Category Archives: Transportation

Putting the pedal to the metal

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It is no small source of amusement to Terry Malley that the ambulance-making operation he manages from a 90,000-square-foot, almost-new, facility, employing 65 people, on the outskirts of Dieppe, New Brunswick, might never have launched but for a wink and a prayer. It was 1984, and for five years he and his father had been running a small company, customizing vans and building parts for campers and recreational vehicles. Then, one day, opportunity walked through the door.

“A local ambulance service wasn’t happy with the vehicle it had, and it wanted to know if we would build one,” he says from the cozy antechamber of his spacious office, overlooking the cavernous showroom where his latest products are proudly on display. “So we said, ‘why not?’”

The problem was they didn’t have the first clue about how to proceed. “After the customer left, we said, ‘My God, we’d better get down to the hospital and see what an ambulance looks like’,” he laughs. “We got out the measuring tape and just started asking questions. That’s basically how it all started. It was a defining moment for us.”

One, it’s fair to say, of many over the past 36 years. Today, Malley Industries is one of New Brunswick’s most durable small businesses, earning healthy revenues (as a private company, it prefers not to divulge much detail on its finances) sufficient for plying its trade, and selling its products across North America, South America and Europe, in a sector for which the province is not especially well known.

“Technically, we are a second stage manufacturer,” Terry says. The industry also refers to operations like his as “bodybuilders”, as they craft and customize chassis and interiors for use as ambulances, motor homes and buses, to name a few. This CEO buys vans for repurposing from five major original equipment manufacturers: Ford, General Motors, Fiat/Chrysler, Nissan, and Mercedes. “We do about 1,500 vehicles a year,” he says.

Indeed, the evidence of Malley Industries’ happy productivity is everywhere along the thrumming assembly floor where skilled electrical technicians work alongside metal and wood fabrication workers, their radios blaring amid the cacophony of industrial machinery making its own peculiar form of music. “We actually train people on the job,” Terry says. “Back in the day, the industry used to refer to these tradesmen and women as ‘coachmen’. It’s a pretty tight-knit tradition.”

In fact, a palpable sense of family infuses the place, and not by accident. Terry’s wife, Kathy, is the company’s vice president; his son, Myles, runs the plastics division; and his daughter, Kayla, is the resident graphic designer, responsible for producing the plethora of product brochures and other promotional materials company representatives use at the countless trade shows they attend, and press opportunities they invite, every year.

All of which, perhaps, has helped the company retain its sea legs during the sea changes that have rocked most manufacturing industries, especially those in the automotive sector, since the economic downturn of 2008.

In that year and the two that followed, General Motors filed for bankruptcy, as did Chrysler. In his joint address to Congress early in 2009, U.S. President Barack Obama promised to invest $15-billion in automotive technologies. He acknowledged that “years of bad decision-making” had

“pushed automakers to the brink.” He added that he was committed to re-imagining and retooling the auto industry, declaring, “millions of jobs depend on it.”

Canadian Prime Minister Stephan Harper evinced many of the same sentiments in the waning years of the last decade. He authorized billions of dollars in government bailouts to keep the industry afloat in this country. As one report by the Financial Post, out of Toronto, a year ago, declared, “In total, the Canadian and Ontario governments spent US$ 13.7-billion to bail out GM and Chrysler. Chrysler’s portion of that was entirely in loans, while GM’s was a combination of loans, preferred shares and equity.”

The report continued: “According to an analysis by Mark Milke, of the free-market minded Fraser Institute, Canadian and Ontario taxpayers lost about US$ 2.3-billion on the deal, based on the current value of GM shares, a portion of which are still held by both governments.”

Certainly, walking away from this sector was not in the cards for Malley Industries, but neither was sinking under the weight of other people’s greed and stupidity. It could even be argued that this company’s close, familial culture had actually enabled it not only to adjust, but to anticipate, the often dramatic changes in the marketplace it was facing, with one foot planted in the past and the other firmly pointing toward a future of its own making.

In fact, Malley Industries’ work on itself over the past 12 months has been something close to a leap of faith. It has begun to concentrate on niche, customized clients, as it has tried to anticipate market demands. This differs, significantly, from its long, standard operating procedure: Open the door, sign the contract, and get the job done.

Says Terry: “For the first time, we are making products that potential customers seek out before we have even approached them. This is a game-changer for us.”

