Small shops compete for big bin business

The bin industry is a crowded place. While large corporations dominate the bulk of business, smaller companies carve out special niches to create their own unique products.

Two of those companies are Novid Inc. in Rosenort, Man., and JTL Industries in Neilburg, Sask.

Since their incorporation in 2003, Novid has grown to become North America’s largest manufacturer of stainless steel liquid fertilizer tanks.

JTL opened shop in 2008 and has since focused on innovative engineering to develop new products.

While consolidation continues in the bin industry, small companies like Novid and JTL thrive in the shadows of large manufacturers.

Like many small prairie ag manufacturers, Novid started out building a handful of units for its own use. In this case, the owners of Rosenort Agro decided in the late 1980s that stainless steel would solve their problem of liquid fertilizer tanks succumbing to corrosion. They built enough stainless steel tanks to meet their needs.

Farmers in the area eventually saw how well the stainless tanks endured and asked Rosenort Agro to build a few for sale. Before long, the farm supply outfit found themselves in the business of manufacturing stainless steel tanks.

By 2003, they realized it was time to turn their sideline into a standalone business.

The original tanks built 30 years ago are still in use today, says Novid president Ryan Plett. He says part of the reason for the company’s success is its narrow focus on stainless steel.

“We offer a product that’s highly unique. We now know for a fact that stainless steel tanks are highly resistant to corrosion. We’ve already proven that. There’s still no signs of wear or corrosion on those original tanks,” says Plett.

“We use a 304 stainless. It doesn’t require epoxy or powder coat. Just plain bare 304. A traditional mild carbon steel can rust through in a couple years; maximum 10 years. On the other hand, our liquid tanks look like they can last a lifetime. We don’t know because we’ve yet to die and see our tanks outlive us.”

Plett says this endurance factor puts Novid in a separate class, and that’s one big reason for its success. Plett closely follows farm auction prices. He says Novid tanks typically sell for 90 percent of their original purchase price. Unlike other equipment purchases, stainless steel bins are viewed as a capital investment in the farm.

The old saying that “location, location, location is everything” applies to Novid.

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Over the years, the Rosenort area has attracted immigrants with a high level of manufacturing skills. Plett says the company’s success is dependent on that reliable source of talented workers with welding and machining skills.

“The Red River Valley has an ample supply of quality labour. That’s why you see so many small manufacturers set up in the area. There’s a large number of talented immigrants here you won’t find anyplace else in Canada.

“They’re attracted to this area because we have communities here who speak the same language, Low German. So we see a lot of Mennonites from Mexico, Central America and South America. And we see a lot of German immigrants and some from eastern Europe.

“They know they can get good manufacturing jobs in this area. They’re not competing with each other over a limited number of jobs. It’s just the opposite.

“It’s the manufacturers who are competing with each other to give people a job.”

Plett emphasizes that the availability of a skilled work force has been a major factor in Novid’s ability to consistently produce a high quality product. Offering a product that’s distinct in the marketplace is the other big factor.

“There are a lot of grain bin companies out there competing for the farmer’s attention. I guess you’d say it’s like a pack of dogs all fighting over the same bone.”

The founders of JTL Industries would agree wholeheartedly with Plett’s remark about competition among grain bin makers, having learned their lesson the hard way.

Lester Thiessen and Richard Walde were in that same dogfight.

The two business partners, who both farm in northwestern Saskatchewan, tried to make a go of it in the highly competitive grain bin building business in the 1990s. But their company, Wilco Industries, was in direct competition with the grain bin giants of the day. Wilco didn’t stand a chance, recalls Walde.

“We tried to compete head to head with the big boys. We were building bins that were exactly what they were building,” says Walde.

“If we’re building the same bin they were building, the only way we could compete was on price. Sell for a lower price. Well, a small company just can’t do that.

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“So moving into this new company, JTL, we knew for sure we needed a mouse trap that was a little bit different. We had to come up with products nobody else was building. We decided to build things we knew would work for us on our own farms, not something designed by an engineer somewhere in an ivory tower.”

Legacy was the first JTL innovation in 2008. This smooth wall bin had the hopper situated inside the bin cylinder. The wall of the bin came right down to ground level and attached to the floor. The flat steel floor across the entire bottom surface made the Legacy very stable. It wasn’t subject to tipping like some skid-mounted bins.

“This enclosed cavity below the hopper was air tight, so it became the aeration plenum. The door sealed up tight. You put the fan up to it and pressurized that whole compartment underneath. We made the hopper with perforated steel so it would blow air up into the bin. So the hopper is like an aeration floor.

“Air always takes the path of least resistance. With a perforated hopper, airflow is uniform throughout the grain. It isn’t up the center like it is with a rocket.”

Next on the JTL list was a universal replacement floor for bins with bad floors. The replacement floor not only saves the bin from the scrap heap, it also adds as much as 1,500 bushels of grain capacity.

“We saw there’s a ton of these old bins around the countryside. They don’t hold enough grain, the doors are too small for today’s big augers and the floors are all rotten. We had a bunch on our farm, and I was ready to push them into a pile. But Dad was a Mennonite and Mom was a Scot, so there’s no way we were throwing out an old grain bin if there was still some way to use it.

“So Lester and I put our heads together and came up with a design for a replacement floor that solved those problems. The walls go six feet high up the original sides. On a 19 foot bin, the farmer gains 1,500 bushels capacity. Now your old 3,000 bushel bin becomes a 4,500 bushel bin and the lifespan has been extended.”

Walde and Thiessen designed a new user-friendly door that’s installed in the six-foot wall at the factory, so it’s ready to go. Now you just walk right into the bin. The opening is big enough to handle the big augers. Installation is a matter of jacking up the bin to un-bolt the old floor pan, then jack it up some more so you can slide the new six-foot replacement floor into position.

“I would have thought the market for replacement floors would be saturated by now, but we still sell tons of these things.”

Their next innovation came in 2012 with the debut of the Force Air line, which followed the basic Legacy concept. This design uses the hopper base and legs to distribute forced air through the bottom of the hopper cone. The fan forces air into the skid, which serves as the plenum. Depending on the model, the skid is up to 26 inches wide. The aeration fan is mounted to the skid.

Air flows up the legs and into the hopper bottom through channels on the hopper. Ducts are located so air is distributed uniformly throughout the bin instead of though a column up the center. The Force Air line today accounts for 95 percent of their business.

Walde says service is the other area where smaller companies like his can compete with the big operations.

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“That’s an advantage Lester and I have in today’s market. We look after our customers in a way no other business will. We know that if we don’t look after our customers first class, the big boys will come in and eat us up.”