In 1990, Mike Wilson had to make one of the most difficult decisions of his life: The president of corrugated steel pipe manufacturer Atlantic Industries Ltd. (AIL) had to lay off 75 employees in the PVC pipe manufacturing operations of the family-owned company located in the small village of Dorchester, N.B.
It was an especially difficult decision because Mr. Wilson, who had taken over as president of the company from his father the year before, had personally hired many of the employees in the plant. But the recession had hit the Canadian PVC pipe manufacturing industry hard, driving half of Canadian manufacturers out of business. Mr. Wilson’s business, a small company located in the Maritimes, found it increasingly difficult to compete as a low-cost producer and was forced to close the plant and liquidate remaining inventory.
Despite the losses in the PVC business, Mr. Wilson knew that AIL’s core business of corrugated steel pipes was profitable. He also knew that his next steps would be pivotal in charting the strategic direction of the company.
So he decided to move out of commodity products – low-cost and low-tech corrugated steel pipes. Instead, using his training as a civil engineer and experience in the construction industry, he chose to focus on proprietary corrugated steel products, which would provide innovative engineered solutions to the construction industry.
Mr. Wilson knew that engineers were cautious by nature and that it would be an uphill task to convince them to accept new and innovative ideas, but he also knew that was the only way to grow and succeed.
Mr. Wilson’s father, John, had moved from Ontario in 1955 to work in the corrugated steel pipe plant of Armco located in Sackville, NB. In 1965, when Armco asked him to transfer to Quebec, he decided to stay in the region and set up AIL in the adjacent village of Dorchester. The younger Mr. Wilson joined the family business in 1981 as a development engineer after completing a degree in civil engineering from the University of New Brunswick and working in the highway sector in Alberta for a couple of years.
AIL’s footprint at that time was restricted to the Atlantic provinces. Mr. Wilson’s ambition was to take the company to the next level. One of his first projects was to set up the PVC pipe manufacturing facility in Dorchester, which had to be shut down. The decision to cut their losses and take a hit on the PVC business was also necessary because the company had done a leveraged buyout in 1988 to finance the acquisition of a number of corrugated steel pipe manufacturers across Canada, which had moved the company from a regional to the national stage.
Mr. Wilson decided to focus on three aspects to grow the business: innovation, marketing and engineering excellence.
He convinced his technical team to move away from low-cost commodity products to high-margin proprietary engineered corrugated steel products. The AIL team focused on providing custom solutions with patented designs and technology, along with a complement of related software, analysis and testing services.
The company also made a commitment to R&D and to be an industry leader. AIL found a niche in the time-sensitive mining sector, where there was more acceptability of new ideas and innovative solutions.
The success of AIL’s products in this industry provided credibility and convinced engineers of the value of these innovative corrugated steel products. This led to an increased demand, both within Canada and abroad, for its products and allowed the company to grow and become an industry leader.
The strategy has worked very well, AIL is now a world leader in innovative engineered solutions in corrugated metal structures, retaining walls, modular steel bridges and corrugated pipe. The company has manufacturing presence, licensees and sales offices in Canada, the United States, South America, South Africa, Europe, China, India, Australia, New Zealand and South Korea.
Mr. Wilson, now president of The AIL Group of Companies, continues to invest heavily in R&D, spending more than $1-million last year, as he believes strongly in always being ahead of the competition.
Despite its worldwide reach and success, AIL continues to call Dorchester home. Mr. Wilson believes that it is possible to be competitive on the global stage as long as Canadian companies are willing to innovate and invest in young people.
Special to The Globe and Mail
Nauman Farooqi is a professor and head of the department of commerce in the Ron Joyce Centre for Business Studies of Mount Allison University.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.
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