In the beginning, of course, the game was just a wee bit simpler.

Terry likes to say that it took him 20 years to become an overnight success. He describes his father as a serial entrepreneur and best friend until the older man’s death some years ago. As the younger Malley once explained, “As long as I can remember, I have always wanted to be in business. My father was a dreamer and I have very much carried that gene forward intact. His and my dream was to grow our humble, family business to be a major force in the vehicle modification and up-fitting industry.”

A key strategic imperative – which remains in force today – was a strict attention to quality. “We always believed,” Terry has said, “that if a product had our name on it, it had to be the very best we could build.”

Another guiding principal was developing a sensible work ethic: “Over the years, I have seen many promising businesses come and go. Many of these quickly reached a plateau and (the ones that) ultimately fell were those run by an entrepreneur who had difficulty letting go.”

Equally important has been knowing how to motivate employees: “We are slow to hire and quick to release those who are not a fit for our corporate culture. We make it very clear that no one has ever been fired from our company for making a mistake. However, in our culture, we expect that, ‘if you mess up you fess up and you dress up’. In other words, if you make a mistake, bring it to our attention and we will work together to make it right. We make no secret of our expectations and employees seem to respond to that in a positive way.”    

Malley Industries’ track record would seem to bear out the efficacy of these management approaches. Over the years, the company has broadened its product lines – and reputation for quality – as a manufacturer of specialty vehicles, including ambulances, and those for people with disabilities, police cars, prisoner transports, and utility trucks for a wide variety of clients, such as Aliant and NB Power.

As business blossomed, Terry and Kathy oversaw the requisite expansion of their operations. In 2010, they opened their state-of-the-art facility, deliberately situating it close to major roadways, air and rail links. “Actually,” Terry says, “I had had my eye on this Ferdinand Street location for years. We’ve been based elsewhere in the area, but I just knew that this location would be perfect. It was always very strategic. This is the busiest intersection in Atlantic Canada.”

Still, even as they settled into their renovated digs, and despite their approaches to building a sustainable business in a notoriously tough industry in a decidedly challenging part of the world, fate and fortune had a tendency, as it always does, to intervene in the most unwelcome and inconvenient ways; indeed, the Malleys could soon see the writing on their industry’s wall.   

Though they didn’t suffer much loss of business or opportunity during the 2008 downturn, the delayed reaction began to hammer them in late 2010. Toward the end of the rebuild of their industrial digs, they experienced that worst of entrepreneurial travails: bottleneck. As Kathy explains, “Despite having customer orders, we were unable to fulfill them as projected. In some cases, vans (for customization) arrived six or more months after scheduled delivery dates. The sluggish economy and delays in the original equipment manufacturers’ ability to supply us with vans had an enormous negative impact on our company.”

For one thing, the Malleys had to lay off staff. For another, it endured what Kathy calls a “retraction” in its actual business over a three-year period – all while the company assumed the enormous financial risk of maintaining a massive, new facility. It was a circumstance, she says, that “will be remembered by our management team as the darkest period in our history.”

Yet, with challenge came change, and the Malleys were not about to take these marketplace assaults lying down. They marshaled their forces, rallied their tight-knit family and staff and began to generate innovative and workable solutions to their problems.

As a result, over the past year, the company has engineered a course correction, shifting its focus from being custom manufacturer of a broad range of products to becoming a lean, mean purveyor of four distinct product and service lines: ambulances, wheelchair accessible conversions, thermoformed plastics for vehicle interiors, and specialized, commercial vehicles.

Of these, perhaps, the Malleys are most enthusiastic about their new line of ambulances, using a RAM ProMaster van. The company is the only one in North America to deploy this chassis and interior design, which, it insists, offer emergency medical personnel more room and better safety features.

Certainly, someone’s buying what the Malleys are now selling.   

To date, the New Brunswick government has adopted the vehicle for its future needs – the first jurisdiction in North America to do so. Moreover, the Malleys have secured ambulance sales distributors in Massachusetts and New York. They have hosted in-depth training for a well-established Ontario-based company for sales and service in that province. They have hired an experienced ambulance service operator, as a consultant, in the U.S. Based in Florida, he will be responsible for distributor development in that country.

