Printer Friendly

Northern firms prosper in changing economy.

Most economic experts agree that the recession of 1990/91 differed from its predecessor of nine years earlier.

This time around the consequence of spiralling debt was accompanied by structural changes in the global economy, the emergence of new technologies and deep-routed changes in market demand.

"This was much more than a recession. The world has never gone through the changes it is going through now," says Laurentian University geography professor Oiva Saarinen.

"We are in an information revolution that is hitting us with a vengeance," says Saarinen. "We are moving from an industrial age to an information age."

With such a dramatic change it is unlikely that the former foundations of our economy - the automotive, steel, forestry and mining sectors - will return to their past prominence.

Of these, mining shows the most promise because it has undergone a dramatic restructuring over the past 10 years. It is this phase of painful rationalization that forestry and manufacturing now face.

Some economists are betting on the strength of the service sector to provide some stability. Service, the largest sector of our economy, only had a 14-per-cent downturn during the recession.

"You have to look at where the jobs are. About 90 per cent are in the service sector," says Rick Lymer, Northern Ontario district economist for Employment and Immigration Canada. "That trend will continue through the '90s."

However, the service sector, primarily retail, faces a tough challenge of its own. An aging, environment- and value-conscious population is forcing the sector to re-evaluate the products and services it offers and how it delivers them.

In light of this, the real growth of the 1990s will be led by companies which can deliver new products and services, put technology to work to solve old problems and tap new global markets.

The areas which show real potential for growth include health care, communications, instrumentation and process controls, computers and the environment.

The good news is that Northern Ontario is home to a handful of companies in each of these areas which are poised to take advantage of new technologies and innovative methods to vault into the next century.


The Tri-Care Group of Companies of Sudbury is well positioned to capitalize on the needs of an aging population and on the financial crisis now being experienced by Ontario's health-care sector.

The Tri-Care Group provides administrative services to a majority of the health insurance companies in Canada as well as to more than 140 corporations.

The company has dramatically reduced the time required to process health insurance claims. It utilizes wallet-sized plastic cards with built-in computer chips and a network of point-of-capture equipment at pharmacies, optical outlets and medical dispensaries which read the cards.

Company president Robert Morel is projecting double-digit annual growth in the company's revenue.

"Currently business is flat, but if you look at the stories in the Globe and Mail and in other newspapers, we're pretty happy with that," says Morel.

Layoffs resulting from the recession have had a significant impact on Tri-Care's business.

"If you have 1,800 companies and each one lays off just one employee, it's going to have an adverse effect," Morel explains.

However, Morel believes his company is well positioned to take advantage of the aging of Canada's population.

"The average age of the workforce is 41, and we're starting to see an upwards trend," he notes.

Morel explains that an older population will generate more drug prescriptions, which account for 70 per cent of all medical claims.

But there are some clouds on Tri-Care's horizon.

Morel is concerned about legislation before the House of Commons which would allow banks to purchase insurance companies, Tri-Care's major clients. He fears that the insurance industry could be swallowed up.

Morel is also concerned that current GATT (General Agreement on Trade and Tariffs) discussions will lead to an increase in protection of brand-name drugs to between 15 and 20 years.

He says the move would reduce the number of generic drugs on the market and increase health-care costs by as much as 100 per cent.

In response, Morel expects that employers will limit employee coverage to cut costs.


"The future looks good for us as long as we keep up the level of quality and service," says John Proeller, owner of Timmins Dental Ceramics Laboratory.

Proeller admits that the recession made business the slowest it's been in five years. "But people need teeth to eat," he jokes.

Timmins Dental Ceramics Laboratory manufacturers crowns and bridgework for patients in northeastern Ontario. Dentists from Timmins to James Bay do the preparation work in their offices and send impressions to Proeller's laboratory. The dental product is manufactured and sent to the dentist.

Proeller recently bought out his partner's share of the business, changed the name of the venture from Balmoral Dental Laboratories (Timmins) Ltd. and expanded the operation, despite the slowdown in business.

Since its formation in Thunder Bay 10 years ago, the company has doubled in size and now employs six people. It could double again in a lot less time if Proeller goes ahead with his expansion plans.

In the next year Proeller plans on expanding his business south. He has targeted Sudbury and Sault Ste. Marie as his main objectives.


The future also looks bright for the Sudbury Orthopedic and Sports Physiotherapy Centre.

The centre, founded five years ago, opened its third clinic last fall and is now developing new business relationships with Falconbridge Ltd. and E.B. Eddy Forest Products of Espanola.

Owned by Fort Frances native James Busch and his wife, Rosemary, the clinic has been working with Inco Ltd. and the United Steelworkers for the past four years on programs aimed at reducing lost time due to injury.

Through consultations with the two groups, Busch has developed a program which includes immediate medical treatment for injuries, individualized rehabilitation programs and referrals to the clinic by either doctors or the company.

The centre also offers workplace evaluations which identify potential hazards to workers. Its three Sudbury locations are manned by a staff of eight and treat between 60 and 80 patients per day.

