Beyond “Git ‘er Done”: Inside Calgary’s Fastest-Growing Companies

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It’s 2 a.m. Pitch black. Two shady-looking guys, bolt cutters in hand, are taking down the fence between the office of HC Piper Manufacturing Inc. and the adjacent business. Their goal: to liberate a $2.5-million piece of equipment destined for the oil sands.

It’s one of my better leads, d’you agree? But HC Piper was such an easy company about which to write a compelling story, and not only because of its crazy 3400% growth in five years trajectory . The four founders, Charles Dean, Hamish Ferguson, Bill Smith and Joe Lyall, are larger-than-life characters; the “upstart” president who’s going to take the company to the next level, Stephen Makisoc, is… well, you know what? Read the story and find out.

Featuring interviews with HC Piper founders Charles Dean and Joe Lyall and president Stephen Makisoc, as well as Richard Neale, AMEC director for  Imperial Oil’s Kearl Project.

Snapshot of HC Piper Manufacturing Inc.

Complete list of Profit’s Fastest Growing Companies for 2013

HC Piper’s dance of joy (aka press release)

Full text in the print version, of course. And below…

Canada’s Fastest-Growing Companies #10 / Calgary’s Fastest-Growing Companies #1 
HC Piper: Beyond “Git ‘Er Done”

HC Piper was a scrappy up-and-comer in the oilpatch services industry. To reach the next level, it needed to polish up its act

by Marzena Czarnecka

It’s 2 a.m. Pitch black. Two shady-looking guys, bolt cutters in hand, are taking down the fence between the office of HC Piper Manufacturing Inc. and the adjacent business. Their goal: to liberate a $2.5-million piece of equipment destined for the oil sands.

But don’t call the cops—one of them is HC’s VP of operations and the other is the VP of manufacturing. They’re supposed to be doing this. In 2006 and 2007, when the company was in its entrepreneurial diapers, this was what Bill Smith and Joe Lyall had to do every time one of their 24-foot-wide vapour-recovery units was ready to deliver to a client.

“It was the only way to move the skids out of the yard,” shrugs Lyall.

This is one of dozens of “remember when” stories that define the past seven years of HC Piper’s history. In that time, the company has grown from a scrappy outfit whose CEO—and all the VPs—would don overalls to put the finishing touches on their skids in a mad rush to meet delivery dates, to Calgary’s fastest-growing company, with a state-of-the-art, 45,000-square-foot facility, 113 employees and a relentlessly upward trajectory in revenues.

HC Piper is a poster child for the technology boom in Alberta’s oil-and-gas service industry. The company designs and manufactures specialized modules used in oil extraction. Its flagship products are vapour-recovery units (VRUs), which capture gases released during the process and keep it out of the atmosphere. The growth of the oil sands, tightening environmental regulations, and the increased popularity of lower-impact steam-assisted gravity drainage (SAGD) for which HC’s VRUs are particularly well suited and have all fed the firm’s impressive growth—a 201% jump in revenues last year, and 3,400% over the past five years. But the founders’ goddammit-we’re-gonna-get-’er-done attitude has been an essential ingredient in this story.

It started, as tales from the oil patch services industry often do, with things going horribly wrong. In 1998, Charles Dean, an engineer and serial entrepreneur, teamed up with Hamish Ferguson to start HC Process System, a firm that specialized in designing VRUs and other complex machinery but outsourced the fabrication. Then the labour shortage hit, recalls Dean. “We decided to go to various subcontractors and get pieces of work done here and there, and that way we wouldn’t be beholden to any one company,” he says. “It was a brilliant idea. Except that it didn’t work.” Instead of one company, HC was now beholden to three or six—and if any one of them slipped up, it was HC that looked bad to the client.

There was one subcontractor, however, that never let Dean and Ferguson down, and that was Smith and Lyall’s shop, Piper Fabrication. The four men decided coming together would allow them to offer clients a one-stop shop, from first drawing to last weld, plus the new company would have control over product quality and end-delivery date.

Deal done.

In April 2006, the newly formed HC Piper started pitching every engineering, procurement and construction and oil company in Canada and the U.S. To the partners’ delight, they immediately got hits. A handful of big-name clients helped HC snag others. To date, the company has completed projects for such oilpatch giants as Suncor, Nexen, Conoco Phillips, Shell, Total and Enbridge. The long-term nature of its products—they take upwards of a year to build—and the long-term view of its clients meant the nascent company not only weathered the 2008 downturn but grew right through it, continuing to create jobs.

HC’s biggest venture to date is its contribution to Imperial Oil’s Kearl Project, an oil sand reserve with some 4.6 billion barrels of bitumen and an extraction lifespan of more than 40 years. The company won the contract for four VRUs for Kearl’s Phase I in 2009, and in December 2011 got the go-ahead for Phase II.

