Photo courtesy of Kudu Industries
Kudu Industries' pumping systems, which can manage heavy, medium or light oil as well as coal bed methane and dewatering applications, are servicing the rapidly growing energy sector in Calgary.

Expansion Management: Building a Manufacturing Culture in Calgary

June 4, 2013
While Calgary boasts a large manufacturing sector,  the local workforce does not have the legacy manufacturing knowledge in key manufacturing tools, such as lean, that many other manufacturing towns have. 

Ray Mills, the CEO of Kudu Industries, has been collecting a lot of awards over the past few years: Calgary Manufacturing Industry's Best Employer for medium-sized manufacturers, Canada's Top 50 Best Managed Private Companies, and the Innovation Insights Award for Manufacturing Practices from the National Research Council of Canada. 

See Also: Manufacturing Plant Site Location Strategies

The company, which manufactures progressing cavity pump systems for the oil and gas industry, has been adding plant space (50% in the past few years) to keep up with its success. In the past decade Kudu Industries has invested more than $20 million in its Calgary plant. The company also benefited from adopting lean manufacturing in 1999, which doubled its production capacity.

Calgary is the heart of Canada's rapidly expanding energy industry. Alberta's Energy Conservation Resources Board reported May 5 that oil production was up 14% in 2012. The board projected that the province would see oil production double to 3.8 million barrels a day by 2022. 

By being headquartered in Calgary, Kudu is close to all of the decision-makers for the major oil and gas companies it serves.

"Our proximity to customers is important, as it allows us to respond quickly, which is essential in an industry like ours that is very volatile," says Mills.

But while Calgary boasts a large manufacturing sector, employing 49,600 people in 1,769 companies, the local workforce does not have the legacy manufacturing knowledge in key manufacturing tools, such as lean, that many other manufacturing towns have. 

To that end, Mills has worked with other area companies to form a consortium that pooled its resources and brought in outside trainers to help workers understand lean. As a board member of Productivity Alberta serving small-to-medium-size companies, Mills says it's necessary for area manufacturers to build the workforce's "expertise in tools that will increase productivity."

His company, which holds 20 patents in using progressing cavity pumps in the artificial lift field, is facing what others in the oil and gas industry are experiencing -- rising costs and an inability to simply pass these costs along to customers.

"Increased productivity will be the factor that keeps us competitive," Mills says.

In fact, Kudu's lean efforts enabled the company to minimize product defects and reduce waiting times. 

Mills sees training as the key ingredient to future growth and has implemented an apprenticeship program at his plant. Additionally, he is working with area educators such as the Southern Alberta Institute of Technology.

Growth will be the name of the game in the energy industry. The Canadian Association of Petroleum Producers estimates that Western Canada could account for 5% of global oil production by 2025. 

Kudu is ready to serve that global market. It has international locations in the United States, Russia, Romania, Oman, Kazakhstan and Australia. 

Oh, and the company won an award for that as well: the 2011 Alberta Export Award for Oil and Gas Manufacturers.

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