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OEM Remanufacturing

OEM is a key business partner with Finning Canada and primarily remanufactures Caterpillar components in its state of the art, 350,000 square foot facility in Edmonton, Alberta. OEM has recently begun to diversify into additional sectors as well, and is currently in the process of expanding its scope of services and clients while simultaneously maintaining a strong relationship with Finning and Caterpillar.

OEM has the capability to work with a wide variety of engine, powertrain, hydraulic cylinder and other components. Furthermore, the team can complete all of the work in-house. The company’s experts will disassemble a component, inspect it, and conduct non-destructive testing; then, they will scrutinize the individual subcomponents to carefully determine each part’s ability to be reused. Reusable components are salvaged in the company’s 75,000 square foot machine shop, while non-reusable components are replaced with new parts from the original equipment manufacturer. Lastly, the team will assemble the component, paint it, and put it through rigorous testing before shipping it back to the client.

The final result is a reliable, like-new component – and substantial savings for the client. The company’s success comes from its ability to significantly lower the price that equipment owners must pay to keep their machines running smoothly. “Remanufacturing the components costs a fraction of purchasing a new component,” explains Nik Jackman, OEM’s Director for Business Development. The potential market for OEM’s services is huge. “Companies operate equipment – it reaches its operational life, they need services provided,” Mr. Jackman explains simply.

OEM’s value doesn’t just come from providing components at a fraction of the cost of new. “It is also the investment,” Mr. Jackman says. OEM understands the significant investment that an owner puts into each piece of heavy equipment; maintaining quality and reliability is crucial, and as such, the team is fully committed to ensuring that all components “are reliable components that are going to meet the expected life of a new component.” This requires advanced technical resources and a rigorously trained staff who are able to replicate the quality and standards of a brand new product.

The mechanical engineers at OEM have “significant experience in the field,” and work hand in hand with the original equipment manufacturer to fully understand each component. “We will also go out into the field to understand how this equipment is actually operating,” Mr. Jackman adds. “What are the specific mine site conditions? What conditions are our gas customers operating in? We want to understand the unique challenges that [customers] are dealing with, things that the original equipment manufacturer might not understand.” The team then utilizes this information to tailor each component to fit its particular environment. “We can change some of the specifications to make sure that it is meeting their specific need,” Mr. Jackman explains.

The team is expanding this successful business model to include several promising industry sectors. “There is a strategic focus on diversifying and having some other business streams come in so we are not as reliant on heavy mining,” Mr. Jackman reports. Natural gas is one promising sector. “With the recent increase in natural gas prices and the activity within both hydraulic fracturing for gas and oil wells, there are new opportunities in this industry that we want to explore,” Mr. Jackman points out. “So we definitely had a bit of a strategic shift. We want to diversify away from having all our eggs in that oil and coal bucket. And natural gas is one of the first areas to explore.”

The organization plans on growing into some additional sectors as well. “We also want to explore other opportunities where there is heavy equipment operating,” Mr. Jackman adds. Fracturing provides huge opportunities, for example. “We can support the fracturing fleet,” Mr. Jackman points out. “They have an engine, a transmission and a hydraulic pump in their fracturing trucks,” all of which have components that OEM can remanufacture. The company is expecting huge growth from these new ventures. “It is exciting right now. We are looking at doubling the revenue of the organization over the next five years.”

Offering a good product at a good price has certainly been foundational to success, but the company also relies on several key strategies to remain competitive. One has been to maintain “operational excellence” through Lean manufacturing. “There is a pretty strong strategy around implementing Lean manufacturing principles throughout the organization,” Mr. Jackman explains. OEM has a Process Improvement Team trained in remanufacturing principles as well as a VP of Production who doubles as Chief Lean Officer. The Chief Lean Officer “has been with the organization since day one of opening the doors, and really understands the operation of the organization and all the practices within Lean manufacturing,” Mr. Jackman explains. As a result, the team has been able to successfully adopt efficient management practices and implement a culture of “continuous improvement.”

Having the capacity to carry out all work in-house has also been crucial. “We have a fully integrated shop,” Mr. Jackman reports. “We have the equipment to disassemble, we have the equipment to salvage all the components, we have the ability to test anything that we are remanufacturing.” Furthermore, OEM can count on its own highly qualified and skilled staff to carry out all of these operations in-house, rather than having to rely on subcontractors to complete a job. As a result, the team maintains complete control over quality.

Many of these employees were trained in-house as well. In fact, providing employment opportunity is an ongoing goal for the company. “We have a progression path for employment at OEM,” Mr. Jackman reports. “In addition to employing journeyman technicians OEM also provides employee opportunities for those with mechanical aptitude where they can progress through the remanufacturing process.”

Career minded individuals lacking specific credentials or experience are employed in the component cleaning area or the component disassembly area, where they will be trained and encouraged to advance. These employees will “ultimately have the ability to completely take down our components, fully assemble them and understand the mechanical operations of the components.” Of course, experienced journeymen technicians are welcome to join the team as well. “It is a diverse opportunity.”

OEM is extremely committed to its rigorously trained workforce, and health and safety are paramount. “We will put safety first,” Mr. Jackman insists. The team strives to improve its already stellar safety record in accordance with the company’s core value of continuous improvement. “We do a lot of near miss reporting,” Mr. Jackman explains. This means that even if no accident has occurred, the mere possibility that an accident might take place is worth investigating. “If there is a risk of an incident, then we take that and look at how we can improve upon that to ensure safety is higher the next time around so that near miss isn’t occurring.”

“Environmental good” is also key to the company culture. For starters, OEM’s business model is extremely environmentally responsible. The company’s remanufacturing efforts prevent thousands of tons of scrap metal from going to landfills each year. In addition, the team’s recycling activities have prevented 268 metric tons of greenhouse gas emissions, which is equivalent to 6950 trees grown. OEM also has a Green Committee that actively works to support environmental initiatives. One current project is to encourage and support employee carpooling efforts.

It comes as no surprise that OEM’s sales are taking off in several new sectors. The company is armed with clear cost saving benefits, winning management strategies, comprehensive remanufacturing capabilities, and a workforce that is dedicated to promoting health, safety, and the environment. Furthermore, the team is committed to increasing its already high level of success. “We will drive for performance,” Mr. Jackman insists. “We will continuously improve.”

With all of the benefits that OEM has to offer, the company’s insistence on excellence is win-win, both for the team and for North America’s heavy equipment operators.

October 20, 2018, 5:13 AM EDT