September 26, 2008 Fabricating Opportunity

Volume 11 | Issue 5

Altex industries Is a leading designer and manufacturer of heat transfer equipment used in the oil, gas and petrochemical industries. David

Thirty to 35 years ago, there were some small and insignificant oilsands mining operations located in the region of Fort McMurray and the Athabasca River of northern Alberta in western Canada. Vast as the oil deposits in these sands are, in those days it was just too expensive to tap into. Today, with worldwide oil prices at record highs that are expected to remain so, along with improved exploration and recovery technologies, the Canadian oil sands are sometimes referred to as “the new Kuwait.” According to John Vidal, environmental editor writing in The Guardian last July, “Shell, Chevron, Exxon, Total, Occidental, Imperial and most other oil majors have so far invested nearly $100 [billion] Canadian dollars in the 1,160-square-mile (3,000-square-kilometer) “bitumen belt…”. By 2030 they plan to produce at least [five million] barrels a day, and export more than Nigeria, Venezuela or Norway, which would make Canada one of the world’s largest oil producers.”

This is good news for the state of reliable oil reserves, the Canadian economy and, in particular, Altex Industries, one of the largest shell and tube heat exchanger fabricators in Canada. “This is the largest oil reserve in the world. There’s a lot of potential that we hope will last for years to come,” notes Stephen Hutchison, general manager. “While we do some export business, the Alberta oil and gas industry is by far our largest market segment. Just the other day there was a television program showing Bill Gates and Warren Buffet touring the Alberta oil sands. If those two guys are interested in this, you know there’s got be some huge opportunities.”

CUSTOM WORK
Altex Industries designs and fabricates shell and tube heat exchangers to custom specifications ranging from six inches in diameter to over 14 feet, weighing up to 250,000 pounds and capable of withstanding pressures of up to 3,000 psi (pounds per square inch). The company’s headquarters and fabrication facility comprising 28,000 square feet is located in Edmonton, Alberta.

Hutchison notes that the custom nature of the work necessitates a certain degree of skilled labor. “There’s high demand for the kind of skills we need and these days, as with most traditional manufacturers, we don’t have the labor pool we used to. The trades are stretched to the max, trade schools are extremely busy as morepeople are looking at the trades as a career. Skilled tradesmen can command good money and there are lots of opportunities.

He adds, “We have a core of loyal employees that have stayed with us over the years. Altex puts a lot of effort in making the company a good place to work.”

Motivated employees who know what they are doing are, of course, a critical component for success. With the rising cost of raw materials, however, it is not the only thing a company such as Altex Industries can rely on. “We’re constantly looking at improving our processes, purchasing new equipment that will make us more efficient and doing anything possible to trim costs and maintain high quality. The challenge is keeping our edge while business conditions constantly change.”

LOCAL VALUE ADDED
In recent years there has been a lot of competition from off shore suppliers such as South Korea, Italy and Malaysia. In order to compete we are constantly looking for ways to trim cost. Today approximately 75 percent of our tubing for exchangers is imported from China. In addition we are seeing more and more steel plate being imported from China. We are confident of the quality because we carry out the proper due diligence to ensure that the materials we use meet the high standards that our industry and customers demand.

This is not to say that cost issues have gone away. “In the last seven months, we’ve seen an increase of 30 to 50 percent in our materials costs,” Hutchison says. “The only bright side to this is that prices are increasing for everyone, so it’s not that anyone has any competitive advantage. It just makes everyone work harder at providing more value added services given that product costs are going up.”

For Altex Industries, that value-add begins with being the only fabricator that specializes exclusively in shell and tube exchangers for the petrochemical industry. “A lot of fabricating shops say they can do anything, but exchangers are all that we do, and, consequently, we offer a level of capabilities and experience that your ‘one-stop-shop’ isn’t going to have,” Hutchison says. The analogy would be that if you had a heart problem, would you rather go to a general practitioner or a cardiologist?

Altex Industries also provides engineering services for thermal and mechanical designs and can translate these designs into a physical product that meets, if not exceeds, customer requirements. Delivery turnaround depends on the complexity of the design. “For project work that involves 30 to 40 exchangers, you could be talking anywhere from a year to a year-and-a-half for delivery. For a single unit, depending on the size, typical delivery is about three months. Of course, if there’s a problem and the customer is looking at a shutdown for an extended period, we’ll do whatever it takes to get them up and running as soon as possible.”

Altex Industries was the first licensee in Canada of CBI’s (formerly ABB) Helixchanger®. Helixchangers are helically baffled shell and tube heat exchangers, as opposed to the traditional perpendicularly segmented baffles, which can offer increased performance in certain situations while reducing maintenance and capital costs.

The company also offers field services through its Evtex Field Services division. “We offer a broad range of field services from small repair jobs to complete plant shutdowns,” Hutchison says. “In addition to heat exchanger equipment, we also can provide onsite machining, flange facing, bolt torquing and tensioning, cold cutting, chemical and high pressure washing, non destructive testing and heat treating.”

Originally called Altex Heat Exchanger when it was founded in 1979, its assets were sold to a local group of private investors in 2001 and reborn as Altex Industries Inc. “The one obstacle we’re still trying to overcome is that some customers still view us as a ‘small guy’ when, in fact, we’ve completed a number of very large scale projects,” Hutchison notes. “We consider ourselves a major player in the supply of shell and tube heat exchangers in North America and we’re working to make that more widely known.”

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