Your weekly source of business intelligence
April 12–18, 2011 • Issue 1120
INSide
ICBC profits down, insurance
broker blood pressure up 3
Leaders’ race: NDP’s four-part
anti-HST harmony 4
Container shortage squeezes port
trade flow to Asia 5
Developer rolls dice on HST
referendum outcome 11
Big pharma goes back to school
days for R&D resources 10
CONSTRUCTION
IN VANCOUVER
Quarterly report on Metro
Vancouver’s construction
industry C1-C12
Casino expansion gamble a bad
bet for City of Vancouver 32
Conifex boss Ken Shields banking
on Chinese demand and clean
energy to build B.C.’s next
forestry giant 35
Biggest construction
starts in 2010
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Business in Vancouver Issue 1120
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let our experience work for you – after all we are...
transportation
Dominic Schaefer
Helijet International president and CEO Danny Sitnam: “we may consider expansion in the air-medical fields and growth in the fixed-wing air
medical side because we’re already in it and there seems to be more room to grow”
Diving for dollars
>B.C. miners taking the plunge
into ocean abyss on the back
of record resource prices
>Bull market injects new life into
fledgling marine mining sector
C6
after three years of industry inertia
By Joel McKay
I nsatiable demand for base and precious
metals is generating a groundswell of ex-
ploration worldwide, pushing miners back
into Earth’s final frontier – the ocean.
A few years ago, a handful of companies
around the world were looking to commer-
cially mine metal from the ocean floor.
Although the oil and gas industry had
been extracting crude from the depths of
the abyss for decades, the mining industry
was a newcomer.
David Heydon, often considered the
6 16 father of modern deep-sea mining, said
R8876
the industry regarded these companies as
“quirky” investment stories.
BIV.COM  $3.00
Helijet’s new northern exposure
see Helijet, 4
At the time, Heydon was founder and
president of Nautilus Minerals (TSX:NUS),
which was based in Vancouver and at the
forefront of the sector.
But then the Great Recession hit, capital
flows dried up and the oceans were forgot-
ten as miners hunkered down to ride out the
economic storm.
Now, emerging nations are demanding
resources, metal prices are reaching for the
stars and, after a failed attempt at retire-
ment, Heydon has plunged back into the
water.
“The big opportunity, the huge oppor-
tunity is offshore. It has to be,” a passionate
Heydon said during a telephone interview
Plan sea: Nautilus Minerals launches a remotely
operated vehicle to explore the seafloor
from his home in Australia.
His new company is DeepGreen Resour- mining is underwater.
ces, a private outfit looking to go public and It’s a compelling tale, one not shy on ideas
set up shop in Vancouver this fall. about dredging submerged deposits to pro-
The company is focused on one project tect biodiversity on land.
– Clipperton, a copper-nickel deposit on But for investors the more captivating
the abyssal plains between Hawaii and part of the story is that underwater deposits
Mexico. appear to have much higher ore grades than
Heydon has no problem talking about their land-based counterparts, where most
the “millions and millions” of tonnes of of the large, well-endowed projects have
ore he believes Clipperton contains, but already been developed.
he’s more apt to explain why the future of see Seabed, 6
www.rbs.ca
604.682.3664
Business Intellectual Property
Advanced Education & Research
 32
Comment
Public Offerings
Timothy Renshaw
A cautionary tale of fat
cats and lean thinking
L ean manufacturers can get fat
real fast.
Toyota’s 2010 saga is a testament
to that. The addendum to this yarn,
however, is that companies built
better from the start can turn even
the worst corporate cock-ups into
improving that solid foundation.
David Chao can speak to that. In
our last episode with the man from
Lean Sensei International (issue
1041; October 6-12, 2009), Toyota was
riding a hot streak. In auto industry
argot, it had accelerated past the over-
weight General Motors motorcade to
become the world’s top automaker.
But the exhilarating wind in the
hair for the executive team in the
bright Toyota convertible motoring
down the fast lane didn’t last long.
The company took some ill-ad-
vised detours along Toyota Way. The
apostles of lean manufacturing and
enlightened corporate vision that
championed customer care were soon
getting sideswiped at every turn. You
might recall something about brak-
ing-system problems and faulty ac-
celerator pedals. Around nine million
vehicle recalls later, the media piling-
on had begun to wane somewhat.
But the damage inflicted was sig-
nificant. Early in 2010 Toyota’s stock
price was down 20%. Its 2010 year-
end financials showed revenue and
sales recovering but still down from
pre-recall days. Net revenue dropped
7.7% compared with the previous year.
The corporate pain, however, was not
confined to sales and revenue. The
company and its corporate culture of
continual improvement (kaizen) and
innovation (kaikaku) were shaken
from the top down, its reputation for
quality tarnished worldwide.
But, as Chao sees it, that was not
all bad. The series of corporate calam-
ities, he said, made “the world’s most
powerful car company stand up and
take notice.”
That it did, and it would have been
an obtuse operation had it not. But
more than taking notice, Toyota was
“humbled … brought to its knees …
[it had forgotten] that crises can hap-
pen to the best of companies.”
Time for some of Toyota’s
much vaunted lean thinking – the
antidote to the ill effects of what Chao
What’s your opinion?
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Daily business news at www.biv.com  April 12–18, 2011
calls Big Company Disease. Among
other initiatives, executive ranks were
trimmed and decision-making pro-
cesses localized to promote nimble-
ness of execution and reduce head
office micromanagement.
The customer-focus mantra that
the sturm und drang of unpreced-
ented global expansion had drowned
out was back atop the playlist for new
Toyota president Akio Toyoda.
The company appears now to
be heading in the right direction on
Toyota Way.
Revenue in fiscal 2011’s first nine Cartoon by Rice
months was up 5% compared with
the same period a year earlier. At Large
For Chao, recently returned from
Peter Ladner
of destination gamblers and looked
Japan and the devastation that has
at the net impact of the expansion –
The exhilarating wind in Casino expansion gamble after factoring in losses to other lo-
cal casinos.
the hair for the executive a bad bet for Vancouver Its prediction of the net increase
in revenue to BCLC was $47 mil-
lion. Deloitte’s comparable number
team in the bright Toyota
convertible didn’t last long
A s we head into the decision-
making homestretch on the
Edgewater Casino expansion de-
editorial board briefings, city reports
and public statements, all stamped
with the imprimatur of a Deloitte
is 425% greater.
Similarly, Deloitte’s estimates of
new gambling revenue to the City
bate, it’s hard to know what we’re be- study for an unnamed client: the ex- of Vancouver are more than three
ing asked to bet on. panded casino/hotel project will pro- times higher than the HLT number
crippled parts of that country, there
The financial ground keeps shift- vide the City of Vancouver with $17 ($3.6 million).
are parallels between the corporate
ing. It’s as if someone keeps changing million in gambling revenue (up from BCLC counters that the HLT re-
and country disasters and how the
the horses in the race. $6 million today), spin off $224 mil- port was based on an expansion with
Japanese culture is helping rather
First it was a casino touted as twice lion to the province of B.C. and gener- 20% fewer slots than the Deloitte re-
than hindering the recovery process.
the size of the existing one. ate $538 million in economic activity port. OK, but how does that account
The finish line for both is still many
“We’re moving it across the street annually. One number eroded slight- for Deloitte’s estimates, which are
miles away: Japan struggling to re-
and doubling its size,” Paragon CEO ly when BC Lottery Corp. (BCLC) 300% to 400% higher?
build; Toyota facing production shut-
Scott Menke told the Vancouver Why was this other document
downs in North America because Deloitte’s estimates of new
Board of Trade. never brought into the public discus-
of parts shortages in Japan. But hu-
Based on the city’s staff report, the sion, even though BCLC had com-
mility, patience and consistency are gambling revenue to the
expanded casino is actually 3.1 times missioned it?
among the common cultural traits
as large as the existing one. Why did BCLC tell HLT not to
coming to the fore on both fronts. City of Vancouver are more
We also heard from Menke that consider international destination
They look good on a global auto
casinos are “safer than shopping tourism, but allow predictions of
colossus. Far more appealing they are than three times higher
malls.” international tourism to underpin
than the inert culture of entitlement
Meanwhile the retired head of the Deloitte’s projections? Why were the
that helped topple the former auto- than the HLT number
RCMP’s integrated illegal gaming en- business community, the public and
making champ of the world from its
forcement team, Fred Pinnock, is on the city led to believe exclusively in
pedestal and whose homeland, stag-
record as saying “other than correc- CEO Michael Graydon told Vancou- the Deloitte study, a dubious piece of
gering under an accumulated debt es-
tional institutions, casinos have the ver city council to expect between $12 marketing hype built on assumptions
timated to be around $44 trillion, still
highest density of organized crime million and $14 million, not the $17 rejected by BCLC in the HLT study?
does not know how to control spend-
figures anywhere.” Think money million originally promised. Finally, do all these business asso-
ing. Any bets on which corporate cul-
laundering. Largely on the basis of the Deloitte ciations and unions really want their
ture will deliver real long-term recov-
After initial promises that “des- numbers, the BC Business Coun- city to be built around an enterprise
ery and improvement sooner? •
tination gamblers” would bring $100 cil, the Vancouver Board of Trade, widely known to have adverse eco-
million into the casino, a tsunami of the Downtown Vancouver Business nomic impacts in other jurisdictions,
Timothy Renshaw (trenshaw@biv.
independent observers from UBC Improvement Association, the BC promoted by fudged numbers?
com) is the editor of Business in Van-
real estate professor Tsur Somer- Chamber of Commerce and vari- Vancouver city council is expected
couver. His column appears every two
ville to local casino and hotel insid- ous unions endorsed the casino ex- to vote on this on April 19. It should
weeks.
ers agreed with U.K. international pansion. vote it down and look for economic
gambling expert Peter Collins, who Now we discover, through a quiet development that creates productive
told BC Business that “pretty much release on Frances Bula’s blog, that an jobs without victims and myriad hid-
90% of your revenues will come from independent study on the Edgewater den costs. •
people living within half an hour’s expansion for BCLC in September
drive time, or maybe 45 minutes.” 2009 came to a radically different Peter Ladner (pladner@biv.com) is a
Through all of this, three key conclusion. Prepared by HLT Advis- founder of Business in Vancouver and
numbers were held aloft in the media, ory Inc., it discounted expectations a former Vancouver city councillor.
President and Interim Publisher: Paul Harris; Editor: Timothy Renshaw; News Features Editor: Baila Lazarus; Editorial Proofreader: Noa Glouberman;
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