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Pipe in the holding area of the PCL Fabrication facilty in Nisku, Alta. Nore than 15,000 tradespeople are working in Nisku and nearby Leduc building components and modules for the oil sands and other energy projects. (Ian Jackson for The Globe and Mail/Ian Jackson for The Globe and Mail)
Pipe in the holding area of the PCL Fabrication facilty in Nisku, Alta. Nore than 15,000 tradespeople are working in Nisku and nearby Leduc building components and modules for the oil sands and other energy projects. (Ian Jackson for The Globe and Mail/Ian Jackson for The Globe and Mail)

Oil sands fuel a new manufacturing boom - in Alberta Add to ...

At the Pipeline Alley Café, a sign in the busy diner promotes its signature dish – the Pipeliner, a monster two-patty burger heaped with bacon, cheese and mushrooms, complete with fries, for less than $10.

They think big in Nisku, a sprawling industrial complex just south of Edmonton – and they think a lot about pipes, which are fitted here into configurations that, in labyrinthine complexity, overshadow even the local eatery’s layered burger.

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In the pock-marked roads outside the café, truckloads of raw steel pipe rumble in, and intricately connected pipe modules roll out, most of them destined for the oil sands near Fort McMurray, 600 kilometres to the north.

In the past few decades, Nisku, with a work force approaching 15,000, has grown from flat moose pasture to the pipe fabrication capital of Canada – and the massive marshalling yard for the great oil sands supply chain.

Just a stone’s throw from the diner, construction giant PCL operates one of the biggest pipe plants, running an integrated production process that creates $100-million of value a year. It practises manufacturing, Alberta-style – one engineered-to-order module at a time, not the mass-produced cars and trucks that roll off assembly lines in the old industrial heartland of eastern North America.

“This isn’t a bunch of Ford Escorts,” Gary Trigg, vice-president of fabrication for PCL Industrial Constructors Inc., says proudly, as he surveys his yard full of huge, twisting modules of pipe, valves, components and electrical wiring.

The modules assembled in Nisku are the basic building blocks of modern energy complexes, such as refineries, petrochemical plants and oil sands extraction sites. The contraptions in the PCL module yard are destined for Imperial Oil’s Kearl oil sands project and the Consumer Co-operatives refinery in Regina.

This constant stream of new Canadian energy projects means that, while manufacturing seems on the ropes in Eastern Canada, it is thriving in the flat land around Nisku and neighbouring Leduc. The oil sands boom, by super-charging the value of the Canadian dollar, is often blamed, most recently by Ontario Premier Dalton McGuinty, for unemployment in the East, but it is creating explosive demand for welders, pipefitters and electricians around Nisku.

Manufacturing is not dead in Canada, but its focus has moved west to meet surging demand for energy gear, including transportable modules that, like Lego pieces, can be made in Niksu and fitted into remote oil sands sites. “Eighty per cent of what pushes our business is heavy oil,” Mr. Trigg says.

It has propelled Nisku’s industrial park to its status as the second-biggest energy-focused park on the continent – behind a Houston location – and it’s all just a short drive from the site of 1947 Leduc strike, where the post-Second World War oil boom began in Alberta.

These days, it is part of the sprawling industrial region south of Edmonton that comprises thousands of hectares of industrial land, close to 3,000 companies and almost 30,000 workers – almost half that number in the Nisku Business Park alone.

Besides the massive fabrication complexes run by Edmonton-based PCL and rival construction firm Ledcor, a lot of other things happen in Nisku – including energy services of all kinds, from drilling firms to small welding shops to Ritchie Brothers , the world’s largest industrial auctioneer which does a big business selling used equipment out of its Nisku site.

“It’s crazy what’s going on around here,” says Jim Rothlisberger, the regional sales manager for Ritchie, as he surveys the hectic scene on the roads around the company’s facilities.

A lot of that activity stems from Nisku’s ideal location, he says, with easy rail connections, access to the major thoroughfare, Highway 2, connecting Edmonton and Calgary – the northern leg of a corridor extending to Mexico – and, across the highway, Edmonton International Airport, in the midst of a major expansion. And, he adds, “We’re right on the road to get to Fort McMurray.”

When the oil sands are booming – as they are now – so are Edmonton and its hinterland. John Rose, chief economist for the city, says the rise of manufacturing jobs helped power Edmonton’s rebound from the 2008-2009 recession. Manufacturing jobs were up almost 50 per cent year-over-year coming out of the recession, before tailing off to lower double-digit gains. “The contrast with Ontario is quite startling,” he adds.

That’s evident in Nisku, where commuter traffic bunches up in the morning, with jams spilling out onto Highway 2. “It’s a quiet sleepy industrial hollow, “ Mr. Trigg jokes, while in the next breath worrying about whether the choked infrastructure will frustrate valuable and highly mobile trades people. There are about 20 companies in the Edmonton area that make pipe modules, and many more in other fabrication roles.

According to Rolf Mirus, a professor of international business at University of Alberta, the region has benefited from agglomeration or clustering, whereby companies with similar activities attract each other, making it easier to share information and to hire, or poach, the skills they need. Linked into transportation routes, Nisku becomes a one-stop shopping mart for fabrication capabilities.

Cost is a big factor in Nisku’s rise. PCL’s Mr. Trigg has a rule-of-thumb scale of costliness: He assigns a rating of one to his fabrication plant, where pipes are welded together; three to PCL’s nearby production yard, where they are “glued” into complex modules; and five to remote Fort McMurray. The cost gap explains why PCL builds the modules in Nisku and moves big loads of steel – up to a legal load limit of 345,000 pounds – by hydraulic trailers in slow northward treks to Fort Mac that can take about two-and-a-half days.

Mr. Trigg says Edmonton’s labour pool is relatively deep compared with Fort McMurray, but he strives for efficiencies through lean manufacturing and computer-assisted fabrication, while driving continuous process improvements. He has, for example, extended the plant’s mobile factory cranes into the supply yards to create a seamless manufacturing operation.

PCL supplies the pipe modules as part of its integrated service to construction clients. The pipe itself is often sourced by client companies, and it comes from everywhere, including Argentina, Japan and increasingly China. A decade ago, Chinese pipe lacked the necessary quality, but now it makes up about 10 per cent of the steel inputs.

Mr. Trigg also knows that what the oil sands give, they can also take away. At the peak of the pre-2008 boom – which saw the price of oil price approach $150 U.S. a barrel – his work force soared to almost 1,000 people, but after the market collapse, it was down to 200. Now, it has bounced back to 650, and growth seems only limited by the labour market.

And there is no end in sight, with Imperial Oil expanding at Kearl, and Suncor talking about massive module needs – and, of course, the Northern Gateway pipeline, if approved, could mean work for Nisku. The lunchtime diners at the Pipeline Alley Café will not be thinning out any time soon.

 
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