$5.50
Return undeliverable items to Plant Circulation Dept., 8th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5 PM 40070230
Volume 69, No. 04 May 2010
www.plant.ca
LIGHTENING UP Automakers work on weight reduction
HIGHLIGHTS Don’t fear the loonie Technology speeds machine set-ups Increasing solar power Expand your global reach
11 13 14 16
Our shipping policies make it easier than ever to order direct from the U.S.! Free standard shipping is available for orders totaling over $300 U.S. (except for items which require LTL shipping, see Web site for details). Also, save on brokerage fees when shipping standard ground to Canada - you can choose to allow AutomationDirect to nominate a broker for your shipment for parts shipping via standard ground. This can save you big on brokerage fees. See Web site for details and restrictions -
www.automationdirect.com/canada
STEPPERS Advanced microstepping drives and high-torque stepping motors
The SureServo family of brushless servo systems from AutomationDirect is fully digital and offers a rich set of features at dynamite prices. Beginners to experienced users can take advantage of this easy-to-use family for as little as $965* Agency Approvals (100W system). for Systems: * All components sold separately.
Bi-polar Stepping Motors start at $17 • Sizes from 61 oz-in to 1,291 oz-in • Multiple stack lengths in NEMA sizes 17, 23 & 34 Advanced Microstepping Drives start at $199 • Software configurable • 200 - 51,200 microsteps (software selectable) Linear Power Supplies start at $109 • 32V @ 4A, 48V @ 5A, 48V @ 10A, 70V @ 5A • Onboard input and output fuses included www.automationdirect.com/stepper-systems
DC MOTORS IronHorse® Permanent Magnet DC motors are available from 1/3 to 2 hp.
SureServo drives accept a wide range of command sources:
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PNEUMATICS NITRA™ Pneumatics A-Series non-repairable stainless steel round body cylinders.
Allen-Bradley
Price/Part Number
$
Digital Servo Drive
• Position commands with “pulse/direction” or “count up/down” format • Encoder follower • Analog voltage Velocity or Torque command
Note: All components sold separately.
AutomationDirect
Servo Systems
• Built-in motion controller with preset position, velocity or torque select presets with switch inputs and/or the multi-drop Modbus serial interface
• • • •
Agency Approvals for Drives:
Agency Approvals for Motors:
479.00 319.00
$
89.00
$
49.00
$
29.00
$
SVA-2040
100W Servo Motor with connectorized Leads
$
Breakout Board Kit for CN1 Control Interface
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10’ Motor Feedback Cable
$
10’ Motor Power Cable
$
SVL-201
ASD-BM-50A
SVC-EFL-010
Configuration Software
Price/Part Number
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970.00
2098-DSD-005
972.00
Y-1003-2-H00AA
195.00
2090-U3BK-D4401
141.00
2090-UXNFBY-S03
82.00
SVC-PFL-010
2090-XXNPY-16S03
FREE SV-PRO*
$
75.00
2098-UWCPRG
*SureServo Pro software is FREE when downloaded and is also available for $9 on a CD
Complete 1-axis 100W System
Features:
$
965.00
$
2,435.00
All prices are U.S. list prices, AutomationDirect prices are March 2010 prices. The Allen-Bradley 100W system consists of part numbers shown in table above with prices from http://shop.rockwellautomation.com 9/18/09.
• Eight standard systems from 100 W to 3 kW • Use with DirectLOGIC PLCs or any other host control • Drives feature on-board indexer and adaptive tuning modes • Free set-up software • 2 year warranty
For configuration, tuning and diagnostics, use the drive’s integrated keypad/display or take advantage of the free SureServo Pro™ PC-based software.
www.automationdirect.com • Interchangeable with other common brands of round body cylinders • Single-acting (spring return) and double-acting models • Nose, pivot and double-end mounting options • Models available with magnetic piston for position indication • 3-year warranty
www.automationdirect.com/pneumatic-parts
For complete information or to order our free catalog, visit: www.automationdirect.com/servos or www.sureservo.com
1-800-633-0405
Editorial 10
Open up trade with the EU
9
C
anada is negotiating a free trade deal with the European Union (EU), which is inciting the usual protectionist rhetoric about loss of sovereignty, industry, jobs and culture. These are the same concerns expressed during free trade and NAFTA negotiations in the latter 1980s and early 1990s. For the record, bilateral trade increased 52% with the US. Employment has showed steady gains over the years, rising from 14.9 million jobs to 15.7 million by the early 2000s, and manufacturing managed to hold steady throughout this onslaught of prosperity. Exports account for 45% of Canada’s GDP, but 87% of them go to the US. A paltry 4.7% go to the EU, a marketplace that is similar to our own in many ways and consists of 27 countries, 500 million people and $19 trillion in gross national product. Although Canada’s trade relationship with the US has been lucrative, the events of the past year have demonstrated the folly of placing too many of our market-board protected eggs in one basket. Exports to the US plummeted last year by 35% and America’s ongoing domestic and international difficulties make Canada’s diversification of trade all the more necessary and urgent. Thanks to the regurgitations of the Icelandic volcano Eyjafjallajokul (ay-yah-FYAHlah-yer-kuhl), I was able to expand a three-day business trip to the Republic of Ireland by an additional seven days, which provided a wee bit of on-the-ground perspective based on this small, EU member. A tour of Dublin revealed a dynamic busy, cosmopolitan city that is in many ways similar to Toronto, but with more historical architecture and much friendlier bus drivers. I also toured the Guinness brewery, enjoyed a pint of the famous stout and learned that the company’s founder, Arthur Guinness, wrangled a 9,000-year lease for a disused brewery sitting on four acres, at 45 pounds per year. You have to wonder how many pints it took to make that deal, but it has worked out nicely for the internationally recognized brewer. Its product is sold in 150 countries and brewed in 40. Ireland, like Canada, is an exporting nation. It was an economic basket case in the later 1980s until it opened up its markets, reformed taxes and cut red tape. Today, this nation of roughly 4.5 million people—one million less than the Greater Toronto Area— is according to the United Nations, the fifth best country in which to live (just behind Canada) and it enjoys the highest trade surplus relative to the GDP in the EU. So far its sovereignty, prospertity and culture are intact. Canadian officials see a potential $12-billion gain for our export coffers by 2014 if a deal is concluded, but the Europeans would like to see an end to our protectionist marketing boards and they’d like to have a fair crack at public sector procurement. Ontario’s Samsung deal and its efforts to quickly build local manufacturing infrastructure for the renewable energy industry is a good example of such an opportunity. To what degree would manufacturers benefit or suffer if municipalities and provinces had to abandon policy tools such as local procurement requirements? How would this balance against having open access to European markets? These are questions Canadian negotiators will have to weigh against any deal they hope to secure, but as an exporting nation, we should reject protectionism out of principle and be prepared to compete and win in expanded, open export markets. A warning though: when the negotiations get tough, Canada’s trade representatives should be very wary if pints of Guinness are offered for refreshment. Joe Terrett, Editor Comments? E-mail joe.terrett@plant.rogers.com.
Vol. 69, No. 04, May, 2010 Editor: Joe Terrett 416-764-1546 joe.terrett@plant.rogers.com Features Editor: Noelle Stapinsky 416-764-1449 noelle.stapinsky@rci.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 Director of Sales, Marketing and Customer Service: Laura Goodwin 416-764-1492 laura.goodwin@rci.rogers.com District Sales Manager: Dean Walter 416-764-1776 dean.walter@rci.rogers.com Advertising Representative: Jason Lofkrantz 416-764-1521 jason.lofkrantz@rci.rogers.com
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Canadian PLANT Fax: 416-764-1742 Circulation Manager: Celia Ramnarine 416-764-1451 deokie.ramnarine@rci.rogers.com Production Manager: Jennifer Reinhardt 416-764-3919 jennifer.reinhardt@rci.rogers.com Executive Publisher of the Industrial Group, BPPG: Tim Dimopoulos 416-764-1499 tim.dimopoulos@rci.rogers.com Rogers Media Inc. President and CEO: Anthony P. Viner Rogers Publishing Limited President and CEO: Brian Segal Senior Vice-President Business & Professional Publishing: John Milne Senior Vice-Presidents: Marc Blondeau, Michael Fox Vice-Presidents: Immee Chee Wah, Patrick Renard Editorial Advisory Board: Robert Hattin, Edson Packaging Machinery • Ron Harper, Cogent Power • Greg MacDonald, Wentworth International Services • Roy Verstraete, Anchor Danly Subscription Department: For subscriptions services e-mail: rogers@cstonecanada.com 416-932-5071 Fax 416-932-1620 Outside Toronto 1-866-236-0608
11
13
Features
>> INNOVATION
9 AUTOMOTIVE Steel and alloys compete for content in automakers’ quest for lighter vehicles. 10 TESTING ACE prepares for state-of-the-art automotive R&D.
R&D Automotive researchers gauge sound quality properties of magnesium.
>> MANAGEMENT
11 CURRENCY Globalization is key to hedging against a higher value loonie. 12 SR&ED Improvements to SR&ED program make it easier to invest in research.
>> TECHNOLOGY
13 AUTOMATION Edson Packaging Machinery develops servo-technology that cuts set-up and configuration time.
>> SUSTAINABILITY
14 Energy Sustainable Energy Technologies brings its solar innovations to the Ontario market.
GREEN MANUFACTURING Use human resources to build a green culture.
