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Bipole spurs capital investment

Manitoba steel fabrication company spends millions on expansion

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It may not yet be clear just how much Manitoba Hydro's Bipole III transmission line will cost, but the massive project is already spurring capital investment from potential local suppliers.

A Manitoba steel fabrication company -- which sources identified as Sperling Industries of Sperling -- is spending millions of dollars on a 35,000-square-foot expansion.

The company's decision to go ahead with the investment provided the missing link for a consortium of steel companies to be able to qualify to bid on the contract to build the Bipole III transmission towers.

Vince Reidy, spokesman for the group called USM Steel Products Inc. -- made up of seven Manitoba companies with annual revenue totalling more than $100 million -- said efforts have been in the works for close to two years to put a consortium together. It wants to bid on the rights to build the 3,000 steel towers needed for the new transmission line the down the west side of Lake Winnipeg.

The cost of the transmission project, estimated four years ago at $2.2 billion, has recently grown to $4.1 billion, according to a recent estimate.

The contract for the towers-- likely to be worth more than $65 million -- could be responsible for the creation of about 100 jobs.

"No matter how much money is going to be spent on Bipole III, we want to see the money spent for the benefit of Manitobans," said Reidy, who originally became interested through his work as an insurance broker in the industrial market.

Reidy made contact with the last piece of the consortium at last fall's Centrallia conference in Winnipeg.

He said he believes the addition of the increased production facility will mean the local group will have the required capacity Hydro officials have indicated would be necessary to be considered for the contract.

Reidy and others say it was almost a foregone conclusion that the towers would have to be sourced from China, India or from a Quebec plant.

Indeed, Glenn Schneider, Hydro's senior spokesman, said, "The only high-level thing I am aware of is that there really was not a supplier in Manitoba that could produce the volume of components that were required."

According to Reidy and others, that is no longer the case.

The identity of the companies that are part of the group is being kept secret until the tender is issued, for fear of them being poached by other potential bidders from elsewhere in Canada or overseas.

"It has happened before," he said.

Sources say Sperling will go ahead with its plant expansion, regardless of whether the consortium wins the contract.

Reidy said because of computerized, state-of-the-art production equipment Sperling will be installing, it will more than replace the production capacity lost in the province with the closing of Dominion Bridge about a decade ago.

One member of the group that is making its presence known is Tribal Councils Investment Group. Mark Chislett, executive vice-president operations at TCIG, said it plans to be part of the consortium.

"Why not have a Manitoba company involved?" he said. "This project will touch and affect many First Nations communities and we have all sorts of ways we could add value."

TCIG is an investment firm owned by the seven tribal councils of Manitoba. It owns or has investments in companies in the construction and engineering and trucking fields which could play a role in a project like the erection of Hydro towers.

"It would be a terrible shame to have to go outside the province for this kind of work," Chislett said.

Reidy said the TCIG involvement also gives the consortium added credibility in having an aboriginal component to the group.

He said he also believes the Manitoba content provided by his group should make a difference when its bid is eventually considered.

"We know that the pricing from competition from places like India will be very stiff, but the experts I have talked to say that for every dollar invested here, there is a benefit of $1.72 in the province," he said.

He hopes that even if offshore bids come it at a lower cost, it might not outweigh the benefits to Manitoba.

Hydro's own tendering documents say that "All things being reasonably equal, preference shall be given to tenders which maximize Manitoba content."

Republished from the Winnipeg Free Press print edition March 26, 2011 B4

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