PLNT02_2011

$5.50

Volume 70, No. 02 March/April 2011

www.plant.ca

Building trust with the CRA Japan’s recovery: Auto parts opportunities Tune up your sustainability reports

Return undeliverable items to Plant Circulation Dept., 8th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5 PM 40070230

Virtual injuries, safer reality

BRIC’s robust

ROBOTICS Custom automation for the world

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MECHANICAL DRIVES

SEVERE DUTY CORROSION PROTECTION

the

F-SERIES SNUGGLER ®

Parallel Helical Gearmotors SEW-Eurodrive’s F-Series parallel helical gearmotor lives up to its name as the ideal drive for tight space conditions. This compact drive, with its multiple mounting configurations, is a rugged alternative to right angled gearmotors.

SEW-Eurodrive has introduced a new line of aseptic gearmotors to meet the high levels of hygiene crucial to the production of food and beverages, as well as the stringent demands of the chemical and pharmaceutical industries. SEW has solved this challenge with the aseptic design of helical, parallel shaft helical, helical-bevel and helical-worm gearmotors made entirely of smooth stainless steel, cooled by pure convection cooling — eliminating conventional fan and cooling ribs, which prevents the build-up of germs and bacteria on the surface and allows for easy regular cleaning.

CORROSION PROTECTION PRODUCT RANGE Power ratings from 0.34 to 2.0 HP Can be mounted directly onto R, F, K, S-Series gear units in all standard positions

F-SERIES PRODUCT RANGE Power ratings from 0.05 to 336 HP Output speeds from 0.06 to 464 rpm (based on 4 pole motor) Output torques to 159,300 lb-in.

You didn’t compromise when you bought it.

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K-SERIES Helical-Bevel Gearmotors SEW-Eurodrive’s K-Series right angle helical-bevel gearmotors deliver maximum performance and reliability with 95%+ efficiency and high torque density. Durable gearing designed for long service life makes this drive an ideal choice for demanding around-the-clock applications.

K-SERIES PRODUCT RANGE Power ratings from 0.05 to 615 HP Output speeds from 0.05 to 326 rpm (based on 4 pole motor) Output torques to 442,500 lb-in.

S-SERIES

Helical-Worm Gearmotors SEW-Eurodrive’s S-Series right angle gearmotors offer helical-before-worm gearing combining durability with power-packed performance in a compact design that requires no motor belts or couplings.

SEW Eurodrive Service Agreements

S-SERIES PRODUCT RANGE If your SEW-Eurodrive needs rebuilding, it’s no time to compromise on its original quality.

Power ratings from 0.05 to 46 HP Output speeds from 0.05 to 257 rpm

You can depend on the people who built your SEW drive in the first place – the people who are best

Output torques to 35,400 lb-in.

qualified to restore it to its original condition, complete with a comprehensive 1-year warranty.

At SEW-Eurodrive, our experienced factory technicians follow strict guidelines developed through years of successful rebuilds. If the existing stator isn’t up to standard, it’s never rewound, but replaced.

Wear items, such as bearings, are automatically replaced with the originally specified replacement parts, Complete Drive Service & Maintenance Management Central data collection of your drive

not "will-fits" that may compromise the performance of your drive. Best of all, SEW Service Agreements deliver industry-leading quality rebuilds at an industry-leading quality repair price.

inventory online through our CDM® and CDS® programs greatly facilitates the

AC MOTORS

and Brakemotors SEW-Eurodrive’s squirrel-cage motors and brakemotors deliver exceptional performance and reliability combined with low maintenance.

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assesment and scheduling of each drive’s maintenance and repair requirements.

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Editorial

Oil sands: not so dirty

A

lberta’s oil sands are becoming a global pariah. Bitumen is dismissively described as “dirty oil” by the Europeans who want to officially designate it as less desirable than the much cleaner oil they buy from suppliers in the Middle East, or Libya; and greenies in the US are doing their best to turn off one of the taps to their market.

They focus their ire on Alberta’s black gold because extracting it from the earth is more energy intensive than conventional oil extraction and the bitumen has to be upgraded before it’s made into fuel for our carbon-emitting vehicles and homes.

This really upsets the carbon accountants and green warriors who would like to see activity in the oil sands halted or at least slowed down. Their efforts to do so include an attempt to hang up the Keystone XL pipeline to Texas claiming a high likelihood of environmental damage along its 700-kilometre path.

You’d think by the amount of global bad press and delusional opposition directed at Alberta and its oil sands that the development of these massive energy reserves is primarily responsible for the rising temperatures plaguing our poor planet.

Well, they’re not.

Yes, there are serious concerns about climate change that must be considered.

Alberta is responsible for expending far more greenhouse gases through industrial emissions, either by carbon-fired electricity or oil sands development, than is its fair share (based on population). And it is home to the country’s top four emitters, making it a generous contributor to Canada’s global emissions total, which places us in seventh place among 215 nations; but a little perspective, please.

China is first on that list at 22.3% with a bullet. The US is second at 19.1%. India is next with 5.5%. After you get by Russia, Japan and Germany, Canada is a paltry 1.9%, at which point, the numbers slowly trail off to several tiny jurisdictions responsible for a mere 0.01% each. So even shutting down the oil sands entirely would have a negligable impact on global emissions, and in fact, any savings would be eclipsed by China’s escalating demand for energy as more of its 1.3 billion citizens join the middle class and partake in the joys of electricity and automobile ownership.

It’s also a distortion to suggest the oil sands product has a significantly higher (up to 15%) carbon footprint than conventional oil. Innovations like Petrobank Energy and Resources’ Toe-to-Heel Air Injection (THAI) method (controlled combustion softens gooey underground bitumen enough for it to flow to the surface, no upgrading necessary) are helping to shave the difference to within 5%, and eventually zero.

But let’s pretend Alberta’s oil sands developments vanish tomorrow. Here are some of the benefits critical to our economic security we’d miss out on: operations and capital spending exceeding $30 billion this year; capital investment of $218 billion over the next 25 years; $1.7 trillion contributed to GDP over the same period; plus roughly 590,000 Canadian (and 340,000 US) jobs will be created.

Not that we should overlook the fact our global economy is driven by carbon-based energy; witness the excitement in the world market over turmoil in the Middle East and Libya that is pushing up oil prices to appalling highs.

Oil and gas will be with us for some time yet, despite the wind turbines, solar cells and biofuel made from bison poop. Oil sands energy represents a secure and reliable supply. Perhaps, some day, the world will get the message.

Joe Terrett, Editor Comments? E-mail joe.terrett@plant.rogers.com.

Editorial Advisory Board: Robert Hattin, Hattin Holdings • Ron Harper, Cogent Power • Greg MacDonald, Wentworth International Services • Roy Verstraete, Anchor Danly

Vol. 70, No. 02, March/April, 2011 Publisher: Tim Dimopoulos 416-764-1499 tim.dimopoulos@rci.rogers.com Group Editorial Director: Lisa Wichmann 416 764-1491 lisa.wichmann@rci.rogers.com Editor: Joe Terrett 416-764-1546 joe.terrett@plant.rogers.com Contributing Editors: Ron Richardson, Steve Gahbauer Art Director: Kathy Smith 416-764-1542 kathy.smith@rci.rogers.com Junior Web Producer: Jessica Mirabelli 416-764-1316 jessica.mirabelli@rci.rogers.com District Sales Managers: Amanda Bottomley 647-339-1666 Amanda.bottomley@rci.rogers.com Catherine Martineau (Quebec) 647-988-5559 Catherine.martineau@rci.rogers.com Deborah St. Lawrence 416-319-3227 Deborah.stlawrence@rci.rogers.com

www.plant.ca

Derek Morrison 905-409-6976 Derek.morrison@rci.rogers.com Ilana Fawcett 416-829-1221 ilana.fawcett@rci.rogers.com Production Manager: Jennifer Reinhardt 416-764-3842 jennifer.reinhardt@rci.rogers.com Circulation Manager: Celia Ramnarine 416-764-1451 deokie.ramnarine@rci.rogers.com ROGERS BUSINESS & PROFESSIONAL PUBLISHING Senior Vice-President: John Milne Vice-President, Financial Publishing, Brand Extensions & Online Services: Paul Williams Director of Audience Development: Keith Fulford 416 764-3878, keith.fulford@rci.rogers.com Executive Publisher, Industrial Group: Tim Dimopoulos CORPORATE SALES General Manager, Corporate Sales: Sandra Parente 416 764-3818, sandra.parente@rci.rogers.com WEB General Manager, Online Operations: David Carmichael 416 764-3820, david.carmichael@rci.rogers.com RESEARCH Senior Director, Rogers Connect Market Research: Tricia Benn 416 764-3856, tricia.benn@rci.rogers.com

PHOTO: BRIC

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Features

>> OPERATIONS

10 Automation BRIC Engineered Systems Ltd. is a small company with big ideas about customized robotics for global customers.

11 Maintenance An oil-sampling program will help you get the timing of lube changes just right and save some maintenance dollars.

12 MORE MAINTENANCE Tips from global experts that will help you create a world-class maintenance organization.

>> MANAGEMENT

14 Marketing Avoid the price-cutting trap. Position your company by demonstrating how it will improve a customer’s performance. exporting Trade finance helps smooth out international transactions between export partners.

15 Finance The Canada Revenue Agency is keeping a sharp eye on trusts. Make sure yours is trustworthy enough to meet its goals and pass CRA scrutiny.

>> TRENDS

16 Automotive As Japan recovers from the March 11 disasters, auto parts makers have an opportunity to help Japanese OEMs stem parts shortages.

Energy Companies looking to invest in and develop Canada’s unconventional gas reserves need to look beyond the US for growth.

>> Sustainability

17 Accountablility Your sustainability strategy should include a report that shows accountability and drives better decision-making.

18 Green Manufacturing Developing a sustainability program may seem daunting, but it’s not. Nine questions will gauge your green levels.

>> INNOVATIONS

18 Leadership John Kao says Canada has all the ingredients to be a world-class innovator nation, it just needs a master chef to put them together.

19 Health & Safety AUTO21 research is placing digital workers into CAD/CAM environments to test workplace conditions for ergonomic issues.

>> TECHNOLOGY

20 PMTS/WMTS Preview SME shows in Alberta and Quebec will help manufacturers invest wisely in new technology.

Departments

4 Industry View 6 Events 8 Labour Relations 9 PLANT Pulse 21 Product Showcase 22 Postscript

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Departments

>> Industry View

>> Bulletins The Canadian Army has awarded a five-year, $22.3 million contract to Lockheed Martin Canada. The Ottawa-based security company will provide support services for its live-fire, battle field training systems that prepare soldiers for future combat missions.

H2O Innovation Inc., a Quebecbased wastewater systems company, has been awarded contracts worth $7.8 million to provide water treatment systems and equipment to power generation and industrial customers in Northern Africa, Russia, and North America. Manufacturing will be done at the company’s Ham-Nord, Que. and Minneapolis, Minn. plants.

BatHium Canada is expanding its Boucherville, Que. plant to meet growing demand for electric vehicle batteries. The manufacturer of lithium-metalpolymer batteries is investing $176 million in its facilities and adding 245 new jobs over five years to a current workforce of 67. The subsidiary of France’s Bolloré Group will ramp up annual production capacity to 15,000 batteries.

Lakeside Steel Inc. is adding thermal processing capabilities at its Welland, Ont. operations.

The manufacturer of oil country tubular goods (OCTG) said the $12 million plant will vertically integrate finished and upgraded tubular products in J, L, N and P grades, to address growing demand in North America.

Héroux-devtek scores $35M Landing gear deals

Domtar reduces freesheet production

LONGUEUIL, Que.: HérouxDevtek Inc.’s landing gear operation has won several contracts worth $35 million to manufacture components and assemblies for commercial and military aircraft.

The aerospace manufacturer, based in Longueuil, Que., will provide actuator assemblies supporting the Boeing Co.’s B-777 program for delivery in early 2013.

Orders from the US Air Force and US Navy are mainly for the F-15, F-16 and P-3 aircraft.

