Mining Supply and Services Sector

Dr. David Robinson drobinson@laurentian.ca is an economist at Laurentian University in Sudbury, Canada. This column was originally published in the December, 2010 issue of Sudbury Mining Solutions Journal.

Mining machines are getting prettier. Today, there is a lineup of machines in the square outside my window at the university. The Canadian Institute of Mining and Metallurgy’s Maintenance Engineering and Mine Operators Conference (MEMO) has taken over the Great Hall. Laurentian University looks like a cross between a mine site and a convention centre.

There aren’t any of the giant trucks you’d see in Chile’s copper mines or Alberta’s tar sands. Those monsters couldn’t get into Founder’s Square. These are underground machines. They are smaller, highly specialized, agile pieces of equipment designed for tight spaces and low ceilings. 

The surprise is that they are pretty. It isn’t just the bright colors – signal yellow, standard orange, red, even white. There are striking and completely unnecessary black stripes, clean lines, consistent detailing.  The bucket of one big scoop is dramatic matte black.

These machines are elegantly suited to their purpose. They are tough and powerful, but refined. Somehow, mining has moved beyond the brutal efficiency of the old days into the Age of Design.

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Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA). destefan@isys.ca

This column was originally published in the December, 2010 issue of Sudbury Mining Solutions Journal.

The Sudbury Area Mining Supply & Service Association (SAMSSA) has become a major player in mining centres domestically and globally in the past seven years. Our members’ proximity to a critical mass of mining operations in Central Canada and the quality of their products and services has enhanced their relationship with mining companies both domestically and globally.

John Pollesel, Vale Canada COO  & Director for North Atlantic Base Metals Operations, supported this belief in a recent presentation to the Greater Sudbury Chamber of Commerce when he said, “(Vale) has one of the best mining supply and service sectors in the world today. This gives us a significant competitive advantage to have access to these supplies and services in our own backyard.

“Although we have embarked on a global procurement strategy, in order to have services and materials delivered as soon as possible, buyers are encouraged to check first with local vendors. In fact, between September 2009 and August 2010, 97 per cent per cent of purchases for goods alone for our Sudbury operations were from vendors located in Ontario.

“Eighty per cent of those transactions were with Sudbury supply and service companies, worth approximately $60 million.”

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Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA). destefan@isys.ca

Summary: SAMSSA looks at the supply of industrial land in the face of complaqints that the City is not “Business Friendly.” Information suppled by the Greater Sudbury Development Corproation suggests the city is not supporting industrial development well.

Since its inception in 2003, SAMSSA has advocated for upgrading infrastructure and services in present and future industrial parks for its members. Recently, a number of complaints were forwarded to the SAMSSA office after an article in the Sudbury Star highlighted one company’s complaint about having to pay for what it believes are fundamental services (sewer, water and paved roads) covered by their signifance commercial taxes.

This article and subsequent SAMSSA News Updates to members triggered a number of requests for our office to investigate what was happening especially in the potential for upgraded roads, water and sewer on both Fielding Road and Elisabella Street.

The Greater Sudbury Development Corporation (GSDC) were very helpful and provided an ongoing study that is looking into these issues.

It is not uncommon in election year to hear that a another study will look at this problem. However, past experience has proven that once a new Council is elected, this study will lose out to other projects because of costs or lack of commitment. There are more votes won by paving high traffic roads than supporting the millions of dollars needed in an industrial park upgrade.

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The Brookings Institution http://www.brookings.edu/ is a nonprofit public policy organization based in Washington, D.C. One of Washington’s oldest think tanks – founded in 1916 – Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and global economy and development.

Its stated mission is to “provide innovative and practical recommendations that advance three broad goals: strengthen American democracy; foster the economic and social welfare, security and opportunity of all Americans; and secure a more open, safe, prosperous, and cooperative international system.” Brookings states that its scholars “represent diverse points of view” and describes itself as non-partisan. – Wiki

The Obama administration’s FY2011 budget request (February/2010) proposed several initiatives to support American regional industry/innovation clusters. The budget request  document states, “We need to recognize that competitive, high-performing regional economies are essential to a strong national economy.” 