The success enjoyed by the Sudbury Centre has also been experienced in Thunder Bay by the Intercity Orthopedic and Sports Medicine Clinic.

Intercity opened as the first full-time clinic of its type in Thunder Bay in 1984, and has since enjoyed steady growth. It has a staff of more than 30, including more than 15 full-time medical personnel.


Roy Jakola expects to see business "explode" in the next few years.

The owner of 10-year-old El-Equip Ltd. of Sudbury says he made use of the revenue from the prosperous mid-1980s to invest in new technology and enter such markets as the United State and South America.

El - Equip designs and develops mine communications systems. It operates a research and development lab in Sudbury as well as a manufacturing facility in Elliot Lake and service office in Manitoba.

Early last year the company out-bid a pair of competitors to secure a $400,000 contract with the National Copper Corporation of Chile (Codelco).

El-Equip more recently took over U.S.-based American Mine Communications which was signed to a massive deal with the Exxon Corporation. El-Equip also inked a $300,000 deal with a midwestern U.S. coal producer.

Jakola says another deal is pending and several more are in the wind.

With a foothold in Chile, Jakola says his company is poised to enter the mining markets in both Australia and South Africa.

In addition, Jakola says his company is in the final stages of preparing a new, unnamed product which involves the government of Mexico.

"We've fought a U.S. company and a British company for this."

The recession did not have an effect on the bottom line of El-Equip Ltd., according to Jakola.

The length of the firm's contracts - one to two years - is enough to carry through the down cycle of the economy, he explains.

While there have been some contracts lost, there have been enough "coming through the door" to balance out the losses, Jakola says.


The addition of new products is expected to produce a 10-per-cent increase in revenue over the next two years for Northern Communications, according to company spokesman Gaston Germain.

"We're holding our own right now, but new services such as VisionTel are going to provide us with new growth," he says.

VisionTel, which involves the reselling of long-distance telephone services, is expected to come on line later this year. The service will pit the company against Bell Canada and several smaller firms such as newly formed Alldial Communications Inc. of Sudbury.

Northern Communications is a 30-year-old company with a diverse base in the communications industry. Its interests include business telephone systems, two-way radio and cellular telephone sales and service, messaging and paging.

The company's security division provides commercial and residential alarms and monitoring services, as well as closed circuit television systems.

According to Germain, security has become the sales leader for the company.


The recession and dropping prices for metals has forced mining companies to cut costs, and Sudbury's BLM Mincon has profited by providing the means to do so.

"A couple of years ago we recognized that there was a need for new products which were aimed at improving the safety and the mechanization of jobs underground," recalls company general manager Steve McMurray.

"Specialized production equipment seems to be the only acceptable way to go. With less bodies available for mines we have to do something."

Even though the economic downturn hamstrung some of its larger clients, BLM Mincon has been able to "operate at a normal level without layoffs," according to McMurray.

He says the company experienced a notable increase in business in late November and early December.

"We expect to see the increase continue," he adds.

The company will be unveiling new equipment within the next six months which McMurray says will allow it to obtain a 25-per-cent rate of growth over the next five years.

The new equipment will also allow BLM Mincon to expand its market south of the border. About 75 per cent of the company's business currently comes from Ontario and Quebec. The balance of the country provides the remainder.

McMurray says BLM Mincon's immediate off-shore target markets are South America and South Africa.


The fact that mining companies such as Inco are striving to improve efficiency and cut the cost of labor has also provided a window of opportunity for Mintronics System Corp. of North Bay.

"Since underground mining is moving towards automation our product is particularly attractive to the industry," says company president Glenn Brophey.

Brophey and a small team of engineers have invested three years in the development of a new guidance system for underground mine vehicles.

The system, dubbed Opti-Track, uses scanners mounted on the front and the rear of an underground vehicle that read coded messages which are contained in a retro-reflective strip mounted on the roof of a drift. The coded messages direct the vehicle's operation.

According to Brophey, the system can increase productivity by as much as 45 per cent during a normal eight-hour shift.

Mintronics began marketing Opti-Track in September and it started taking orders in November.

Brophey expects that his company will be busy in the near future, "since this is the direction the industry is heading."


To boost its sales North Bay-based Nortek Computers Ltd. recently opened an office in West Palm Beach, Fla. The office will handle some of the work Nortek receives from NASA.

The company is also examining the feasibility of setting up an office in Europe.

"We're going to try to get more business in the foreign markets," says company president and chief executive officer Brian McGaffney. "We are going to pursue European business."

Nortek Computers began modestly in 1978 in McGaffney's basement. Today it has assets worth an estimated $30 million, 47 employees and an annual payroll of more than $1 million.

The company reported $4.1 million in revenue in 1990 from the manufacture and repair of computer hard drives, ranking it second in the North American industry.

Nortek also reported $1.2 million in revenue from the repair of computer tape drives, ranking it third.

The North Bay company expects that its sales will approach $6 million in 1991. Its clients include NASA, IBM, AT&T, Sun Microsystems and Honeywell.

Nortek also specializes in "reverse engineering," a process which McGaffney describes as the disassembling, inspection and customizing of computer components. One of its latest developments is a state-of-the-art Model 3000 servo writer.

