JNE Welding – how Indigenous economic development is reshaping manufacturing on the Prairies

Thinking Big

How Indigenous economic development is reshaping manufacturing on the Prairies

From http://www.prairiemanufacturer.ca/#!thinking-big/u0bwg

 

By Martin Cash

Jim Nowakowski knew he’d have to be patient when he began succession planning for his Saskatoon manufacturing firm, JNE Welding — a company he founded in 1980, which has grown to become one of the largest custom steel fabricators in the province.

But, for Nowakowski, that patience was tested as the bottom collapsed out of the price of oil and expansion in the potash industry dug in its heels.

The latter was particularly impactful. For years, JNE’s capacity and capabilities expanded alongside developments in the potash sector. Take, for example, the 38-foot high, 33-foot wide, and 186-foot long crystallizer it rolled down Highway 11 last year to K+S Potash Canada’s $4.1 billion Legacy mine north of Regina.

Those mega-projects, however, have largely wrapped up; and, with potash prices roughly one-third of what they were in 2008, new developments have not kept pace. Mining giant BHP Billiton recently announced it would be slashing $130 million from its budget for the build of its Jansen Lake underground facility, 140 kilometres east of Saskatoon.

Still, there were equity investors that were looking to exit, so Nowakowski needed to push through. He wanted a partner that would be committed to continued growth, to keeping operations in Saskatoon, and one that could add value to its business development activities.

“I know, for it to be successful, things like that don’t happen overnight,” says Nowakowski. “I started down that path four or five years ago. I had a couple of false starts where it wasn’t right, neither for me nor the groups we were considering, so we backed away.”

Nowakowski wasn’t just thinking about his own pocketbook. He had a responsibility to the 130-plus people working for him to get the “right fit.”

That fit turned out to be a partnership with two Saskatchewan First Nations groups.

This past January, English River First Nation and Peter Ballantyne Cree Nation announced they would be joining forces to acquire a 60 per cent majority ownership stake in JNE — a deal that took about a year to complete.

The agreement marked one of the first times that enterprising — and increasingly well-capitalized — Indigenous investment bodies targeted the Prairie manufacturing sector as a way to build wealth and stimulate economic development, shifting the role of First Nations and Métis Peoples from workforce participants to owners.

The decision for Nowakowski was far from passive.

There is a growing understanding by mainstream businesses in Western Canada that their future prosperity is heavily tied to their success engaging with Indigenous populations in the regions in which they work.

This concept was not a new one for JNE. The company had partnered in the past with Tron Construction & Mining — another business venture owned by English River’s economic development arm, Des Nedhe Developments.

Now, under the direction of its own new mandate, JNE has forged ahead.

“There has been a positive impact,” says Nowakowski. “I think we have already been considered for a few jobs that we otherwise would not have been.”

That’s because many Crown and resource development corporations have strong directives to engage First Nations and Métis Peoples.

German-owned K+S Potash Canada is one of those companies.

Terry Bird, lead advisor on First Nation & Métis initiatives with K+S, says it is a fundamental piece of the company’s operating principles, with specific policies on both procurement and employment. Gone are the days of having a community outreach policy just for show.

“It’s good for the organization,” explains Bird, “and it is the right thing to do.”

Gary Merasty, chief operating officer of Des Nedhe Developments, has an enviable network of contacts by virtue of his tenure as a two-time former grand chief of the Prince Albert Grand Council, seven years as a vice president with uranium producer, Cameco, and one term as a Liberal MP for the northern Saskatchewan riding of Desnethé–Missinippi–Churchill River. In addition to the people he knows, he also has the benefit of perspective.

“It’s not strictly a social issue,” Merasty says of the current wave of industry engagement with Indigenous Peoples. “If you step back and rise above 10,000 feet, you can see it is a growth issue. “Baby boomers are retiring, but you have a growing Aboriginal population. If there are ways and means of mobilizing that talent, they can rise to help fuel growth especially in the western provinces. Because [Indigenous Peoples] are such a huge part of the overall population compared to the east, our impact contributes to growth big time. That is part of the overall strategy.”

English River has built an impressive portfolio of business interests, including multi-location retail operations and a 134-acre urban reserve that nestles up to the City of Saskatoon. Top line revenue for the operations, including its 30 per cent stake in JNE, is up to roughly $200 million.

“Whether it is Indigenous or non-Indigenous, we are in it together,” exclaims Merasty. “These provincial economies in the west are integrated. By partnering like this, it allows the pool to go a little deeper and little wider for the future.”

That is why Nowakowski and companies like K+S are prepared to spend the time and effort to foster partnerships that work.

And it takes more than just policies, procedures, and a stated commitment. It takes steadfast dedication. According to Bird, that means a willingness “to go across the road and shake hands” with community leaders, to find out what they can offer and what they may need from you.

“There is a fair amount of engagement that we continue to do on an on going basis,” he says.

Meanwhile, Pasqua First Nation, just east of Regina, has been building an active portfolio of its own, generating $40 million in business revenue during 2015, including from the delivery of several training programs it administers on-reserve in partnership with Parkland College.

Pasqua Chief Todd Peigan also preaches the same message of hard work, and is adamant you can’t sit and wait for companies to come to you.

“Industry is very supportive, but you have to take the initiative to go and meet with them,” Peigan says. “Industry doesn’t necessarily make a point of meeting with the First Nations on business — it’s up to the First Nation to go out and get involved.”

In February 2016, Pasqua acquired Pro Metal Industries, a Regina custom metal fabricator, to become one of the few 100 per cent First Nations-owned manufacturers on the Prairies.

It’s part of an ambitious strategy started by Peigan when he became chief in 2011, to ultimately make the band self-sufficient. To attain that goal, Peigan reached out for help, bringing in 30-year industry veteran Bob Dumur to manage Pro Metal.

Dumur, who built his own company, Dumur Industries, into a 100-plusperson precision metals shop before selling it in 2013, knew Peigan and the Pasqua band before becoming involved.

“Pasqua’s ownership undoubtedly creates more opportunity for their people and Pro Metal,” adds Dumur. “It’s a win-win for us, and a win-win for our customers.”

In Winnipeg, Sean McCormick’s Métis roots are not far removed from the trap line where his aunt was born and where his grandfather made a living north of The Pas.

McCormick is the founder and CEO of Manitobah Mukluks, an internationally-acclaimed footwear company, whose modern, rubber-soled slippers and boots with distinctive Métis beadwork patterns are now sold in 50 countries. The company placed 182nd on the Profit 500list of the fastest growing companies in Canada — the highest ranked company from Manitoba with 2015 revenue between $10 million and $20 million.

McCormick is passionate about his heritage and personally sponsors an educational program that teaches mukluk-making to Indigenous communities across the country.

And while his company trades on its Indigenous heritage, it’s something McCormick treats with a solemn respect.

“Quite frankly, I think our authenticity is established by the actions we take in the community way more than who might be the owners,” he explains. “That said, when it comes to self-sufficiency, development, and sustainability, we (Indigenous Peoples) need to own our own things.”

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on July 25, 2016, in economic impact, miscellaneous, oil, other minerals, political, potash. Bookmark the permalink. Leave a comment.

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