Deliveries will begin in 2012 and will be spread over a four-year period.

MONTREAL: Domtar Corp. is shutting down one of four paper machines at its Ashdown, Ark. pulp and paper mill.

The Montreal-based paper manufacturer said this reduces its annual uncoated freesheet paper production capacity by approximately 125,000 short tons.

The mill’s workforce will be reduced by approximately 110 employees, but it will continue to operate three fibre lines, a pulp dryer and three paper machines, and employ approximately 940 people.

Annual production will be approximately 810,000 metric tons of pulp and 780,000 short tons of paper.

(L-R) Francesco Profumo, rector of Politecnico di Torino; Sergio Marchionne, CEO of Fiat S.p.A. and Chrysler Group LLC; Alan Wildeman, president of the University of Windsor, at signing ceremony to launch a joint international degree program in Automotive Engineering in Turin, Italy.

PHOTO: CNW/UNVERSITY OF WINDSOR

Komet shifts to marketing and distribution

Joint Masters program targets automotive R&D

MONTREAL: Komet Manufacturers Inc. is making a strategic shift out of the manufacturing business and instead will subcontract the work to another manufacturer.

The Blainville, Que. company said despite developing new product lines such as bathroom vanity furniture and kitchen cabinetry, it has not been able to compensate for the loss of a major customer last year.

Komet specializes in designing and manufacturing bathroom furniture products marketed under the Aquadis brand, and it manufactured kitchen cabinets for builders and consumers.

Its manufacturing equipment has been sold to a specialized kitchen manufacturer for $350,000. Komet’s production will end by the end of April as the company focuses on marketing and distributing its products.

Komet did not say how many jobs will be affected.

WINDSOR, Ont.: The University of Windsor and Politecnico Di Torino in Italy have entered into a first-of-its-kind joint degree agreement that will see the two institutions of higher learning participate in a two-year Masters program working on cutting-edge research and development projects with Chrysler and Fiat.

Five University of Windsor students will spend their first year in Windsor, Ont., where they will study vehicle, virtual simulation, powertrain and manufacturing process management engineering.

Their second year will be spent in Turin, where students will take courses and work on a research and development project determined by Fiat, the student, and an academic advisor.

Five Italian students will spend their first year at their home university and a second year studying at the University of Windsor, and will complete a thesis at the University of Windsor-Chrysler Automotive Research and Development Centre.

At the end of the program, students will be ready to work in the global automotive industry, packing both a Masters of Applied Science degree from the University of Windsor and a Laurea Magistrale degree from Politecnico di Torino.

Chrysler and Fiat will support research projects, provide space, research tools, equipment and the personnel needed to supervise the graduate students’ work.

Candidates for the new degree will be selected by a committee on the basis of academic qualifications and suitability for the program, which begins in September.

$4.1M gas membrane Prosep system sold MONTREAL: ProSep Inc. has been awarded a $4.1 million contract to provide a gas membrane system to a large independent North-American customer.

The Montreal provider of process solutions to the oil and gas industry said an un-named customer will use the system for its operations in Texas.

This system, scheduled for delivery in the first half of 2012, will be used for enhanced oil recovery activities for a repeat customer’s operation in Texas.

The membrane equipment, designed to treat 60 MMscfd of natural gas reduces high levels of CO2 content, and will produce an upgraded stream for use in CO2 flooding associated with enhanced oil recovery activities.

>> PLANT Off-Site You manage expenditures to get the best value so when evaluating chilling systems consider that Berg Chilling ranked number 1 against its competitors in all criteria in an independent survey*.

Linda Duval takes PLANT on a cruise through Milford Sound, South Island in new Zealand. Linda is the vicepresident of MasterNet Ltd., in Mississauga, Ont.

• Product Quality • Environmental Impact • Reliability

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Trust Berg to make every dollar count.

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www.berg-group.com System Design | Installation | Service * Independent study: Rogers BPPG, Research Group

4 Canadian PLANT

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Digital photos should be 5x7 inches and 300 dpi. Send them to joe.terrett@plant.rogers.com.

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Departments

>> Industry View

Electric trains for Aussie cities

Davie Yards finds investors for RFP quest

BERLIN: Bombardier Transportation has received a $278 million order from the South Australian government for the supply and maintenance of 22 Bombardier 25kV 3 car electric trains.

LÉVIS, Que.: Davie Yards has its eye on federal shipbuilding contracts as it looks to exit credit protection with an exclusivity agreement involving Fincantieri – Cantieri Navali Italiani and DRS Technologies Canada.

Fincantierian Italian shipbuilding company with global operations, and DRS Technologies, a Finmeccanica company, will negotiate the potential acquisition of the Levis, Que. shipyard by an entity that will be majority owned by Fincantieri.

DRS Technologies Canada, a wholly owned subsidiary of DRS Technologies Inc. based in Carleton Place, Ont., is a developer and manufacturer of shipboard communication systems and surveillance sensors.

“In Fincantieri and DRS, Davie has found the industrial investors it was looking for, combining both the financial strength and the technical expertise,” said Davie president and CEO Gustav Johan Nydal.

Fincantieri and DRS will immediately join Davie’s efforts to respond to the request for proposal to become one of the two selected shipyards under the National Shipbuilding Procurement Strategy.

The federal government plan is to approve two shipyards, one for combat and one for non-combat vessels for a $35 billion replacement program that will run from now to 2028.

PHOTO: BOMBARDIER

Bombardier’s 25kV rail car destined for Australia.

The A-City vehicles will be built at Bombardier’s Dandenong (Victoria) and Maryborough (Queensland) manufacturing facilities.

The 240-seat train was designed specifically for Adelaide, South Australia’s capital, and will be the first rail vehicle in Australia to meet stringent new international crash standard specifications.

Berlin-based Bombardier Transportation is the rail arm of Bombardier Inc., based in Montreal.

Silfab, a Mississauga, Ont.-based subsidiary of v ertically integrated solar provider Silfab SpA (Italy), said the 5-megawatt system will use its SLA245M high-efficiency modules made from 60 mono-crystalline high efficiency silicon cells.

The solar farm, consisting of a combination of fixed mounted racks and single axis trackers, will be installed on Alderville-owned properties and will be operational

by November producing approximately 5.7 million kilowatt-hours. That’s the equivalent of more than 80,000 tons of avoided CO2 emissions during the lifetime of the facility.

The fully automated plant will employ 200 skilled workers at full capacity, making modules for rooftop and ground-mounted applications. The company said part of its production will be for solar companies wishing to enter the Ontario market.

Silfab to supply AFN solar farm MISSISSAUGA, Ont.: Silfab Ontario Inc. is launching its new photovoltaic module plant with a contract to supply and support 20,1410 ground-based modules with Alderville First Nation (AFN) near Cobourg, Ont.

>> Careers Jim Johnson Jr. has been appointed president of Osram Sylvania Ltd. in Mississauga, Ont. He’s responsible for the Canadian company’s sales, operations and support functions, including the trade, retail and automotive lighting sales channels and the Sylvania Lighting Services division. Previously, he was executive vice-president and general manager for global automotive lighting.

Cameco president Tim Gitzel adds CEO to his responsibilities at the Saskatoon-based uranium producer. He’s replacing the retiring Jerry Grandey. Gitzel joined Cameco in 2007 as senior vicepresident and COO and was promoted to president in May 2010.

Jim Johnson Jr.

Ryan Judge joins Intelligrated Canada Ltd. in Mississauga, Ont. as a sales account manager for the manufacturer of automated material Ryan Judge handling systems. Judge previously worked with Liftow Ltd., where he worked as territory manager.

Auto parts maker Martinrea International Inc. is undergoing a transition in its top executive ranks. Fred Jaekel has moved from the CEO post but remains as the chief technical officer. Nick Orlando, Martinrea’s president and CFO, has assumed the CEO role.

COM DEV International Ltd., a Cambridge, Ont. manufacturer of space hardware subsystems, appointed David Masotti to its board. Masotti currently serves as executive chairman of the life sciences, biodefence company Defyrus Inc. and as managing director of Tancho Innovation Capital.

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>> Events Supply Chain Canada SCL/CITA May 10-1, Toronto The Supply Chain & Logistics Association Canada (SCL) and Canadian Industrial Transportation Association (CITA) combine their annual conference and trade show. For supply chain managers, shippers, government, suppliers and academics in Canada’s supply chain sector.

Visit www.supplychaincanada.com.

PMDS 2011 SME May 17-19, Montreal PMDS (the Plant Management and Design Engineering Show) presented by the Society of Manufacturing Engineers (SME) is for Quebec industry, covering products and systems for plant and facility maintenance, plus equipment and systems design.

Visit www.pmds.ca.

Fugitive Emissions LDAR ISA May 17-19, New Orleans The 11th Annual ISA Fugitive Emissions – Leak detection and repair (LDAR) Symposium will host the Emissions Reduction Technology Forum focusing on technologies that reduce VOC emissions.

Visit www.isa.org/ldar.

Better Physical Asset Management C-MORE May 30-June 3, Toronto The Centre for Maintenance Organization & Reliability Engineering (C-MORE), presents “Better Physical Asset Management Initiatives That Work” covering leading-edge strategies. Visit http://cmore.mie.utoronto.ca.

Measure Up for Success 2011 AME/CME June 6-10, Calgary The Association for Manufacturing Excellence (AME) and Canadian Manufacturers & Exporters (CME) host this regional lean conference featuring six keynotes from business and lean leaders, 36 practitioner presentations and 15 workshops.

Visit www.ameconference.org/2011-calgary.

Western Manufacturing Technology Show SME June 14-16, Edmonton The Society of Manufacturing Engineers (SME) presents the Western Manufacturing Technology Show (WMTS), a showcase for manufacturers of products ranging from machine tools, welding equipment, design engineering and plant maintenance to process control and automation. Visit www.wmts.ca.

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Departments

>> Labour Relations

Lessons not learned from the bubble

by Ken Lewenza

I

n early March, Ford Motor Co. announced it had handsomely rewarded two of its top officers for the company’s turnaround with tens of millions of dollars.

For their efforts, Ford gave chief executive officer Alan Mulally $56.5 million in stock and executive chairman Bill Ford $42.4 million in shares. While Ford’s turnaround is great news for the auto industry, this announcement begs further reflection.

nation’s top paid CEOs pocketed an average of “ The $6.6 million during the darkest period of the recession... ” I, like many members of the Canadian Auto Workers (CAW) union and the public, reacted angrily to this news. Many of us find it obscene that any executive can take home many tens of millions of dollars in personal compensation as a result of the performance of an entire large corporation. There is no rationale for such excessive compensation, however great the individual’s talent. Indeed, this is an example of the greed and excess that

contributed to the bubble that preceded the financial collapse in the US and the resulting global recession.

Have we learned nothing from that experience?

While average working Canadians are still experiencing the lingering effects of the recession, top-level executives have barely felt the pinch – in fact, the 100 best-paid CEOs are as comfortable as ever. In 2009, this group enjoyed salaries

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155 times higher than average income earners.

A recent study by the Canadian Centre for Policy Alternatives entitled, Recession-Proof, Canada’s 100 best-paid CEOs (www.policyalternatives.ca) found that the nation’s top paid CEOs pocketed an average of $6.6 million during the darkest period of the recession – a stark contrast from the total average Canadian income of $42,988. But the CCPA says that huge number understates the real story. A change in corporate reporting was introduced in 2008, so now we only have a conservative statistical estimate of the stock options that make up about one third of a CEO’s 2009 pay. In fact, the public will never know how much most of these CEOs actually got paid.

And that’s only half the story. These CEOs are sitting on $1.3 billion of stock options they haven’t yet cashed. That’s about $2 in future income for every $1 they declared in 2009.

Mulally appears to be included in a group that has not been touched by the recession. These inflated compensation packages are particularly offensive when compared to the lived reality of workers employed by the corporation and the tens of thousands of workers who have been laid off by the company across North America.