Malley Industries is also the only Canadian manufacturer of what it calls “a lowered floor Ford Transit Connect conversion for wheelchair accessibility”. This provides the nimble company with a nice entry into a promising, new market. As the company’s strategic plan notes, “Many cities are tabling new legislation requiring taxi services to substantially increase the number of wheelchair accessible vehicles in service.”

Then, there’s the initiative to goose the company’s specialized commercial vehicle product line. This simply means that what the Malleys have been learning over the years – and especially in the past 12 months – about new vehicle design, sales and marketing will be applied to their customization process. They are embarking, in effect, on a sate-of-the-art refit of their manufacturing procedures to accommodate high-end orders from anywhere in the world.

Finally, the product line this enterprising family believes will cradle some of the best, long-term revenue streams is plastic interiors for all the vehicles they produce. “Our mould manufacturing process enables us to enter the market with new products that are significantly more cost-effective and faster than a number of the plastics manufacturing companies that were providing mass-produced, lower-quality van-liner packages,” Terry says.

Common to all of these moves is a sense of timing and strategic vigor. Rather than take orders as they come through the door, the Malleys are identifying holes in the marketplace – either existing or anticipated – and moving swiftly to fill them before the next player on the custom-vehicle block does.

To their relief, with such sweeping changes underway, both Terry and Kathy believe they have turned an important corner. They have come through the manufacturing recession, weathered the downturn in the automotive sector, and begun to hire skilled workers again. Although they are loath to talk about their financials, they are now projecting strong growth in their new, higher-margin product categories and are breathing, let’s just say, more easily these days.

And if the lessons were hard-won, they won’t soon be forgotten.          

“We can’t afford to stand still,” Terry says. “In fact, that’s never been part of our corporate culture, anyway. That wouldn’t be like us in anyway.”

If it were, the chances of Malley Industries surviving its infant few years, let alone its most recent ones, would have been slim to none.

As it is, it’s hard to imagine Terry Malley telling that very first ambulance customer, “Thanks, but no thanks. . .we haven’t got a clue about how to proceed.”

Then, as now, it’s full steam ahead for Malley Industries. Opportunity, once again, is walking through the door.

Note: This piece originally appeared in the November issue of Atlantic Business Magazine

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Meet the planes, trains and automobile campaigners

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Having temporarily exhausted their rhetoric, for and against, shale gas development, New Brunswick’s front-running political pugilists are, by way of a break between rounds, tucking into an issue about which they can both agree. Sort of.

As Conservative Leader David Alward announced his intention to craft a comprehensive port strategy for Saint John and Belledune, Liberal Leader Brian Gallant introduced an ambitious, $900-million, six-year program to refurbish roads, highways and other “strategic infrastructure” across the province.

“One of the best ways to (create jobs). . .is through stimulus in the short term, like making strategic investments in our roads and bridges,” Mr. Gallant said this week. “We have a comprehensive plan to create jobs in the near term, medium term and long term.”

He keeps saying that and he may even believe it. Still, infrastructure spending is that least sexy of all campaign issues; that it invariably comes with what seems like a staggering price tag usually spells disaster for the candidate who embraces it.

True to form, Mr. Alward and NDP Leader Dominic Cardy were ready at the pounce.

“We don’t have any money,” Mr. Cardy said simply, when asked for his opinion. “You can’t keep talking about spending billions of dollars we don’t have. . .$88,000 is the preliminary costing we got on this particular announcement. This is the worst of old-style politics. They was we create jobs is by educating workers, not hiring people onto the government payroll.”

Not to be outdone for timely displays of righteous indignation, Mr. Alward said, “Every cent that he (Mr. Gallant) is talking about investing going forward and increasing means money is going to have to be borrowed because the revenues are not there. Wheat he is doing is saddling taxpayers today, New Brunswickers today, but very importantly, he’s saddling future generations with huge debt that is not sustainable.”

Should Mr. Gallant prevail next month, and ride gloriously into Fredericton, it will, indeed, be fascinating to watch the young premier make good on his spending promises, given the province’s $500-million annual deficit and $12-billion debt. Maybe he can pull it off without waving any red flags at international bond-rating agencies.

All the same, the voter is always best served when he or she is in possession of real numbers, if only estimates, to consider.

What, in contrast, are we to make of Mr. Alward’s plan to get strategic with the province’s ports? Apparently, the Tory leader insists, it will “help unlock New Brunswick’s export potential and capitalize on our capacity to be able to say yes to natural gas development.”

