“A lot of eyes are watching,” as Bay Limited in Billings begins moving large modular components across Montana roadways toward Canada.
President of Bay Limited’s parent company, Berry Y & V, Ken Luhan, was in Billings last week to observe “what is almost a test case,” to demonstrate the feasibility of manufacturing in Montana for the oil sand producers in northern Alberta. A lot of prospective clients are watching, said Luhan, about a project which has taken almost three years to implement.
After considerable coordination with the Montana Department of Transportation (MDOT), Bay Limited has received permits from the state to move nine large loads, and expect to get permitted for 20 more. Three loads were well on their way to Canada, at the time of the Big Sky Business Journal’s interview with Luhan. The loads are modularized pre-assembled components for a refinery for a secondary upgrader project in Ft. McMurray, Alberta.
It will take two to three days for each load to reach the Sweetgrass-Coutts Canadian border crossing, with each successive load improving in the efficiency of modifying barriers along the route. Each load can reach maximum sizes of 24 feet by 120 feet, and weighing a maximum of 280,000 pounds. Some, not all, will require the lifting of aerial power lines along the route. Once they get to Canada, it will be much easier transporting, as they hit a corridor which has been cleared of all barriers for large loads.
Bay Limited hopes to see a similar corridor developed in Montana. Luhan said that doing so holds great economic prospects for the state. “What we are doing is shifting manufacturing jobs from Canada to Montana.”
Bay Limited in Billings is poised to take advantage of what they expect to be growing demand for pre-built components, as manufacturing capacity in Alberta, Canada is forecast to reach a saturation point in 2013 or 2014.
Bay Limited has been working with state officials, and hope to see the 2013 State Legislature assist, in developing a clear corridor in Montana. Many of the improvements and changes in the route have already been made and paid for by Bay Limited.
“It is quite a burden because we have to pay the utility companies to permanently move the lines,” said Luhan. Bay Limited has paid to clear about a third of the corridor. The company has spent “several millions to date and forecast for many more millions,” said Luhan. Utility companies are not allowed to incorporate the cost of modifying the route for such a purpose in their utility rates.
It is hoped that some kind of process can be established in which the burden of that cost can be shared by other companies using the route in the future, and as they apply for permits to do so.
Moving large loads is not all that unusual, in the state, said Luhan. Some 1500 permits are issued by MDOT, every year. Other companies move materials like wind turbine components, boilers or houses. A system that spreads the cost of establishing a clear corridor would be a cost savings for all of them, as well as encouraging the development of a whole new manufacturing sector in Montana.
“We have not received any kind of assistance,” said Luhan, “We are working with all the economic development agencies, and we have been in contact with the federal representatives and senators and government officials looking for some assistance because we have to spend a lot of money on clearing a route in the interest of public safety and convenience, and in order to bring jobs from Canada, into Montana, Yellowstone County and Billings.”
The clear corridor through Montana is necessary to remain competitive with Canadian manufacturers. Luhan explained that to be competitive they must be able to build components of the same size as those built in Canada. Smaller units entail more costs for Canadian oil producers. In an area where labor is scarce and the work environment is very harsh, they “try to minimize the man hours on site and maximize man hours of work in shops and yards.”
“We are getting a lot of cooperation from counties along the routes, sheriffs, mayors and MDOT, as we are trying to enable this job creation to occur and to do it in a safe manner that does not disrupt the public,” said Luhan.
This inaugural project for Bay Limited is a very small contract, compared to the future contracts that Bay Limited plans to acquire, according to Luhan. But even at that, the company is currently employing 259 people in Billings, most of which are welding jobs.
Following the completion of the project, there may be a layoff, while the company lines up more contracts. But, given the prospects for growth in the oil industry in Canada and in the region, “bigger opportunities will follow, and we will be hiring back in great numbers,” predicted Luhan, “We are actively talking to other clients about similar work.”
“We had such an aggressive schedule on this project,” said Luhan, “we hired every local qualified person we could find, and still had to bring workers from out of state. That costs more and is not in our best interests. The more longevity we can build and to build up a local workforce of qualified, skilled workers, the better for us.”
Bay Limited is a subsidiary of Berry Y & V headquartered in Corpus Christi, Texas.