Many sacrifices Of those still working – members of the CAW and our counterparts in the United Auto Workers union – Ford demanded many sacrifices. Adding to this outrage is the fact Ford will close its St. Thomas, Ont. facility later this year. So far in Canada Ford has approximately 1,300 workers on lay-off.

Autoworkers and their communities have experienced incredible loss, insecurity and belt-tightening in recent years. When Ford closes its St. Thomas plant later this year, another 1,300 hardworking families will be devastated.

It’s simply beyond me how Ford’s board of directors can pay out $56.5 million to one individual while the company is jeopardizing the future of thousands of Canadian families.

This specific example relates to the compensation of two officers at Ford Motor Co., yet it’s a situation that’s endemic to the corporate sector where greed and excess continue to trump common sense and humility, despite what recent events should have taught us. Those who lavish such compensation upon top executives should know better.

Ken Lewenza is the president of the Canadian Auto Workers union, which represents 225,000 workers across the country in 17 different sectors of the economy. E-mail cawcomm@caw.ca.

Comments? E-mail joe.terrett@ plant.rogers.com.

8 Canadian PLANT

March/April 2011

Economy << Departments

Industry drives economic growth

BY PLANT STAFF

A

s federal and provincial governments wind down stimulus spending and consumers moderate their spending, Canadian businesses are stepping up with investments in new plants and equipment and seeking new export opportunities.

Indeed, Canadian manufacturers scored solid sales gains in January as output from American plants powers the US recovery.

Statistics Canada reports sales blew past expectations for a 1% month-over-month gain in January, tallying $47.7 billion – a 4.5% increase. Adjusting for inflation, sales were ahead 5.5%, with 17 of 21 industries representing 87% of total manufacturing reporting positive results. Inventory-to-sales declined to 1.29 from 1.33 in December, its lowest level since July 2008. Unfilled orders increased 1.6% while new orders hit 8.6%.

And productivity improvements are on the horizon.

CIBC World Markets Inc. reports rising capital investments from the oil sands, utilities and manufacturers.

“By any measure, the current recovery in capital spending is impressive,” says Avery Shenfeld, chief economist at CIBC. “The real return on capital employed is rising and is now currently at just under 6% – a full point above its long term average, and return on equity is now above 12%.”

While the strong loonie is hurting manufacturers’ exports, Shenfeld says it’s also playing a role in spurring investment in the sector.

“We expect the loonie’s strength to persist over the longer term, which should help boost investments going forward in sectors that can remain competitive.”

Capacity utilization in the manufacturing sector is now at 81%, a record six points above that of the rest of the economy, and fast approaching pre-recession levels.

With improving capacity use and rates of return on capital approaching a 10-year high, he expects investment to rise strongly in 2011.

TD Economics, in its quarterly forecast, noted corporate profits will rise “at a healthy clip” and balance sheets are strong. “Furthermore, tax changes by the federal and provincial governments will provide further incentives for business investment over the long term.”

Canadian manufacturers are benefiting from a resurgence in the US economy driven by industry. TD Economics notes US manufacturing makes up about 12% of US economic output, but it has “bounced back with a vengeance,” contributing more than 30% of the economy’s growth since the recession ended.

Recent data suggest that manufacturing momentum may slow in the months ahead, but the report says this is likely to be a short-lived. With low interest rates and pent up demand supporting demand for manufactured goods at home, and a continued global recovery supporting exports, TD Economics says manufacturing is likely to remain a key source of economic growth in 2011.

Shenfeld said a strong Canadian dollar will remain a challenge for exporters, but CIBC expects the improving global economy to generate increased opportunities over the next few years.

However, small and medium-sized enterprises (SMEs) looking to grow need to be more engaged with exporting. CIBC notes just 9% are exporting and some of those only sporadically, and that number appears to be declining, despite globalization.

It says strong growth in emerging markets and increased opportunities to participate in global supply chains offers an opportunity to reverse this trend.

www.plant.ca

ECONOMIC DEVELOPMENTS AND TRENDS PRICES FOR INDUSTRIAL GOODS INCREASE index (2002=100) 125 Industrial Product Price Index (IPPI) 120 IPPI excluding petroleum and coal products

REAL GROSS DOMESTIC PRODUCT billions of chained (2002) dollars 1,270 1,260 1,250

All industries

1,240

115

1,230

110

1,220

105

1,210 1,200

100

1,190 1,180

J

J 2008

J 2009

2010

J 2011

GDP rose 0.5% in January at about the same pace as in December.

Manufacturing was the main driver, up 2.8% following a 0.8% increase the previous month. The largest increases came from fabricated metal products, vehicles and auto parts.

SOURCE: STATISTICS CANADA MANUFACTURING SALES

$ billions 56 54 52 50 48 46 44 42 40 38 36 34 J

seasonally adjusted 2002 Constant dollars Current dollars

95

F

J 2008

J 2009

JF 2011

2010

The Industrial Product Price Index was up 0.7% in February. Petroleum and coal products registered a 3% increase for the month, followed by primary metals at 2.5%. Vehicles and other transportation moderated the gains with a 0.4% decline.

SOURCE: STATISTICS CANADA REAL ECONOMIC GROWTH percentage point contribution to annual real GDP growth 10 fcst

8 6 4 2 0 -2 -4

Businesses and exports Governments and households

-6 J 2008

J 2009

2010

J 2011

January’s month-over-month sales gain of 4.5% was fuelled by a 26% jump in vehicles and a 23.2% increase in auto parts sales. Aerospace products and parts were up 25.2%. Machinery sales were up 6.7% and food rose 2.2%.

SOURCE: STATISTICS CANADA

-8

2000

2004

2008

2012

US demand for Canadian manufactured goods, such as automobiles and industrial products, is likely to extend throughout the 2011-12 forecast period, tempered only in part by the high Canadian dollar.

SOURCE: TD ECONOMICS

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04/10/2007 01:02:59 PM Canadian PLANT 9

Operations

>> Automation

By Noelle Dickey

W

hether you want to strip coatings off of an aircraft, pick and place small parts or move a heavy load, BRIC Engineered Systems Ltd. has an arsenal of automated robotic capabilities to customize a solution to even the most intricate specifications.

And it is selling these solutions to customers who are for the most part outside Canada, not an easy feat for a small company with sales between $5 million and $10 million a year.

The Oshawa, Ont.-based company got its start in 1989 when owners, Isabelle Roberts, a computer engineer, and her husband Ralph Roberts, who specializes in process and motion control, designed and built an automated guided vehicle for moving materials around a warehouse. But they were ahead of their time.

“We talked to forklift companies and we did all the right things, the market just wasn’t ready,” says Isabelle Roberts.

“It was scary to some people back then.”

Although that concept didn’t fly, they used their expertise in motion control and automation to create solutions for the chemical, plastics and aerospace industries.

“I know that’s a broad range, but I think that’s one of the reasons we’re still around. We didn’t focus on automotive. In fact, we tried to stay away from it because we felt at the time it was a crowded market and there were other opportunities,” says Roberts.

Today, BRIC employs 40 people and its large-scale gantry robotic systems and automated workcells, ranging in price from $50,000 to $400,000, provide solutions for a broad range of industrial and defense applications, such as coating and coating removal, specialized welding, assembly, processing and material handling.

Robust robotics BRIC’s standard line of heavy duty gantry robot systems are servo-based electro-mechanical systems that consist of a combination of COTS components, and motion controllers, which are currently supplied by Parker Hannifen Canada – a recent partnership that allows BRIC to supply more modular solutions, quicker delivery and improved support worldwide.

BRIC’s SuperARM, StrongARM and the SnakeARM robots are designed to automate labour-intensive loading and off-loading processes. The SuperARM handles a wide range of parts of various sizes, while the StrongARM handles heavy loads using a thrust bearing technology, and the SnakeARM is designed for inspecting and coating large items, ideal for rail, automotive and aerospace industries.

For manufacturers with small parts, BRIC’s Flexible Intelligent System (FIS) is a pick and place technology capable of assembly, processing, unscrambling and sorting at high speed.

The company also designed what it calls the Mantis Robot, which integrates CO2 or fibre lasers for coating and coat-

10 Canadian PLANT

Robust robotics BRIC takes custom

automation to global markets

plastic media,” says Gerard Mongelli, executive director of technical and logistics support for Concurrent Technologies.

“We wanted to reduce the environmental burden on the air force depots by finding an alternative technology that could meet the production requirements and be environmentally sound.”

The Mantis can also be used in the marine industry to strip coatings from ships and on commercial aircraft, two industries BRIC is currently targeting.

One of BRIC’s only Canadian clients is Kingston, Ont.-based G.S. Manufacturing, a supplier of aluminum laundry carts for hospitals and institutions.

“BRIC supplied us with an ergonomically designed welding table that bends the rails of our carts,” says Cathy Ballow, health and safety manager at G.S. Manufacturing. “It was done manually before and we were getting a lot of shoulder injuries due to the repetitive nature of the bending process.”

BRIC’s technology is also capable testing and packaging live ammunition, degating plastic parts and even automating pipe and tube handling for the mining and oil and gas industries.

The export business

Ralph and Isabella Roberts with prototypes used to design an automated system for coating or de-coating aircraft.

photo: Noelle Dickey

ing removal, cutting, welding or marking. Over the past few years BRIC has been working with the US Department of Defense in testing, evaluating and implementing a laser de-coating system to remove paint and other coatings from aircraft parts and components, which was traditionally a manually intensive process using harsh chemicals that created hazardous waste.

The challenge with the CO2 laser is getting the beam to the end of the robot arm. “To do that you have to use mirrors and tubing to create the beam delivery system. The mirrors must be aligned properly to send the beam and direct it through the joints of the arm to the work piece,” she says.

Aptly named because the robotic arm resembles that of a praying mantis, this system also incorporates BRIC’s Contour Following Technology (CFT), a vision capability using sensors and integrated software. This enables the robot to follow the surface of a part without knowing anything about it and maintain a certain distance, while remaining perpendicular to it.

“Our clients have many different parts.

It wouldn’t be feasible to reprogram each one,” says Roberts.

For all of its products, BRIC uses motion controllers with an open architecture system for easy integration and programming. Off-the-shelf robots such as those made by Fanuc and ABB have closed controllers and are limited in terms of what you can do if you need access to the kinematics and software.

Concurrent Technologies Corp., a Fairborn, Ohio contractor for the US Air Force, is using two BRIC systems with its contour following technology.

For one of the systems, BRIC reengineered a gantry robot that the US Air Force was no longer using. “We removed all of the electronics and some of the mechanical components and replaced them, and added our contour following subsystem,” says Roberts.

The second system is a Mantis Robot.

Both are being used to remove coatings from F-16, B-52 and KC-135 military aircrafts.

“Traditionally, de-coating was a manual process using methylene-chloride or

The majority of BRIC’s technology and products are exported to the US, Brazil and abroad, and for a small SME that’s not an easy feat.

“When you’re a small business there’s limited resources and the people managing the business tend to wear too many hats,” says Roberts. “But one of the key things that people often overlook or not pay enough attention to is culture.”

Understanding how people in different geographical areas do business is key.

BRIC sets up partnerships with local companies in the target market or hires someone from the area to call on clients.

“I think it’s important. If someone is buying from you, they need to trust that you will deliver. That level of trust doesn’t come easily and needs to be taken seriously,” says Roberts.

For BRIC, the US market was the most difficult to break into. “Everyone wants to be in that market, the expectations are high and you’re competing with the best in the world,” she says. But generally, Canada is highly regarded around the world. “When you present a product that’s made in Canada, often the reaction we get is ‘well it must be good.’”

For new companies looking to export, Roberts says one of the biggest mistakes is not understanding how long it takes and how much it will cost to break into new export markets. “It doesn’t just happen over night. It’s a long process and it’s costly. As a general rule of thumb you should be prepared to invest two to three years before you might even get your first sale. When you’re a small company that is a long time.”

Over the past few years, BRIC has invested heavily in R&D and worked in partnership with the University of Waterloo and University of Ontario Institute of Technology (UOIT).