>> OPERATIONS
15 Think Lean Optimize your maintenance team to eliminate waste.
Tech tips How to test DC armatures.
>> TRENDS
16 EXPORTING Preparing the ground for opening new export markets.
Departments
4 Industry View 6 Events 7 Labour Relations 8 PLANT Pulse 17 Product Showcase 18 Postscript
Mail: Canadian PLANT, Circulation Dept. 7th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5 Subscriber Services: To subscribe, renew your subscription or to change your address or information, please visit us at www.rogersb2bmedia.com/plnt. Mail Preferences: Occasionally we make our subscriber list available to reputable companies whose products or services may be of interest to you. If you do not want your name to be made available, please contact us at rogers@cstonecanada.com or update your profile at www. rogersb2bmedia.com/plnt. Canadian PLANT—established 1941, is published by Rogers Publishing Limited, a division of Rogers Media Inc., One Mount Pleasant Road, Toronto, Ontario, M4Y 2Y5. Montreal Office: 1200 avenue McGill College, Bureau 800, Montreal, Quebec, H3B 4G7. Subscription Price: Canada $69.00 per year, Outside Canada $141.00 US per year, Single Copy Canada $5.50. Plant is published 8 times per year except for occasional combined, expanded or premium issues, which count as two subscription issues. Printed in Canada, contents of this publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher. Publications Mail Agreement #40070230. Return undeliverable items to: Canadian PLANT Circulation department., 8th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5. U.S. periodicals registration no. 0010-881 at Lewiston, N.Y. US Postmaster: Send address changes to Rogers Media, PO Box 4541,
15 Buffalo, New York, 14240, USA Performance claims for products listed in this issue are made by contributing manufacturers and agencies. No responsibility for the accuracy of these performance claims can be assumed on the part of Canadian PLANT or Rogers Media and its agents or distributors. Contents copyright© 2010 by Rogers Publishing Limited, may not be reprinted without permission. Canadian PLANT receives unsolicited materials (including letters to the editor, press releases, promotional items and images) from time to time. Canadian PLANT, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. This statement does not apply to materials/pitches submitted by freelance writers, photographers or illustrators in accordance with known industry practices. Our environmental policy is available at www. rogerspublishing.ca/environment. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund (CPF) for our publishing activities.
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Canadian PLANT 3
Departments
>> Industry View
>> PLANT Online
Visit www.plant.ca
Green intentions The environment may be on their minds but not too many manufacturers have any formal plans to address sustainability issues this year. Only 16% of 503 respondents to PLANT’s Canadian Manufacturing Outlook: 2010 view green and sustainability initiatives as a priority and 19% have no formal efforts planned. The most common initiatives planned include: • Recycling more material 53% • Increased energy efficiency 43% • Reducing packaging 31% • Sourcing locally 24% • Using more environmentally friendly suppliers 19% • More environmentally friendly machinery and equipment 17% • Using more fuel-efficient transportation modes 13% • Sustainable suppliers 12% • Reconfiguring supply chain 7% For a pdf of the survey results go to COMMUNITY/Research.
News you missed Go to NEWS/Industry News to catch up. • First electric commercial vehicle makes North American debut • Ontario aerospace industry looking at growth • Linamar diversifies into wind energy
News updates Subscribe to Canadian PLANT’s weekly e-newsletter. • Go to www.plant.ca • ABOUT US/Print Subscription • Scroll down to the PLANT logo • Click on the mouse icon • Select register/check Online Access
Lakeside forms a thermal alliance WELLAND, Ont: Lakeside Steel Inc. has formed an alliance with Scot Industries of Wooster, Ohio, which will provide thermal treatment services to the steel pipe and tubing manufacturer. Lakeside Steel said thermal treatment allows it to upgrade products produced at its Welland, Ont. facility to the L80, N80 and P110 grades required for the Marcellus Shale natural gas reserves. This upgrading was previously performed in Texas. Scot Industries’ Ohio location brings the finished product within a closer proximity to key Marcellus Shale drilling locations in the eastern US.
Funding for two waste-to-fuel plants EDMONTON: Enerkem Inc., a waste-to-biofuels and advanced chemicals company, is getting funding from Alberta Energy for its future Edmonton waste-tobiofuels facility. The Enerkem GreenField Alberta Biofuels (EGAB) plant will get $3.35 million from Alberta Energy’s Biorefining Commercialization and Market Development Program, which has been set up to stimulate investment in ethanol, biodiesel and biogas facilities. The plant will divert residential waste from landfills and produce a green transportation fuel. The Alberta energy funding is in addition to the $20 million financial contribution made by Enerkem’s partners: the City of Edmonton and Alberta Innovates. Ground breaking is set for the summer.
Enerkem's Edmonton plant will use municipal waste for green transportation fuels such as cellulosic ethanol (left) made from bio-materials such as wood waste (right). PHOTO: ENERKEM
Enerkem also operates two other plants in Canada: a pilot facility in Sherbrooke, Que. and a commercial-scale plant in Westbury, Que. In Ontario, Woodland Biofuels Inc., a Mississauga-based renewable energy developer, is getting a $4 million investment from the province through its Innovation Demonstration Fund. The money will go towards the construction of a demonstration plant that will produce cellulosic ethanol from renewable wastes. Woodland’s patented technology produces sustainable fuels from virtually any type of biomass, including wood waste and agricultural waste.
Carpet firm closes bath plant ACTON VALE, Que.: Beaulieu Canada is shutting down production at its bath and floor plant in Acton, Que. The carpet manufacturer said the plant’s output went to one (unnamed) customer that has pulled the work back to its own plant in the US where there is
currently surplus production capacity. The shutdown, effective July 10, will affect the plant’s eight management staff and 40 unionized employees, 15 of whom are on a recall list. Beaulieu Canada said it’s seeking a buyer or a tenant for its bath and floor building. In the meantime, it will continue to perform full interior and exterior maintenance at the plant. Operations at its two other plants, one in Acton Vale that produces residential and commercial carpet, and the other in Farnham, Que., which produces continuous filament yarn, will continue.
M&A ACTIVITY fuelS automotive recovery TORONTO: Mergers and acquisitions will boost the automotive industry’s recovery, according to a report by PricewaterhouseCoopers LLP (PwC). Drive Value—Automotive M&A Insights (www.pwc.com/ auto) says M&A activity will continue to drive the fundamental changes necessary for
the near-term restructuring and long-term sustainability of the auto industry. Global deal values soared to US$121.9 billion, up 286% from $31.6 billion in 2008. Despite the record high deal value in 2009, the total deal volume fell to 532 transactions, representing a 3% decline from an already weak 2008 level and its lowest point since 2004. “The current deal environment is showing positive signs and presents a number of opportunities for both strategic and financial buyers who have access to financing,” says Damian Peluso, a PwC partner and Canadian automotive leader. The report notes as the auto industry consolidates and companies continue restructuring efforts, investors who have the liquidity and access to capital are well-positioned to pursue growth through acquisitions. Automotive companies with stronger operating models and cash positions will likely leverage M&A to develop a competitive advantage.
>> Feedback Protectionism is not the answer I enjoy reading PLANT very much. It’s important to me as a manufacturer trying to survive in these times. While I appreciate the position of CAW president Ken Lewenza in his article on the Siemens plant closure in Hamilton (Looking for leadership on plant closings, March 2010) its very one sided. When judging the actions of any person or company, there are always three sides to every story: Continued on page 6
>> PLANT Off-Site
Wendy Chen, a process improvement engineer with ThyssenKrupp Materials CA Ltd. in Concord, Ont., takes a break with PLANT on the Charles Bridge over the Vltava River in Prague, the capital of the Czech Republic. Appear in PLANT Off-Site and win $50! Have a photo taken of you reading PLANT in a remote, interesting or exotic location. Send photos with name, title, company, address and phone number to Off-Site, Canadian PLANT, One Mount Pleasant Rd., Toronto, Ont. M4Y 2Y5. Sorry, we can’t return them. Digital photos should be 5x7 inches and 300 dpi. Send them to joe.terrett@plant.rogers.com.
4 Canadian PLANT
May 2010
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EXAIR’s Ultrasonic Leak Detector can help you identify costly leaks in your compressed air system. Leaks can account for 30% of total compressor output! In many cases, finding one small leak can quickly pay for the leak detector. • Detects leaks up to 20’ (6.1m) away • Accurate in noisy industrial environments www.exair.com/18/496.htm
EXAIR’s award winning Super Air Knives™, Super Air Nozzles™, and Super Air Amplifiers™ entrain large volumes of room air using only a small amount of compressed air as the power source. They dramatically reduce air consumption and noise. • Low cost - Replaces noisy blowers • Improves blowoff performance and safety www.exair.com/18/423.htm
EXAIR’s EFC™ is an electronic flow control that minimizes compressed air use by turning off the compressed air when no part is present. For use on blowoff, drying, cooling, conveying and static elimination operations. • Easy hook up 100-240 VAC with compact eight function timer • Photoelectric sensor withstands water and dust www.exair.com/18/4efc.htm
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Departments
>> Industry View
Continued from page 4
yours, mine and the truth. Mr. Lewenza may think Buy Canadian legislation is the answer, but such protectionism would raise a big red flag to any company looking to locate in Ontario and probably cost more jobs. Think of “Buy American” and what that did to Canadian companies. Maybe he could reflect on what his union can do to help protect jobs. I find that ironic that he, or the CAW, don’t consider themselves part of the leadership on this issue. Could the union have made a difference at Siemens?
