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Crane maker rebuilds with joint venture

By Keith Norbury | January 23, 2013
Crane maker rebuilds with joint venture
O’Brien Installations Ltd

The challenge
Like most businesses coming out of the 2008 economic downturn, Ontario industrial crane manufacturer O’Brien Installations Ltd. was looking for ways to reinvigorate its business. The company, which had been based for decades in Stoney Creek, was also looking to expand with a new product line to take full advantage of the additional space it inherited when it relocated in January 2011 to its new manufacturing plant in nearby Burlington.

The strategy
O’Brien had to figure out how to meet its customer demands, stay competitive and remain true to its brand. One of O’Brien’s major product lines has long been jib cranes (industrial cranes that have a horizontal boom known as a jib), which are often used in anything from stockyards to foundries. Their major U.S.-based competitors dominate the market selling light-rail workstation bridge cranes, which are popular with such industries as automotive parts making, whose companies include Magna International of Aurora, Ont. “One of the comments I always got from our dealers, or potential dealers, was, ‘Boy, you know, we’d like to sell your jib cranes but it would be nice if you had a light-rail system that you could add to that,’” says Wayne Davis, O’Brien’s general manager. O’Brien recognized a product gap, one that it could easily fill.

That led to an exclusive deal in the spring of 2011 with Metreel Ltd. of Britain for O’Brien to manufacture and distribute Metreel’s Met-Track “crane in a box” system. “They had approached us at our old facility,” Davis says. “Unfortunately, we didn’t have the shop space or the room to do it effectively.” The joint venture provided a strategic alliance to develop a new product to bolster the manufacturer’s prospects and competitive edge.

There was risk involved in working with a new partner and in manufacturing and distributing a new product. But it was mitigated by knowing there was already a demand from O’Brien’s customers and a high-quality existing product.

The result
The deal gave O’Brien exclusive rights to manufacture and distribute the crane in a box in Canada and in 10 states in the northeastern United States. In the first fiscal year, which ended last March 31, O’Brien made and sold almost $1-million worth of Met-Track systems. Despite just eight months of production, the sales exceeded the $500,000 to $750,000 projection that Davis had expected.

Met-Track production occupies about a 10th of O’Brien’s new 4,000-square-metre plant. The company has hired new engineers, welders and fitters to work on the Metreel products. O’Brien has also bought new equipment, such an indexing saw system, a semi-automated machine capable of cutting multiple pieces at a time to improve operational efficiency. “We wouldn’t have purchased that equipment had we not taken on this product line,” Davis says. “We’ve bolstered our ranks, so to speak,” Davis says.

The addition of the Met-Track product has even by its very presence bolstered, or least maintained, productivity in the whole plant. “So certainly it helps to keep the shop busy and keep the flow, which is important,” Davis says. “With a shop like ours, once you can get to full manufacturing capacity, your overheads come down dramatically.”

Looking forward
Davis is confident that the success of the joint venture will convince Metreel to open more U.S. territories to O’Brien for distribution. “I think what it’s going to allow us to do for the most part is increase our dealer base significantly,” Davis says. “That’s really what we wanted to do.”

And should another similar opportunity present itself, he says, the company would consider forming a partnership on other product lines.

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