“You have to focus on being ahead of the competition,” says Roberts. “Patents

March/April 2011

Maintenance << Operations are important in certain cases, but I don’t think they’re the complete answer. As long as you’re leading with new innovations and technologies, and always looking to improve your products and services, those that are copying you will always be one step behind.”

That said, BRIC recently announced the launch of its newest product line, the BOT Links R-Series, S-Series and Optimum Series. All of them include the Contour Following Technology, and feature a new open architecture, composite-based design. The R-Series is designed for long reach application, ideal for coating and de-coating large aircraft. It’s capable of reaching up to 6.1 metres and handles payloads up to 30 kilograms.

The S-Series are for high-speed applications often found in the packaging industry. It can reach speeds of 150 parts per minute and higher with a smaller reach of 1.5 metres and handles light payloads of under 1 kilogram. And the Optimum Series falls between the R- and S-Series, developed to compete directly with current COTS robots.

“This new line of BOT Links Robots offers customers the open architecture, flexibility and performance that has been missing from the robot industry,” says Roberts. “The BRIC BOT Links robots are designed specifically for non-automotive applications, filling a niche market that has historically been ignored by the large robot manufacturers.”

In addition, BRIC has a partnership with a UK-based company called Midas NDT, through which it provides automated non-destructive testing and inspection (NDI) equipment. The BOT Links line will also offer clients the ability to implement robot-based NDI to automate inspection processes.

A laser de-coating system in action.

Photo: BRIC

Demand for industrial robots and advanced automation is in its ascendency – the International Federation of Robots (IFR) has forecast that industrial robot sales will continue to increase over the next decade by an average of 10% annually. With such diverse technology and flexible programming, BRIC intends to take advantage of the upswing.

Noelle Dickey is a Toronto-based business writer and editor, and former features editor of PLANT.

Oil Sampling It’s all about the timing

E

veryone knows how important oil changes are. Lubricants and the additives they contain deteriorate with time due to friction heat, operating severity, evaporative hydrolysis and contamination. So when is the best time to change lubes? Too often results in wasted effort and lubricant. And too much lubrication is as harmful as too little. Overstuffed gearboxes and bearing housings cause churning, which ruins components as quickly as lube starvation.

five plants. (These costs do not include labour, additional material or risk-based costs.) The annual cost for oil sampling is $3,600 per location, or $18,000 for all five plants (administration costs not included.)

That’s a $27,900 cost difference per location, or $139,000 for all five plants.

Over a five-year period, this customer could save $697,500 by switching from annual oil changes to oil sampling, assuming that there will be no increas-

Use sampling to get oil change frequency right.

PHOTO: iSTOCKPHOTO

gearboxes and bearing housings “ Overstuffed cause churning, which ruins components as quickly as lube starvation... ” An oil-sampling program will help you get the timing just right. But it’s much more than purchasing a sample bottle, filling it with oil and sending it to a laboratory for analysis. Yet many companies waste thousands of dollars doing just that, warns Darren German, the hydraulics business unit service manager for Bosch Rexroth Canada in Welland, Ont. German, who has 20 years of hydraulic service experience, contends basing maintenance decisions on properly interpreted and understood analysis reports is one of the best return-on-investment (ROI) predictive maintenance practices available when executed in an accurate, timely and consistent manner.

He offers this customer example: the company has five plant locations with 15 machines per plant, all heavily relying on the use of hydraulics. The machines operate 24/7 and all power units are sampled once a year to satisfy quality requirements. But the customer did not understand how to read the oil analysis reports and changed the oil in all units annually, whether it needed to be changed or not.

The annual cost of oil changes is $31,500 per location, or $157,500 for all

es in sample package cost and that no oil changes occurred.

Start logging those savings by figuring out how much an oil sampling program will cost, the payback, what tools are needed, what training is required, and what the program is to accomplish. German notes it’s also important to understand that contaminants (dirt and water) can be built in by the manufacturer/supplier and/or introduced by the service process.

Here are some sampling tips: • Start slowly and build the program.

• Send a sample of new oil to the lab before starting the program to establish baseline chemistry for reference.

• Use transfer carts with appropriate filtration for fill-ups.

• Eliminate tramp oil from repairs and filter carts.

• Respond promptly to clogged filter indicators.

• Change breathers as part of preventive maintenance.

• Where possible standardize on oil to avoid cross-contamination.

• Pay meticulous attention to methods and locations of oil storage.

• Always sample prior to fill-ups.

Information in this article by Steve Gahbaver is based on a presentation made by Darren German at a MainTrain maintenance conference, convened by the Plant Engineering and Maintenance Association of Canada (PEMAC).

>> TECH TIP

Optimize your seal efficiency Pinpointing problems and taking quick and appropriate remedial action optimizes seal performance and seal life. Extend the life of any type of seal by checking these conditions: • Seal wear • Proper storage in 40% to 70% humidity area • Intact packaging • Correct installation tools used • Installation area clean and free of grit • Correct seal for the required speed • Operating temperature against lip material specifications • Compatibility of lubricant with seal lip material • Shaft hardened to Rockwell C 30 or harder • Range of tolerance of shaft diameter

• Shaft-to-bore misalignment; must be within 0.25 mm • Dynamic run-out; must be within 0.25 mm Vent equipment to the atmosphere to prevent pressure build-up. In case of high-seal wear, look for the possible cause to come up with the right remedy. Inspect the seal before it’s removed; wipe the area clean; rotate the shaft to assess misalignment; check seal type and materials; and look for excessive lip wear.

When the seal is removed, check for rough bore surface, shaft cleanliness, shaft damage, shaft corrosion or discoloration, and flaws or voids in the bore. These will influence seal performance.

Source: Mark Adams, business development manager with SKF US Inc.

Comments? E-mail joe.terrett@ plant.rogers.com.

www.plant.ca

Canadian PLANT 11

Operations

>>

Maintenance

Is your plant world class?

IMEC offers maintenance tips from global experts

By Steve Gahbauer

M

aintenance professionals, practitioners, scientists and speakers from around the world gather in Toronto each year for an exchange of ideas and to report on research and effective maintenance practices. The International Maintenance Excellence Conference (IMEC), co-organized by the Centre for Maintenance Optimization and Reliability Engineering (C-MORE) of the University of Toronto, and Applied Technology Publications (US), encourages collaboration between industry and research.

The following ideas presented at the sixth IMEC offer a selection of take-aways from the sessions.

Eliminating waste. Anders Lif, the global director for product and industry marketing of Sweden-based ISF AB and a regular presenter at IMEC, is passionate about eliminating wasteful practices that cost manufacturing and processing plants billions of dollars in lost time each year.

Says Lif: “The idea is to solve the problem before it turns into a full-scale disaster. By feeding your Enterprise Asset Management (EAM) system with information, such as production events, meantime between failure and equipment condition, you can react instantly. All information is gathered in real-time, avoiding costly time lags.”

Organizations could share inventory between similar plants. For this to work, a common naming standard would have to be developed. A shared master data would greatly benefit several locations, resulting in greater availability of spare parts and a reduction in tied-up capital.

A winning maintenance strategy. Guy Delahay, the founder of Holland’s Mainnovation and a principal proponent of value-driven maintenance (VDM), has some workable ideas on how to win the maintenance game.

An important step is aligning VDM with other running initiatives, such as reliability-centred maintenance (RCM), total productive maintenance (TPM), and lean maintenance efforts. Bear in mind that RCM is a very structured approach to find the most effective preven-

Putting some old fashioned elbow grease into machinery maintenance.

Photo: istockphoto

tive maintenance action for an asset. Thus, reliability engineering is a crucial competence in any VDM improvement agenda.

Driving VDM TPM is useful to understand production output and aligning operations and maintenance. However, he warns “zero defects” is not necessarily a logical goal anymore.

He says manufacturing techniques have evolved and improved over the last five decades. Now there is Toyota’s total production system (TPS), which combines TPM with Six Sigma, kaizen and other techniques. “Lean” is about

Standards

Application Tools

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| Education & Training

reducing waste, reducing redundancies and eliminating non-value-adding activities. But what is and what is not value-adding to maintenance? Here, VDM provides a framework for finding solutions. For a winning maintenance strategy you have to know your dominant value driver, understand how good you are and where to improve, use technology and innovation, and measure your performance continuously.

World-class reliability. Klaus Blache, associate director of the Reliability and Maintainability Center, and research professor at the College of Engineering, University of Tennessee, says what the best plants have in common is standardization, lean maintenance, TPM, Six Sigma, kaizen and 5S. What better plants have in common is numerous small teams on the plant floor wanting to make a difference and being given an opportunity to achieve it.

Create the condition that enables excellence. Live the core values. There are many small improvements happening at varying intervals that are leads to learning. In North America we say that new equipment performs at its best when acquired, and over time performance will degrade. In Japan, the thinking is different: at acquisition, new equipment performs at its worst. Work needs to be done to improve its performance dramatically.

Blache maintains that excellence is a culture value.

Benchmarking, flexibility, openness to new ideas, continuous improvement, meeting customer requirements, minimizing the seven wastes in all parts of the business are all good things. But to derive benefits from them requires positive and cooperative employees.

Optimizing performance. Dr. Andrew Jardine, director of the Centre for Maintenance Optimization and Reliability Engineering (C-MORE) at the University of Toronto and the instigator of IMEC, is a strong believer in evidence-based asset management (EBAM) and the role knowledge plays in optimizing maintenance performance.

EBAM presents both challenges – data is limited – and opportunities (taking advantage of tacit knowledge and combining it with hard data).

The best example of this is condition-based monitoring via a predictive maintenance program. However, condition monitoring is not really a precise science, Jardine is quick to point out. There is plenty of data, but he questions how much of it is really informative.

He cites oil analysis as a classical example. It’s simple to understand, but there are limitations: the questions of which measurements are meaningful, what are the optimal limits, how does age affect the readings, and how reliable are predictions? What are the real consequences of failure?

A useful tool is the EXAKT software for conditionbased maintenance optimization (developed by Jardine et al), which produces charts for optimal maintenance decision-making.

What does it take to become a world-class maintenance organization? A plenary session offered these points: make smart decisions; communicate smart information effectively to stakeholders; understand how assets function and eventually fail; make maximum use of information technology; keep people informed; encourage buy-in; keep employees smiling and contributing suggestions; take those ideas seriously and implement the most promising ones; and work as a team every day.

Steve Gahbauer, an engineer and Toronto-based freelance writer, is the former engineering editor of Canadian PLANT. E-mail gahbauer@rogers.com.

12 Canadian PLANT

March/April 2011

The Truth About Compressed Air! If you think compressed air is too expensive and noisy - read this. The facts will surprise you!

Compare these Blowoffs

Facts about Blowers

There are a variety of ways to blow the water from the bottles shown in the photo below, but which method is best? To decide, we ran a comparison test on the same application using four different blowoff methods: drilled pipe, flat air nozzles, Super Air Knife (each using compressed air as a power source), and a blower supplied air knife (using an electric motor as a power source). Each system consisted of two twelve inch long air knives. The following comparison proves that the EXAIR Super Air Knife is the best choice for your blowoff, cooling or drying application.

Energy conscious plants might think a blower to be a better choice due to its slightly lower electrical consumption compared to a compressor. In reality, a blower is an expensive capital expenditure that requires frequent downtime and costly maintenance of filters, belts and bearings.

Here are some important facts:

The goal for each of the blowoff choices was to use the least amount of air possible to get the job done (lowest energy and noise level). The compressed air pressure required was 60 PSIG which provided adequate velocity to blow the water off. The blower used had a ten horsepower motor and was a centrifugal type blower at 18,000 RPM. The table at the bottom of the page summarizes the overall performance. Since your actual part may have an odd configuration, holes or sharp edges, we took sound level measurements in free air (no impinging surface).

Filters must be replaced every one to three months.

Belts must be replaced every three to six months.

Typical bearing replacement is at least once a year at a cost near $1000.

Drilled Pipe

Blower Air Knife

This common blowoff is very inexpensive and easy to make. For this test, we used (2) drilled pipes, each with (25) 1/16" diameter holes on 1/2" centers.

