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Forging partnerships

By Christopher Korchin | December 7, 2015
Forging partnerships
Marc Dutil

Canam Group, North America’s top fabricator of steel components, rose to prominence in an era when going it alone was a risky but viable model. Today, for President and CEO Marc Dutil, large-scale projects are all about collaboration

“We’ll never be perfect, but we are the result of the risks we’ve taken, not the result of the risks we’ve not taken,” says Marc Dutil, President and Chief Executive Officer of Canam Group Inc. Founded by Dutil’s grandparents in 1961, the company has grown from a tiny but plucky single-plant operation in rural Quebec into the leading supplier of structural steel on the continent, with an expanding presence in emerging markets and nearly 4,100 employees worldwide. If you’ve strolled through the new Whitney Museum of American Art building in New York, caught a Toronto Raptors game at the Air Canada Centre or driven over the Pitt River Bridge in Port Coquitlam, B.C., you’ve witnessed the types of high-profile collaborative projects that Canam, based in Saint-Georges, Que., is known for.

But the company’s way of doing business has evolved over a half century as it’s moved from a family operation to a publicly traded corporation. Dutil says that his father, Marcel, whose legendary drive led to Canam’s steady expansion and made him something of a folk hero in Quebec business circles, “went double or nothing a few times in his life, because double was more and nothing was not so bad.” 

Today, though, Dutil not only manages the needs of his customers and his enterprise, but also the expectations of shareholders. Whereas, in his father’s words, “we did what the customer told us to do” back in the day, he now must listen to investors and business partners too – parties that may question overly aggressive moves.

But Dutil points out that his main focus remains on the company itself. “Our duty in risk management is to our own corporation,” he says. “I’m not the portfolio manager for investors. The shareholder has the ability to manage his risks through his portfolio; so a little Canam, a little Bombardier, a little GM, a little Apple.” His goal with investors is not to “sell” Canam, but rather to “explain” it and show why it’s attractive over the long term, through good years and bad.

The relationship with business partners is more critical, according to Dutil. “Investors are born, but suppliers, financial partners, insurance companies, PwC – there’s a whole ecosystem around Canam that we benefit from,” he says. “A steel mill that accepts to work with us when times are tough? Listen, they have a stake in the company.”

Dutil feels that such notions of trust and continuity are necessary for successful collaborative projects. But in a hypercompetitive, bottom line-obsessed industry, he thinks they’re often lacking. For him, the vogue of prioritizing risk management above all else tends to poison the collaborative environment and, in many cases, undermine the projects themselves. “What I’ve been witnessing is project teams, whose ultimate goal should be the successful delivery of a project, behaving to protect themselves against others,” Dutil says. “There’s a rampart mentality – you’re always protecting yourself. And the management of risk ends up with the party with the least sophistication holding the ball.”

He maintains that if there’s trust, “you’re all in. You don’t restrict where you go; you share fully – even the bad ideas.” But, again, the process is fraught with suspicion. “Today, we can’t possibly sell a job without legal going through it 10 times, without arguing with the other side, without looking at their insurance coverage, without looking at their retainage, all the things that could go bad, the liquidated damages … all this vocabulary that doesn’t lead to successful projects.” When owners, general contractors, suppliers, tradespeople and financial backers are looking to extract the maximum value from a project at the expense of their colleagues, all pretence of a genuine partnership reaching for a common goal is lost. “Most desire for collaboration is collaboration with a small c, not a big C,” Dutil says.

He also points out that in the construction world, compromising on quality always carries consequences, ranging from the merely embarrassing and expensive – such as the problem with windows falling from the John Hancock Tower in Boston in the 1970s – to the tragic, with the collapse of the Quebec Bridge due to engineering flaws causing the deaths of 75 workers in 1907. Clearly, risk management has to start with public safety.

Low front-end investment is also a warning sign for Dutil that a project is headed for trouble. “On most projects that go well, people are willing to spend money upfront,” he says. “I would say give more money to your professionals – the engineers and architects. The quality of their work will make everybody else’s job easier.”

Likewise, Dutil believes that awarding contracts to the lowest bidder or seeking price reductions from trusted partners has a corrosive effect on any collaboration. “On $1.2-billion in sales last year, we made $29-million in profit. That’s 2.4 per cent. So, for every $1,000 of something we sell, we make $24. Do you think we should make $20, maybe $19? That would mean cutting our price by less than 1 per cent.”

Similarly, in dealing with Canam’s own suppliers, he says, “When we know these guys are really good at what they do and I trust them, why would we want to extract a last pint of blood from them?”

Dutil mentions one recent example of a healthier approach to a multipartner collaboration, a project for a major American entertainment company. “They sat everybody around the table and said, ‘This is a team: You’re my structural guy; you’re my general contractor; you’re my creative team; you’re the architect; you’re the engineer. Here’s my budget, and collectively, if you allow me to do better than my budget, you will share. I picked you because of your reputations: You won’t lose money, but you will only make a profit if the project is successful.’” This approach not only circumvents pervasive self-interest, it also means that “as you work out issues, you tend not to isolate yourself,” adds Dutil.

He also sees hope in the growing public-private partnership model, arguing that it can provide a kind of intrinsic oversight and quality assurance. “If you have a history of having respectful relationships, then you get the right players on your team,” Dutil says. “P3 rewards the strength of the teams that are assembled.”

Successfully navigating such a challenging industry is a source of pride for Canam Group. Since participating in the construction of Boston’s new TD Garden, for instance, the company has been involved in 65 other stadium and arena projects.

But perhaps Dutil’s greatest contribution to business will be the École d’Entrepreneurship de Beauce, a Saint-Georges-based training ground and think-tank for aspiring and established entrepreneurs that he founded in 2010 and where he teaches risk management. The school’s motto, “Donner au suivant” (“Pay it forward”), tells you everything you need to know about his belief in continuity and his desire to improve the prevailing business culture.

 

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