The very day the March issue of Today’s Trucking’s annual Top 100 was going to press, an announcement came out of Calgary. The Mullen Group Income Fund (at the time number six on our list of the biggest for-hire fleets in Canada) amalgamated with Producers Oilfield Services Inc, which is Number 16.
That move sparked a series of consecutive acquisitions since the start of 2006 for Mullen, culminating with the recent purchase of Winnipeg Kleysen Transport. Thanks largely to the Producers buy, Mullen has jumped to the No. 2 for-hire carrier in Canada, behind TransForce.
As Seinfeld would ask, “what’s up with that?”
Ric Peterson is what’s up with that. He’s 46, an entrepreneur out of Grande Prairie who grew a fleet-of-foot outfit called Formula Trucking from zero in 1991 to the point where in 2004, his company — with 278 employees, 506 trailers, 184 tractors, 32 trucks and 19 owner-operators — found its way onto the Today’s Trucking Top 100 list.
Fifteen years ago, Peterson saw the opportunities that awaited companies who could provide special services to the oil patch in Northern Alberta and he started providing mud, rigs, camps and anything else the exploration teams needed. “The first three years were pretty tough going,” he told Today’s Trucking, “but then things started happening.”
Things started happening indeed. And now, as we take a look at the state of the trucking industry in Canada, Ric Peterson is not the only one with his eyes on western wealth. Everybody’s facing that direction.
When we last compiled this list, nobody thought that a single hurricane could disable more than half the American fuel supply in one quick storm. Then Katrina hit. Prices went wild. George W. Bush declared that the American economy can no longer remain “addicted” to unstable foreign oil sources. And you can be confident that Mr. Bush considers neither the Oil Sands of Alberta foreign nor the government of Stephen Harper unstable.
The oilpatch. For one thing, the boom is exacerbating the driver shortage because workers who might otherwise choose to drive for a living are being lured west because of the high wages.
There’s uncertainty in other parts of the trucking industry, too. In the Ontario auto-manufacturing sector a small brigade of medium-sized oufits who rely on the auto sector for their livelihood are being forced to adapt to changes brought about by the Big Three North American automakers. And it’s actually fomenting a bit of a price war among smaller fleets — this after a year during which most truckers across the country were confidently boosting rates and meting out surcharges.
As for looking toward the Maritimes these days, as one trucker said recently, “we used to worry about getting backhauls from the U.S. to Quebec. No we worry about getting the front hauls.”
It’s not just labor-hungry workers or oil-hungry politicians looking toward the oilsands. Last year, Transforce’s Alain Bedard turned his attention westward and purchased two Calgary-based truckers, TST Porter Trucking and Rebel Transport. Then early in 2006, he announced another Alberta buy, KOS Oilfield Corp., as well as its associated companies. KOS is projected to turn over about $77 million this year.
Ric Peterson, on the cover of the March issue of Today’s Trucking, is said to be “astute businessman” by colleagues
Meanwhile, everybody’s watching the team of regulators and bureaucrats who will be combing that part of the country over the next year to see if they should give Imperial Oil Ltd., and its partners permission to tap into the more than three trillion cubic feet of natural gas laying in what’s called the MacKenzie Valley gas fields. Much of northwest Canada is buzzing with anticipation of the ensuing prosperity that might come from the $7 billion project.
It’ll come as no surprise that Peterson mentioned to Today’s Trucking, “We’re ready for MacKenzie.”
So inasmuch as the list of Top 100 for-hire fleets in Canada looks pretty much the same as it did this time last year, with a few disappearances due to mergers and the arrival of a few clever upstarts — Uwe Petroschke’s imaginative LTL outfit Totalline out of Concord springs to mind — it’s business as usual.
Unless you’re in the oil patch. Then it’s business as unusual.
Producers Oilfield Services Inc., with 640 tractors, 1,700 trailers, 10 trucks, 80 owner-operators and 800 employees overall, will be a natural fit for the Mullens, dedicated as much of it will be to serving the northernmost territory of the Mullen empire. It is also somewhat of a homecoming for Peterson.
In January 2001, the Mullens actually started Producers Oilfield Services, albeit under the name Moveitonline.
The Mullen brass felt they could supply software and online logistic solutions in a separate company and spun out Movitonline.
At the time, Murray Mullen called it “a logical step that allows Mullen to continue to focus on serving our oilfield and trucking companies while Moveitonline develops software solutions to resolve many of the transportation industry’s current challenges.” Little did he know that the spinoff would, in the span of half a decade, expand to be one of the country’s 10 biggest truckers, a competitor to Mullen, and then, an acquisition.
Moveitonline had an inauspicious start but in 2003 bought Patch Point Enterprises, a company specializing in construction and maintenance and waste-haulage services to the oilpatch. A far cry from moving data across the information highway, but far more profitable indeed. (Such morphing is a hallmark of this industry. Transforce started life as a means of delivering the Saputo family’s cheese.)
Moveitonline continued to show red on the books but losses were being stemmed quickly.
Also in 2003 Moveitonline saw the oilfield services divisions eclipse the software side. That year, it changed its name to Producers Oilfield Services Inc.
Then Producers, a publicly traded company, purchased Peterson’s Formula Trucking, and brought Peterson on board to run things. Co-chair of the Mullen Group Murray Mullen, who was in charge of Producers at the time, left, saying “Ric Peterson didn’t need me around to babysit him.”
Producers last year, under Peterson, went on its own buying spree picking up eight companies — most of them truckers or related operations, and each of them serving a specific oilpathc niche.
Among the purchases: the Swanberg Brothers (Number 100 on last year’s Top 100) J.L. Powell, Raydan Trucking, NWP Trucking, Supply-Rite Rentals and Withers Services most recently, R. Robinson.
People who work around Peterson say he’s down-to-earth, a fast thinker and that he has a good sense of humor. Murray Mullen calls him an “astute businessman.”
When Peterson started at Producers it was trading on the TSX for $3 per share. It was just nearing $11 two days before the company reached its deal with the Mullen Income fund in February.
The Mullen-Peterson team’s a powerhouse. “This is a wonderful opportunity to bring together two strong, well managed western Canadian businesses,” Stephen Lockwood, the President and co-CEO of Mullen said at the time of the merger. “We expect that on a combined basis that revenues will exceed $1.0 billion generating EBITDA of approximately $250 million.”
On the night of the Federal election less than one month earlier, when Prime Minister Stephen Harper announced to Canada that “the west is in,” the new PM was saying something Murray Mullen, Ric Peterson and other people in Canada’s trucking industry have known for a long, long time.