As shown in the test results below, the drilled pipe performed poorly. The initial cost of the drilled pipe is overshadowed by its high energy use. The holes are easily blocked and the noise level is excessive - both of which violate OSHA requirements. Velocity across the entire length was very inconsistent with spikes of air and numerous dead spots.

The blower proved to be an expensive, noisy option. As noted below, the purchase price is high. Operating cost was considerably lower than the drilled pipe and flat air nozzle, but was comparable to EXAIR’s Super Air Knife. The large blower with its two 3" (8cm) diameter hoses requires significant mounting space compared to the others. Noise level was high at 90 dBA. There was no option for cycling it on and off to conserve energy like the other blowoffs. Costly bearing and filter maintenance along with downtime were also negative factors.

Flat Air Nozzles

EXAIR Super Air Knife

As shown below, this inexpensive air nozzle was the worst performer. It is available in plastic, aluminum and stainless steel from several manufacturers.

The flat air nozzle provides some entrainment, but suffers from many of the same problems as the drilled pipe. Operating cost and noise level are both high. Some manufacturers offer flat air nozzles where the holes can be blocked - an OSHA violation. Velocity was inconsistent with spikes of air.

The Super Air Knife did an exceptional job of removing the moisture on one pass due to the uniformity of the laminar airflow. The sound level was extremely low. For this application, energy use was slightly higher than the blower but can be less than the blower if cycling on and off is possible. Safe operation is not an issue since the Super Air Knife can not be deadended. Maintenance costs are low since there are no moving parts to wear out.

• Blower bearings wear out quickly due to the high speeds (17-20,000 RPM) required to generate effective airflows.

• Poorly designed seals that allow dirt and moisture infiltration and environments above 125°F decrease the one year bearing life.

• Many bearings can not be replaced in the field, resulting in downtime to send the assembly back to the manufacturer.

Blowers take up a lot of space and often produce sound levels that exceed OSHA noise level exposure requirements. Air volume and velocity are often difficult to control since mechanical adjustments are required.

To discuss an application, contact:

EXAIR Corporation 11510 Goldcoast Drive Cincinnati, Ohio 45249-1621 (800) 903-9247 Fax: (513) 671-3363 email: techelp@exair.com www.exair.com/18/423.htm

The Super Air Knife is the low cost way to blowoff, dry, clean and cool.

Blowoff Comparison Comp. Air

Sound Level dBA

Annual Purchase Approx. Annual First Year Electrical Maintenance Cost Cost Price Cost*

Type of blowoff

PSIG

BAR

SCFM

SLPM

Horsepower Required

Drilled Pipes

60

4.1

174

4,924

35

91

$50

$4,508

$920

$5,478

Flat Air Nozzles

60

4.1

257

7,273

51

102

$168

$6,569

$1,450

$8,187

Blower Air Knife

3

0.2

N/A

N/A

10

90

$5,500

$1,288

$1,500

$8,288

Super Air Knife

60

4.1

55

1,557

11

69

$494

$1,417

$300

$2,211

* Based on national average electricity cost of 8.3 cents per kWh. Annual cost reflects 40 hours per week, 52 weeks per year.

Prices shown are U.S. Dollars.

Management

>> Finance

>> Marketing

Beat the low price blues It’s all in your positioning

Do you trust your family trust?

How to ensure it passes CRA scrutiny

By Andrew Shedden

A

re you singing the low price blues?

Many manufacturers sell and market themselves into the pricecutting trap because they see it as the only way to differentiate their offerings from those of their competitors.

How do you know if you are poorly positioned? You’re likely selling at a low level to purchasing agents or junior buyers, cutting into margins to stay afloat and struggling to generate interest in your products. Poor positioning comes from being too focused on things other than measurable business results. Here are some examples: • Our drill press was voted best looking at the World of Drill Presses show in Las Vegas last year.

• 1,325 precisely machined parts; over 432,317 drill bits in our climate controlled warehouse.

• We are a family-based drill press business with family values. Our staff has more than 325 years of collected experience.

A better strategy is to communicate how your company and products help customers improve performance by: identifying a target market; simply stating the benefits that will flow from doing business with you; describing the product or service you offer; and being of value.

Start by crafting a powerful and simple positioning statement that answers the following questions and use it as the key message in all of your marketing and selling practices: Who are you? What do you do? Why does it matter? Here’s an example: “ABC’s unique drill press program helps aerospace manufacturers reduce waste by a minimum of 37%.”

Be a value supplier, not a price chopper. Reduce the downward pressure on your margins by communicating with clarity how your solution helps customers increase performance.

Andrew Shedden is the president of Broadfield Communications, an industrial marketing consulting firm.

Call (800) 353-4447. Visit http://www. broadfieldcommunications.com/plant. htm for the Seven Steps to Manufacturing Profits special report.

Comments? E-mail joe.terrett@ plant.rogers.com.

14 Canadian PLANT

By Bruce Ball

and common shares of the new company. As the owner, you hold the voting preferred shares and control of the company while your beneficiaries hold the common or growth shares. All future growth accrues to the common shares, held in trust.

When the common shares are sold, the capital gain is allocated to the beneficiaries. Since there is an enhanced capital gains exemption available on the sale of shares of privately owned Canadian small businesses, each beneficiary can

• Where trust income has been allocated to beneficiaries, was the income actually paid; or is there any owners of manufacturing a genuine obligation to pay that companies rely on family trusts income to a particular beneficiary? to achieve a variety of financial The CRA will review documentation to and tax goals. In fact, since trusts have substantiate payments. Documents may become so popular, the Canada Revenue include trustee resolutions that allocate Agency (CRA) is increasingly scrutinizthe trust’s income, proof of payment for ing them and penalizing or disallowing income paid during the year and promisthose that aren’t properly established sory notes or other evidence that the and maintained. If you’ve already trust has made the income payable to established one, be sure to review its specific beneficiaries. If these documents “trustworthiness” before the CRA does. are not available or are not adequate, the income may still belong to the trust and will be taxed at top rates.

• Where trustees make payments to third parties, did they benefit the beneficiary?

Another way to pay income to a beneficiary is to make payments to third parties for their benefit. The CRA wants to ensure funds paid by the trustees are benefiting the beneficiaries and not someone else, so it will want to see the documentation of payments and evidence they benefit a particular beneficiary. If, for example, a trustee is the parent of a child beneficiary and the parent is reimbursed for expenses The Canada Revenue Agency will be taking a close look at your “trust of the living.” photo: IstockPhoto incurred on behalf of the child, there should be shelter up to $750,000 of the gain if the expense receipts to prove the funds If you’re contemplating a trust, there are conditions for the exemption are met. were not spent for the parent’s benefit. a number of factors to keep in mind to Inter-vivos trusts must calculate The CRA will also be reviewing ensure it achieves your objectives while income, file a tax return and pay taxes. trust records to determine whether meeting the government’s expectations.

Since trust income can be allocated to income has been calculated and First some background. Inter-vivos beneficiaries and taxed in their hands, reported properly. Auditors will expect trusts or “trusts of the living” transfer the this arrangement produces most of the to see relevant bank and investment benefits of owning assets (such as shares tax benefits – and receives most of the accounts, and appropriate maintenance of a corporation, a building or land) to focus of CRA audits. of records. others while retaining control of them.

The CRA, not fond of income splitting Having the necessary records and Business owners often use trusts to because it reduces government revenues, strategy in place will ensure your family assist with managing assets, succession looks at three key issues: trust stands up to CRA scruntiny. After planning, optimizing tax exemptions, • Has the trust been properly all, you need to be able to trust that your reducing probate fees, income splitting formed? The CRA may request the family trust will achieve your goals. with family members, providing for disoriginal signed trust document, includabled family members, asset protection, ing a description of the beneficiaries Bruce Ball is the national tax partner charitable gifting and supporting a will. and the settled property. A trust set up of BDO Canada LLP (www.bdo.ca) and For example, trusts used in an estate by a lawyer shouldn’t be a concern. The co-author of BDO’s Guide to the Famfreeze will allow future growth in the CRA will also expect to see evidence of ily Business. Call (416) 865-0111 or value of your company to accrue to bentrustee decisions, such as minutes. If e-mail bball@bdo.ca. eficiaries while you retain control. One the CRA determines the trust was not way to accomplish this is to transfer the formed properly, there may be adverse Comments? E-mail joe.terrett@ shares of the corporation to a new holdtax consequences. plant.rogers.com. ing company in exchange for preferred

M

March/April 2011

Exporting << Management

Trade finance: Smooth out potential bumps

By Mark Drake

“M

oney makes the world go round,” sings the emcee in Cabaret, but the “clinking, clanking sound” of coins dropping into the cash box is not quite so evident to international traders. The financial crisis made money tighter, loans from banks harder to obtain, credit more strictly controlled and currencies more volatile.

Canadians know this only too well with a dollar hovering just above or below par with the US greenback. Not so long ago it was a “very competitive” 65 cents. And technology is changing the way in which trade finance is conducted.

As every salesman knows, a sale is only completed when payment is received.

Trade finance aims to facilitate payments between partners, minimize risk and smooth out the challenges of international transactions – especially those beyond the US border. They include: • Currency risk. Most transactions are handled in US dollars or euros. Forward buying or selling mitigates the risk of significant fluctuation.

• Cash flow. Extended credit terms are usually involved in the export process, and there may also be pre-production and pre-shipment costs such as raw materials and subassemblies.

• Distance. Seller and buyer may be separated by geographic distance, and by less tangible differences related to language, currencies, business practices and social customs.

Banks and other institutions offer a range of mechanisms to help buyers and sellers bridge these gaps and complete transactions effectively through the provision of finance, risk mitigation and information. These mechanisms include the following:

Banks and other institutions offer a range of mechanisms to help “ buyers and sellers bridge these gaps and complete transactions … ” • Financing. It may be required at different stages in the export process from pre-production to payment after delivery.

When banks are unable to provide it, sellers use export credit agencies (ECAs) such as Export Development Canada (www.edc.ca) or Northstar Trade Finance (www.northstar.ca).

• Risk mitigation. ECAs also offer a range of related products including insurance of foreign receivables, bonds and guarantees. They will cover commercial risks (the importer goes bankrupt), bank risk (the bank goes under) and sovereign risk (the country is in trouble). EDC has an excellent reputation for competitive products, and it will cover currency risk.

Banks also work extensively in this area, primarily by processing and guaranteeing payments with standard export documentation such as letters of credit.

• Information. Tracking orders, shipments and payments is much easier and quicker with the current tools available online.

So how does the international trader get paid and limit risk?

Transactions in Canada, the US and the EU will usually be with an open account.

This requires trust that has been built up through long-term relationships. It’s obviously risky with unknown clients and unstable countries.

Documentary collection involves a bank paying the exporter for the goods once the agreed documents (such as a shipping note) are presented. The rules for international transactions are set out by the International Chamber of Commerce in Paris (www.iccwbo.org). The ICC is

also responsible for INCO terms – rules (reviewed every 10 years) covering when details such as title and insurance risk pass from seller to buyer. INCO terms 2010 went into effect in January. For more information link to www.chamber.ca.

A documentary letter of credit (LC) provides additional security as the bank checks that the exporter has complied with all terms such as credit, insurance and transfer of title. Careful completion of documents is paramount, and horror stories of delays due to inaccuracy are legion.

Confirmed LC is similar to the documentary LC, but a bank known to or at least trusted by the exporter (probably in the home country) “confirms” that it will pay the exporter.

Such arrangements may be at “sight” (payment when the documents are presented) or – more likely – they’re on agreed credit terms of 30, 60 or 120 days.

These terms likewise apply from when

documents are presented or when the goods are shipped.

Bonds and guarantees are required for larger capital projects and involve performance guarantees with penalties for failure. Medium and long-term financing can also be arranged through buyer or seller credits, forfeiting, countertrade or leasing, and there’s information on the web sites already noted from banks, ECAs and international financial institutions (just Google IFIs). Also check out www.gecapitalsolutions.ca and www.upscapital.com.

