S.M.I. taps into lu­cra­tive Al­ge­rian mar­ket

$32-MIL­LION CON­TRACT Firm to build 87 dig­i­tal com­mu­ni­ca­tion cen­tres

Montreal Gazette - - B u s i n e s s - ROBERT GIBBENS THE GAZETTE

En­tre­pre­neur Bernard Poulin, founder and CEO of S.M. Group In­ter­na­tional Inc., a lead­ing Que­bec en­gi­neer­ing firm, has won a $32-mil­lion con­tract to build 87 dig­i­tal com­mu­ni­ca­tions cen­tres for the oil and gas in­dus­try in en­ergy-rich Al­ge­ria.

The satel­lite-based com­mu­ni­ca­tions cen­tres, in­clud­ing voice, data and imag­ing, will keep drilling sites in con­stant touch with owner Sona­trach’s head­quar­ters and send back en­crypted drill hole data to its pro­cess­ing unit.

Af­ter the de­sign stage, S.M.I. will be a “sys­tems in­te­gra­tor” sourc­ing the high­tech com­po­nents from spe­cial­ized firms world­wide and then as­sem­bling the cen­tres in Mon­treal.

Each will fill a stan­dard six-me­tre­long ship­ping con­tainer for the jour­ney across the At­lantic to the Mediter­ranean for de­liv­ery to Sona­trach in Al­ge­ria, Poulin said.

The State-owned oil and gas gi­ant op­er­ates about 200 drill sites across Al­ge­ria’s prospec­tive oil and gas pro­duc­tion ar­eas sev­eral hun­dred kilo­me­tres in­land from the Mediter­ranean coast, and Poulin hopes to get more or­ders.

S.M.I. is a di­ver­si­fied full-ser­vice de­sign, en­gi­neer­ing and con­struc­tion man­age­ment group with a pay­roll of more than 650 and earns an­nual rev­enue of $100 mil­lion-plus, half from Que­bec and half from over­seas.

It is one of sev­eral Que­bec-based en­gi­neer­ing firms, in­clud­ing SNC-Lavalin Group Inc.

and Des­sau-So­prin Inc., that have big con­tracts to de­velop Al­ge­ria’s ne­glected in­fra­struc­ture.

In June, Al­ge­ria’s Agence na­tionale des bar­rages et trans­fers awarded S.M.I. the job of man­ag­ing con­struc­tion of an 85-me­tre earth­fill dam, an 88-kilo­me­tre aqueduct and a large wa­ter-treat­ment plant, cost­ing about $500 mil­lion in all.

The project will sup­ply drink­ing wa­ter to 12 towns in the coastal cor­ri­dor be­tween Arzew, one of the world’s largest liq­ue­fied nat­u­ral gas ex­port ter­mi­nals, and Oran to the west. Oran is Al­ge­ria’s sec­ond-big­gest city af­ter Al­giers.

S.M.I. will have a team of Que­bec en­gi­neers on site for two years or more and earn $8 mil­lion in fees for its man­age­ment ser­vices.

Telecom­mu­ni­ca­tions and in­for­ma­tion tech­nol­ogy have re­cently be­come S.M.I.’s fastest-grow­ing busi­ness seg­ment.

“Our suc­cess has been built on our long ex­pe­ri­ence with satel­lite-based mon­i­tor­ing sys­tems,” Poulin said. “We’re also in­stalling a state-of-the-art na­tional se­cu­rity net­work for Morocco’s Gen­darmerie.”

While de­sign­ing build­ings, man­ag­ing con­struc­tion of roads and bridges, elec­tri­cal en­gi­neer­ing, the en­vi­ron­ment and qual­ity con­trol will con­tinue to make up the core of the busi­ness.

“We’re be­com­ing.more of a sci­en­tif­i­cap­pli­ca­tions com­pany,” Poulin said.

Poulin, 54, from Sher­brooke, founded S.M.I. in 1972. He was an en­gi­neer­ing stu­dent at Univer­sité de Sher­brooke and his ini­tial con­tract was a geotech­ni­cal study for a Drum­mondville hous­ing project.

He hired his teacher Jean-Paul Morin and friend Gérard La­ganière, who is now 56 and vice-pres­i­dent of re­search and project de­vel­op­ment.

Poulin owns a ma­jor­ity of S.M.I.’s shares and La­ganière owns the rest. The com­pany av­er­ages a 10- to 12-per­cent pre-tax re­turn and re­wards staff with an­nual bonuses.

Poulin joined Hy­dro-Québec’s James Bay dam-build­ing spree in the mid-’70s and S.M.I. was soon do­ing ma­te­ri­als man­age­ment and qual­ity con­trol. It built the mas­sive high-volt­age sub­sta­tions that con­trol the flow of elec­tric power to the trans­mis­sion lines run­ning to Mon­treal.

Ac­qui­si­tions later took S.M.I. into con­struc­tion man­age­ment, trans­porta­tion, power gen­er­a­tion, lab­o­ra­tory ser­vices for in­dus­try and the satel­lite­based mon­i­tor­ing sys­tems. It now has seven of­fices across Que­bec and a Euro­pean unit han­dling over­seas clients.

“We’ve in­stalled in­stru­men­ta­tion at older Chi­nese and Viet­namese earth­fill dams to mon­i­tor their safety, stud­ied the cool­ing wa­ter dis­charge from the Gen­tilly II nu­clear sta­tion, done wa­ter and en­vi­ron­men­tal projects in Egypt, man­aged Val­ley­field’s har­bour ex­pan­sion and built the High­way 30 in­ter­change in Mon­térégie,” Poulin said.

S.M.I. was part of a con­sor­tium that won the struc­tural con­tract for the Caisse de dépôt et place­ment’s $400-mil­lion head­quar­ters in Mon­treal. “Only the pub­lic sec­tor can in­vest in such beau­ti­ful build­ings that later be­come land­marks,” he added.

The com­pany plans to bid for both Mon­treal su­per-hos­pi­tals, High­way 25 and other pub­lic projects as Que­bec City loosens its purse strings. It will man­age de­con­tam­i­na­tion of Lac St. Pierre, near Trois Rivières, where un­ex­ploded am­mu­ni­tion is cre­at­ing prob­lems.

Times were tough in the 1991 re­ces­sion and again in the mid-’90s when Pre­mier Lu­cien Bouchard hacked the prov­ince’s deficit, forc­ing S.M.I. to shift its fo­cus over­seas to off­set Que­bec’s pub­lic spend­ing freeze.

“All Que­bec’s en­gi­neer­ing firms have had their prob­lems,” he said. “The big­gest risk is tak­ing on too many farflung jobs and get­ting over­stretched … leav­ing you with too many chiefs and not enough work.”

S.M.I. has no plans to sell or go pub­lic, but Poulin said the com­pany may later put cer­tain ac­tiv­i­ties such as wind power into in­come trusts.

“So long as you can get fi­nance, com­pa­nies like S.M.I. are best pri­vate­ly­held,” Poulin said. “I’ve two sons and a daugh­ter in S.M.I. and La­ganière a son. We’ve achieved fi­nan­cial sta­bil­ity and now we’re poised for the next growth phase. The world des­per­ately needs se­cu­rity for the en­vi­ron­ment but also for the in­di­vid­ual.”

PIERRE OBENDRAUF THE GAZETTE

Bernard Poulin, founder and CEO of S.M. Group In­ter­na­tional Inc., says there are no plans to take the com­pany pub­lic.

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