| Business in Vancouver By Nelson Bennett |
He just didn’t like the competition.
“When I acquired Dynamic Structures in 2007, it was largely because they competed in the steel fabrication business,” said Nelson, Empire Industries’ founder and CEO. “It wasn’t because I had a burning desire to get into the ride system manufacturing business.
“I lost a contract to them. We were duking it out in the steel fab business out here, and it was predominantly because I was in the steel fab business that I bought the company.”
He quickly realized, however, that it was a perfect fit for his convictions, which included a focus on Asia and reinvigorating traditional industries through high-tech innovation.
“He’s always very good at strategizing where business has to be directed,” said Steven Judge, president of International Breweries Inc. – a longtime friend and business associate. “He wanted to focus more on the high-tech, high-margin areas and also push more into Asia, where he felt there would be potential for growth to help the company survive.
Dynamic Structures specialized in precision steel fabrication for two niche markets: building amusement rides and the domed steel enclosures for astronomical observatories.
“Looking at the engineered products that were designed and manufactured here in Port Coquitlam, I started to realize that this is a better business – better margins, higher value added, less competition,” Nelson said.
He began focusing on building that business unit, which originally was just one of half a dozen. Today, the Port Coquitlam business units of Empire Industries – Dynamic Structures and Dynamic Attractions – account for 80% of the Winnipeg-headquartered company’s business. Empire employs 450 people and had $150 million in revenue in 2015. More than half of the workforce, about 250, is based in B.C.
“Here we might have had 10 engineers back in 2007 working for the company as a steel fabricator,” Nelson said. “Now we would have over 100.”
Still, the 450 staff Empire now employs is roughly half the workforce it had at its peak in its various business units prior to the 2008-09 recession. Surviving that recession proved to be the biggest challenge of Nelson’s business career.
Originally from Calgary, Nelson earned a bachelor’s degree in commerce from the University of Alberta followed by an MBA from the University of Western Ontario, where he met his future wife, Leslie, who became an oil and gas analyst and, later, an investment adviser for RBC.
Nelson served as vice-president of Trimac Ltd.’s oilfield services division for several years before he and his wife decided to leave Alberta and move to Toronto in 1986 to escape the recession that was ravaging Western Canada.
“My wife was pregnant, and the recession in Western Canada made us both reflect on [how] opportunities with each of our careers were more appealing at the time in Toronto.”
Nelson and his wife would end up raising three children in Toronto, where they still live, even though Empire Industries is headquartered in Winnipeg and its biggest business unit is based in Port Coquitlam. The company also has divisions in Orlando, Florida, and a joint venture in China. Not surprisingly, Nelson spends about half his time travelling. From 1986 to 1997, Nelson worked for a number of investment firms in mergers and acquisitions, equity investment advising and raising private equity. In 1997, he struck out on his own. Through a holding company he controlled he bought Empire Iron Works, a steel fabrication company, and in 2006 he took the company public through a reverse takeover.
“The plan at the time was to grow through acquisitions of fabrication and construction companies that were very busy at the time because of a shortage of skilled trades, because of the tremendous construction activity in Alberta, predominantly the oilsands,” Nelson said.
Nelson bought six companies over a two-year period, including Dynamic Structures. And then the 2008-09 recession hit.
“It decimated the Canadian manufacturing industry,” Nelson said.
The company had $50 million in debt, and suddenly he had banks breathing down his neck. He managed to save the company from financial ruin through workforce reductions, selling off assets and refocusing on the one business that had the best prospects: the Port Coquitlam units.
“We were largely, between 2009 and 2012, in survival mode,” Nelson said. “We recognized we had to move beyond steel fabrication or we would be in deep trouble. So over that period we made the adjustments necessary – tough adjustments: retirement of debt, selling of assets, shutting of plants, laying off of people, and redirecting our efforts to a higher-value sales proposition and product that, in hindsight, is proving to be a good move.
“I decided to shift our focus away from steel fabrication and toward manufacturing engineered products.”
Dynamic Structures had started in the 1920s as a private steel fabricator, but eventually specialized in two niche markets. One was building the domed housings for large telescopes.
These observatories use mechanical track systems that allow the domes to turn and apertures to open and close. There are similarities between the track systems used in observatories and the track systems for some amusement rides.
While working on the Keck telescope project in Hawaii, Dynamic Structures president David Halliday worked with an American mechanical engineer who ended up at Walt Disney Co. (NYSE:DIS) and called on Dynamic Structures to help out when the company ran into problems with one of its projects in Florida.
Out of that grew a whole new business division – Dynamic Attractions – which now provides Empire Industries’ bread and butter.
“We backed into the business,” Nelson said. “It wasn’t a strategic decision – it was a request from a buddy for help.”
Dynamic Attractions has built or helped build 50 amusement rides. It specializes in “motion theatre” attractions that combine moving seats with visuals like theatre screens to provide a sensation of moving through fantasy realms.
It has built enclosed roller-coaster rides like Space Mountain for Disney and worked attractions like the Harry Potter and the Forbidden Journey ride for Universal Studios at its amusement parks in the U.S. and Japan.
The biggest new market is China, which is catching up to other industrialized countries by building new amusement parks for a growing middle class.
Dynamic opened an office and fabrication plant in China through a joint venture there, which was part of the strategy to reduce costs. Nelson said it made little sense to bring steel in from China and build the rides in Canada and then ship the components back to China for assembly. So the rides built for China are now constructed there.
“It just made no sense to be shipping this stuff across the ocean. The engineering, the design work, the innovation – that’s done in Canada.”
In September 2016, Dynamic Attractions announced a partnership with China’s Altair (Shanghai) Space Technology Ltd. to build, own and operate a $600 million theme park. Dynamic Attractions expects about $150 million in work out of that deal.
Meanwhile, as Dynamic Attractions continues to meet the demand for new amusement rides, its sister company, Dynamic Structures, continues to specialize in building the housings for astronomical observatories. And one other division, Dynamic Optics, is developing mirror-polishing technology for large reflecting telescopes.
The biggest telescope project it has worked on thus far isn’t built yet: the US$1.4 billion Thirty Meter Telescope (TMT) planned for the top of Mauna Kea in Hawaii.
Canada is one of five countries involved in the project. The TMT will be the world’s largest optical telescope and will use a special “calotte” aperture that Dynamic Structures designed. The company will also likely be awarded the contract to fabricate the telescope’s housing – a contract estimated to be worth about $150 million to Dynamic.
When he isn’t working, Nelson likes to ski and play tennis and squash. He also now has a keen interest in astronomy – thanks to Dynamic Structures – something he knew little about before buying the company.
When he told his wife he had bought a company that builds housing for large telescopes, she bought him Astronomy for Dummies.
“She laughed and said, ‘What do you know about astronomy? You know nothing about astronomy.’”
He does now, though. After becoming the owner of Dynamic Structures, he became co-chairman for the Coalition for Canadian Astronomy, a position he still holds.
Source: https://bit.ly/3l7F2yj
