Phoenix still flying high despite oilpatch downturn
Phoenix Industrial is a classic Alberta success story, and a testament to the entrepreneurs who make our oil-fired economy tick.
Through good times and bad, the company’s growth has been spectacular.
Two decades ago, Phoenix was little more than an idea in the head of company founder and president Jim Adams, who began his entrepreneurial career in 1989 by launching a startup that provided maintenance services for Alberta Newsprint’s plant in Whitecourt.
Although his initial company died in 1994, when Adams and his two partners split up, it paved the way for the birth of Phoenix in 1995.
In year one, it posted modest revenues of about $1 million.
Today, the Edmonton-based oilfield construction, fabrication and maintenance firm boasts a payroll of 900 people and annual revenues of roughly $150 million.
With a metal fabrication plant in Whitecourt and a sprawling 16-hectare module assembly yard in Nisku, Phoenix has provided equipment and services for a string of major energy projects in the oilsands and well beyond.
Its list of corporate clients reads like a who’s who of major oilpatch players, including Canadian Natural Resources, Husky Energy, Conoco-Phillips, Nexen Energy, Devon Energy, MEG Energy and the Northwest Redwater Partnership, which is building the $8.5-billion Sturgeon Refinery northeast of Edmonton.
At Phoenix’s Nisku operations, a dozen trailers house makeshift on-site offices and a small army of about 400 iron workers, pipefitters, welders, electrical instrumentation experts and other tradespeople are assembling modules.
Adams says Phoenix has largely sidestepped the carnage that has hit so many other industry suppliers.
“I have to say there’s got to be a white angel looking over us, because we’re probably having our best two years as a company right now, despite the downturn, and in 2008 and 2009 we actually went through the same thing,” he said.
“For some reason the clients we were working for at that time were out of tune with the rest of the industry, and they had major projects going. So we went through 2008-09 without blinking an eye.
“And with the grace of God, it looks like we’ll go through this (downturn) without blinking too hard either.”
Kelly Adams, Phoenix’s vicepresident, operations, and one of three sons who now play key management roles, said the company’s success isn’t entirely due to good luck, however.
It has invested heavily in sophisticated electronic reporting systems that give it a leg up on other suppliers.
“That’s probably one of the biggest differentiators for us — the level of sophistication of our project execution and delivery systems,” he says.
“Around 2007 we were getting up to about 450 in our head count, and we were still using the traditional small, oilfield contractor approach. So we started looking at enterprise resource planning systems that formalize a lot of our processes.” The payoff? Phoenix is now able to track and estimate project costs, materials, labour needs and work schedules far more accurately and quickly, giving it a competitive edge over smaller players and evening the odds when it’s bidding on new work against major national contractors and engineering firms.
It’s a far cry from the situation Phoenix faced in 1995 when the company began work on its first oilsands project.
“We went up with 50 guys and like Kelly says, we had no systems, no nothing. We thought we were pretty well-equipped, but once the client started asking us questions, it was a real firefight,” said Jim Adams.
Although Phoenix has taken the latest oilpatch downturn in stride, Jim Adams said it’s clear the boom times are over, and oilsands megaprojects are likely a thing of the past.
“I don’t think you’re going to see any more megaprojects that cost $1 billion or more.
“It seems like the trend now is projects of between $10 million and $100 million, with most in the $30 million to $50 million range,” he said.
“Companies will build them in phases rather than spend a billion all at once.”