A thorough knowledge of the mechanics of trade finance (www.fitt.ca) gives international traders an important competitive advantage in a vital area of business development. Those who take full advantage will be the first to hear that clinking, clanking sound.

Mark Drake is former president of Electrovert Ltd. and the Canadian Exporters’ Association. E-mail corsley@videotron.ca.

Comments? E-mail joe.terrett@ plant.rogers.com.

More exporting to emerging markets OTTAWA: More Canadian exporters are looking beyond North America for business. Export Development Canada (EDC) helped develop $84.6 billion worth of business volume last year, of which a record $24.7 billion involved emerging markets.

The federal export credit agency reports its products, services and matchmaking expertise in those markets rose 32%, with China, Brazil and India leading the way.

Brazil, Russia, India, China and Mexico accounted for $11.4 billion of the volume and EDC-supported trade to Asia increased 21%, which the agency said indicates a much higher penetration into a traditionally challenging market for Canadian companies, but one that’s expected to lead world growth.

EDC’s Canadian direct investment abroad (CDIA) reached a total of $4.7 billion, a 12% increase over 2009. The number of CDIA transactions reached 573, which is 79 more than last year. CDIA transactions include loans to help companies open facilities in new markets or participate in joint ventures, as well as insurance for Canadian-owned foreign affiliates.

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Canadian PLANT 15

Trends

>> Automotive

Opportunities for auto parts As Japan recovers, focus on changes to supply chains

By Joe Terrett, Editor

T

he 9.0-magnitude earthquake, tsunami and damage to the Fukushima Dai-Ichi nuclear plant in Japan will likely have an impact on how automakers there deal with sourcing and global integration, according to a report by AutomotiveCompass LLC. In the meantime, there are limited opportunities for Canadian auto parts suppliers as the Japanese OEMs sort themselves out following the March 11 disaster.

The AutoCRM Japan Crisis Update, prepared by the West Chester, Pa. global automotive research and consulting firm, catalogues the production disruptions among the Japanese OEMs worldwide, and highlights the minuses related to current supply chain thinking.

In its assessment, the report notes shortages of key materials, electronic components and systems “show the downside of scale effects, restricted sourcing (Japan exclusivity) and global integration.”

While the full depth of this downside isn’t clear at this point, the report suggests tough decisions lie ahead about evolving global integration and supply substitution: “Over time, less reliance on Japan is likely, based on its key vulnerabilities and the need to manage risk from a global context.”

In North America, Toyota Motor Co. suspended overtime at all plants to conserve available parts, and the company warned its US, Canadian and Mexican plants that eventually full production shutdowns were a possibility. But in a recent update, Toyota said most parts for those vehicles come from approximately 500 suppliers in North America, and parts already in the pipeline are arriving, limiting the immediate impact from disruptions.

In Canada, Honda Motor Co. Ltd. also suspended overtime shift production of the Civic at its Alliston 1 plant in Alliston, Ont. to conserve parts and as of late March said it would cut production temporarily by varying levels at factories in the US, Canada and Mexico.

The Global Auto Report from Scotia Economics noted China and other parts of Asia where half of all Japanese shipments are destined will be affected most by parts shortages.

Although the US is the world’s largest auto parts importer (more US$43 billion annually with $7.6 billion coming from Japan) the report said roughly 80% of the parts used to assemble new vehicles in the US and Canada are produced in North America. Japanese-made parts account for 6% of the total.

Carlos Gomes, a senior economist at Scotiabank and author of the Global Auto Report, identified the greatest supply risk as semiconductors and infotainment systems, as well as chemical resins used to make automotive paint.

16 Canadian PLANT

Toyota warns of potential production slow downs as parts disruption hits its North American plants.

PHOTO: Toyota

“Japan supplies 21% of global semiconductors and is a major producer of integrated circuits and sensors for automobiles,” wrote Gomes. “Compounding the problem is the fact that automakers are unable to get supplies from alternative sources due to the proprietary nature of many of these niche products.”

Damage to a plant in northeastern Japan also created a global shortage of a shiny pigment called Xirallic used in automotive paints. As a result consumers can look forward to fewer colour options when they purchase new vehicles.

The AutomotiveCompass report notes the potential risk of delayed production starts, including Toyota’s Prius V wagon at the Tsutsumi plant in Japan and a Corolla from the new Ohira plant. The Honda Civic made at Alliston 1 and 2 is also mentioned, “although Honda officially anticipates no

Japan-related supply chain delays.”

The Automotive Parts Manufacturers’ Association (APMA) doesn’t expect Canadian suppliers to experience significant issues arising from Japan’s crisis over the short term, but they can be of help to Japanese automakers.

Helping OEMs “This is a great opportunity for Canadian auto parts suppliers to demonstrate to the Japanese OEMs that they are onside, and supportive, even if they aren’t going to get ongoing business,” says APMA president Steve Rodgers.

Some supply shortages are proving to be challenging, such as mass airflow sensors.

Rodgers says the Hitachi Automotive Products plant in Japan, which handles much of the world supply, was heavily damaged.

He also notes one North American OEM

will likely handle some of its power train shortage by shipping from North America, “so there’s an upside for Canadian suppliers who are more North American based.”

That OEM, according to the AutoCompass report, is Renault/Nissan. It had to shut down its Iwaki engine plant, the primary source for the VQ Series V6 engines used in Japan. The plant’s future is in question because of its 50-kilometre proximity to the damaged nuclear plant, but some of the lost production will come from excess capacity at Nissan’s Decherd, Tenn. plant.

The APMA doesn’t see Toyota making any other significant sourcing decisions short term, but Rodgers says the automaker knows it needs more global distribution of its parts and to source components from two different geographic locations for greater flexibility.

Longer term, Honda may consider moving its engineering centre for the Civic to North America, which Rodgers says will make interaction with Canadian suppliers easier.

A higher Japanese yen (inflated higher by the disaster) was already pushing Japanese OEMs to source more of their parts and major components globally. Rodgers doesn’t expect a lot of that business to come to Canada and the US, although some may go to Mexico; but there will be opportunities for Canadian suppliers who are on top of where the new sourcing is going.

The AutomotiveCompass report identifies the self-reliant Hyundai and Kia as likely winners as the Japanese industry recovers. And there will be other non-Japanese OEMs looking to gain market share.

Rodgers’ advice to suppliers: “Pay attention to all of these impacts.”

Comments? E-mail joe.terrett@ plant.rogers.com

>> Energy

Unconventional gas developers: Look beyond the US for growth

C

ompanies looking to invest in and develop Canada’s unconventional gas reserves will be challenged by pricing uncertainty, anticipated lower demand from the US and changing regulatory and fiscal policies, says consulting firm Ernst & Young.

To hang onto market share and remain competitive Canadian companies need to look farther afield for new customers.

“While we expect lower demand from the US, Canada is seeing interest from companies that hold a long-term view of the unconventional natural gas sector, including international oil companies, national oil companies and independents, many of them from Asia,” says Lance Mortlock, senior manager in Ernst & Young’s Canadian oil and gas practice.

The industry also faces a host of other challenges, including the timing of new pipeline facilities and infrastructure, uncertainty about power stations converting en masse from coal to gas, and questions about the industry’s ability to solve environmental challenges. What’s more, overcapacity and high inventories mean North American customers are unwilling to pay higher prices for services.

Canada is currently the largest exporter of natural gas to the US (with an approximate 87% share of US imports of gas, supplying 14% of de-

mand). However, considerable shale gas reserves in the US are expected to slow gas exports from Canada as supply and inventory levels.

“Many perceive that the Utica shale formation northeast of Montreal will not only create huge economic growth in Quebec, but also change the flow of gas in Canada, meaning less demand for Western Canadian gas,” says Mortlock. “With this anticipated shift on the horizon, companies should be on the lookout for new long-term customers in markets like Asia where demand is rising. Canada’s ability to export this gas is key to our growth.”

Companies can also manage ongoing uncertainty by seeking out more joint ventures and partnerships, which help develop unconventional gas reserves by sharing risk and costs with outside oil and gas hungry economies.

Ernst & Young says continued mergers and acquisitions activity will likely be driven by juniors struggling to remain profitable and willing to consolidate, especially in cases where companies are focused on gas and have limited oil interests. More value-chain integration between mid-stream and downstream companies is also likely to help lower intermediary costs and provide market flexibility for price.

March/April 2011

Accountability << Sustainability

Green Strategy 10 tips for tuning up your reports

>> C lean Tech Korean power demo using Ballard fuel cells VANCOUVER: Ballard Power Systems is partnering with a South Korean petroleum refiner to demonstrate waste-to-energy power generation using zero-emission fuel cells and hydrogen produced from municipal solid waste.

GS Platech, a subsidiary of GS Caltex, one of South Korea’s largest petroleum refiners, will stage the demonstration at its pilot plant in Cheongsong, South Korea.

The plant is capable of treating 5 tons of organic solid waste per day using plasma gasification technology and producing enough hydrogen to generate 50 kilowatts of clean power.

Ballard, a hydrogen technology developer based in Vancouver, will supply a fuel cell generator fuelled by this hydrogen.

Ballard said if the demonstration is successful, GS Platech intends to take the technology to new customers worldwide.

Hydrogen purification units in development

Data-rich reports help establish your reputation for transparency.

R

eporting is an important part of your company’s overall sustainability strategy. Ernst & Young, a Torontobased tax and transaction advisor, cites research that shows more than 3,000 companies worldwide, including two-thirds of the Fortune Global 500, issue reports, and they’re being used to drive better decision-making.

“Canadian businesses that produce quantifiable and data-rich sustainability

tive and quantitative targets that address your stakeholders’ concerns and material issues. Setting targets as KPIs also creates accountability for your company to meet publicly stated goals, leading to better measurement and tracking.

• Include stakeholder engagement.

Companies that do so better understand and respond to the material concerns of those stakeholders. This adds credibility to your report.

targets as KPIs also creates accountability “forSetting your company to meet publicly stated goals... ” reports establish a reputation for transparency and build stakeholder trust. The practice is also expanding to areas such as the supply chain and risk management. Ernst & Young offers 10 reporting tips: • Use a recognized framework to structure the report and add credibility. Although no universal reporting standards exist, several frameworks developed by non-governmental organizations are in widespread use, including the Global Reporting Initiative Reporting Framework and the AccountAbility standards.

• State your company’s vision and commitments. Stakeholders want to know that your company’s sustainability initiatives are driven by a long-term vision that aligns with your corporate strategy. There should be a unified vision between the company’s annual financial and sustainability reports.

• Set and report on targets by establishing non-financial key performance indicators (KPIs). Reports should provide a balance between qualita-

www.plant.ca

• Identify opportunities for strategic innovation and market building.

Stakeholders want to see their companies identify and tap into new business opportunities. Undertaking sustainability innovation drives growth by creating demand, opportunities and new markets.

• Show performance trends. Reports should provide historical data whenever possible and provide feedback on why performance has changed over time.

• Be frank about difficult issues and shortcomings. Investors hate surprises, so acknowledge in the report sustainability risks your organization faces and highlight any short- and long-term initiatives underway to mitigate such risks. Also, be forthcoming with your readers if you miss a target. Stakeholders will see this is a journey and want to understand what corrective actions you are taking.

• Develop a corporate governance structure with clear reporting lines.

Sustainability reporting is a mandate that requires backing from senior leadership and accountability at the operating level.

What’s more, companies should consider

photo: istockPhoto

creating robust systems and processes that help collect, store and analyze sustainability information.

• Obtain third-party assurance.

While sustainability reports don’t need to be audited just yet, they’re being more closely monitored. As this trend continues, those who use sustainability information will come to expect it to be validated by a reliable third party.

• Consider creating a specialist advisory board. It could include academics, lawyers, non-governmental organization representatives and industry experts who would provide an independent assessment of your report.

CanadianManufacturing.com

BLAINVILLE, Que.: Xebec Adsorption Inc. has signed a $3.25 million license and engineering service agreement (ESA) with Nuvera Fuel Cells for the development of two rapid-cycle hydrogen purification units for use in hydrogen refueling and merchant hydrogen applications.

