BUSINESS

Quebec's ADF Group to supply Alberta oilsands and U.S. from Montana plant

11/05/2012 08:12 EST | Updated 01/23/2014 06:58 EST
MONTREAL - Quebec structural steel company ADF Group Inc. is proceeding with the largest expansion in the family-run company's history, building a US$24-million complex in Montana to service Alberta's oilsands and act as the base for new opportunities in the western United States.

The company said Monday that the new 9,290-square-metre complex in Great Falls, Mont., will have state-of-the-art equipment similar to what ADF has at its main operation in Terrebonne, Que., north of Montreal.

It will be built in three phases, starting with a 7,200 square metre facility, followed by a paint shop and finally an expansion of the plant.

Montana was selected for "strategic geographic" reasons after the company considered various alternatives, including Winnipeg, over several months.

ADF founder and CEO Jean Paschini said the Great Falls location 160 kilometres from Alberta's border will allow ADF to pursue its development both in Canada and the United States.

"We have some projects right now out West but we're too far regarding transport and everything, so that's why we're going to establish ourselves in Montana," he said in an interview.

The structural steel manufacturer will initially make oil production modules for customers in Alberta's oilsands. The large units will be built and assembled at the 40 hectare industrial site before being transporting north.

It then plans to seek deals, including U.S. public infrastructure contracts such as bridges, convention halls and airports, in western States including California, Nevada, North Dakota, South Dakota and Idaho.

The plant's annual fabrication capacity is estimated to be more than 25,000 tons. ADF (TSX:DRX) will also set-up a large structural steel fabrication and pre-assembly yard adjacent to the facility.

At full production, the western base could ramp up to about US$100 million in annual revenues, compared to peak Terrebonne revenues of $150 million to $200 million, Paschini said.

"Right now we're bidding quite a few projects. In our mind we think it's going to grow quite fast and this company is going to have to do Phase 2 and 3 pretty soon," he added.

About 200 to 300 workers are expected to be hired within about a year, but another 800 people could be added in the yard doing assembly work.

Paschini said some excess oilsands work will also be done in Quebec and no jobs in Terrebonne will be lost because of the western expansion.

The new plant will also allow the children of Paschini and his brother and sister to gain experience and work in the business.

"We have kids that are growing up and it's time to take expansion so some of them can go work down there."

ADF said the project has been well-received by city and state officials, which will secure training grants and financing from the Montana Board of Investment. The state of Montana and the Great Falls Development Authority have committed US$5 million in loans and grants. ADF's portion will be funded by cash on hand.

The authority said it is excited to be the base for ADF's western expansion.

"ADF is truly a family-run company that is going to fit in and be a huge addition to the region of Great Falls and is going to provide a lot of really good jobs for hard-working people," stated Jeremiah Johnson, vice-president marketing.

ADF is a specialist in making special-purpose structural steel used in the commercial, industrial, institutional and public sectors.

Among ADF's recent projects is an antenna to crown a New York skyscraper being built on the site of the former World Trade Center towers. It recently settled a lawsuit with the owners of the site, allowing work to proceed.

Terms of the deal involving delivery and payment for structural steel and the antenna have not been disclosed.

The Port Authority of New York alleged ADF was holding the materials for "ransom" until it received about $6 million owed for other projects.

On the Toronto Stock Exchange, ADF's shares gained five cents, or four per cent, to $1.30 in afternoon trading Monday.