Northern Life, Greater Sudbury’s community newspaper, gave Republic of Mining.com permission to post Bill Bradley’s article. www.northernlife.ca
Times may not be as bad as they may seem for the mining cluster, said participants at a mining cluster meeting Wednesday morning at the Howard Johnson Hotel on Brady Street.
The Sudbury Area Mining Supply and Service Association (SAMSSA) was holding its annual general meeting. Association members employ an estimated 15,000 workers locally.
Though executive director Dick DeStefano has admitted several hundred layoffs have occurred, in general, the mining cluster remains healthy.
Access to financing, a key component of business health, still remains viable so far.
Denis Goupil, associate director of northern Ontario operations of Roynat Capital, said while the chartered banks may be tightening up their lending practices in the short term, other long term finance companies like his organization and the Business Development Bank, have a longer outlook.
“The chartered banks focus on receivables and inventory. They have a short term focus. Right now many chartered banks are admitting they have been exposed to the U.S. debacle, more than they have reported in the past,” said Goupil.
Goupil said local mining cluster companies need to protect the relationship they have with the chartered banks.
“Try not to break any bank covenants. If you do they may jack up your bank rates or worse call in the loan. I have seen rates jump one to three per cent,” he said.
Compared to what is happening in southern Ontario, local companies are faring well so far, he said.
“I have heard of horror stories in the auto manufacturing cities like Windsor. Banks have no patience there because they need their money. It is insane there,” he said.
Complicating matters for local suppliers is the fact that Vale Inco has been undergoing a revamping of their payment procedures, he said.
“With delays by Vale Inco being extended to 120 days, that is ridiculous. Luckily our local banks are sympathetic. In Windsor and Kitchener, in the auto plant areas, banks are saying that any payment owed over 60 days is the company’s responsibility. I hope that does not happen here. SAMSSA has to stand up for its members on this issue.”
Many mining supply and service company presidents and managers said they had weathered downturns before and had plenty of advice to give.
“There are peaks and valleys in any business,” said Don Rastall, chief executive officer of Rastall Mine Supply.
“Make sure you set aside money in the peaks for when the valleys happen. But remember the sun will shine again,” he said.
Robert Lipic, president of Mining Technologies International, said companies should never compromise on quality during a downturn. “Control your costs but be innovative in terms of technology,” he said.
Dave Rector, operations team leader at Rector Machine Works in Sault Ste. Marie, said diversification of product lines is key in downturns.
“In the 1980s the steel industry dived. We diversified into supply forestry companies. Right now I am here looking at exporting our products with the help of SAMSSA,” he said.
Jeff Fuller, president of Fuller Industrial, said it is time to think outside the box. “There are still opportunities in mining but they are in gold and uranium operations. My company is looking at potash operations and even water treatment plants for our rubber products,” said Fuller.
Paul Finley, a business development officer with Greater Sudbury, agreed with thinking differently.
“President-elect Barack Obama is pushing renewable energy. Since some of our companies are doing advanced manufacturing why not look to that as a new market opportunity?” Finley also touted the Alberta tar sands as another opportunity.
“We have been connecting local companies with possibilities in the tar sands. Those operations may have slowed but they are very long term projects. They mine the oil just as much as we mine nickel. They need our products too.”
For more information, visit SAMSSA’s website. www.samssa.ca