The Kearl contract was a major catalyst for growth—at an almost terrifying pace. “They were a very small company when they took on the original project,” says Richard Neale, the Kearl director for AMEC, the project manager. But despite a competitive procurement process that drew bidders from around the world, little HC won the mandate. Early on, Neale engaged the partners in a “difficult conversation” about their firm’s shortcomings. “They passed the test to get the contract technically and commercially,” says Neale, but the company was weak on the management side. To put it bluntly: HC didn’t really have a management side. It had four co-founders, two of whom ran the manufacturing and the other two were busy designing and selling stuff. The day-to-day management was happening largely on the fly. And long-term strategic planning? Um…well…none to speak of.

Kearl’s scope stretched HC Piper’s resources, but the company got ’er done, adding people and capability as needed. However, the message the partners got from the project was this: You’re competent enough to win to this mega-project. Now, imagine how successful you could be if you had a real management team. “It was clear the managing of the organization was getting more complicated,” Dean says. “Plus, I wasn’t getting any younger.” The company needed a shake-up.

Enter Stephen Mackisoc.

Mackisoc’s first job out of high school was at Syncrude’s Mildred Lake truck-and-shovel oil sands operation back in 1976. The “sands” didn’t hold him, though, and he embarked on a sales-executive career that cut across several industries, including oil and gas service companies and manufacturing. Immediately before Dean lured him to HC Piper, Mackisoc was president of tank manufacturer TC Industries.

Dean wanted someone with a solid sales background who would take over the day-to-day operations. That’s what he got in Mackisoc—plus a track record of ruthlessly evaluating enterprises in which he was involved and making difficult decisions. At two previous employers, he made calls that resulted in the shutting down of acquired operations, the selling off of assets, or otherwise dramatically changing the direction of the company.

Were the four founders ready to have someone do that to their baby?

“We definitely had some early stumbles,” says Mackisoc. “I’m a pretty direct guy.” Dean was prepared to put a lot of trust in Mackisoc from the get-go, and to pursue an aggressive one-year transition plan that would see the four founders recede into the background as a board of directors “who did not micromanage or nitpick.” But that leap of faith was a tad harder for his partners.

“I was a little apprehensive,” admits Lyall. The newbie, brought in initially as VP of sales and general manager, did some weird stuff. To wit: He sat down with every single employee to find out what they thought worked well and what needed changing. He pored over the financial statements and questioned everything. (“I think the polite term for it is being ‘fiscally prudent,’ but let’s just say I work with three Scots and a Brit, and I’m the cheapest one of the lot,” Mackisoc quips.) And then, he started hiring people—pricey people: a controller, whom he was prepping to become the CFO within a year, and a top-drawer engineer whom Mackisoc quickly groomed into the new chief operating officer.

It was the quality of the hires, and the impact they almost immediately had on the operations, that sold Lyall. Plus, the four partners suddenly found themselves free to think big-picture. Or, as Mackisoc puts it, “to send me emails at 10 p.m., saying, ‘Hey, Steve, have you thought of this?’”

At least some of the time, he hadn’t. Now, the deeper he delves into the company—he came on-board in May 2012 and took over the president and CEO role last March—the more he appreciates both the founders’ willingness to step away and the ability to draw on their knowledge and experience as he needs it.

“It’s all about moving the end accountability,” Mackisoc says. “It has been with the four owners—this is where the buck stopped. Now, we’re taking a fairly diverse group of people and making them self-accountable and responsible at [their] level.” It’s a huge shift, but essential for HC Piper’s future growth.

AMEC’s Neale thinks the company is on the right track. As HC Piper begins to deliver product for Kearl’s Phase II, “we can see a marked improvement in their performance from the first scope,” Neale says. Some of that, of course, is just experience—but some is the Mackisoc effect, notably the improved communication, says Neale. “They recognized that they had challenges and had to grow as a company to deal with those challenges. That’s a very positive characteristic of the company.”

Lyall’s forecast for HC Piper under Mackisoc’s leadership: “$100 million in annual sales.” For Dean, likewise, the future is simple—“just draw a straight line that keeps on going up.”

For Mackisoc, who’s charged with getting them there, things look more complicated. “I’m pretty comfortable with what’s going to happen team-wise and organizationally,” he says. What’s keeping him up nights is—as befits a former VP of sales—sales.

Like many oilpatch service providers, HC has been a victim of the slowdown that started in early 2013 and saw projects stall. “We’re starting to see a bit of a turnaround,” says Mackisoc. “In 12 months, I hope to be able to sleep regularly.” But the slowdown has him thinking about the very specialized company’s need to seriously look at diversification. Aside from SAGD, HC Piper’s units are also used in pit mining. Mackisoc wants to find additional high-growth niches: “take what we’re good at and see where else we can apply it.” For example, HCwill design and fabricate atmospheric tanks for bitumen, oil and water storage. “It’s a natural extension from part of our business, so I am expecting good success,” he says.

The company is also looking at geographic diversification. In providing VRUs and massive specialized gear to the Alberta oilpatch, HC enjoys a competitive advantage, as it can cut out most of the transportation costs that American or Asian rivals would incur. But as the firm gains traction locally, there’s more and more appeal in pitching to the global market. A broader range of clients means greater sources of sales—and a higher likelihood of Mackisoc sleeping at night.