Personally I’m doing everything I can to protect jobs at our company. Our product competes with China. Not easy to do in these times, but thanks to innovation and attention to quality, we are doing okay. So far, by working together with our employees, the company has never laid anyone off.
>> Careers
Kevin (last name withheld), Oakville, Ont.
CenterLine (Windsor) Ltd. has appointed a new account manager. Chuck Roberts Chuck Roberts comes to the Windsor, Ont. supplier of resistance welding, metal forming and cold spray products from Ultimate Manufacturing Systems where he was the engineering manager.
We’d like to hear from you. Send letters to joe.terrett@ plant.rogers.com with your name, address and phone number. Letters will be edited.
EMC Metals Corp., a specialty metals company based in Vancouver, has appointed William Harris non-executive chairman of its board of directors,
replacing William Sheriff. Harris will lead the implementation of EMC’s expansion into specialty and exotic metals. He is presently a partner of Solo Management Group LLC, an investment and management consulting firm.
>> bulletins Researchers at the University of Waterloo in Ontario will receive $115,000 over two years from the Natural Sciences and Engineering Research Council of Canada (NSERC) under the Automotive Partnership Canada initiative. The light-weighting project will focus on the devel-
opment of a viable plastic heat exchanger. Ag Growth International Inc., a Winnipeg manufacturer of grain handling, storage and conditioning equipment, has acquired Mepu Oy, a manufacturer of grain drying systems for $11.7 million. Mepu, based in Ylane, Finland, gives Ag Growth a foothold in Europe. Wind Works Power Corp., a wind energy firm based in Ottawa, has been offered seven power purchase agreements through Ontario’s Feed-in-Tariff program for 80 megawatts.
>> Events
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SAVE 30% TO 70% CALL 1-800-263-3939 www.chem-ecol.com
WSIA 101: What You Must Know EAC June 3, Kitchener, Ont. Employers’ Advocacy Council (EAC) presents this workshop on the Workplace Safety & Insurance Act (WSIA 101) that introduces the critical elements of the WSIA and WSIB operation policy manuals. Register at events@EACforEmployers.org. Global Economic Overview and Exchange Rate Outlook CME, Ontario Division June 4, Mississauga, Ont. This session hosted by the Ontario division of Canadian Manufacturers & Exporters (CME) offers strategies used to manage currency volatility. Register at http://tiny.cc/ CME0406. 2010 Automotive Conference APMA/AUTO 21 June 7-10, Windsor The conference, hosted by the Automotive Parts Manufacturers' Association and AUTO 21 will focus on automotive industry trends, research and new technologies. Visit www.apma.ca. 2010 CANDU In-Service-Inspection and NDT in Canada CINDE June 14-17, Markham, Ont. The third international conference, presented by the CANDU Owners Group (COG) and the Canadian Institute for NDE (CINDE), will focus on the accuracy of non destructive testing in Canada, inspection experience, evaluation and correction. Visit http:// events.cinde.ca. World Tooling & Machining Conference ISTMA June 20-24, Windsor, Ont. This International Special Tooling and Machinery Association (ISTMA) conference hosted by the Canadian Tooling and Machining Association (CMTA) and the National Tooling and Machining Association (NTMA) will explore global opportunities for special tooling and machining companies. Visit www.istma.org/istma-world. For more events visit www.plant.ca, Community/Events.
6 Canadian PLANT
May 2010
Labour Relations << Departments
Time to improve retirement security By Ken Lewenza
T
he financial crisis and the recession that followed highlighted a terrible shortcoming in conventional wisdom concerning pensions and retirement security: retirement security shouldn’t be left to the private sector. For years, registered retirement savings plans (RRSPs) have been sold to Canadians as a smart and safe vehicle for putting away money and ensuring a decent income for retirement. Yet Statistics Canada reported that only 34% of the people who filed their taxes in 2008 contributed to an RRSP, down from 41% in 1997—even after a massive push by government and banks to convince Canadians of the plans’ merits. The financial crisis has highlighted how the RRSP system has let Canadians down. Even Don Drummond, the TD Bank’s chief economist, has been widely quoted as saying “RRSPs have been a colossal failure.” During the next decade as many as 2.7 million Canadians will retire and up to 72% of them do not have a workplace pension, leaving them incredibly vulnerable during their senior years. We saw the public fury that erupted when the right-wing media depicted emergency support for the auto industry as a bailout for the autoworkers’ “rich” pension fund. Citizens were angry that public money could go to bail out a pension fund when they must fend for themselves in retirement. Their anger is understandable, but misplaced.
Near destitution We should be angry that our retirement income may not be enough to live on and that some elderly Canadians must return to the workforce because our public pension system leaves them near destitution. We can do something to change it. Tens of thousands of Canadians participated in some form of lobby group or demonstration over the last year because of our pension system. These public actions are opening the eyes of politicians to the need for serious pension reform. Indeed, how to tackle the pension issue was an item on the agenda at a December meeting of federal and provincial finance ministers in Whitehorse. Since then the issue continues to gain momentum, including the call for changes to the CPP. Federal Finance Minister Jim Flaherty recently announced the government will conduct three public pension consultations and three expert roundtable discussions with invited guests. The consultations are taking place in Charlottetown, Quebec City and Richmond, BC and there will be roundtables in St. John’s, Nfld.; Winnipeg; and London, Ont. The CAW will present at the roundtable discussion in London, and has joined with the Canadian Labour Congress to urge that the CPP be doubled. Unlike other private plans, the CPP has proven itself
www.plant.ca
Canadian PLANT 7
more than a third of seniors with public pensions “(OldCurrently Age Security and CPP) have annual incomes under $15,000... ” to be a safe, efficient retirement savings plan. It’s portable, keeps up with inflation, and it includes contributions from both employers and workers. The doubling should take place by small increments over the next seven to 10 years. Currently more than a third of seniors with public pensions (Old Age Security and CPP) have annual incomes under $15,000. Boosting the Guaranteed Income Supplement by 15% would help these
lower-income seniors. The federal government must also create a new insurance plan to protect workplace pensions, especially when it comes to bankruptcies. In the last few years, far too many workers have seen their workplace pension plans greatly diminished or evaporate when the plant doors are closed, as was the case with Nortel. Do not accept the logic that fixing our retirement system should be left to the
private sector. Strengthening the CPP is an issue that involves all Canadians. We need to do something about it. For more information on the CAW’s ongoing pension campaign visit www. caw.ca/en/7978.htm. Ken Lewenza is the president of the Canadian Auto Workers Union, which represents 225,000 workers. E-mail cawcomm@caw.ca. Comments? E-mail joe.terrett@plant. rogers.com.
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Departments
>> Economy 180
MANUFACTURING GDP gross domestic product billions of chained (2000) dollars
175 SOURCE: STATISTICS CANADA
170 165 160 155 150 145
8 Canadian PLANT
2009
J F 2010
Manufacturing output grew 1.2% in February, with 14 of 21 major groups advancing. Durable goods manufacturing increased 1.4%, led by fabricated metal products, non-metallic mineral products, as well as computer and electronic products. Non-durable goods manufacturers (notably pharmaceuticals and beverages) increased production 1.1 per cent. Manufacturing of transportation equipment, and of petroleum and coal products, was down.
Retiring boomers will slow growth GLOBAL GDP FOR 2007-11
125
6
CANADA’S MULITIFACTOR PRODUCTIVITY index (1961=1000)
120 4
0 -2
Avg. 2007-09 Industrialized countries
2010 Developing countries
2011 World total
EDC forecasts global GDP will rise to 3.7% in 2010 and 4.2% in 2011. Developed markets will follow emerging markets with 2.1% growth this year and 2.6% in 2011. The EDC says the US will outperform other developed markets, supported by ongoing incremental improvements in home inventories, household debt bank balances and general market confidence.
been strong, but accompanied by high and still-rising inventory levels, surplus productive capacity and low aggregate demand. EDC expects an orderly softening in prices, but there’s danger a sharper correction could test overall confidence. • Inflation is an increasing worry. High unemployment and generally low capacity utilization suggest core inflation pressures will remain weak for some time, even if growth accelerates rapidly. The challenge will be to unwind stimulus in a way that doesn’t upset current growth before sustainable recovery occurs. EDC pegs world growth at 3.7% (compared to a 1.1% contraction last year), but it contends that’s still not enough to be called a true recovery. Improvements in fundamentals will contribute to a 4.2% expansion in 2011, while emerging markets promise faster and steadier growth. Canada’s growth is expected to rise 2.5% this year and 2.9% next year, with some industries, such as the auto sector, posting double-digit gains, although still well below previous peak activity by year-end. Visit www.edc.ca/gef for a pdf of the global forecast.
110 105 100 95
61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06
TD economics notes that between 2002 and 2007, the economy was growing at a solid pace, profits were robust yet business investment in machinery and equipment rose just 5% per annum, indicating businesses were not being innovative enough. The multi-factor productivity metric illustrates how firms take advantage of new technologies and more skilled workers. In 2008 Canada was at the same level as it was in 1970.