However, the picture is not entirely bright for Nortek.

Despite an approximate $400,000 jump in revenue during 1991, McGaffney expects that his profits will drop by 42 per cent because of government fees and taxes.

"They (government) tie our shoe strings together and our hands together," he comments.

According to McGaffney, 30 per cent of the company's revenue is invested in research and development. It's a level he says will be hard to maintain should government-mandated costs continue to rise.

The company's expansion into Florida and proposed expansion into Europe are intended to counter the rising costs of doing business here.


Increased concern for the environment by both the federal and provincial governments is expected to produce big rewards for Sani Mobile Ontario Inc.

Company president Dan Drouin believes business will improve dramatically over the next few years.

Serving northeastern Ontario and northern Quebec, Sani Mobile specializes in industrial cleaning, environmental protection and toxic waste management.

The company's immediate plans are to expand across Northern Ontario and into southern Ontario, as well.

Drouin says potential clients in the southern market have been identified and preliminary discussions are under way.

The company also has plans to establish a pair of waste management centres, one in Northern Ontario and one in Quebec, as well as a water treatment facility.

However, Drouin remains cautious.

"We have to be careful until the economy turns around," he says.

"The provincial government is putting more effort on the environment (through new regulations), but some companies just can't afford it."


"We're the right business with the right product at the right time. And we are making the right moves," says Gene Farquhar, vice-president and founder of Spill Tech Industries Inc. of Sault Ste. Marie.

Established in November 1990, Spill Tech claims to be the only company in Canada that produces non-woven highloft polypropylene fibre specifically for oil spill recovery.

The company produces two products - Spill Klean and Machine Guard.

Spill Klean is an adsorbent designed to clean up oil and chemical spills from, in or on water. It is being marketed to fire departments, coast guards and emergency response contractors.

Machine Guard is an adsorbent designed to clean up aqueous spills as well as oil and chemical spills. It is marketed to industries, utilities and businesses.

Farquhar predicts that the company's revenue will increase by about 300 per cent this year, before slowing to 100 per cent in subsequent years.

"This is not at the expense of companies that are out there. It's strictly a territorial growth," he says.

Spill Tech's plans for the immediate future include entering the U.S. market this year, the European market in 1993 and the Asian market in 1994.

While market growth will not likely result in any expansion of the company's Sault operations, Farquhar says Spill Tech will need to establish warehouses in off-shore markets.

Farquhar claims the recession left Spill Tech untouched.

"I haven't noticed a recession," he says, adding that the company has doubled in size and started operating 24 hours per day.

"We've been in a growth mode."


When Sudbury's Roy Jakola (El-Equip) learned late in 1990 that the province would be introducing radical changes to the Mining Act, he was quick to seize the business opportunity.

Jakola formed Mine Closers Inc. last summer to capitalize on new regulations which require that all mines, including abandoned facilities, have detailed closure plans.

"I understood that the provincial government was making major changes to the Mining Act," Jakola recalls. "There was going to be a significant increase in the monitoring and controlling of mines."

Jakola then landed a $2-million contract from International Corona Corporation to close the 50-year-old Renabie gold mine north of Wawa, cap two mine shafts, demolish 21 buildings, revegetate the tailings area and monitor ground water.

Jakola says Mine Closers essentially took over the site and began reclaiming the tailings. It has continued the work in liaison with the Ministry of Northern Development and Mines.

It is because the regulations regarding the closing and reclaiming of mine sites are relatively new, that the latter aspect of the project is the most difficult, according to Jakola.

"They (the ministry) have to make up the rules as we go along," he says.

Jakola says his immediate plans for the company are restricted to Ontario, where there is plenty of opportunity for work.

"Closing Algoma Ore will cost $20 million," he says. "If they ever close Kidd Creek, it would cost more than $1 billion because of the metallurgical site. And for Inco it would be $20 billion."

However, he notes that both Quebec and British Columbia are considering legislation similar to Ontario's, and this would create even more business opportunities.

Jakola's main competitor in this emerging sector is Erocon Corporation of Timmins which specializes in land rehabilitation, abandoned mine reclamation, environmental planning, turn-key mine closure and acid mine drainage treatment.
COPYRIGHT 1992 Laurentian Business Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:Jan 1, 1992
Previous Article:Bold entrepreneurs seek out new markets.
Next Article:United strategy required for tourism industry to grow.

Related Articles
United strategy required for tourism industry to grow.
Preserving the Family Farm: Women, Community, and the Foundations of Agribusiness in the Midwest, 1900-1940.
Transforming Rural Life: Dairying Families and Agricultural Change, 1820-1885.
Northern New Jersey industrial marketplace called 'robust'.
Analyzing the benefits of location.
FIRMS FEAR ANTI-TRADE RHETORIC\Immigrants, goods integral to economy.
Who's who on the Smart Growth panel.
Report: New Jersey economic recovery hasn't gained traction.
Regionalism and the new world economy: the No. 1 message for Southeast Michigan is that metropolitan regions--not cities, counties or states--define...

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters