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Bob Lipic: international trailblazer

June 1, 2006
by Sari Huhtala
In: News with 0 Comments
President and CEO of Mining Technologies International (MTI), Canada’s largest manufacturer and supplier of mining equipment, Lipic has done business in more than 40 countries in the past 20 years, and traveled on average 30 weeks a year since the company’s inception.
Knowledgeable, respected and keenly focused on customer service, he also knows just the right amount of cash to carry to appease any bandits who cross his path.

 

Lipic’s career began in the early 70s selling raise drilling products to the iron ore mines in Labrador and Northern Quebec. Doing business by focusing on the customer’s needs rather than selling equipment earned him a loyal clientele.

 

“I spent so much time with some of the big producers in Canada that I had a strong sense of how to manage a drilling program. I took those simple, basic philosophies and offered them as suggestions (to international clients),” he said.

 

In the case of the Iron Ore Company of Canada in Labrador City, “we were up there in the early 70s and we’ve been almost the only supplier since then. I’ve sold to them more than $100 million worth of equipment.”

 

Lipic was hired by Smith International, a manufacturer of oil and mining tools, in 1974, and appointed general manager of its Canadian mining group in 1979. Smith’s Drillco division held the patent for the thread that was successful for drilling bore holes when using a raise bore. It was also the only facility in Canada that produced drill rods for rotary rigs.

 

Lipic had just persuaded the company to hire a mechanical engineer to work with Inco, Falconbridge and Kidd Creek to research and develop tools for the industry, when the market went into the tank.

 

Metal prices plummeted, orebodies were being mined out and freight and transportation prices were escalating, forcing mining companies to re-evaluate their operations.

 

“The iron ore industry pretty much disappeared through the 1980s,” Lipic recalled. “There were only four left in Canada out of about 20 (mines).”

 

For sale

 

In response to the shifting market, Smith International asked Lipic to present a closure plan, and put the mining group up for sale.

 

“I said, ‘Geez, I know this business.’ They came and offered me a position to transfer into their oil field group and in the same breath I asked them for permission to look at buying the business. My love was in the mining industry. That was my expertise. I made a lot of friends; I had a lot of contacts. I phoned and visited all of them and asked them, if I were successful in buying the company, would they support me. I got unanimous support, so I decided that I would pursue that, even though I could see the market was changing.”

 

The transaction was completed in 1986. The purchase agreement had a clause that restricted him from selling the products internationally for three years, unless he changed the business’ name.

 

The only potential that existed at the time was in exporting, so after the first year, Lipic changed the name of the company from Drillco Industrial Canada to Drillex International Canada, and ventured into Mexico and South America.

 

“We really focused on helping the customer, not just selling the product,” Lipic said. Placer Dome’s gold operation in Mexico supported Drillex until it ceased operations, as did the country’s large copper mines.

 

“Every international trip we were able to generate an increase in the volume of the business,” Lipic said.

 

Risks

 

Doing business in some of these markets wasn’t without risks.

 

When the Maoist guerilla insurgent organization, Shining Path, was active in Peru, it was dangerous to go to the mines, Lipic recalled.

 

“A lot of the drugs moved through Peru and how these drug traffickers would conduct business is they’d set off explosions on these mountain roads to block the road,” Lipic said. “In between they would have their stash of drugs, they’d land a small plane on the road and the plane would pick up the drugs. If you got in between there, you’d get shot, so that was the danger. You just never knew what was going to happen. People that I knew were killed. Some of them were local guys and there were some sales people from the U.S. or other countries who were killed. They were in the wrong place at the wrong time.”

 

Lipic spent his first year establishing markets in North and South America, increasing sales from about $9 million to $13 million. Next on his list were Australia, South East Asia and Africa.

 

Lipic can rhyme off a number of instances where he was accosted by bandits in countries like Chile and Zaire, sometimes knife-wielding bandits, who would poke and prod him to get him to give them his money.

 

“I’ve learned not to carry too much money on me, just lots of small denominations, like 20 one-dollar bills.

 

“I always thought I’d be smart enough and careful enough to get away with it, and so far I have been,” Lipic said. “I’ve looked down the barrel of a gun a few times. Guys come up to you and they try to hijack you. I think in Nigeria we got shot at, and I had once warned a guy from France, who was staying at the hotel I was in, not to go out because he might get shot, and sure enough, he was.”

 

MTI

 

By 1994-95, the business had expanded to about $40 million in annual sales. He purchased Inco’s equipment division, Continuous Mining Systems, and changed the name of the company to MTI.

 

Lipic never hesitates to hop on a plane and give it one more shot at closing a deal, even when the odds appear stacked against him. When Western Mining in Australia was expanding, MTI provided the company with a quote for a rail-haulage system. After reviewing the quote, Western opted to go trackless.

 

“I wanted one more chance to go and talk to them, so I got on an plane and flew to Australia. I went through the benefits and reviewed the costs of setting up a rail haulage system, and convinced them to look at it again. They made the decision to switch to a rail haulage system and we won a contract worth $12 million over a two-year period.”

 

MTI saw rapid growth between 1995 and 1997, with sales exceeding $105 million, and a growth plan for $200-$250 million on the horizon. When the market shifted again, MTI “struggled” and in response decided to sell off assets, closing plants in the U.S. and Australia, and paying off debt. Today, it maintains two plants in the Sudbury region and one in North Bay, and is achieving sales levels that are equal to when the two companies amalgamated in 1995.

 

Lipic’s new focus is on developing joint ventures in countries like China, where he sees the need for North American expertise in expanding the skills of their workforce and refining engineering design processes.

 

MTI is considering a partnership with a Chinese company that would become an MTI affiliate, giving them limited intellectual property to manufacture products in China for the Chinese market.

 

“(China) has 200 million people who earn a dollar a day; they want to upgrade their skills.These countries have a long way to go, so they need our help.”

 

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