How much is not important, because, as the Saint John Telegraph-Journal reported yesterday, “Alward said there’s no specific cost to developing a strategy.”

That’s convenient considering there’s also no specific reason why the province’s seaports, which fall under the jurisdiction of the federal government, would undertake a planning exercise of this complexity without Ottawa’s explicit support, both moral and monetary.

On the other hand, apart from the funding piece (always the Achilles heel in these matters), Mr. Gallant’s scheme, if given a chance, might actually produce tangible benefits. Moncton-based economic development consultant David Campbell has actually costed out the investment and calculated the return.

According to the T-J article, “The Liberals say an analysis conducted for them by Jupia Consultants indicates that spending $150 million per year on infrastructure would create and sustain 1,702 full-time jobs over six years and return $13 million in tax revenue to the province, annually.”

Moreover, “the annual spending is expected to generate $92.6 million worth of direct and indirect GDP through the supply chain in New Brunswick and $113.5 million with induced economic impacts. That would include $69.7 million worth of direct and indirect labour income and $78.5 million worth of labour income, including induced effects.”

In the end, the Liberals’ plan to get people back to work – preparing the province for that fine, sunny day when its booming economy will require superior infrastructure – may be too costly. It may even be unworkable.

But at least here’s a bottom line, instead of the usual empty rhetoric, to scrutinize.

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Who’s been working on the railroad?

 

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A former Conservative henchman once declared that Canada’s passenger rail line receives operating subsidies from the federal government thanks solely to the general public’s sentimental attachment to trains – or, rather, the idea of them.

During an interview with the Globe and Mail in 2012, ex-transport minister Chuck Strahl, opined that “train travel in Canada has this romantic notion that if we all rode the rails, all of our problems would disappear.”

To which I might rejoin, “Well, wouldn’t they?” 

Though I haven’t had much occasion recently to “ride the rails,” when in the past I have, I managed to settle the affairs of my own corner of the world with greater alacrity and confidence than I’ve ever managed to muster whilst whipping down a pot-hole-strewn highway or jetting through turbulence in the lower stratosphere.

There’s just something about a train ride that’s so comforting, so evocative of a more elegant, civilized time. Indeed, Mr. Strahl was right. All such sentimental journeys are, by nature, romantic. But what, pray tell, is wrong with that?

The blunt truth is that without some form of public support (both financial and material) passenger rail service in Canada would die a fast and furious death. The numbers just don’t add up to suit the neo-cons and free-market proselytizers among us. Predictably, every government cut to Via Rail since the early 1980s, has hastened that federal Crown corporation’s demise. In fact, if I had any faith in the proposition that governments actually know how to plan for the future I would swear that the gutting of the “national dream” was a deliberate, carefully executed plot.

Today, Via’s national, intercity service provides 497 trains a week in all provinces, except Newfoundland Labrador and Prince Edward Island, rolling over 12,500 kilometers of track. More than four million passengers a year avail themselves of the service, though most travel the Quebec City-Windsor corridor.

That may sound like a robust business, but since 1981, federal subsidy cuts have have prompted the railroad to chop from the outside in. 

In 2012, the Canadian line between Toronto and Vancouver was reduced to two, from three, days a week. The Ocean line between Halifax and Montreal was hacked to three, from six days a week. Other service cutbacks in the Corridor line west of Toronto followed suit. 

With each cut, of course, comes a self-fulfilling prophesy: ridership actually falls which, in turn, justifies more reductions in service and frequency down the road. 

All of which makes the news of Via’s decision last week to spent $10 million fixing a stretch of track between Miramichi and Bathurst welcome, indeed, though Via CEO Yves Desjardins-Siciliano offered an overly circumspect explanation for the move:

“We took three months to look at our options with the rail line, meet the province, municipalities, look at the market opportunity, and convince ourselves that if we made the investment and re-tarted the service, that there would be a possibility for growth,” he said at the announcement. “I think three months to look at that is reasonable.”

Actually, it’s rather ominous, for what Mr. Desjardins-Siciliano is scrupulously avoiding, in his statement, is the fact that without this paltry investment, all passenger rail traffic from the Maritimes to Quebec would effectively cease. Thirty years ago, such a scenario would have been unthinkable in official circles. Today, well, not so much.

