Ash Sahi, CEO of CSA Group, is photographed in a room used to determine the electromagnetic compatibility (EMF) of various pieces of electronic equipment.Fred Lum/The Globe and Mail
The Canadian Standards Association, now known as CSA Group, is familiar to consumers for its logo that indicates hockey helmets and electrical cords are up to scratch. But the organization does much more: Its 1,600 employees develop standards and perform testing and certification for everything from medical devices to fireplaces to solar panels. It has even issued a standard for maintaining mental health in the workplace. Chief executive Ash Sahi has spearheaded an aggressive international expansion, buying or setting up test labs in Asia and Europe to broaden the agency's global footprint.
How do you describe what the CSA does?
When we began, the idea was to have more public safety in railroads and bridges and electrical products. We have transformed from just looking at safety, to adding other things that are important to society, such as writing standards in medical fields. I see our role as an organization that does social good. Whether it is workplace safety, mental health, electrical shock, or electric vehicles, we are interesting in making sure that people don't get hurt, and that they have safe products.
How are you trying to make it a more global entity?
That evolution has taken place over the last 40 or 50 years, but in the last 10 years we have been much more focused on becoming international. Eighty per cent of our revenue today comes from outside of Canada. One reason is the China growth story. A lot of manufacturing moved from the Western world to Asia. Our customers manufactured products in Asia, then shipped them back here, and they still needed those products to be tested and certified. For a long time we would fly engineers over there, but then we decided to invest in our own laboratories in China. Today we have at least a dozen labs and 200 employees in China.
Where do you want to concentrate your international expansion?
We focus on countries that are stable politically, have reasonable control on currencies, and where there is technology and growth. In Europe we picked the United Kingdom, Germany and Switzerland, [as well as] Italy and Holland. In Asia, we selected China because we already had a big presence there, along with South Korea, India, and Taiwan.
Are developing countries really interested in setting standards?
The developing countries do write lots of standards. The problem is there is no implementation. Companies are broke, and they will put in thinner wires [in a product] than they need to. The policing of these standards is still behind the Western world.
Aren't countries such as Germany already saturated with testing labs?
We have made two acquisitions there [of companies] serving the automotive industry and the electrical industry. We have about 40 engineers at BMW who go there every day to test electric cars and hybrid cars. We also built a power tools lab so we can test Bosch's drills and those kinds of things. And we are building a new medical lab and a new hazardous locations lab where we test instruments to ensure that they don't blow up in explosive environments.
How have you managed your international acquisitions?
We have chosen to run in each country with local management. We want people to be able to speak the language, understand the culture, and understand relations with government. Expats just can't do that, especially in countries such as China where English is really not spoken very much, even at the higher levels of government.
Should private Canadian companies be taking a more aggressive approach internationally?
If companies don't go to Asia where the majority of the population is on this planet, they will miss out on a huge opportunity. The middle class in China and India is already more than a billion people. That didn't exist 20 years ago. If you are not participating in that, and you are [only] participating in the U.S. and Canada, you will miss a whole bunch of stuff.
Who actually controls CSA, since it is a not-for-profit entity?
We have about 8,000 members in Canada and the United States. Seventy per cent of our members are industrial manufacturers, but a member can be an engineer, a non-governmental organization, someone from a university, government, or a regulator – anyone who has something to contribute to a standard. They elect the board and the board elects the CEO.
How do you raise funds for international expansion, if you are a not-for-profit without access to capital markets?
We charge companies to do testing, and certification. And in some cases when we write standards, companies will fund some of the development work on writing standards. Today we have $150-million in the bank. We have no debt. We have become a cash machine.
Would it be easier to run this company if it were a for-profit firm and you could tap public markets?
We have this discussion at the board once every year. If we spend the $150-million and are leveraged to the hilt, then we are going to need a new structure. But for the time being, we don't. As long as we are delivering good results, we have cash, and we are executing our business plan, there is no need to change.
What environmental areas have you added to your portfolio of standards?
We focused primarily on safety for the first 70 or 80 years, but now our mandate is safety and sustainability. [For example], we have carbon-dioxide capture and storage as part of our portfolio [of standards]. It defines how you capture carbon dioxide, how you store it, and how you manage these storage facilities. We now certify solar panels and their connection to the grid, and [we certify] electric vehicles. [We will also look at ] hydrogen vehicles, and certify the handling of the fuel and how it is filled into the car.
Are there areas into which you are hesitant to expand?
The areas we would like to get into, but are kind of risky for us, are food and water. They [are important] but we don't have the core competency in that area. If we do get into that are, we would probably do it through an acquisition, where the company has a demonstrated history and performance.
Do you get resistance from companies that want to operate in a free market without standards?
Sure, there are always industries or companies that don't want standards. At the oil sands, we have been trying to get in there and say, "We can help you develop standards." It has been like pulling teeth, but we are starting to make some progress. Our resource sector is pretty much a self-managed industry and automotive, in North America, tends to behave like that, too.
Where, in the energy business, is there a need for more standards?
We would like to get into pipeline safety inspection. We would like to get into mining.
Where is the CSA's greatest success in improving safety?
We probably made the biggest impact in electrical safety. But in the last four or five years we have made a lot of progress in the medical area. We test CAT scans, and X-ray machines and those kinds of things, both for performance and for safety.
How big a problem is counterfeiting of the CSA logo?
It has been increasing, mostly from Asia, where companies will sell a product and put our mark on it, even though we have never seen it.
We have an anti-counterfeiting group to chase down these products. We have taken companies to court and sued them for damages. They are stealing our mark, but more important they are putting out a product that is not safe. We have about 600-plus complaints a year about counterfeit products, and we chase down every one of them, so it is a big job.
Two years ago, Christmas tree lights were distributed to Wal-Mart. The wire gauge didn't meet the standard, and they had a fake CSA logo. We had to go to Wal-Mart and say, "You have to take it off the market."
CSA was losing money when you joined. How did you turn it around?
First we took out layers of management, which is a hard thing to do. Then we said, "Are we making enough money for the work that we are doing? Are we getting paid for the value?" So we adjusted our pricing, and took out some of the customers that were not helping our bottom line. And then we got into growth areas.
How do standards help companies work better?
We are helping companies work more efficiently, and we are facilitating trade. Our companies are more competitive if they are able to capitalize on some of these standards and make better products.
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ASH SAHI
Title
President and CEO, Canadian Standards Association
Personal
Born in Ludhiana, India; 57 years old
Education
Chemical engineering degree from McGill University, Monreal; MBA from University of Toronto
Career highlights
-Joined DuPont Canada Inc. in 1978, eventually managing several global businesses over 26 years
-Seconded to the federal government from 1998 to 2000 to work as director of industry programs for the Department of Industry and Trade
-In 2000, joined Denmark-based packaging firm Hartmann North America as president
-Appointed CEO of CSA Group in October, 2009