Quebec Manufacturer Not Feeling the Love in His Home Province/
Story and Photos by Robert J. Galbraith, March 2014
The success of Raymond Kyling’s, Quebec-based, hydraulic press company is the story of how one man’s perseverance and adaptability has taken him to the top of his industry, while avoiding the pitfalls of Quebec’s dire economic situation.
Kyling is the owner of RK Machinery, located in Bedford, Quebec (in the province’s Eastern Townships region). RK is the only Canadian manufacturer of high quality, hydraulic presses; including H Frame and C Frame presses. These industrial machines are used with die sets to shape, bend, draw and stamp metal by the use of hydraulic pressure. The presses are used in the production of car and machinery parts and are the backbone of any machine shop or industrial manufacturing floor. Kyling’s presses are sold throughout North America, ranging in price from $3000.00-$60,000 a piece, depending on the size and type of job.
The sixty-two-year-old manufacturer states that the lack of sales of industrial presses in his home province reflects the economic reality industry faces in Quebec, and that if these machines are not being purchased or upgraded; it is an indication that the manufacturing sector is flat and not growing.
“As of today we have $1,200,000 in back-orders; work orders from outside of Quebec that we are presently assembling. At the same time, we have only $720.00 worth of orders in Quebec, and that is for spare parts.” explained the silver-haired Kyling, as he held up a computer printout of his inventory. “Sixty-percent of these total orders are for sales in the US; 40% are for Canadian orders, and 0.004% for parts in Quebec,” he stated.
“Quebec is not business friendly and this fact is hurting the overall economy. These machines are for production of growth businesses. If there is no growth, there’s no need for these machines,” he said.
Kyling explained that Quebec industrial manufacturers and machine shops are buying used presses from auction house sales or businesses that are going out of business. “They buy from auctions sales of people moving out of the province or going out of business. These used machines are sold-off into the Quebec market. Some are buying cheap imported presses from China and Turkey, lower-end quality with a low-end price. So, companies that need presses here, and are uncertain of the future, are buying these cheaper products.”
RK Machinery doesn’t have a sales team, however Kyling personally visits machinery dealers that deal in wholesale. He feels business is best conducted face-to-face. This is how he says he will break into the European market. “I know the quality and what they are paying for presses made in Holland, Italy, Denmark, Turkey and China. I will have to drop my margins, but I will win them over with quality and price. What I am doing is selling an Audi for same amount of money as a Toyota or Honda.”
The manufacturer understands that he will have to work a little smarter. His plan has been to invest his profits back into automated machines and not more bodies, allowing his production to become more efficient. Another part of his strategy has been to control all facets of press parts and assembly. “The strategy of working from scratch allows you more control of what you are providing, rather than relying on or waiting on others for parts or other items needed in assembly,” he said. “When you have complete control of the materials, you call the shots and are able to get out as high a quality product as possible; then turning around and selling it to people who only want the highest quality material and workmanship. This has been the key to my success.”
Kyling’s concerns about the economy were reiterated in February when former Quebec premier, Jacques Parizeau wrote an opinion piece in a Montreal newspaper criticizing the Parti Quebecois for the mishandling the Quebec economy. He said it would make more sense for Quebec to invest in small and medium-sized businesses, rather than investing in large projects or offering massive tax breaks.
Parizeau’s editorial came out on the heels of a report from the University of Montreal’s business school that described Quebec as living beyond its means with unsustainable fiscal and economic policies. This report was followed by another damning report from the University of Sherbrooke, suggesting that unless the Quebec government makes a sea change in the way it spends money, it faces an “apocalypse” in the next 35 years.
Kyling founded RK Machinery in 1991, after a decade of selling drill presses, air compressors and other machinery, door-to-door to farmers and small machine shops in the Townships. “By the 1990’s, the air compressor business was beginning to bottom out and had reached the end of its profitability. I didn’t see a future in it. Then in 1991 I opened RK Machinery in Bedford and started building hydraulic presses from scratch. I saw a niche in that market and grabbed at it.”
RK Machinery has a work staff of 14 employees who work to produce the parts used in the assembly of the presses, using automated lathes, radial drills and boring machines. “We train from the ground up.” The manufacturer says he looks for a potential employee who is honest, not lazy and willing to work, and with the ability to learn. “With these 4 requirements, we will train the person to do the job on milling machines, drills, painting etc. Its machine shop work we do here.”
John Kessler is the manager of Modern Tool Ltd., the largest machinery distribution business in Canada, based in Calgary, Alberta, and the exclusive Canadian distributor for Kyling’s presses. A New Jersey-based company is Kyling’s exclusive U.S. distributor. “Investors feel the instability due to the threat of Quebec’s separation from the rest of the country. Do we want to take that chance and does it make good business sense,” asked the Calgary salesman?
Kessler explained that, “We don’t do a lot of business in Quebec except with Ray. He builds an excellent product and his presses are such a good selling item. The simple reason we don’t have a customer base in Quebec is we don’t get inquiries from there,” he explained. “If we don’t get inquiries from an area, then we stay clear of it; it’s strictly about economics.”
According to the University of Montreal’s HEC report, (released January 30, 2014), Quebec has become less productive than many industrialized countries and most other Canadian provinces in the past 30 years. It shows that Quebec firms are investing less in machinery and equipment (software, industrial and agricultural machinery, office equipment, furniture, transportation equipment, telecommunications equipment, etc.) than their counterparts elsewhere in Canada.
When its investment in equipment is compared with that in some twenty industrialized countries, Quebec also sits near the bottom of this list.
Kyling believes that the only way Quebec can improve its economy is to get people to come here from out of province and invest is to make potential investors feel comfortable in this province. He puts the blame for this on ruling Parti Quebecois policy. “Their only aim is to have their own country and they are willing to go forward with this agenda at any cost, including taking down the economy, the people, the province, and the country along with it.”
Kyling says that in the next 12 months he will be focusing on the opportunities in the European market. “Will have to reduce the selling price to compete against the Turks and others, but there’s still a decent margin left. We are looking for more efficiency and machinery automation. Its automation that is going to make sure that any business that remains here, it’s going to stay here. Turkish labour is cheaper, and yes we have to automate because if you don’t, you fall behind.”
Kyling has no thought of leaving his home province for possible greener pastures elsewhere and will continue to build his business, believing that someday soon, the tide will turn. “The only way Quebec will start to boom again is by getting the message out that we welcome English-based industry to come in and invest money. Unless this happens, Quebec will continue to plunge.”