Kinectrics Inc.

Source: Energy Digital

Date :26/07/2007 20:56:11

Formerly a part of the Canadian government, Kinectrics Inc. is taking a leadership role in privately servicing major utility players

Written and produced by Lynn Haber & Michael Townsend

Transforming a government entity into a successful, private sector commercial business is no small feat. Yet, Toronto-based Kinectrics Inc. is doing just that.

The seven-year-old company, which specializes in specialized services and technology for the electric generation (nuclear, hydro and fossil), transmission, and distribution, industries, continues to unlock the talent of its scientists and engineers since being spun off from Ontario Hydro in early 2000.

Formerly the research and development arm of one of North America’s largest and most reliable utilities, Kinectrics is a $63 million company – up from $48 million in 2003 – with 250 employees. The company attributes its success to its world class employees, investment in leadership, capital facilities and customer relationships.

The company also boasts the advantage of having more than 95 years of experience meeting technical challenges during its affiliation with Ontario Hydro.

Acquired by Vision Capital Limited of London, England, in September of 2006, the company is poised for aggressive growth fueled by a commitment of financial investment, as well as announcements by the government of Ontario, that it expects to invest in power generation, transmission, and energy saving throughout the province.

With 60 percent of its business coming from the province of Ontario, its former owner remains its biggest customer. But the company is growing its U.S. and international business, and with several hundred customers to date, it continues to diversify in order to bring in new customers.

Korea, for example, is Kinectrics biggest trading partner out side of North America, and company executives visited India earlier this year and again just several weeks ago to explore business opportunities there. Worldwide environmental concerns are creating huge opportunities for Kinectrics, according to company president David Harris.

Energy market growth is being fueled by several drivers. Nuclear energy is being revisited by many nations that consider it a green technology with zero emissions or greenhouse gases. In some cases, governments are looking to replace existing aging generation plants with newer, cleaner and more efficient ones. And, volatile gas prices are promoting interest in alternative energy solutions.

Calling North American’s renewed interest in nuclear energy a “nuclear renaissance,” Kinectrics is well-positioned to win more business. In addition, existing nuclear stations are being operated for longer, and Kinectrics provides lifecycle management services to help existing and refurbished plants, as well as technical expertise to help replace obsolete parts, as many original equipment manufacturers no longer make needed components.

“We help the industry find off-the-shelf parts that we then test to nuclear industry standards or, in some cases, we can reverse engineer components,” says Harris.

Kinectrics is going beyond geography to expand its business and customer base. The company is growing its expertise in exciting new markets such renewable energy, new transmission and distribution lines and smart metering.

Kinects Power Line Communication (PLC) technology is considered by Harris as one of Kinectrics’ most exciting areas of investment. Power Line Communication is a rapidly emerging technology providing communication links over existing power transmission and distribution networks.

Kinectrics technology is unique in that it enables information to be sent in either direction, and through the distribution transformer, without modification. Smart metering, in particular, is one of a handful of applications for Kinects PLC, the company’s patented, advanced, low-cost way of sending digital data.

Ontario is moving to time-of-use pricing for electricity and India has a strong interest in smart metering to prevent non-technical losses, or theft of electricity, Harris says. Some countries, such as Italy, have already rolled out smart metering to reduce peak demand. Others are expected to follow, he notes.

Culture shock

Becoming Kinectrics, an independent commercial entity, meant huge changes for the former government funded research organization that required both restructuring of the organization and reorganization of the company’s profit centers.

The initial structural foundation for the privatized company was laid between 2000 and 2003. Change, however, is continuous, notes Harris.

Today, there are three general managers, one for each of the company’s business areas: transmission and distribution; generation lifecycle management; and, nuclear parts and project engineering. Powerline Communications include, Kinects Solutions, was recently realigned as a separate area.

Department managers oversee teams of 15 to 20 people, made up of project managers, technology experts, engineers, senior scientists and technologists.

Senior corporate management consists of the office of the president and chief executive officer, chief financial officer and functional area vice presidents.

A board of directors is headed by the recently appointed Glenn L. McCullough, Jr., a well-respected leader in the North American electricity industry, with strong ties to industry leaders such as the Tennessee Valley Authority, for example.

“In a part-time capacity, McCullough serves as an external chairman, helping us shape our future strategy as well as growth in U.S. markets,” says Harris, noting that strong leadership is critical to steering Kinectrics’ future course.

While on one hand, growing the company is a must for Kinectrics, retaining key staff is paramount to its ability to maintain its historic credibility in the industry. With approximately 20 percent of its current staff made up of new recruits, and looking at an additional 10 percent growth in the near future, company executives are concerned with replacing retiring industry experts who possess troves of industry knowledge.

Recognizing that the transfer of knowledge from retiring employees to new, younger hires is critical, Kinectrics has programs in place to invest in leadership and knowledge transfer.

“We try to retain the services of our older, experienced workers through a variety of flexible employment relationships such as temporary and part-time work or working with them as consultants, coaches and mentors,” says Harris.

Viewing itself a tough and selective recruiter that looks far and wide for bright, talented people, Kinectrics encourages its employees to get involved in recommending recruits and providing financial rewards to those employees whose referrals result in hires, Harris says.

The referral program is one innovative measure the company has taken to source and hire new employees in a very competitive labor market.

“We also continue to introduce other major cultural change initiatives to help the organization meet the challenges of finding customers, providing customer satisfaction, project and program delivery, selling services and generating profit,” says Harris.

Profit generation was a new concept to many of the former government R & D arm, which is a must for company success. Educating employees about customer relationships, customer satisfaction and working on funded projects versus non-billable time is a core focus at Kinectrics.

Having the right equipment and facilities at its campus is another way Kinectrics invests in the future of its employees and the company, Harris says. In the past three years Kinectrics invested in new capital facilities including an electric high current lab for arc testing, scanning electronic microscopes, and a radioactivity lab.

Looking ahead

Maintaining and nurturing a focus on the basics — people, facilities and customer relationships — is what the keeps the pulse of Kinectrics strong.

“Continued growth and investment in new products, such as Kinects, and services is what we’re looking at over the next three to five years,” says Harris.

On the service front, the company is currently piloting a series of technical classroom-based technical training courses that it expects to roll out in the fall of 2007. Computer based learning packages will follow.

“It’s another area of opportunity for us, as the average age in the industry is 50, and there’s an increasing demand for recruitment and knowledge transfer.” explains Harris.

Digging into its objective to be a leader in the energy industry, Kinectrics is looking to expand and accelerate its presence in U.S. markets through business acquisitions.

While Harris confirms that there are only a few organizations that offer the same breadth of products and services as that of Kinectrics, there are more niche players on the competitive landscape. However, there are a lot of collaborative bids among industry players and Kinectrics often partners with other companies rather than compete against them.

“Our technology and patents differentiate us in the industry,” says Harris, pointing to the company’s Ever-Clear Filtration system to remove zebra mussels from service water systems at power plant intakes and a similar filtration system for ballast water treatment.

Another unique Kinectrics product and service centers on the company’s Mobile Processing unit for PCB destruction.

Finally, the company’s long standing safety record in the industry is of paramount importance in an industry where potential hazards abound.