Nerves of Steel
Alain Bolduc built his steel transformation business through well-timed acquisitions

These days it's not surprising to hear that a high-tech executive left his job to run his own company. In fact that's what Alain Bolduc did. But it was his decision to go into the steel business that raised eyebrows.

"A lot of people leave old economy companies to work in new economy ones," said Bolduc, president of Les Entreprises Bolduc-Vartel. "But very few go in the other direction."

The move turned out to be a good one. Through astute management, aggressive selling and a succession of acquisitions, Bolduc managed to turn a one employee metal workshop, into a 50-person steel manufacturing, cutting and folding operation, which he estimates will generate close to $4.2 million in sales this year. All this, in an industry riddled with plant closures and over-capacity.

Bolduc landed in the steel transformation business by chance. He got industry exposure working part-time at his father's workshop, Les Entreprises N. Bolduc et Fils Inc. But he never expected to make it his life's work.

In fact, Bolduc was determined to make his own way in life, joining Office Equipment, a Canon distributorship, as a sales representative in the early 1980s. He then worked through a series of increasingly demanding jobs, eventually winding up at Netscape, where he was as vice-president, in charge of sales for Eastern Canada,

At the time, Netscape, was a high flyer marketing a new line of enterprise software, and executives benefited from substantial salaries and stock option packages, inflated by a high stock prices. But toward the end of the 1990s, Bolduc sensed the company had peaked, and he began looking for new options.

While he was assessing his options, Bolduc's father suffered a stroke, and was unable to continue working. Though Les Entreprises N. Bolduc et Fils had less than $400,000 in sales, Alain sensed its potential, and quickly bought the assets.

He then quickly put his sales skills to work. At the time, the company had only one employee in its plant, and just one contract, to build steel frames for Hoyt Corporation, a U.S. company, which used them for its industrial dry cleaning and washing machines. These machines, which designed to clean clothes at large volume operations such as prisons, and dry cleaning stores, are so big, that a man can fit into the washing bin.

But Bolduc knew that Hoyt had other suppliers, and that there was potential to expand production. So he flew down to Hoyt's Boston head-office, and convinced management to let him manufacture the entire line.

As a result of the new orders, sales doubled during 2000. Then they doubled again the year after that. By 2001, the company had revenues of close to $1.5 million, and Bolduc felt ready for his next step.

That year he got a call from one of the owners of Vartel Métal et Plastique Inc., which operated a steel cutting and folding plant in Terrebonne. Though the company was well-managed, it had liquidity problems, stemming in part from a large bad debt it had absorbed from a customer bankruptcy.

The offer was simple: Bolduc could buy the entire company, for the liquidation value of its assets. In exchange Bolduc would take on certain debts, and Vartel owners would be relieved of their personal obligations to company creditors. It was an offer too good to refuse, especially since Vartel had a good reputation in the industry, good employees, and a long client list.

The only problem was financing the transaction. Bolduc had some money to put into the deal, but not nearly enough. So he enlisted Yvan Charron, president of Focus Corporate Advisors, to help.

Charron prepared a detailed business plan, and lined up financing for the 35,000 square foot Vartel building, from the Business Development Bank of Canada. The BDC also provided working capital, and an equipment loan in conjunction with Newcourt Capital.

Charron was also able to line up a $300,000 grant under Investissement Quebec's FAIRE regional development program, which is contingent on the company, now known as Les Entreprises Bolduc-Vartel generating 60 new jobs by the end of 2004.

"(The Vartel acquisition) was a big move for Alain," said Charron. "The company he bought was more than twice his size."

The deal was concluded in March of 2002, and integration is going well Bolduc said. The Vartel plant included new equipment that substantially increases the combined company's capabilities.

These include a 32-ton roof mounted crane for lifting large steel blocks, and tools to cut thick steel. According to Bolduc, this provides a unique competitive advantage, since his is the only Quebec based plant that can cut steel which is more than 3 " thick.

Bolduc was able to keep on several Vartel employees including two of its original owners. In fact, he seems to have a knack for identifying and keeping good people.

The company controller is the wife of a one of Bolduc's friends, and his sales manager, Richard Clément, was his old boss at Office Equipment, who is more than impressed with his protégé's progress. "(Bolduc) is a visionary," Clément said. "He has a knack for identifying opportunities, and taking advantage of them."

Although Bolduc joined an old economy industry, he continues to think at new economy speed. He is projecting revenues of close to $7 million for 2003. And according to Charron, despite the large Vartel purchase, Bolduc is already looking to make another move.

"They say it takes about two to three years to integrate a new acquisition," Charron said. "So if we can make a deal by the middle of next year, it'll be a year and a half between deals. That's close to two years."

 

 

 

Photo caption: According to Alain Bolduc, shown here in front of a 32 ton, 12" thick, steel slab, one of Vartel Bolduc's big competitive advantages is its ability to cut steel that is between three inches and 14" thick.

 

 

Sidebar: Getting ahead

o Bolduc got into the steel business buy buying out the assets of his father's fledgling company
o He grew his business through timely acquisitions of bankrupt or troubled companies, paying only for the assets, not goodwill.
o Vartel-Bolduc's competitive advantage is its ability to cut steel slabs of more than 3" thick.
o To pay for his acquisitions, Bolduc enlisted a professional who got building financing from the BDC, and a regional development grant under Investissement Québec's FAIRE program.

 

peter@peterdiekmeyer.com

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