The growth of Ground Force Manufacturing LLC, a Post Falls company that converts large truck chassis into giant support vehicles for even bigger mining vehicles, is mirroring that of fast-growing regions of the world that are starved for commodities.
The company, which currently contracts with 25 additional workers because its struggling to find full-time workers, expects to break ground soon on another manufacturing facility that will add 25,000 square feet of space to the 50,000 square feet it currently occupies at its six-building, 6-acre complex along east Seltice Way, owner Ron Nilson says. That project, which will take six months to complete, will provide only a temporary solution to the companys growing needs. Its still looking to buy land nearby on which to build a 100,000-square-foot facility within the next three years, he says.
Nilson attributes much of the companys growth to an industrial revolution occurring in developing countries and to rapidly increasing exploration activity at the Athabasca oil sands in Alberta, Canada. Developing countries around the world are just beginning to ramp up their mining activity, and nearly every nation is increasing its oil consumption, he says.
People need to know that China is a real player. Theyre smart and they know our market, Nilson says. Also, Theres a huge opportunity in the oil sands. Thats nothing more than a gold mine.
Ground Forces employment has doubled to 75 workers in the last four years, as, he says, have its revenues, which Nilson declines to disclose. The company expects to hire 60 more people within the next five years, and also anticipates another two-fold revenue increase in that time period, he says.
Ground Force manufactures and installs equipment to convert truck chassis into vehicles that provide fueling and other services primarily so machinery at open-pit mines can run without taking much time to refuel or for maintenance, he says. Its products include fuel and lube trucks, water tankers, explosives mix-and-delivery trucks, and what are called wheel dozers, Nilson says.
Prices for the vehicles range from $200,000 to more than $2 million, Nilson says. Fifty percent of the companys revenue comes from its fuel and lube trucks, which he claims are the largest in the world. The biggest has a 200-ton payload capacity, and its wheels stand taller than a man on a second mans shoulders.
The companys water trucks, which have a capacity of up to 45,000 gallons of water, make up 25 percent of its revenues, he says. Mining companies use them to hold down dust at mining sites.
Ground Forces explosives support trucks and wheel dozers comprise the balance of its revenues, he says.
The company ships an average of six trucks a month to customers as close as Gillette, Wyo., and as far away as Australia, Argentina, South Africa, and Mongolia. Nilson expects the company will be able to produce another one or two trucks a month as a result of its upcoming expansion project. The company transports its smaller trucks on trailers and ships its larger trucks in pieces on as many as seven full-size trailers. Ground Forces employees travel to mining sites to reassemble the larger trucks.
We dont produce volume; we produce specialized tools, he says.
About 55 percent of Ground Forces shipments are now international, and the company currently has a 10-month backlog of orders, up from seven months a year ago, he says.
ChinaNilson, who recently returned from a trip to Mongolia, says the mining activity occurring in Asia and Eurasia is a primary driver of Ground Forces growth. The company ships trucks in those regions to China and Mongolia, as well as to some of the former Soviet Republics, including Russian and Kazakhstan.
People have always been their biggest resource, so they would rather have 1 million people with buckets than 20 big machines move 1 million tons of material a day, he says. Now, theyre getting online with the efficiency concept of the U.S. and Australia, because it takes an industrial mindset to move 200 million tons of material.
Nilson points to rising commodity prices as signs of the increased demand placed on countries rich with natural resources. The price of gold currently is about $810 an ounce, compared with $415 in 2004 and $268 in 2001, he says. Copper has risen to roughly $3 a pound, up from $1.38 in 2004 and 68 cents in 2002. Meanwhile, the price of oil has skyrocketed to more than $90 a barrel, compared with $40 a barrel five years ago.
China, he contends, is driving those price increases with its massive infrastructure projects. For example, more cranes are working on projects in two cities in China than in the entire U.S., he asserts.
The Chinese raised demand overnight for pure coal, copper, and iron ore, he says.
Nilson sees so much room for growth in Chinaand for future competition from manufacturers therethat Ground Force is working on a joint venture with a manufacturer in Shanghai. Ground Force will provide the Shanghai company with intellectual property rights to use its designs and specs in exchange for royalties, and the Shanghai concern will manufacture products like Ground Forces and sell them only to customers in China. The two companies will split the profits from those sales.
As a result of the arrangement, Ground Force, which currently ships about two trucks a year to China, will be involved in the sale of about 40 trucks there a year, he says. Sales through that joint venture are expected to make up 25 percent of the companys overall profits in the future, he says.
Traditionally, the seven-year-old company has competed with foreign manufacturers by providing a complete product, rather than by selling components or designs of its equipment. Recently, though, Nilson has become concerned that Chinese competitors would buy the companys trucks, take them apart to discover how theyre made, then use their cheap labor to sell similar products at a fraction of Ground Forces price.
Ground Force also is looking at opening satellite manufacturing facilities in other locations, including Birmingham, Ala., but for now is focusing on China, he says.
Oil sandsMeanwhile, mining activity in the Athabasca oil sands, which are huge deposits of a natural mixture of sand, clay, water, and bitumen that can be refined into synthetic crude oil, also is fueling Ground Forces growth. Currently, production there is at more than 1 million barrels of oil a day, and it is expected to hit 2 million barrels within the next decade, Nilson says. For the last several years, oil producers have been investing enormously in new infrastructure there and are continuing to do so.
The oil sands are such a large resource that theyre believed to be big enough to meet North American oil demand for 100 years. Currently, the U.S. consumes 20 billion barrels of oil a year, Nilson says. China consumes a seventh of that amount, but has five times more people and a superheated economy, so its only a matter of time before they exceed our consumption, he says.
Oil is basically liquid gold, Nilson says. Demand is never going to stop, and the oil sands are a very successful, profitable way to meet it.
Ground Forces oil sands customers include some of Canadas largest oil producers, such as Syncrude Canada Ltd., Suncor Energy Inc., and Albian Sands Energy Inc., he says. The company ships about 24 trucks to Canada a year and half of those are sent to the oils sands, he says. He expects that shipments to Canada will increase, but says the company also has to keep up with demand from customers in other parts of the world.
Were feeding it as fast as we can, he says.
While world demand for oil and precious metals is driving Ground Forces growth, its also presenting challenges to the company, Nilson says. Rising steel costs pose one of the biggest hurdles, since steel is the biggest part of its production. Steel prices doubled between 2004 and 2005, he says.
Contact Emily Proffitt at (509) 344-1265 or via e-mail at firstname.lastname@example.org.
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