36
CANADIANS SHIFT FROM SMALL CARS % of total sales y/y % change
8 6
34 4 2
32
0 30
28
-2
Small cars (LHS) New car prices (RHS) 00
02
04
06
08
10
-4
Scotia Bank reports the automotive market continues to gain momentum across North America with double-digit volumes in Canada and the US during March. Canada is running 1.6 million annualized units, up sharply from 1.46 million for 2009. The numbers show Canadians are shifting from small- and lower-priced cars to more expensive light trucks. Annualized North American vehicle output for the second quarter is expected to hit 12.4 million units, up from 11.5 million in the first quarter.
May 2010
SOURCE: SCOTIA BANK
2
SOURCE: STATISTICS CANADA
115 SOURCE: EDC ECONOMICS
C
J F 2008
ECONOMIC DEVELOPMENTS AND TRENDS
anada can expect robust economic growth over number the next four years, but it will slow after 2014 as baby boomers retire from the workforce, according to a Conference Board of Canada report. Canada’s Canadian Outlook: Long-Term Economic Forecast says real GDP will increase 3.1% this year, and 3.7% in 2011, and will average 3.4% from 2012 to 2015, while the national unemployment rate is expected to fall below 6 per cent. “Beyond 2014, however, economic growth will be restrained as the baby boomers leave the workforce,” said Pedro Antunes, director, national and provincial outlook at the Conference Board. “Labour shortages brought on by a wave of retirements will be the dominant economic trend until about 2030.” With tight labour markets on the horizon, the Conference Board projects annual immigration to reach just over 350,000 per year in the final three years of the forecast, 2028 to 2030. The Ottawa-based research firm doesn’t expect strong immigration levels to reverse Canada’s aging trend, but they will help stabilize total population growth throughout the forecast period. By 2030, Canada’s population will reach 41.7 million, up from 33.6 million in 2009. Export Development Canada (EDC) says exports will rebound from a dismal 2009 with an 11% increase this year, but it warns we’re not out of the woods yet. The EDC’s Global Export Forecast predicts Canadian exports will rise 7% in 2011when true, sustainable growth will begin. The report notes current growth numbers are supported by a heavy dose of public stimulus worth nearly 4% of OECD GDP, a significant impact when compared with average annual growth in OECD economies. Four risks to export recovery are identified: • Fiscal stimulus will soon stop contributing to bottom-line growth, taking many by surprise. Uncertainty could harm overall growth. • Financial markets face one more test. Loan defaults, lagging the economic cycle, are now hitting peak levels. Weathering this phase well is critical for the sector, and for the overall economic outlook. • Crude oil and base metals price increases have
F
Automakers are
lightening
Automotive << Innovations
up
Steel and alloys compete for vehicle content By Noelle Stapinsky, Features Editor
A
s automakers focus more on light-weighting vehicles, there has been some debate over which is better: alloys such as aluminum and magnesium or advanced high-strength steels. Some firms are even dabbling in composite plastic materials in anticipation of the electric car. Aluminum and magnesium are used for component parts, but automotive manufacturers argue the cost of these materials is high and unpredictable. Making the switch from conventional steel products is far too pricey. “Aluminum is becoming an important component part for engine blocks and body parts,” says Steve Treiber, engineering professor at McMaster University in Hamilton. “And the only time you’re going to find magnesium is in wheels and engine components. But both are strictly for high-end applications. You’re not going to see them in a Honda Civic unless some kid decided to tune his car.” Indeed, aluminum, magnesium and titanium are used mainly in the high-performance racecars that reach 12,000 rpm, or in luxury niche vehicles. And some automakers such as Aston Martin are going even more high-end. It unveiled its One-77 two-door sports coupe featuring a complete carbon fibre chassis at the 2009 Geneva Motor show. Layers of the carbon fibre are applied by hand and put into an autoclave multiple times for heating and forming. Sleek exterior body panels are made of handcrafted aluminum. “It’s a $2-million car,” laughs Treiber, “so it’s a little out of most people’s price range.” Although the tensile strength and crashability of these alternatives are comparable to steel, they probably won’t make it into mainstream production unless the cost comes down. Eugene Ng, a mechanical engineer at McMaster University, partnered with Treiber to create the Manufacturing Technology Network to promote innovation in manufacturing. He says there’s not a lot of magnesium and aluminum development being done in Canada because GM, Ford and Chrysler dictate which materials parts manufacturers must use, and next-generation high-strength steel will continue to have a firm grip on the market. Gunter Riegel, one of the owners of Markham, Ont.based Woodbine Tool and Die Manufacturing Ltd., a tier two tool and die manufacturer that produces stampings and welded assemblies for the automotive industry, admits he looked into working with magnesium but passed on it, partly because of cost fluctuation. “I’m not equipped to work with magnesium here and I don’t really want to because it’s a dirty operation,” says Riegel. “Depending on what kind of machining you do, it can be somewhat dangerous.” Treiber concurs. “When machining magnesium, the
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Steel makers are focused on developing a third generation of advanced high-strength steel.
mixture of heat, pressure and oxygen can make it combust. But if you’re forming it, it’s okay.” Riegel says steel continues to be one of the most cost effective and stable commodities. The first generation of advanced high-strength steel (AHSS) that came out in the late 1990s was dual-phase with transformation induced plasticity (TRIP)—a microstructure comprised of austenite embedded in a matrix of ferrite. The second generation employed an extreme alloy chemistry consisting of about 20% manganese, but Peter Bradgley, director of research for US Steel Canada, says this generation had drawbacks because it was too complex to manufacture, making it more expensive. “Steel makers are now focused on developing a third generation of AHSS. [It] will have a cost structure [similar to] the first generation,” says Bradgley. As the strength of the steel goes up, ductility is reduced, but by using less manganese, the new generation steel maintains high strength (in the 800 to 1,200 pascal range) as well as ductility. This will allow automakers to down-gauge the steel. “Steel with a tensile strength of 980–versus first generation steel that had a tensile strength of 40—achieves
Green partnership Magna International recently announced it’s partnering with the National Research Council (NRC) to build a $7.2-million facility that will develop lighter, more environmentally friendly parts for Canada’s automotive industry. Dubbed the Magna-NRC Composite Centre of Excellence, the facility will be located in an existing Magna facility in Concord, Ont. and is slated to open this summer. In a press release, Bob Brownlee, president of Aurora, Ont.-based Magna’s interior and exterior division, said the facility will help the company maintain a competitive position in the global auto parts industry.
PHOTO: iSTOCKPHOTO
up to a 31% weight reduction if you maintain a constant ratio between the tensile strength and thickness,” Bradgley explains. Riegel has his eye on this next generation of steel and is already re-tooling in anticipation.
Weight reduction “In the old days, you would make a cross beam from steel out of 4-millimetre material. If you use this new type of steel, you can literally use just two thirds of that. You can reduce the weight of the car and the strength of the car is not compromised.” Steels are not only stronger and lighter than they were five or 10 years ago, they’re more rust-resistant and they’re convincing automakers that have been developing alternatives to switch back, says Treiber. Bradgley notes a lot of aluminum designs in flagship vehicles—such as the 2009 Jaguar XF, Audi Q7 and BMW 57 series—are using high levels of AHSS now. But as the industry moves closer to producing electric vehicles, both Treiber and Ng believe there’s no single known metal that will make them light enough. “For these vehicles to be practical they need to be able to go about 500 kilometres on a single charge,” says Treiber. “To get that, you’ll need a much lighter car and you’re not going to do it with aluminum or steel. It’s going to end up being some composite material.” Some steel engine components will still be needed, but Ng and Treiber agree 10 years from now $20,000 cars will be plainer with less luxurious components. The challenge for OEMs will be to convince consumers they can do with fewer bells and whistles. Noelle Stapinsky is the features editor of Canadian PLANT and Canadian Manufacturing.com. E-mail noelle.stapinsky@rci.rogers.com. Comments? E-mail joe.terrett@plant.rogers.com.
Canadian PLANT 9
Innovation
>> R&D
>> Testing
ACEing innovations
A
utomotive companies, reusable energy developers and others will soon have access to a state-of-the-art research, development and innovation centre at the University of Ontario Institute of Technology (UOIT) in Oshawa. The 16,300-square-metre General Motors of Canada Automotive Centre of Excellence (ACE) will be divided into two distinct sections: one for core research and the other for training, says UOIT spokesman Dan Miles. “A full range of testing facilities will be available in the research section as well as one of the world’s largest and most sophisticated climatic wind tunnels.” It can generate wind speeds of more than 240 kilometres per hour, and temperatures ranging from -40 to 60 degress C with humidity fluctuating from 5% to 95% anytime of the year. The large rotating chassis dynamometer tests road load and a solar array replicates the effects of the sun. ACE will also have a four-poster shaker to test products in an up and down motion for durability and the detection of buzz, squeak or rattle. And a multi-axial simulation table will allow researchers to test products for structural durability, noise and vibration using a full range of motion. The five-floor centre houses offices, laboratories and common work areas with machine tools such as mills, welders, grinders and lathes. Although ACE has been designed to accommodate cars, trucks and buses, it has the capacity to handle locomotives, military vehicles, aircraft and aerospace components and renewable energy technology such as wind turbines. But there is also potential for other uses, such as training. Miles says military personnel and rescue crews or competitive athletes could conduct performance testing of outdoor survival gear. The total cost of the centre will be more than $123 million and it will be available for use by the fall.
