DPA701 case due July 1, 2015
Solid Manufacturing Corp. “(SM”) is a privately owned Canadian corporation that designs and manufactures equipment and conveyor systems for a variety of customers primarily in the natural resources industry.
Headquartered in North Bay, Ontario, SM operates as a quasi-independent group of three subsidiary companies. The three subsidiary companies are Mining Products, Industrial Solutions, and Truck Products.
SM was founded by Cassandra Smith in 1963. Cassandra was the first woman graduate of McMaster’s
Engineering and Management programme and a trail blazer in the Canadian mining industry. SM originally serviced the local North Bay mining sector by designing and fabricating mining conveyor equipment. Over the next couple of decades, business growth was fuelled by booming Canadian market demand for innovative mining equipment and the company’s reputation for producing high-quality, innovative mine supply equipment. Today, SM’s mining supply products are sold in major mining markets such as North
America, Eastern Europe, South America, Australia and Africa. SM conducts the majority of its nonCanadian sales through a variety of independent distributors.
In 1984, the Industrial Solutions Division was created to provide custom-engineered equipment primarily for oil refineries and natural gas processing companies in North America and Europe. This business began with piping system design, manufacturing, installation and commissioning for projects in the natural gas and oil industry. In 1992, operations expanded to include the design and manufacture of attachments and guarding for yellow iron machinery (e.g. trucks, loaders and bulldozers), material cranes and custom dump bodies. In the past few years, some agriculture-specific machinery has been added to the product line, utilizing conveying designs that were previously developed for mining and oil customers.
By 1999, truck customers (mining yellow iron) accounted for approximately 50% of sales in Industrial
Solutions. Accordingly, the Truck Products Division was created to specialize in materials-handling equipment for the mining truck industry worldwide. This business line includes the design and manufacture of trucks and custom dump bodies. To date, all sales have been in North America.
In 2008, after eight years of steady growth and profitability, SM considered several expansion opportunities, including becoming a distributor for tunnel boring machines, venturing into the remote camp resource sector and building a facility to produce equipment for the agricultural industry. No decision was made because of the uncertainty that financing could be obtained from financial institutions due to the
2008 global financial crisis. Consequently, the Board of Directors concluded that SM would be best served by continuing to operate with its current business model.
The majority of SM’s products are related directly, or indirectly, to the mining industry. SM considers the oil sands in Canada and Venezuela to be part of the mining industry rather than the oil and gas industry.
Cassandra began with this market definition because the oil sands are mined with large scoops, conveyor systems and trucks rather than drilling rigs and connector piping.
Canada relies on the mining industry as a key economic sector and major job creator. Approximately
380,000 people across Canada work in the mining and mineral processing industries. Canada has one of the largest mining supply sectors globally with more than 3,400 companies supplying engineering, geotechnical, environmental, financial and other services to mining operations. Mining contributed $54 billion to Canada’s GDP in 2013 and almost 20% of the value of goods exports.
Thanks to its rich geology, Canada is one of the largest mining nations in the world producing more than 60 minerals and metals. Canada ranks in the top five countries in the global