Xebec, a Blainville Que. provider of clean energy biogas upgrading, natural gas and hydrogen purification, said the agreement builds on previously completed product development projects for its advanced separation and rapid cycle pressure saving adsorption (PSA) technology that purifies gases.

The company’s technology allows operation at significantly higher cycling rates using less adsorbent material and smallersized equipment.

Nuvera is a Bellerica, Ma.-based developer of fuel cell systems and fuel processors.

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Canadian PLANT 17

Sustainability

>> Green Manufacturing

How are your green levels?

Innovation

>> Leadership

Re-thinking

innovation A master chef is needed

9 points to check off

to whip up the ingredients

By Erika Beauchesne

By Brett Wills

F

or manufacturers at the beginning of the sustainability journey, deciding where to start and developing a program may seem to be a daunting task. It’s not. Answer these questions to gauge your green levels.

1. Is senior management engaged?

Sustainability starts with a commitment from the senior management team. They must understand the concepts and be aware of the benefits and implications to the organization.

2. Is sustainability part of the longterm vision and short-term business goals? A vision provides a future desired state that will guide your company’s dayto day activities and long term strategies.

What initiatives are under way? Reaching milestones shows progress to desired future state.

3. Does your company have a transformation plan? No plan, no progress.

You need a road map to reach the desired destination.

4. Are employees engaged? Ensure they are aware of how sustainability initiatives impact business goals and their own lives.

5. Do employees understand the role they play? Everyone has a part to play and once they understand that, it’s up to management to ensure they have the tools and resources needed to make it happen.

6. Have green/sustainability leaders been appointed? Every journey requires passionate change agents who will build and maintain momentum towards a more sustainable organization.

7. Are there metrics? They may include measures such as kWh per unit of output, CO2 per dollar of revenue or litres of water per square-foot of building space. If it doesn’t get measured it doesn’t get managed.

8. Is your company using a sustainability toolbox? Contents could include lean and green manufacturing, carbon foot printing and CSR reporting.

9. Are you communicating sustainable progress internally and externally? Sustainability initiatives lower internal costs, and they help grow market share.

Communicate accomplishments to avoid accusations of green washing.

Brett Wills is the director of the Green Enterprise Movement and a senior consultant with High Performance Solutions in Cambridge, Ont. E-mail bwills@hpsinc.ca.

18 Canadian PLANT

I

nnovation in Canada today looks something like a half-cooked dinner. At least that’s what American innovation activist John Kao thinks.

“Canada already has most of the right ingredients in place,” he said at a recent conference in Ottawa noting our good global reputation, plenty of resources and considerable financial power.

But as the global innovation race heats up, he says we need a master chef to bring all the ingredients together in a national strategy.

Kao, who has worked as an advisor in regions ranging from Abu Dhabi to Finland, says at least a dozen nations have appointed chief innovation officer to develop and oversee strategies.

Officers can be individuals, ministries or councils. Germany has a chancellor in charge of innovation and in Sweden, there’s a government agency appointed to the task. Even smaller nations such as Rwanda and Singapore are taking innovation in hand.

The idea of an innovation officers is still new, but it’s been picking up steam over the past five years. Kao sees it becoming a much bigger trend in the years to come – a development Canadians should be aware of. “When I visit Canada, I hear people say how they’re not satisfied with the state of innovation.”

Although he says we aren’t doing as badly as we think, based on the country’s potential, we are underperforming, especially when it comes to measures such as the availability of early stage capital, private sector investment in R&D and willingness of people to start companies.

Kao says countries are also re-thinking the term “innovation” to include more than just industry. “If you have a government sponsoring innovation at policy, educational and cultural levels, it’s going to make a big difference [to industry].”

Another strategy is to re-think business entirely. This is especially important for manufacturing, where companies offer the same product as others but at cheaper prices and at faster rates.

“IBM is a great example of this. It was a high-tech manufacturer but saw the market was changing and transformed itself into a service company. I’m not saying manufacturing is dying, but companies can’t just stick to the same thing they’ve been doing. They need to think in an alert manner about how they’re going to re-invest their resources,” he says.

But investments shouldn’t fall solely on

industry’s shoulders, says Jim Stanford, chief economist with the Canadian Auto Workers (CAW) union.

With the right government support, he says Canada’s auto manufacturing sector could be a global innovation leader.

Canadian plants are already more advanced in terms of technology such as automation, quality control and labour standards.

“But the fact is, all our automakers are headquartered outside of Canada and I think that’s undermining research and

be up to industry to take the lead.

“What we need now are innovation leaders to step forward in each sector, examine best practices and talk about new ways of doing things,” she says.

The Public Policy Forum, the Ottawabased research group that organized Kao’s lecture, is working on doing just that.

The forum invited Kao to speak after conducting a series of roundtables with industry, academia, and government that found Canada needs a stronger innovation culture.

Innovation activist John Kao recommends a chief innovation officer to oversee a national strategy.

engineering efforts here,” Stanford says.

Canada could stimulate more R&D by demanding a portion of GM and Chrysler operations take place north of the border – a tactic the German government uses with Volkswagen.

The federal government could also use its shares in Chrysler and GM to leverage more investment in innovation, he says.

Help from the Canadian government would also propel innovation in Ontario’s broader manufacturing base, says Sandra Pupatello, the province’s Minister of Economic Development and Trade.

“The best thing the federal government could do is improve its Scientific Research and Experimental Development (SR&ED) credit.”

The SR&ED provides refunds or tax credits to businesses for R&D spending.

“Companies find it cumbersome and it takes too long to get the money back,” Pupatello says.

Other strategies to spur innovation include incentives for workplaces to take up information and communication technology and finding new ways to incorporate management education. But even with increased government assistance, it will

President David Mitchell says it was important to get a global perspective on innovation. The next step will be researching how to promote more partnerships between Canadian business, government and research facilities.

“In countries such as Singapore, Korea, and Israel, there’s far more collaboration across sectors compared to here. We want to dig deeper to find where collaboration is happening in Canada and then identify best practices,” he says.

The forum also plans to start measuring how Canada compares globally and benchmarking innovation within the country on a sector-by-sector level.

“We’ll be looking at manufacturing, natural resources, the financial sector and government,” Mitchell says. Results from the group’s research are expected later this year.

Erika Beauchesne is an online writer and section editor with Canadian Manufacturing.com. E-mail erika. beauchesne@rci.rogers.com.

Comments? E-mail joe.terrett@ plant.rogers.com.

March/April 2011

Health & Safety << Innovations

Virtual injuries, safer reality Designing ergonomics into the workplace

By Jim Potvin

M

anufacturing environments exert physical demands that are strenuous and repetitive, often resulting in injuries. In Ontario from 1996 to 2004, there were more than 382,000 cases of such injuries accounting for costs of $12.3 billion.

Ergonomics seeks to reduce the toll on muscles, joints and bones through effective workplace design.

As with any structure, human tissues are damaged when the demands placed on them exceed their capacity. Ergonomics uses science to determine thresholds for these demands.

tures and motions that workers will eventually use on the real tasks. Ergonomic engineers manually manipulate digital avatars at computer workstations, or real humans can be immersed in virtual reality environments where they interact with CAD/CAM objects. This is similar to the motion-capture technology used to drive movements in video games and computer animation to make it look smooth and realistic.

Work simulation contributes in many ways to improved worker safety, increased efficiency and enhanced product quality. Avatars evaluate process sequencing, workplace layout and workstation design. For example, the insertion of a hose might be much easier for the worker, and take less time to perform if it’s completed before another part is placed in an obstructive way farther up the line. In the past, these issues wouldn’t have been known until production began. Now they can be flagged and fixed before a prototype is built.

Virtual reality also allows for many aspects of the human/task interface to be assessed early in the virtual build sequence.

Different sizes of avatars are tested to ensure smaller workers can reach locations to perform their value-added tasks.

Conversely, larger workers may have hand clearance issues and simulation will identify these cases.

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Designing ergonomics into the manufacturing process helps prevent workers from being exposed to the risk of injury.

“

photo: istockPhoto

The risk of injury is often dictated by the strength requirements of a task...

”

Preventing strain injuries in manufacturing have been mostly reactive. Work tasks injure workers and only then are the jobs redesigned to remove the risk. This is an expensive way to discover poorly designed tasks and it results in unnecessary suffering.

But there are some companies taking a more proactive approach by applying sophisticated technologies that allow for ergonomic interventions much earlier in the virtual manufacturing design process that prevent workers from being exposed to the risk of injury. During virtual builds, digital human avatars are immersed into CAD/CAM environments to simulate interaction with machines, tools, parts and other workers long before the tasks exist in reality.

These avatars have become increasingly sophisticated in the past 20 years, now accurately representing females and males in all sizes. The skeletons represent real human motions and they have been designed to calculate human strength for a variety of postures.

A challenge when using this technology comes with accurately predicting the pos-

www.plant.ca

The risk of injury is often dictated by the strength requirements of a task. Work simulation provides accurate estimates of the postures that will be required to perform work tasks, and digital avatar software calculates the proportion of the population that would have the strength to perform the task safely at the required frequencies.

Tooling introduced to the simulations determines what’s best for each operation.

In Canada, researchers funded by the AUTO21 Networks of Centres of Excellence are improving and refining the efficacy of virtual reality, digital human models and work simulation for improving worker safety.

These studies, in collaboration with several industry partners, focus on increasing the understanding of tissues and how they are affected in the shoulder, forearm, hand and wrist – areas that contribute to a high percentage of assembly injuries. Research is also evaluating the validity of current virtual reality practices and processes.

Recommendations have been made to further optimize the positive impact of these techniques.

Ford Motor Co., among others, has already demonstrated huge cost and quality benefits from using proactive ergonomics very early in the automotive manufacturing design process. However, many more companies and industries have yet to reap such rewards. While this technology is relatively new and still evolving, it shows great promise for improving worker safety while positively influencing high quality and profitable manufacturing.

Jim Potvin is a professor in Kinesiology at McMaster University and leader of the AUTO21 project, “Proactive automotive manufacturing ergonomics through improved work simulation and digital human modeling.” Visit www.auto21.ca.

Comments? E-mail joe.terrett@ plant.rogers.com.

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Canadian PLANT 19

Technology

By PLANT STAFF

T

?

>> PMDS/WMTS Preview

he numbers are in and it’s official: Canadian manufacturers and exporters will be the major contributors to economic growth this year and next.

Statistics Canada reports manufacturers scored solid sales gains in January, a whopping 4.5% with 17 of 21 industries recording growth. And companies are loosening their purse strings to invest in new plants and equipment as they seek new export opportunities. CIBC World Markets Inc. expects this investment to add significantly to capacity, ensuring it remains a consistent source of support for the domestic economy in 2011 and in coming years.

Manufacturers in Quebec and Alberta who are ready to spend some of this investment money on improving their productivity and competitiveness can check out new technologies, systems, equipment, machinery and more at two regional shows presented by the Society of Manufacturing Engineers (SME).

In its twenty-second year, the Plant Management and Design Engineering Show (PMDS), from May 17-19 at Place Bonaventure in Montreal, connects you with top industry suppliers of plant, maintenance and systems products and services.

“Now, more than ever, it’s essential for manufacturers to come together in an environment where they can compare the latest

Time to invest Check out PMDS and WMTS for the latest technology

Head west for WMTS

Two regional SME shows will help manufacturers invest their money wisely in technology, machinery and equipment.

PHOTO: ISTOCKPHOTO

in equipment, technology and services in order to be as competitive as possible,” said Nick Samain, event manager with the Society of Manufacturing Engineers (SME), organizer of the event. “PMDS provides a unique forum that brings together three critical elements for manufacturers

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discussed include: developing an industry that is attractive to the workforce of tomorrow; recruiting, motivating and retaining a workforce; productivity in relation to quality and profitability; and best practices from industries that inspire.

• Preventive or predictive maintenance? This workshop will help you make informed choices about which method is best for your machinery and equipment.

