub-assembly operations for the auto industry, noting that there are very few competing shops north of Bay City, Mich.

"We can compete quite favorably," Bourque said of the Sault, Ont. shops. He listed quality, price and a better work ethic as advantages. "You get more for your money."

The Sault can also accommodate "just-in-time" orders because Detroit is only six hours away, he noted.

"The opportunities are there," he stated. "They have to be targeted."

Bourque's firm assists Canadian companies which are seeking to work in the U.S. with such things as customs, incorporation and taxation.

"All things have to be taken into consideration to set up a business," he said.

CO-OPERATION NEEDED

According to Sault Mayor Joe Fratesi, co-operation is the key to the survival of Algoma-dependent machine shops.

The mayor believes that once Algoma Steel gets through its coming restructuring, it will be a smaller, but stronger and more stable operation.

"To get through this period of time, to get through this restructuring, the co-operation of everyone, including those who do business with Algoma Steel, will be required," Fratesi said, adding that he is convinced that the co-operation will occur.

Starting a decade ago Soo Foundry & Machine (1980) Ltd. has been diversifying its business to become less dependent on Algoma Steel.

"Ten years ago we were pretty dependent on Algoma Steel, and we realized after the 1982 recession that if we were going to survive as a business we had to diversify," said company president Robert Cohen.

More than 60 per cent of Soo Foundry's business of that time was with Algoma Steel.

Cohen noted that the machine shop was almost cut off by the mill for almost two years when Algoma was hit hard by the recession of the early 1980s.

While Soo Foundry & Machine began knocking on doors for other business, some other machine shops went under, he recalled. "The majority survived."

By 1990 the company had reduced its dependence on Algoma Steel to between 10 and 20 per cent of its total business.

Cohen said his company could now survive without Algoma's business, but he noted that many of his customers are companies which rely on the steel mill. The machine shop would therefore be hurt directly and indirectly by a downsizing at Algoma.

The steel company works well with suppliers in good times, Cohen noted. "When things are good, Algoma Steel is an excellent company to do business with."

Cohen believes Algoma Steel will come out of its current difficulties as a successful company.

Cohen believes Sault Ste. Marie would be a good place for machine shops even without Algoma Steel. He points to the business derived from the Hemlo gold camp, nearby forestry operations, industry in Michigan and mining to the east in Elliot Lake and Sudbury.

"I think that, given our location, there is still need for machine shops," he said. "There's a lot of other things out there."

The company, which has about 30 employees, has three facets: machining, fabrication and hydraulics.

Aside from the steel mill, its major customers are mining, forestry, pulp and paper, construction and hydroelectric generation operations.

Soo Foundry & Machine is actively seeking new customers and has doubled its advertising budget in the last three years. The company promotes itself on television and in newspapers and also participates in trade shows.

"You have to advertise," said Cohen. "How else are you going to reach out?"

In addition, the company has produced a promotional brochure and utilized direct-mail advertising.

PHOTO : Steve Givens of Soo Foundry & Machine (1980) Ltd. works on a shaft from a hydraulic cylinder used in a pulp and paper mill.
COPYRIGHT 1991 Laurentian Business Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Focus On Sault Ste. Marie
Publication:Northern Ontario Business
Date:Apr 1, 1991
Words:753
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