Westward, Ho!

By Steven Theobald
Toronto Star
(Jul 4, 2006)

Sometimes the answer to your problems is right in front of you.

Or, in the case of Alex Kamicheril, 3,500 kilometres or so to the west.

Like most Ontario manufacturers, Kamicheril is trying to adjust to life under a 90 cent US dollar and ever-increasing competition from low-wage rivals overseas.

The quest for new business takes the engineer to places such as India, China and Trinidad.

Much to his amazement, however, the biggest opportunities are in Alberta. The booming oil patch is absorbing such massive investment that the province's suppliers are now pleading for help.

A recent study predicts $100 billion will pour into the oil sands -- and spill over into Ontario.

Last week, Kamicheril was invited to one of three trade missions organized partly by the Alberta government to make Ontario firms aware of the massive amount of work to be had.

About 60 Ontario firms attended the meeting in Oshawa.

"We were all totally flabbergasted that this is on our back door and we weren't aware of it," said Kamicheril, president of Whitby-based Gamma Engineering Ltd.

The Alberta firms at the forum said they are facing dire labour shortages and just don't have the capacity to go it alone, Kamicheril said.

"They are declining work."

The opposite is true in Ontario, Kamicheril said, noting he has had to trim his workforce to 25.

"If I can get work from anywhere, including Alberta, I'll bring them back on. I could hire another 10 easily."

So Kamicheril, who specializes in metal fabrication and cement work, is busy establishing relationships with Alberta firms and possible joint ventures with fellow Ontarians.

"It's more than important. It could be a life saver."

It could also keep the province's economy going. Manufacturing directly employs 1.15 million Ontarians, a number that had been shrinking as the strong loonie battered export earnings.

A key reason the Canadian dollar has been soaring is surging commodity prices, particularly crude oil. The red-hot Alberta economy continues to draw job seekers from around the country.

Statistics Canada reported last week that Ontario lost 6,600 people to Alberta in the second quarter of the year, taking the total net outflow to 25,300 in the past 12 months.

That's more than double the average annual migration since 2000.

"We are employing all means to attract labour from across Canada, and internationally, but we also recognize that there is manufacturing capacity in Eastern Canada that could do it just as well," said Justin Riemer, executive director for investment and development for the Alberta government.

Riemer, along with his counterparts at Queen's Park and in Ottawa, as well as Canadian Manufacturers & Exporters, are launching a website later this month, icosmo.ca, which aims to bring buyers and sellers together. (Parts are open now.)

This isn't a public relations exercise. Alberta really does need help, Riemer said.

"If we don't have the manufacturing capacity, the labour force or any of the infrastructure to deliver these projects, the economic opportunities and the investment climate will be harmed," he said.

"So we are pulling out the stops to demonstrate the opportunities to others in the country."

A prime objective of the ICOSMO project -- it stands for Innovative Canadian Oil Sands Manufacturing Opportunities -- is to attract manufacturers who traditionally do not sell to the energy sector, said Ron Subramanian, director of special projects at Canadian Manufacturers & Exporters (Ontario).

For instance, Ontario auto-parts makers have all the machinery and expertise needed to fabricate goods for oil-sands projects, Subramanian said.

"They need to be more flexible and customize their processes," he said.

"But that is a good thing. Manufacturers are realizing they can't do business as usual any more."

Alberta's energy sector is so important to Welland-based Lakeside Steel Corp., it decided to merge with a Calgary firm, Canadian Tubulars (1997) Ltd.

Both companies specialize in supplying exploration firms with pipe and tubing.

"It gives us a stronger selling presence on the ground in Alberta with experienced, capable guys," said Ian Bradley, Lakeside's interim president.

The new company will have 500 employees in Ontario and 42 in Alberta.

Given Ontario's manufacturing base and proximity to the American markets and raw-steel suppliers, the province is perfectly positioned to sell to the oil sector, Bradley said.

Alberta is acting as a "big counterbalance" to the difficulties exporters are facing right now, he added.

"Obviously, with the Canadian dollar being so strong, you have to work harder. You have to be more productive. And that is what we are doing."

Sixty per cent of Lakeside's revenues are from the energy industry, but the firm also makes products for the auto and mining sectors.

Bradley agrees that auto-part makers are largely metal fabricators, so moving into oil and gas products isn't that big a stretch.

Alberta companies are more than willing to go beyond their traditional sources, said Bob Seguin, an assistant deputy minister in Ontario Economic Development and Trade.

"The same machine tooling and the same materials would be required."

But making people aware of the opportunities open to those who look beyond their traditional markets hasn't been easy so far, Seguin added. Hence the need for the innovative manufacturing project.

Included in the plans of the project is a trade fair in Alberta, probably in early 2007, to bring all parties face to face.

"They'll have a chance to link up," Seguin said.

"Otherwise, if you had no history in that supply chain, where do you look?"