The high price of gold, silver and other metals has been a bonanza, not only for mining companies but also for Canadian mining equipment manufacturers. MacLean Engineering has used this boom to continue expanding in emerging markets and diversifying its product line.
Fragile and fickle sector
MacLean knows how fragile underground mining can be, not only owing to potential ground falls but also as a market for its products. The company has long been a leader in ground support equipment (scaler screener bolters and shotcrete transport/placing units) used to ensure work areas are safe for miners. It also designs and manufactures other mobile mining equipment, such as remotely controlled drill rigs, elevating work platforms, explosive loading units and utility vehicles that transport explosives and other materials throughout a mine.
“My father was a mining engineer, as am I, and I followed him working underground until the mid-sixties,” says founder and director Donald MacLean. “At that point there was a paradigm shift in underground mining methods – from rail-bound service and haulage access to low profile, trackless equipment.
“I recognized a vacuum that needed to be filled, so I started a career innovating tools required for the new normal. Opening my own business in 1973 resulted in being able to say, ‘I haven’t worked a day in my life since,’” adds MacLean, who thrives on the challenges and changes in his field.
The company has since diversified its product line to include municipal vehicles (MVs), whose attachments transform the mobile power source from snow handling in the winter to grounds and road maintenance in spring and summer. All of its equipment is manufactured in facilities in Collingwood and Owen Sound, Ontario.
Like most manufacturers, during the height of the recession, this privately held firm had to reduce costs and take other measures to remain viable. For example, it contracted out its engineering facilities and ramped up its parts and service business.
It also drew strength from diversifying its product line and markets – MVs did better than mining vehicles during the recession, and the Australian, Chilean and Mexican mining markets bounced back earlier than Canada’s. By the middle of 2011, the company was creating jobs again and now has close to 500 employees. At the end of this year it will have reached record sales.
MacLean drew strength from diversifying its markets – the Australian, Chilean and Mexican mining markets bounced back earlier than Canada’s.
Fitting into the world’s four corners
Today, the company’s mining equipment is sold farther and wider than ever. From offices in Mexico, Peru, Chile, South Africa and Australia, it regularly delivers to all continents but Antarctica.
The company has been doing business in Latin America for more than a decade. “You have to go where the mines are; and not many new ones are being found in Canada these days. I went on my first trade mission to Peru and Chile in 1977; slowly we made contacts and eventually started getting orders from the region,” says MacLean.
“Once you have committed to a foreign investment strategy, it takes a long time to reach fruition and is very expensive – from taking care of legal issues in setting up branches to gaining customer recognition. When you read that a country is, let’s say, 130th for business ease, it doesn’t mean much until you are waiting for parts and they’re just sitting in containers until you get the right signatures to release them!”
Despite such challenges, the company persisted in diversifying abroad. Today exports represent a major contribution to its factory load and bottom line, at the same time allowing it to grow and invest in equipment – improving its productivity too.
Getting MacLean’s equipment accepted in Latin America was far from a given. It took about five years and many market visits demonstrating the mechanized equipment’s advantages. This was exacerbated by the fact its equipment is often unique and so takes longer to get accepted; at the same time this means it isn’t selling based on price.
“EDC helped finance our first equipment sales to Mexico, and provided credit checks and insurance,” says Tony Caron, MacLean’s business development manager for South America. By providing direct financing to some of MacLean’s foreign buyers, EDC takes on the loan risk, the buyer gets to make more manageable payments, and the company gets paid sooner. It also insures some of its assets against political risks.
These services are essential for success, adds MacLean, as many customers don’t have capital to pay cash, the units are expensive (being in high six figures), Canadian banks won’t accept its foreign receivables and it can take six months before equipment is commissioned and operating.
In addition, MacLean has participated in matchmaking meetings with Chile’s Codelco and other mining giants, organized by EDC, helping it build relationships and business with these companies. Today, with EDC by its side, the company is exploring additional opportunities in Brazil and other South American countries, and increasing its exposure to Asia.
Matchmaking for Mining Opportunities
MacLean Engineering was one of more than 50 Canadian companies that participated in matchmaking meetings this spring with foreign mining giants, organized by EDC, at two of the biggest mining and mineral exploration shows in the world.
One was at Toronto-based PDAC, the Prospectors and Developers Association of Canada’s international convention and trade show in March, which attracted some 30,000 official delegates, and up to 20,000 more visitors. There EDC brought together Canadian mining equipment, technology and service suppliers, from Miramichi (N.B.) to Sidney (B.C.), and major foreign buyers from Mexico, Brazil, Peru, Guatemala, Algeria, Morocco and Mongolia. Some of these companies were in Canada for the first time.
Secondly, EDC collaborated with Canada’s Department of Foreign Affairs and International Trade, mining association CAMESE, Ontario Ministry of Northern Development, and 48e Nord International to host a matchmaking program in April at Expomin 2012 in Santiago, Chile – the largest mining trade show in Latin America. EDC helped arrange for qualified mining sector companies from across Canada to participate in private meetings with Chile’s Codelco, Antofagasta Minerals, and Compañía Minera del Pacífico S.A. (CAP).
To find out about future matchmaking, trade show and trade mission events in all key sectors, visit edc.ca Events.