Large dynamometer inside the climatic wind tunnel.
PHOTO: UOIT
Sounding off on vehicle
acoustics By Colin Novak
A
utomotive manufacturers have made great efforts to improve the performance and reliability of cars over the past 20 years and as a result, consumers are more aware of other characteristics such as noise, but it’s the quality of the noise that may attract or repel a customer from a purchase. The goal should be to improve the quality of the sounds produced by the automobile, which falls within a research area called sound quality or psychoacoustics. Many factors affect the evaluation of sound Sound quality is important when assessing the quality of a vehicle. quality. Traditional objective measuring and PHOTO: iSTOCKPHOTO analysis techniques such as A-weighted sound pressure and frequency analysis are good at quantifyinterior of a vehicle from exterior sounds such as road ing noise emission levels, but they fall short analyzing noise, but it impairs the driver’s ability to hear high sound quality. Jury-testing techniques and purpose frequency emergency sirens. designed psychoacoustic metrics are key because ultimately only the human ear can tell product engineers Gauging driver reaction and developers whether a product has the right sound. A low frequency modulation penetrates the soundproofWith the help of the AUTO21 Network Centres of ing but researchers want to determine to what degree Excellence, the Noise Vibration Harshness and Sound it grabs the attention of a driver without being startling. Quality (NVH-SQ) research lab at the University of To accomplish this, a Bruel & Kjaer NVH driving simulaWindsor in Windsor, Ont. is determining sound quality tor is being used to gauge a driver’s reaction to an approperties associated with the use of magnesium as a proaching police vehicle. Like a real car, the simulator structural component in automobiles. The goal is to has a steering wheel, foot pedals and three very large minimize the use of sound absorbing materials, which screens that project the roadway in front of the driver, would negate the weight advantage of the magnesium. including signs and other traffic. While listening through Magnesium’s lower weight would contribute to headphones, the driver hears a realistic representation improved fuel economy while maintaining strucof the car’s sounds and the approaching police car. tural strength but there would be more noise transfer Automobiles today are much quieter, but more work throughout the vehicle. Researchers use several sound needs to be done to refine noise quality. More comfortquality metrics and then optimize the use of the magneable vehicles mean happier consumers, which will be sium to derive the best acoustic properties. the pay-off for automotive manufacturers. Sound quality research is also investigating a new type of police siren that emits a low frequency modulating Colin Novak is a researcher for the AUTO21 Network of sound with the conventional high frequency wailing siren. Centres of Excellence and an assistant professor at the 6031 Plantof-Windsor. ASPSC080.qxd 4/21/10 2:21 PM Page 1 Modern vehicles are better designed to isolate the University Visit www.auto21.ca.
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May 2010
Currency << Management
Don’t fear the
loonie
Globalization is key to hedging against dollar volatility
By Noelle Stapinsky, Features Editor
C
anadian manufacturers have declared the high Canadian dollar to be a national emergency. Although it may be good for importers who purchase equipment and machinery from abroad, exporters are howling over dangerously shrinking margins. But a new study by the Conference Board of Canada shows manufacturers are the mostly likely to weather the loonie’s volatility because they have more ways to hedge against its fluctuations. The Dollar Volatility: Who Should Care? report used four indicators: export intensity; import intensity of inputs; import intensity of machinery and equipment investment; and the extent of Canadian direct investment abroad (CDIA), which identified 27 industries that rely heavily on international transactions. The study found globalized industries such as oil and gas extraction, plastics, primary metal, non-metallic mineral production, and electronic product manufacturing, have more flexibility with operating structures. In the larger globalized business category, “you have companies like Bombardier, which has plants in Mexico, the US, and a presence in Asia. Research In Motion (RIM) is another example,” says Louis Theriault, director of the Conference Board’s International Trade and Investment Centre. In the smaller business category companies find niches that tap into foreign markets and global supply chains. They generally have this strategy in place from the beginning and simply follow the demand. “You can’t just lean on the US markets for revenue or only Canadian suppliers and limit yourself to domestic activity alone in terms of production,” says Theriault. “For large and medium manufacturers, opening plants abroad and outsourcing makes sense.”
Moving forward However, most Canadian manufacturers fall into the small to medium enterprise (SME) category. They have a long history of trading with the US and rely heavily on North American supply chains. In today’s “new normal” economy, he says SMEs must change the way they look at global markets and diversify to move forward. The global trade landscape has shifted dramatically in the past 10 years, from about 85% of our exports going to the US to about 77% today. And about 63% of Canada’s imports came from the US, but
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The gap has narrowed between the value of Canadian and US currencies, but manufacturers have more ways to hedge against fluctuations.
that too, has dropped to 56 per cent. Although the US still accounts for much of our two-way trade, Canadian companies must find a place in the global supply chain. “Small manufacturers may think of Asia and Europe as other markets for suppliers, but they also have to think of them as a final market for their products,” says Theriault.
abroad, buy their currency and secure contracts at the value their currency is at that time to secure revenue and cost streams. Recently, federal finance minister Jim Flaherty suggested there’s a new comfort level for industry and a strong loonie could help drive Canadian productivity by boosting investment in imported machinery and equipment priced in US dollars.
You can’t just lean on the US markets for revenue or only “Canadian suppliers and limit yourself to domestic activity alone in terms of production… ” Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) have experts to help small manufacturers take advantage of the global supply chain and make it part of its globalization strategy. “If you want to hedge against dollar volatility, you need to be more present in foreign markets and look at foreign suppliers,” says Theriault. “All of this builds a natural hedging to your cost structure.” SMEs can also leverage customers serving an international market. A multinational that you supply indirectly is also a way to get engaged with the global supply chain. Look into financial hedging, too—play the currency market. For example, if you’re dealing with a supplier or client
But another Conference Board study on innovation in Canada says manufacturers have been reluctant to invest in advanced machinery and equipment, whether it’s good times or bad. “[Canadian manufacturers] are not investing at the same pace as our competitors,” says Theriault. “This has been a phenomenon driven by a really low dollar. When the cash flow starts looking better again with a higher dollar, I think we’ll start seeing more of that type of investment.” When the dollar is strong and you have the financial means to start planning for the next five years, he advises looking at the state-of-the-art technology your competitors are using. Although investment is one way to
PHOTO: iSTOCKPHOTO
overcome Canada’s lagging productivity performance, it’s not the only way. How you use technology combined with labour will help fill that productivity gap.
Filling the gap Companies can also corner their markets through product innovation, improved processes and marketing innovations. Over the past few years the Canadian dollar has peaked and declined against most major currencies, and such rapid movement has made it difficult for many businesses to develop workable cost structures. As the Canadian dollar inches towards parity, Canada’s economy is picking up the pace, ranking high among the G8. In a recent Statistics Canada report, labour productivity posted its biggest gains since 1998, although it was a small boost and we still trail the US. To gain a truly natural hedge against a strong dollar and drive up our productivity, manufacturers will have to get serious about diversification and globalization. Noelle Stapinsky is the features editor of Canadian PLANT and Canadian Manufacturing.com. E-mail noelle. stapinsky@rci.rogers.com. Comments? E-mail joe.terrett@plant. rogers.com.
Canadian PLANT 11
Management
>> SR&ED
CRA accelerates innovation Companies that produce qualifying new or improved products or processes “may deduct 100% of all eligible current and capital expenditures... ”
By Sandy Hale
I
nnovation is a cornerstone of the federal government’s plans to create economic growth in Canada. In fact, the March federal budget trumpets innovation as one of the key ways the government intends to “strengthen our capacity for world-leading research, improve commercialization, accelerate private sector investment, enhance the ability of Canadian firms to participate in global markets, and create a more competitive business environment.” A number of recent announcements have followed that promise to improve the Scientific Research and Experimental Development (SR&ED) tax incentive. Many Canadians are not aware this program distributes over $4 billion in tax credits annually to more than 18,000
Canadian businesses. Tax credits delivered in a timely and consistent manner help make products and processes more innovative, yet the program has been criticized for inconsistent claims approvals and delays in delivering credits. An in-depth review commissioned by the National Revenue ministry delved into these issues and the Canada Revenue Agency (CRA) has been actively working to strengthen the program’s administration. For example, to ensure policies and procedures are aligned with current business practices and consistently applied across the country, the CRA is clarifying and consolidating policies, improving claim processes and forms, enhanc-
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ing communications, reviewing appeal procedures and augmenting auditor training. This process continues, but a number of improvements are now in place that may help manufacturers wishing to take advantage of the program. The CRA is addressing consistency concerns with a new Claim Review Manual that streamlines audit procedures. Since the claim review process is highly subjective, it’s hoped this tool will contribute to more consistent reviews and approvals. The manual sets out comprehensive procedures for the CRA to explain the program’s requirements, processes and decisions. It also describes procedures CRA auditors can use to inform claimants of other potential SR&ED claims not included in the original submission and to provide an opportunity to resubmit within the filing deadline. The manual includes sections on planning and preparing for a review, conducting on-site meetings and communicating, reporting and finalizing results. There are also sections describing how to work with claimants and their representatives, there’s a taxpayer bill of rights and descriptions of the mutual expectations of claimants and CRA advisors who evaluate the eligibility of the work. A condensed version of this manual is available at www.cra-arc.gc.ca. To promote the timely resolution of claims, the CRA will begin in July to report the time required to review an SR&ED claim from start to finish. These enhancements reflect the federal government’s belief that supporting business innovation will improve productivity growth, which is necessary to increase wealth and deal with such challenges as an aging population and a stronger currency.