As for the financial patch, “it’s useful,” national transportation consultant Greg Gormick told this newspaper’s Cole Hobson recently. “It’s useful, but it doesn’t represent any big change in thinking, any admission that we have some problems with the rail passenger system. . .There has to be a plan to boost the ridership and improve the promotion of the train. That’s the crunch. I think there’s still a lot of things that need to be done before anyone knows which way they can turn on this.”

The fact remains that without some form of government support, the numbers for privately administered rail – especially along the lightly populated Halifax-Montreal corridor – will never add up.

Yet, trains are an integral part of our history, our psyche, and, despite their cost, they do provide an essential, environmentally efficacious, mode of transportation without which all Canadians are somehow diminished.

 

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Whither, or wither, Canada’s National Dream?

You won’t find the date marked on any calendar, but November 7 is, officially, Canada’s National Railway Day, which is either a meaningless designation or a cruel joke, depending on your perspective.

Transport Action Atlantic’s point of view is clear enough, and its members are not at all amused. “Three years ago the Government of Canada declared. . .National Railway Day. . .to commemorate annually the driving of the last spike in the Canadian Pacific Railway (CPR) – often called ‘the wedding band of Confederation,’” a media advisory from the group declares. “That historic event came nearly a decade after the Maritimes were joined to Central Canada by completion of the Intercolonial Railway (ICR), which linked Halifax with the existing Grand Trunk Railway in Quebec.”

One-hundred-and-twenty-six years later, the national rail network is troubled; a victim of institutional negligence, short-sighted policy and managerial malaise.

Or, as Transport Action Atlantic opines, “In recent months, Canada has experienced the tragedy of the Lac-Mégantic derailment, several other serious rail accidents, severe cuts to the nationwide VIA Rail passenger service, the threatened severing of the ICR along New Brunswick’s North Shore, a hostile takeover of the CPR by a corporate raider, and the dismantling of 200 miles of the CPR’s transcontinental main line in eastern Ontario.  Once the pride of the nation, our rail system is in turmoil.”

Naturally, you won’t read a syllable of this on Transport Canada’s website. The most recent item regarding National Railway Day, posted precisely two years ago, quoted Denis Lebel, then-minister of Transport, Infrastructure and Communities. “The rail industry contributes enormously to our economy by moving people and goods across vast distances,” he said. “Canada’s rail network is part of a legacy going back to that historic last spike and one that helps unite Canadians. The Government of Canada recognizes the importance of maintaining a rail system that is safe, efficient and stands as an example to the world.”

It’s comments such as these that makes you wonder whether the centre of power in Ottawa (AKA the Prime Minister’s Office) churns out cheerful tropes for any and all occasions, regardless of their veracity, much like a greeting card company. Canada’s rail system is many things, but an example to the world is not one of them.

Once upon a time it was, and it still ranks as the fifth largest, integrated network of its kind in the world (behind India’s, Russia’s, China’s and the United States’s). But these, and other, countries are making the investments necessary to both maintain and expand their rail infrastructure. According to Transport Action Atlantic, the reasons are sensible: “Every other G8 nation. . .(is) investing heavily in their railways to tap the vast economic, social and environmental benefits of moving people and goods with steel wheels rolling swiftly and safely on steel rails.”

This includes the United Kingdom, where Network Rail has announced a $63-billion (CAN) scheme to expand British passenger service by more than 170,000 commuter seats next year to accommodate an expected increase in riders of 225 million by 2019. Meanwhile, some industry reports indicate that spending on new rail engineering projects in the UK is poised to jump thanks, in part, to a $54-billion high-speed project and a $25-billion crossrail system.

The Middle Kingdom, too, is lurching ahead of the curve Canada once lead.

“Fixed asset investment in China’s railways rose 25.7 percent year-on-year to 37.63 billion yuan ($6 billion US) in the first two months of the year (2013), the railways authority said,” Chinadaily.com reported earlier this year. “The investment is a part of the ministry’s 650 billion yuan fixed-asset investment package this year, slightly higher than last year’s 631 billion yuan.”

These nations know something we have forgotten: Moving people and goods (apart from oil) by rail is still the safest and most efficient method to cover vast distances

“The time has come to ponder the consequences of Canada’s failure to do the same,” Transport Atlantic points out. “Where does this leave Canada in an increasingly competitive world?”

It’s a good question. Are we only now facing our last spike?

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