You’ll learn about the main requirements of both, their strategies and weaknesses, and assessing the best strategies.

• Unplanned breakdowns. Learn how to stay ahead of failures and establish contingency plans. This workshop will help you quickly find the source of a failure; make a repair or replace decision; and keep the right parts in stock.

– knowledge, technology and networking – each critical to success in today’s highlycompetitive business environment.”

But it’s much more than a trade show.

PMDS also provides opportunities for networking and learning. New for 2011 is an advanced Plant Maintenance Conference, bringing high-level speakers and content designed to help manufacturers take advantage of the economic recovery.

Topics include: • Continuous improvement. Reduce manufacturing costs and secondary operations by: building a culture of continuous improvement; implementing Six Sigma to reduce scrap and rework; and making production more efficient.

• Shortage of manpower. Learn how to recruit and mobilize an unskilled workforce. Key points covered include: understanding the job market; how to position yourself in that market; how to promote and differentiate your company; and training your employees to follow new technological developments.

• Encourage collaboration between your departments. The session will look at how you can create a maintenance and operations team. Topics include: how to develop a team; preparing it to cope with a period of high workload; putting reliability teams together; aligning supervisors with corporate goals and encouraging ownership of their projects; and laying a foundation for succession through coaching and leadership.

• Lean maintenance. Apply the concepts of lean manufacturing to your strategies and maintenance procedures by: reviewing all aspects of maintenance; identifying key steps and best practices for the successful implementation of lean; and encouraging your workforce to be more efficient.

• World conversation café. Interactive discussions on maintenance and plant engineering will accelerate the search for innovative solutions to complex challenges by drawing on the wisdom and creativity of the participants. Issues to be

The Western Manufacturing Technology Show (WMTS) held every two years in Edmonton, provides western manufacturers a showcase of products ranging from machine tools, welding equipment, design engineering and plant maintenance to process control and automation.

This year’s show, June 14-16, will help Alberta’s manufacturers address some of the challenges they face in a booming energy economy.

Investment in Alberta oil sands development and operations is a huge contributor to the resurgence of spending on machinery, equipment and technologies. This year’s capital and operational spending is expected to exceed $30 billion, which cascades through Alberta’s economy and across Canada. Manufacturers who want to share the bounty will have to be efficient, productive and ready to deliver.

WMTS, held at Edmonton’s Expo Centre, Northlands, will feature leading-edge machine tools, tooling and accessories, fabrication, design, automation, process control, and plant maintenance equipment, plus opportunities to network with technology experts and peers. And Weld Expo Canada 2011 is back.

The program will also include keynotes and a town hall panel, details to be announced.

PMDS and WMTS are produced in partnership with Canadian Manufacturers & Exporters (CME), Canadian Wind Energy Association (CANWEA), Canadian Tooling and Machining Association (CTMA), Quebec Aerospace Association (AQA), Canadian Machine Tool Distributors Association (CMTDA), Rogers Media and Edmonton Tourism. Canadian PLANT, a Rogers Media publication, is a media partner for both shows.

>> Show Dates PMDS May 17-19 Place Bonaventure, Montréal http://pmds.ca WMTS June 14-16 Edmonton EXPO Centre, Northlands http://wmts.ca

March/April 2011

Product Showcase << Departments

>> Automation units and sensors

>> Plantware

Light curtains play it safe

Sensing workplace safety.

Two series of safety light curtains (active optoelectronic protective devices) from AutomationDirect, a Cumming, Ga. supplier of automation technologies, protect people, and ensure product/machine safety where risks can’t be eliminated by machine design or the process might require frequent, open access during operation.

The YBB-14 series has a 14-mm sensing resolution for finger-size protection, an operating distance of up to 3.5 m, and protective heights ranging from 142 mm to 1,045 mm. YBB-30 light curtains have a 30-mm sensing resolution for hand protection and an operating distance of up to 12 m with protective heights ranging from 279 mm to 1,827 mm.

Safety ratings include Type 4, Cat 4 PL e and IP65. www.automationdirect.com/safety

Sense distances up to 2 mm

These IP67-rated sensors come in die-cast zinc/nickel-plated housings If you’re dealing with precise industhat prevent damage during installatrial applications involving limited tion and operation. space distance measurement and Baumer, a Southington, Conn. senmetal targets, the Baumer Group has sor manufacturer, recommends them the sensor for you. for a variety of applications including: IWFM 08 inductive sensors meaautomotive production; electronic suring just 4.7- x 8- x 16-mm sense manufacturing; injection moulddistances up to 2 mm with <0.001 mm ing; laboratory automation; medical resolution.

Tiny iwfm inductive sensors. equipment; metalworking; packaging; An integrated 0-10 V output conprinting/graphics; solar cell/PV manufacturing; textile nects directly to the analogue outputs of the control production; and wood/lumber processing. system eliminating the need for measuring boards or www.baumerelectric.com/usa processing units.

Eco-friendly proximity sensing ICB inductive proximity sensors from Carlo Gavazzi are eco-friendly and tough.

The automation company based in Mississauga, Ont. says the sensor’s high-performance potting material is ICB proximity sensors. made from a recycled corn by-product that withstands higher resistance to mechanical stress.

An air-core sensing coil replaces traditional ferrites and coils so the ICB has greater immunity to magnetic fields and withstands higher vibration levels and impacts.

It’s available in standard and double distance sensing ranges with nickel-brass housings in long and short barrel lengths.

Three-wire sensors are available in opened or closed NPN or PNP outputs. Connection options include a 2-m PVC cable or a M12 disconnect plug. www.gavazzionline.com

Get the measure of movement Compact CD 375 miniature LVDTs from Macro Sensors attach to a robotic arm and provide displacement feedback.

These linear position sensors detect change when an actuator moves the arm, providing an analogue voltage signal proportional to the amount of motion to a controller that makes appropriate adjustments based on programmable set points.

They come in full-scale measurement ranges from ±0.025 in. (±0.63 mm) to ±2.0 in. (±50.0 mm), and have a 50% larger coreto-bore radial clearance (0.012-in.) than similar sized competitive units.

Macro Sensors is a Pennsauken, NJ manufacturer of LVDT-based linear and rotary sensors. www.macrosensors.com

Pocket PLC packs ethernet punch The RIO-47100 pocket PLC, an intelligent input and output controller for the ethernet from Galil, communicates with many devices including the company’s DMC-40x0 ethernet motion controllers.

The RIO-47100 contains a fast RISC processor for handling I/O logic and is programmed using the Rocklin, Calif.-based motion controller company’s easy-to-use, two-letter command language.

Each RIO-47100 unit is self-contained with, among other features, eight analogue inputs and outputs, 16 optically isolated inputs, eight high-power isolated outputs and eight low-power isolated outputs.

Housed in a 3.9- x 4.3- x 1.3-in. package, this compact PLC has a powerful RISC processor for fast I/O handling and includes ±10 V analog I/O, program memory with multitasking, PID process control loops, timers, counters, web interface, e-mail alerts, data logging, Ethernet 100Base-T, and RS232.

It’s distributed by Electromate Industrial Sales, based in Woodbridge, Ont. www.electromate.com

Mastercam X5 runs in Solidworks CNC Software Inc. has added a CAM application that runs seamlessly in Solidworks.

Mastercam X5 features a full suite of cutting strategies, including featurebased machining (FBM) and 3D high speed machining (HSM) toolpaths. And, says the Tolland, Conn.-based and aptly named CNC software developer, its automated cleanup toolpaths will help you get parts off the machine faster with little or no handwork.

Working in 2D or 3D, the machining functions include the new OptiRough Toolpath that removes large amounts of material quickly. Large, aggressive cuts followed by fast, smaller up-cuts safely and quickly deliver a fully roughed part. And hybrid finishing intelligently blends two efficient cutting techniques in a single toolpath. It evaluates the model shape and smoothly switches between constant Z cutting and scallop machining for a finer finish with less work. www.mastercamforsolidworks.com

Pump up the platform power A new CPU board with an Intel CoreTM2 Duo P8400 processor pumps up the platform power of B&R Industrial Automation Corp.’s Automation PC 810 and Panel PC 800 devices by combining the 2.26 GHz Core2 Duo processor and the GM45 chipset.

Both processor cores share a 3 MB level 2 cache, which allows efficient multitasking. A fast 1.066 MHz frontside bus combined with DDR3 RAM modules rounds out the high-performance infrastructure of the entire system.

Smaller variants of the APC810 with one or two slots, larger types with three slots and the PC with five slots make sure there’s a device type that fits the application, regardless of how many cards are needed, saving space in the switch- High-performance infrastructure. ing cabinet.

Panel PC 800 systems, with 15-in. XGA and 19-in.

SXGA displays and either one or two slots, also form a foundation for any system.

B&R Industrial Automation Corp., based in Atlanta, Ga., manufactures automation equipment. www.br-automation.com

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Canadian PLANT 21

Departments

>> Postscript

Mistaken beliefs hamper stronger ties

By Brian Lee Crowley

W

e live in a time of mistaken beliefs. Many are harmless or amusing, like knocking on wood or throwing salt over your shoulder to ward off bad luck. And while we laugh at people who believe the Earth is flat, many of us hold similarly superstitious or mistaken beliefs about our relationship with the US. Too many Americans see Canada as an unreliable partner, having even let some of the 9-11 terrorists into the US. On our side, too many Canadians believe the US is a

and the US have built a very successful community “ Canada of economic interests... ”

bully that takes us, its largest trading partner, for granted, does not play by the rules under our shared institutions, and holds fundamental values different from ours.

Both sides are wrong. Our relationship, which has brought both countries enormous economic and strategic advantages, is built on a deep and solid foundation of shared values. We all believe in a special kind of democracy where even the will of the majority is bound by laws and rules.

We believe freedom alone allows each of us to reach our full potential as individuals. We make choices based on our beliefs, experiences and priorities and not on those of dictators, mullahs, caudillos or even benevolent bureaucrats.

And we both believe in self-sacrifice.

In two world wars, Korea, the Cold War and in Afghanistan today, we have stood shoulder-to-shoulder against tyranny.

Canada and the US have built a very

successful community of economic interests that requires constant, but friendly attention. Prosperity for both is deeply damaged by barriers thrown up at the border. To ensure the fewest number of obstructions to free trade, we need to implement an agreed upon set of security standards, such as pre-entry screening, profiling, intelligence cooperation, and police work that apply to all points of entry into North America. We also need to expand existing trusted shipper and traveller programs, 24-hour-a-day access and border services at major crossings, an integrated “single window” or on-line portal for entering all borderrelated importing and exporting data, and streamlined procedures regarding ordinary regulatory compliance.

For that to occur, Americans have to give up the mistaken belief they have major security and control problems at the Canadian border. And Canadians have to stop equating co-operation with the US on security or integrated border controls as a loss of sovereignty, rather than the intelligently effective exercise it is.

Secure energy Canada’s energy resources occupy a revealingly special place within the Canada-US relationship. Most other sources of foreign oil for the US are within the grasp of regimes that abuse human rights, pursue weapons of mass destruction and spread subversion and hateful radical Islamist messages. As alternative energy sources are decades away from supplanting fossil fuels, Alberta’s oil sands constitute a national security acein-the-hole for both of us.

In The Canadian Century: Moving Out of America’s Shadow, my co-authors and I outlined a series of practical steps to deepen the Canadian-American relationship, including: • A new treaty on continental security and a common external tariff.

• A new joint commission on border management.

• A new joint committee of Congress and Parliament on Canadian-American issues.

• A joint tribunal on issues that arise under our various cross-border agreements.

It’s encouraging that Prime Minister Stephen Harper and US President Barack Obama recently issued a statement of intent to move forward on many of these issues. But popular and elite support to achieve actual progress in both countries requires a willingness to dispel and discard the myths and misunderstandings that keep us from seeing how much we have in common.

Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent and non-partisan public policy think tank in Ottawa.

E-mail mgdir@macdonaldlaurier.ca.

Comments? E-mail joe.terrett@ plant.rogers.com.

22 Canadian PLANT

March/April 2011

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