An except from a United States Department of Commerce, February 1, 2010 News Release states, “Competitive, high-performing regional economies are the building blocks of national growth and can benefit from smarter policies. The budget supports growth strategies based on stronger regional clusters of economic activity through funding in the Commerce Department’s Economic Development Administration, the Small Business Administration (SBA), as well as the Department of Labor with other agencies in key support roles. As part of the administration’s place-based initiative, the 2011 budget provides $75 million in regional planning and matching grants within EDA to support the creation of Regional Innovation Clusters that leverage regions’ competitive strengths to boost job creation and economic growth.”

Mark Muro and Bruce Katz have produced an excellent policy paper on the economic value of regional clusters for the Brookings Institute. The Executive Summary is posted below. For the entire policy document please click here: http://www.brookings.edu/~/media/Files/rc/papers/2010/0921_clusters_muro_katz/0921_clusters_muro_katz.pdf

EXECUTIVE SUMMARY

Twenty years after Harvard Business School professor Michael Porter introduced the concept to the policy community and 10 years after its wide state adoption, clusters—geographic concentrations of interconnected firms and supporting or coordinating organizations—have reemerged as a key tool and rubric in Washington and in the nation’s economic regions.

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Norm Tollinsky is editor of Sudbury Mining Solutions Journal, a magazine that showcases the mining expertise of North Bay, Timmins and Sudbury. This article is from the September, 2010 issue.

A recently published study on the Northern Ontario mining supply and service sector confirms that it is a key engine of growth and a strategic asset with unrealized potential for the regional economy.

The Northern Ontario Mining Supply and Services Study, commissioned by the Ontario North Economic Development Corporation (ONE-DC) and carried out by Ottawa-based Doyletech Corp., estimated the total value of the sector’s output at $5.6 billion annually.

“The study firmly establishes the credibility and value of the mining supply and service industry in Northern Ontario by a third party,” said Dick DeStefano, executive director of the Sudbury Area Mining Supply and Service Association (SAMSSA). “Prior to the study, we had been using numbers we extrapolated from various sources, so this finally puts us where we thought we were and confirms that we’re one of the largest wealth creators in Northern Ontario.”

Funded by the Ontario Ministry of Northern Development, Mines and Forestry and by FedNor, the federal government’s economic development agency for Northern Ontario, the study identified approximately 500 companies and organizations with 23,000 employees that derive more than 50 per cent of their revenue from the sale of mining supplies and services. Counting companies that derive less than 50 per cent of their revenues from mining supplies and services boosts the value of the sector to close to $7 billion, said DeStefano.

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Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA). His column was originally published in Sudbury Mining Solutions Journal, a magazine that showcases the mining expertise of North Bay, Timmins and Sudbury. destefan@isys.ca

The recent Doyletech study of the mining supply & service sector provided significant data indicating that this sector has close to 500 companies in Northern Ontario that sell more than 50 per cent of their products and services to mining companies. This is a large industrial sector within this important geographical region. Results demonstrate that this sector created more than 23,000 jobs and generated more than $5.6 billion in gross sales in 2008.

The six months of face-to-face interviews of over 150 companies established this industry sector as a vital contributor to wealth and employment in the four major cities of Northern Ontario.

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Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

We in the mineral industry often speak of “direct jobs” generated at mines and mills and “indirect employment”, those jobs as suppliers, manufacturers and consultants that spring up to serve the needs of the industry. We know that for every person directly employed by the mining industry there are several others indirectly employed.

Those numbers and others aspects of mining’s importance have been pinned down in a new survey prepared for the Sudbury Area Mining Service and Supply Association (SAMSSA). The Northern Ontario Mining Supply and Services Study looks at about 500 separate firms and organizations in what might arguably be called the “heart” of the mining sector.

The study found approximately 23,000 people are employed in the supply sector. That is a more generous number than the Ontario Mining Association came up with. But the OMA estimate of 480 direct mine jobs and 2,280 supply and services jobs in the province sounds too low by a factor of 10. The difference is probably due to differing definitions of what is a “mine” job or an “indirect” job. Either way, keep the multiplier effect in mind.

