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Machining firm says bye autos, hello solar

Inside a Samco Machinery machine shop, vice-president of operations Jaswinder Bhatti has to shout to make himself heard over the screech of steel grinding steel, as tooling for other machines, ones that will soon be spitting out racking components for solar panels, is being formed. He's talking about the re-hiring of workers laid off when the recession bit deep into the company's business.

"I'm starting to bring the night shift people back," he says. "We used to have a whole night shift, eight guys here. And I just hired back four more."

Roll-forming equipment, pre-punch presses and other industrial machines have been the firm's bedrock earners since the Toronto company was founded by Joe Repovs in 1972. But today the rebound is largely due to a new demand: solar energy.

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Three years ago, Mr. Bhatti accompanied Mr. Repovs to India. Mr. Repovs was searching for new opportunities there, including one that saw the firm win a major contract for roll-forming machinery that would produce parts for the famous Tata Nano car.

Despite that kind of impressive score, family-owned Samco was knocked for six when the recession hit its main customers, the plants making parts for the automotive and construction industries. Company sales plummeted, to $20-million from $30-million, in 2008, and down again to $17-million in 2009. Almost half of its employees had to be let go.

This year they are projecting sales of $20-million again, with 10 per cent of those due to solar, says David Pichard, vice-president of business development for Samco Solar. "I think we'll achieve $30-million next year and, in my opinion, 10 to 15 will come from solar," he said. Staff levels, meanwhile, have risen to 76 from a low of 63.

Behind those improving numbers is the deal Samco signed earlier this year with Maryland-based SunEdison, a subsidiary of MEMC Inc. and the largest maker of photovoltaic technology in the United States.

SunEdison, which already manages 102.7 megawatts of solar energy in North America, set its sights on Ontario when the province passed the Green Energy and Green Economy Act in 2009. The act encourages both companies and private citizens to install solar panels and feed the resulting electricity back into the power grid. The Ontario Power Authority will pay them anywhere from 44.3 to 80.2 cents per kilowatt hour, depending on the project.

The act's provisions, however, also come with domestic content requirements. By next March, 60 per cent of the solar equipment used in approved projects must be produced locally.

As a result, said Mr. Pichard, "you pretty much have to get your racking made in Ontario, because all the other components - silicon wafers and cells, for example - are not available and won't be for a long time."

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Samco got into the solar business thanks to its relationship with American Roll Form, an Ohio-based company with whom they have worked for more than 30 years. "They were approached by other solar companies," said Mr. Pichard, "and because there were customers of theirs wanting to come to Canada, after the green energy initiatives were announced, it was, 'don't look further. Here are the guys you're going to work with.'"

Samco invested about a million dollars in refurbishing part of its Scarborough plant to set up the racking line, and expects production to begin next month.

Mr. Pichard is also spending increasing amounts of time in Europe, looking for more business. While several countries there have already developed solar energy programs, the prices paid per kWh by electricity providers are starting to go down. That makes Ontario "a hot new market," he said, and opens the door to sales south of the border, in states like New Jersey, Connecticut and Massachusetts where power authorities are also offering incentives for renewable energy sources.

And as Ontario's coal-generated electricity - about 7 per cent of the total - is phased out by 2014, the demand for renewables is likely to keep growing.

The domestic-content rule "has already attracted billions of dollars of investment," said Kristopher Stevens, executive director of the Ontario Sustainable Energy Association, "and I think we're going to see a lot more. We're seeing a lot of manufacturers who are coming here, or are transforming what they used to produce, to produce technologies that support solar, wind, thermal and other things."

SunEdison, meanwhile, has already set up three solar parks in Ontario: one in Stone Mills, and two in Norfolk County, totalling 27.1 megawatts of solar energy capacity. It is planning to export racking to the United States, and has won OPA approval to install roof-mounted panels on commercial sites that will provide another five megawatts. That, said Mr. Pichard, "is a good amount of rooftops for the Ontario market.

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"That's why we're pleased to work with them," he added, "because they were very diligent and very professional in the way they address the project, and how they get projects approved. And they've done it all around the world. They know how to make it work."

For Mr. Bhatti, the new focus on working with solar technology companies is good news. "I love to hear about these contracts," he said. "I'd love to hear of more deals like that."

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