A construction project that irrevocably changed the prairie landscape is now complete, one year ahead of schedule.
Project Horizon, the largest capital expansion in Saskatchewan Wheat Pool history at $270 million, was announced in March 1997.
The last of the 22 high-volume grain terminals to be constructed, at Rosetown, Sask., is now being commissioned.
Chief executive officer Mayo Schmidt said that takes the project from being an expense to being an earner.
“It’s going to certainly mark significant change in terms of our balance sheet here and income statement,” he said.
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The pool’s fortunes have taken a dive since announcing in 1997 that “something big is on the horizon.”
Its balance sheet sank into the red, the share price dropped as low as $3.20 and member loyalty was tested. Along with construction of the state-of-the-art concrete facilities came the closure of hundreds of wooden elevators.
But Schmidt said the decision to revamp the grain company’s handling system was the right one, given today’s environment.
“It’s no longer an event, it’s a process,” he said.
“Every day in this competitive environment it’s a changing landscape. You cannot afford to be the last to adjust. You need to be the first to be successful.”
Industry leader
David Vanderwood agrees. The analyst with Odlum Brown in Vancouver said overcapacity in prairie grain handling had to be addressed.
“They’re certainly leading the way.”
But the consequences are large losses and a large debt, he said.
“(Completing Project Horizon) is a good start. They need to quickly cut their costs, narrow the focus by selling non-core assets.”
The pool must also close its older facilities. That is expected to be complete by July 2001.
Schmidt said some of the elevators to be closed are still accepting deliveries. Any disappointment members have with those closures is not showing up, he said.
“As we look at the number of different commodities that we’re receiving and the volumes, they’re rather substantial.”
He also said the decision to move quickly and finish Project Horizon ahead of schedule was essential.
“Is it better to pull the Band-Aid off slowly or quickly?” he said.
“It would have been a drain on the organization had we not moved.”
Schmidt said he is satisfied with the location of the facilities, although competitors have moved into some strategic locations.
Vanderwood said farmers could see higher prices as older elevators close and grain companies try to force grain to new facilities, some of which may be situated close together.
Schmidt said producers are already benefiting from the efficiency savings gained by loading 50- and 100-car trains at the new terminals.
He said it’s not necessary for the company to go through another expansion right away, but he said it’s possible more terminals could be built as grain companies consolidate. Those facilities would likely support processing, he added, something that Sask Pool facilities are well positioned to do.