The SAMSSA study put a value of $5.6 billion on the supply and services sector in Northern Ontario.

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Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA).

The recent Doyletech Study entitled Northern Ontario Mining Supply and Services – recently released placed a significant amount of emphasis in the value of the sector and its ability to create wealth and employment in Northern Ontario.

I was impressed with results that demonstrate that the 500 plus mining supply companies throughout Northern Ontario generate over $5.6 billion in sales and employees over 23,000 at peak times.

Notwithstanding the value of this enormous financial and employment footprint was the recommendation that an enhanced International Market Entry Strategy needed to be added to the existing Infrastructure within the Companies.

The first-order objective would be to assist sector firms and organizations enter export markets, through a shared-costs public/private partnership program that aided relevant organizations. 

As well, it would support optimum approaches in terms of partnerships, distributors, and product/service profiles. 

The three ways to conduct foreign market entry is by trade, contractual agreement, or direct investment.

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Norm Tollinsky is editor of Sudbury Mining Solutions Journal, a magazine that showcases the mining expertise of North Bay, Timmins and Sudbury. This column is from the May, 2010 issue.

The preliminary results from a study of the Sudbury and area mining supply cluster and its value to the economy of Ontario confirm the claims that Sudbury Mining Solutions Journal has been making since our inaugural issue in March 2004. We knew that the mining supply cluster in the Sudbury, Timmins, North Bay triangle was substantial in size and impact, but we would never have guessed that its value to the economy was a whopping $5.6 billion per year or that it accounted for some 23,000 jobs.

Sudbury, Timmins and North Bay may be big players in the mining industry, but they represent a very small percentage of Ontario’s population and can be easily overlooked on public policy agendas, both at the provincial and federal levels.

Hundreds of relatively small mining supply businesses failed to register in the public consciousness outside the region, but thrived in the shadows. Until the establishment of the Sudbury and Area Mining Supply and Service Association (SAMSSA) and the founding of Sudbury Mining Solutions Journal, the cluster was an uncoordinated and unheralded collection of independent businesses focused on doing their own thing. Coming together under the umbrella of an association and served by a journal dedicated to promoting their capabilities and innovations to an international audience, hundreds of disparate businesses are now part of something much bigger.

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Dick DeStefano is the Executive Director of Sudbury Area Mining Supply and Service Association (SAMSSA). His column was originally published in Sudbury Mining Solutions Journal, a magazine that showcases the mining expertise of North Bay, Timmins and Sudbury. destefan@isys.ca

A comprehensive survey of Northern Ontario mining supply and service companies supports earlier estimates that this sector is a significant wealth creator in Northern Ontario.

SAMSSA joined forces with a number of supporting partners to examine the importance of the mining supply and service sector and especially its claim that this mining support cluster is one of the most concentrated in the world. The partners included the Sudbury Area Mining Supply and Service Association (SAMSSA), the Ontario Ministry of Northern Development, Mines and Forestry (MNDMF), Ontario North Economic Development Corp. (ONE DC) and FedNor (Industry Canada).

The overall objective was to assess growth opportunities and outline a plan to realize them through concerted stakeholder action, both public and private.

Primary information for this analysis was complied by Doyletech Corporation over a five month period through interviews with 150 companies and three focus groups.

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Dick DeStefano is the Executive Director of the Sudbury Area Mining Supply and Services Association (SAMSSA)
www.samssa.ca  destefan@isys.ca

December 10, 2009 was a special day for me.   Working with a small and determined group of invisible mining supply companies in the early stages of 2003 has now evolved into a viable, dynamic community of entrepreneurs making a difference in Northern Ontario and throughout the world.

Twenty centimetres of driving snow and frigid conditions did not prevent more than 90 SAMSSA members and guests from attending the SAMSSA annual meeting in Sudbury.

We all applauded our two SAMSSA Hall of Fame inductees, Peter Matusch and Ron Miller, both of whom were introduced by their sons.  We congratulated our slate of new board members and thanked those who retired.

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