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Bank of Canada Governor Mark Carney notes Canada’s governments have put conditions for a productivity revival in place and he is encouraging Canadian businesses to invest in innovation. The budget committed to a comprehensive review of all federal support for R&D and the government promises to reduce red tape; eliminate tariffs on machinery, equipment and goods imported for manufacturing; improve reductions business access to federal programs and information; and to continue corporate tax reductions. For manufacturers in particular, the government proposes to enhance their ability to participate in global markets by making Canada the first G20 country to become a tariff-free manufacturing zone. For manufacturers keen to increase productivity, the SR&ED program is a wise place to start. Companies that produce qualifying new or improved products or processes may deduct 100% of all eligible current and capital expenditures. They also receive federal investment tax credits ranging from 20% to 35% based on a company’s business structure, taxable income and taxable Canadian capital. The higher level of incentives is generally reserved for Canadian-controlled private corporations. With additional SR&ED policy initiatives under development and billions of dollars in tax credits available, manufacturers now have compelling reasons to invest in innovation. Sandy Hale is a tax partner with BDO Canada LLP (www.bdo.ca) based in Mississauga, Ont., who works with companies to secure federal and provincial tax refunds for their research and development expenditures. Phone (905) 270-7700 or e-mail shale@bdo.ca.
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Comments? E-mail joe.terrett@plant.rogers.com. PFERD1.indd 1
12 Canadian PLANT
4/6/10 1:40:04 PM
May 2010
Automation << Technology
Quick change for packaging machinery
>> Plantware BE$T iPhone app
Servo-technology cuts set-up time
Here’s a neat app for your iPhone. In fact, the Baldor Electric Co. says it’s the “BE$T.” The Fort Smith, Ark.based manufacturer of energy saving motors, power transmission products and generators says the desktop program compares an existing motor’s annual electricity use based on its nominal efficiency to Baldor’s Standard-E and Super-E premium efficiency motors. It then recommends by catalogue number the appropriate Baldor motor for the application. And it provides the payback period and the savings on a group of motors when they’re all changed over to Baldor products. The BE$T iPhone application is available from iTunes and can be located by searching “baldor.” It’s also available in CD-ROM format or downloadable from the company web site. www.baldor.com
By Noelle Stapinsky, Features Editor
I
The 3.5-in. PCM-9361 single board computer from Advantech is a low power user: just 10 watts. Advantech, a provider of embedded platform products based in Irvine, Calif., has included the small yet powerful 45 nm Intel Atom N270 processor with a 945GSE and ICH7M chipset to drive the PCM-9361. Multiple display outputs are supported, including: 36-bit LVDS1, 48-bit LVDS2, CRT and 18-bit TTL LCD. The computer’s total height, including the fanless heatsink, is 27 mm, making it suitable for a 1U chassis design. Advantech’s Software API (SUSI) is included to easily integrate and configure applications. www.advantech.com
Edson president Robert Hattin (left) and operations manager Bob Krouse with Edson‘s new SR 3600 large arc and tray packer handling paper towel rolls. PHOTO: NOELLE STAPINSKY
16, but after every eight there’s another control module that you have to install.” The 24-volt servomotors require minimal real estate on the power panel and avoid hefty installations of high voltage cables or large transformers for power supply. Running on an Allen-Bradley PLC, operators adjust the packing configurations on a human machine interface (HMI) touch screen in real time. Instead of a 30-minute changeover, it now takes just five minutes. Krouse and Hattin find a client’s first reaction to the machine really interesting. A quick demo shows the machine up and running within minutes, and the math is simple: if it costs $10 a case and the Edson case packer is spitting out 20 cases a minute, that’s $200 a minute. “The first client that purchased this machine is already asking how we could retrofit their existing machines,” says Hattin. Edson has also incorporated radio frequency identification technology (RFID) into this system. Each change part has a robust Balluff industrial RFID tag attached to it which lines up to mounted tag readers inside the machine. This ensures the appropriate part is in place for the machine’s packaging configuration. “If the incorrect part is put in the machine, the machine will not run—it’s an electronic Poke Yoke,” says Krouse. Although Edson’s technology was designed as a solution to a specific problem in a specific sector, Hattin discovered it also met needs in other markets. “The really cool part is that it’s like a Windows operating system, but developed for mechatronic automation,” says Hattin. “We came up with six variants of the mechatronic design so we can apply
it to anything.” Edson invests up to 8% of its annual revenue on R&D. Its company motto is, “Always thinking, thinking all ways,” laughs Hattin. “It’s like Monster Garage here. We’re always building something. [Our equipment] needs to look like a Ferrari and run like an Edson.” Noelle Stapinsky is the features editor of Canadian PLANT and Canadian Manufacturing.com. E-mail noelle. stapinsky@rci.rogers.com. Comments? E-mail joe.terrett@plant. rogers.com.
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n the packaging industry, reconfiguring case packing machines for new products could take 30 minutes or even days if an entire line needs to be changed. Well, not anymore. A new servo automation technology developed by Edson Packaging Machinery Ltd. will handle the job within minutes. Operators routinely rely on charts to switch the machine’s change parts to accommodate product configuration and packaging requirements that can have 30 to 60 points of adjustment and millions of combinations for different set ups. Since Canadian packagers need to produce a wide range of skews in short production runs, the Hamilton manufacturer of packaging machinery saw an opportunity to reduce the extended changeover time between runs and increase overall equipment effectiveness. “One of the biggest concerns expressed by our customers involves machinery set up and centre-lining, and the amount of time it took,” says Robert Hattin, president of Edson. “For us the technology was never there to cost-effectively automate it.” However, after scouring the world for the perfect automated servo technology that would meet its criteria—a low voltage motor for easy wiring; absolute encoders to eliminate re-homing; a small body that didn’t require much panel space; and the standard fittings required to retrofit to existing machines—Edson turned to Festo Inc., a German automation supplier. “They didn’t have it exactly, but Festo had something similar and was willing to engineer something exclusive for us— they saw the bigger picture,” says Bob Krouse, Edson’s operations manager. It retrofits onto any of Edson’s existing technology, but it can also be used on practically any mechanical production set up that requires tricky adjustments. Festo’s engineers came up with the low-voltage servo technology that could be offered at a palatable price point with a good return on investment (ROI) for the end user. That servo—branded the Edson E-Just (electronic adjustment)—was the lynchpin that made Edson’s new SR 3600 large case and tray packer a possibility. The machine combines multi-servo automation with a sleek mechanical assembly—a Canadian first in case packing innovation. The SR 3600 uses E-Just to automate 16 axes, which accomplishes all 16 changeover points in just 90 seconds. This automation also provides 100% positional repeatability within one millimetre. “Our current machine uses 16 axes, but those can be scaled up in groups of eight,” says Krouse. “There’s no limitation that [requires] you to use eight or
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Canadian PLANT 13
Sustainability
>> Energy
Powering up for
>> Green Manufacturing
solar
Use HR to grow a green culture By Brett Wills
W
hether any continuous improvement programs—lean, green or otherwise—succeed or fail will depend on company culture. Every team member must understand the environmental vision, goals and why they’re important. The human resources department can help to engage employees to create a greener culture by following these four tips: 1. Incorporate green into the orientation package. Include the organization’s environmental vision, goals and why they’re important. Providing this information up front to a new employee sends the message that green is part of the company culture. Provide a refresher orientation for existing employees that includes the green message. 2. Add green to job descriptions and performance reviews. Employees must understand that green is part of their responsibilities. Revise job descriptions to include green priorities. Including green efforts in performance metrics will reinforce the message. 3. Develop incentive programs. Rewarding people for their green efforts both on and off the job addresses the all-important question, “what’s in it for them.” Key to a successful incentive program is the tailoring of rewards to the employees’ preferences. Some may like a voucher for a movie or a restaurant, others may be motivated by a paid day off, shares in the company or an opportunity to climb the corporate ladder. 4. Provide training and support. Employees require knowledge of the tools, techniques and processes used to achieve green objectives. Organizing training and ensuring they have the support needed to complete green projects will help ensure successful green endeavours, which increases employee buy in. It’s all about creating and maintaining a winning green culture. The most successful organizations will integrate green thinking across the organization through employee engagement and achieve results by reaching people through the efforts of human resources. 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.
Sustainable Energy targets the Ontario market
The SUNERGY inverter connects solar cells to the power grid for increased efficiency. PHOTO: SUSTAINABLE ENERGY
By Joe Terrett, Editor
C
limate change is hot right now— pardon the word play—creating opportunities for innovative companies ready to tackle a growing global market for cleaner energy technologies. Yet in some respects, Canada seems to be missing the bus on global climatefriendly trade, according to a March report by the Conference Board of Canada. World trade in clean tech grew 10% annually between 2002 and 2008, but Canadian exports haven’t done so, declares Global Climate-Friendly Trade: Canada’s Chance to Clean Up. In fact, taking inflation into account, exports have fallen. The report does note Canada has an advantage in several categories, one of them being photosensitive semiconductor devices (translation: solar cell technology). That’s an area—specifically photo voltaic (PV) technology—in which Sustainable Energy Technologies Ltd. is, ahem…shining. The Calgary-based developer and manufacturer of power inverters for gridconnected solar PV systems is making global deals and expanding operations to Ontario where it expects to do some significant business under the Ontario Power Authority’s Feed In Program. The company, formed about 12 years ago, has developed innovative and unique power inverters commercialized under its SUNERGY trademark (and part of the PARALEX line of solar generator products and systems) that increase the energy yield of individual solar modules. The technology, based on nine US and Canadian patents (additional patents pending) was originally applied to inverters for attaching fuel cells to the power
grid, says former president and CEO Ron Bucher (who recently resigned from the post for personal reasons). “Basically we’ve changed solar cells so they can operate at a lower voltage, which is a unique technology in terms of efficiency because it has solved a lot of problems acquiring and harvesting solar energy,” says Bucher. The inverters used with solar cell arrays on institutional and commercial rooftops or on the ground, handle rapid power fluctuations to maintain a continuous connection to the grid.
Solar efficiency Sustainable Energy’s technology is based on parallel wiring rather than the more conventional serial wiring commonly used in the industry. Serial operates like a line of old Christmas tree lights. One light goes out, the whole line is down. In a parallel series of solar cells, if one malfunctions the rest continue to operate. Bucher says a parallel system increases efficiency by 5% to 15 per cent. The system also addresses a safety issue. Most rooftop installations are high voltage (600 to 1,000 volts), which makes installation and access a more highly charged affair. Sustainable Energy’s system is 100 volts or less, and below the 120-volt extra low voltage threshold of the International Electro-Technical Commission. The company appears to be in the right place at the right time. The PV industry is the fastest growing segment in the world and potentially the fastest growing for the next decade, says an ARC Advisory Group study. The Boston research firm says the solar inverter market was $3.1 billion in 2008 and it’s forecasting more than $12 billion by 2014. “This is a very dynamic market that is going against the tide of the remnants of the global recession, and while Europe has been a leader in PV solar farm imple-
mentations, China and the US are racing to take over the lead,” said Steve Clouther, the author of ARC’s Solar Inverter Worldwide Outlook. “But trying to sell a component into established markets is like trying to paddle upstream in a canoe,” says Bucher. Ontario represents its first opportunity for a steady revenue stream, which is why Sustainable Energy is moving its manufacturing there. Bucher says software engineering will remain in Calgary but inventory, assembly and testing will be moved to the Ontario location likely in the Niagara Peninsula region. The company currently employs about 30 people, but when the 80,000 to 90,000 square-foot plant is operational, 300 to 400 people will be added to the payroll. With the feed in tariff, a manufacturer with a 100,000 to 120,000 square feet of roof could put in an installation and be paid a guaranteed 71 cents per kilowatthour of power hooked up to the provincial grid. Bucher says a 250-kilowatt generator using Sustainable Energy’s equipment will cost about $1.25 million. “You get the feed in guaranteed at that rate for 20 years, [so] the system will be paid off within two and half years and you will make back between $4 million and $5 million over the remaining 17 ½ years.” He notes solar power is lagging in the US, but it will certainly take off. If business is good in Ontario, the company will extend its reach in North America and to other export markets. Sustainable Energy’s next step is to expand its manufacturing capabilities as distribution and development projects come online. Doing so will demonstrate that at least one Canadian company is positioning itself to be player in global climate-friendly trade. Comments? E-mail joe.terrett@plant. rogers.com.
Get connected www.plant.ca 14 Canadian PLANT
• • • •
Regular news updates Online-only features Access to research, reports Digital edition of Canadian PLANT
May 2010
Think Lean << Operations
>> Tech Tip
testing DC armatures
D
C armatures are the most time-consuming components to test, but they are also the easiest. There are three basic methods that can be used. With trending, all measurements are used; however, a bar-to-bar impedance measurement is used for assembled and disassembled testing. When testing an assembled DC armature, the best method is to perform a bar-to-bar test using the motor brushes. If the motor has two brushes, they don’t need to be raised. If there are four or more sets of brushes, all but two sets 90 degrees from each other need to be raised, which takes them out of the testing circuit. Good contact is maintained by ensuring more than 90% of the brush is in contact with the commutator bars, which should be clean. Once set, mark the position of one bar on the commutator, then bring the bar to a position where it is just under the leading edge of one of the brushes. In the assembled test, you will probably be covering at least one and a half bars with the brush. Perform an impedance test, mark down the reading, and move the armature so that the leading edge of the brush is over the next commutator bar. Take the next impedance reading and continue until each bar has been tested. A good result will show a consistent pattern, while an inconsistent pattern will identify a poor armature. In disassembled bar-to-bar testing, the tester will use an armature fixture or test leads to connect from bar-to-bar. The spacing between each impedance reading should be constant and about 90 to 180 degrees from each other. The first bar should be marked and testing should then be continued until one leg of the testing fixture or test lead has made it 360 degrees around the commutator. Mark the impedance for each bar-to-bar test then look to ensure there is a consistent pattern.
Excerpt with permission from Electrical Motor Diagnostics, by Success by Design Publishing, Old Saybrook, Conn. Visit www.motordoc.com.
FRA-RED HEAT.indd 1
Optimize your
maintenance team By Richard Kunst
Organize your maintenance team by applying 5S+1. PHOTO: iSTOCKPHOTO
O
kay, I probably shouldn’t generalize, but I am convinced many organizations aren’t optimizing their maintenance groups. When I visit most companies the plant tour normally bypasses the maintenance shop, likely because they would be embarrassed by what I may see. In other cases, the group is secluded in a back part of the facility shrouded behind a tarp or curtain, supposedly to shield employees from welding arcs. Here’s what I think: maintenance folks tend to have the following common traits: • They have a valued skill set. • They like to keep everything, just in case, which means a lot of dollars. • They’re always busy…just ask them. • They’re doing stuff, but what stuff? We’re never entirely sure. • They never travel alone anywhere in the plant. • They’re like paramedics ready to administer first aid to equipment. How do we make the department more pro-active and of value to the organization? Get them organized through the application of 5S+1. This may seem basic but if you think it’s a difficult task within the plant, getting maintenance people organized is 100 times more so. Remember, they’re always busy. But if a machine suddenly breaks down, how much search time is consumed while they walk back to their maintenance cave searching for replacement parts? When equipment breaks, the accountability of expense controls is put aside to get equipment up and running. Categorize their MRO supplies and place them on a kanban system or VMI
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program. All of the fittings, fasteners and other gadgets used for equipment first aid will quickly consume a lot of cash. Most companies remain focused on just getting the employees to complete daily TPM tasks. Get your mechanics to be more pro-active. If a TPM program is already in place, have them conduct daily audits of specific machines and operations. This is a great opportunity for enhancing the training of team members who are running the equipment. Schedule your mechanics to run a machine or operation for an extended period of time during the week. They’ll find areas of opportunity and have the ability to enhance and improve the process capability of the machine and/or the process. Be prepared for push back since they will claim not to have time to run the machine… because they are busy doing stuff. Richard Kunst is president and CEO of Kunst Solutions Corp., which publishes the Lean Thoughts e-newsletter. Contact him at rkunst@kunstartofsolutions.com. Comments? E-mail joe.terrett@plant. rogers.com.
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Trends
>> Exporting
Research drives global marketing By Mark Drake
L
ess than thorough research has been described as walking a tightrope without a net! Selecting target markets from the world’s 195 countries requires a diligent approach to preliminary research. Many countries can be ruled out immediately, and by checking import/export statistics you can come up with a list of say 10 countries that are “possibles.” Check on economic trends in these countries and assess any competitor-free ground
The fundamental question research must answer is whether “your company has a competitive position… ” floor opportunities in niche or specialized areas to shorten the list to five or so countries for more detailed analysis. The fundamental question research must answer is whether your company has a competitive position (and preferably a distinct advantage) and can sell products in the chosen country at a profit once reasonable levels of market penetration have been reached. These factors will influence your decision:
The economy. Is the market growing or at least stable? If the market is in decline, will it rebound soon? Security and red tape. What challenges are there in terms of excessive bureaucracy and unethical practices (such as corruption) and crime rates? How difficult is it to do business there? Access. How far away is the market? How will that impact transport and other related costs?
Infrastructure. What is the level of basic services such as road, rail, port, power and communications facilities, including broad band internet? Language. How easy will it be to operate in the country? Are English, French or Spanish widely spoken as second languages? What translation and interpretation costs may be incurred? It’s generally easier to do business in Malaysia than in Myanmar and in Brazil rather than in Belarus. Demographics. Average age and income levels may be important. Many developing countries have young and growing populations. The internet has made preliminary and even detailed searches immeasurably easier. The following can be located from your desk: • Country reports, either general or focused. The Economist offers excellent general country or sector information. The Northern Miner will have something a little more focussed. • Competitors’ web sites. Careful study will reveal the extent of their activities and professionalism. • Specialized reports on markets/ sectors. These are available on line from many sources, including Export Development Canada (www.edc.ca), Foreign Affairs and International Trade (www. international.gc.ca), The Trade Commissioner Service (www.infoexport. gc.ca), from business associations, bilateral trade councils and from research departments of major finance and legal companies. Foreign embassy websites will have links to organizations in their home countries with market reports. • Search engines. Most of us go to Google first but the Forum for International Trade Training (www.fitt.ca) suggests some other interesting sites to check: www.alacrawiki.com for industrial trends—it’s user-generated like Wikipedia; www.techorati.com a web log site with a large specialist data base; and www.marketresearch.com, which has specific market research reports and useful abstracts. Go to Google “International Market Research” for other sites. More information can be obtained from personal contacts with immigrants from the countries concerned—an advantage of Canada’s multiculturalism— and from companies that are already active there. Canadian Trade Commissioners are also a very useful source of preliminary information, particularly for the “intangible” background conditions in the country. All of this should prepare you for the next step—a preliminary marketing plan for a chosen market. Mark Drake is former president of Electrovert Ltd. and of the Canadian Exporters’ Association. E-mail corsley@ videotron.ca. Comments? E-mail joe.terrett@plant. rogers.com.
16 Canadian PLANT
May 2010
Product Showcase << Departments
Power Transmission
Higher linear load capacity Thomson’s 4-in. RW64-V RoundWay linear roller bearing delivers a dynamic load capacity of 70,000 lbf—more than 20 times the load capacity of a conventional linear ball bearing, even at operating temperatures of up to 260 degrees C and speeds of up to 31 m/s. The all-steel and iron bearings operate on Thomson 60 Case LinearRace shafting and are available in sizes ranging from ½ in. to 4 in. Concave rollers handle the extremely high loads with a 10-million in., L10-rated travel life. Chain-link rollers deliver high travel speeds but they can also be used for severely contaminated applications such as metal removal, paper and wood processing, and granite quarrying. And thanks to a lateral self-alignment feature the bearings may be out of parallel as
RW64-V RoundWay linear roller bearing. much as 0.1875 in. An eccentric trunion pin assists pitch selfalignment for reliable operation in inaccurate mounting surfaces, and ± 0.030-in. height adjustment sets preload in locked-in arrangements for applications requiring maximum stiffness and minimal deflection. www.thomsonlinear.com
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Wittenstein Engineering has taken its alpha SP+ HIGH SPEED gearbox and optimized components, processes and specifications to create the low-friction L-Version. The manufacturer of servo motion products with North American operations based in Bartlett, Ill. has made the low-friction gearbox available for its high-speed versions of the SP+100, SP+140 and SP+180. The L-Version was developed specifically for applications demanding continuous duty with high nominal output speed, and those requiring longer service-life for continuous duty. It features: high maximum and nominal output speed, reduced nominal torque; lower heat build up; lower no-load running torque; and high efficiency. Wittenstein has a Canadian tech centre in Waterdown, Ont. www.wittenstein-us.com
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Canadian PLANT 17
www.plant.ca 2010-UK COL.indd 1
12/9/09 11:24:28 AM
Departments
>> Postscript
Why BC and Ontario need the HST By Roslyn Kunin
O
n July 1, the cost of becoming more productive and competitive in BC and Ontario will fall significantly as the harmonized sales tax (HST) replaces the provincial sales tax (PST). The PST directly adds to the cost of machinery, equipment and the technology we need to make our businesses productive enough to survive in global market. HST can be deducted from the tax collected when a manufacturer sells its final output. This will save our indus-
In the last quarter of 2009, Canadian productivity grew a mere “1.4%, while the US surged ahead by 6.9 per cent... ” tries billions of dollars and go a long way to helping us deal with a strong dollar while improving our economy and lives. Canadians and Americans are different in some ways. We see ourselves as more polite, we don’t carry firearms and we have the edge when it comes to hockey. But we also have many similarities: We speak the same language, shop in similar malls, live in the same kinds of houses and hold the same kinds of jobs. Moving
south of the 49th parallel is not nearly as big a change for Canadians as moving to Asia, Africa or even or Europe. But there are some important areas where we are not keeping up with the US. In fact, with our currencies at par, American companies are eating our lunch. When Americans go to work, they turn out more goods and services each hour than we do, making them more productive. In fact, their output per hour worked
has been higher than Canadian productivity over the lifetimes of most Canadians. And the gap is widening as US productivity improves at a faster pace than ours. In the last quarter of 2009, Canadian productivity grew a mere 1.4%, while the US surged ahead by 6.9 per cent. Producing less means earning less, and this hurts our standard of living. As long as those who bought what we produced could pay in 65-cent dollars, we only noticed how poor we were while travelling out of the country. Now, with our dollar almost equal to the US dollar, goods and services sold to the rest of the world are more expensive, making it harder for us to compete.
More output, less effort If we want a better life, we need to become more productive, but we don’t do that by toiling like slaves. Instead, we need machinery, equipment and technology to generate more output for each hour worked. Yet a recent report from Statistics Canada shows we are moving in the wrong direction with a record drop in this kind of investment during the recession. Short run, there was a small benefit: companies that were not spending on improving productivity could afford to keep more workers on and minimize unemployment. Over the long run, not investing in productivity enhancing tools is like not giving your child medical treatment because it will hurt. And the likely consequence is the loss of jobs as customers migrate to more productive companies. There are many things we can do to improve our economy and strengthen our job base, including undertaking research and applying new, innovative ideas; adding human capital; and training workers at all levels. But the fastest and most immediate thing we can do is to apply more up-todate machinery, equipment and technology. By reducing the cost of investment, the HST will make it easier for companies to do so. Roslyn Kunin is the director of the Canada West Foundation’s BC office. E-mail kunin@cwf.ca. Comments? E-mail joe.terrett@plant. rogers.com.
Poor productivity Weak business investment and lower stock capital have been major contributors to poor productivity, says TD Economics in a recent Observation report. In 2008, machinery and equipment per worker was 49.1% of that in the US. Capital intensity grew 0.5% annually between 1984 and 2008 compared to 2.8% over the previous 20 years. And stock of information and communications technologies was 45% of that in the US. Source: TD Economics
18 Canadian PLANT
May 2010
Advertorial ®
SMALL BUSINESS— BIG PLANS TAPPING INTO YOUR COMPANY’S POTENTIAL FOR GROWTH
O
wners of small and medium-sized businesses (SMBs) are known for their entrepreneurial spirit and their ability to spot opportunities others miss. They’re usually incredibly driven, taking a hands-on approach to just about every facet of their business. Such attentiveness is what makes these companies successful in the first place. The challenge, though, is having enough time to craft a plan to take your enterprise to the next level. Many small business owners aim to grow their customer base, while balancing cash flow and inventory levels. Others strive to enter new markets. Though the end goal might be different, there’s one key commonality: each business requires its own unique plan, developed through research, networking and a clear vision of the company’s ideal trajectory. On that note, David Wilton, director of small business banking with Scotiabank, sees immense value in careful planning. Scotiabank’s advisors across the country work with small enterprises from all callings—manufacturing to retail to services—and have noticed the all-toocommon hitches faced by small companies. “With growth often comes cash flow challenges,” Wilton says. “That’s why it’s important to have a strong business plan that you use as a roadmap to deal with challenges and opportunities as they become evident.” One company keeping an eye out for those opportunities is GRI Simulations Inc. Although it was founded only seven years ago, this developer of software
and computer modeling technology for underwater operations has found its niche.
flow would I need to increase inventory and receivables 50 per cent?”
“There isn’t another company in the world doing what we’re doing,” reflects Russ Pelley, co-owner and president of the Mount Pearl, Nfld. based company. “That in itself was a challenge—trying to project what our income would be.”
With receivables, you could review policies, payment terms and methods—cheque, Visa or a number of other mechanisms— that might allow remittances to grow at a slower rate than revenue growth, thereby protecting cash flow.
“With growth often comes cash flow challenges. That’s why it’s important to have a strong business plan that you use as a roadmap to deal with challenges and opportunities as they become evident.” Cash flow was another pressing issue, in part because growth in international markets required the company to be present at trade shows in the U.S., Europe, Central and South America. To help forge a game plan, Pelley brought in Scotiabank. “My philosophy is let your bank know pretty much everything you’re doing,” he says. In fact, regular communication with a trusted advisor underpins any successful expansion plan, adds Wilton. Growth is typically more complex than it first appears, so getting the right advice, and making use of tools such as business plan writers and forecasting guides are key steps. “These tools allow you to investigate the natural outcomes of various levels of growth. They include a financial projection tool that let’s you play ‘what-if?’ So, for instance, it lets you model questions, such as ‘if my revenue were to increase 50 per cent, how much incremental cash
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“You can also determine if you have the right level of owner equity invested in the business, if you should arrange for a higher credit limit, or potentially bring in partners that might invest. These are all things you can investigate once you understand the implications and financial impact of different strategies,” Wilton said. Through his day-to-day conversations with SMB owners—getting to know their companies, goals and challenges—he notes the most successful ones have built themselves a trusted network of advisors, comprised of accountants, lawyers, financial planners and small business bankers. With the right advice, tools and partners in place, small business owners realize being pressed for time doesn’t mean putting growth on hold. A solid plan and regular check-ups will keep your company on course—through the commotion, busy days and overall juggling act that comes with owning a business. Get growing!
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