Alberta’s Vidar Forest Technologies has a winning approach with its diversified business strategy—working for both the forest and energy industries—and maintenance deal with Deere dealer Brandt Tractor.
By Tony Kryzanowski
Alberta’s Vidar Forest Technologies is not exactly your typical logging contractor. This Grande Prairie-based business has earned a reputation over the years for thinking out of the box and for not being afraid to put into practice what sounds good on paper. The company is named after Vidar, the mythical Norse guardian of the forest, which is testimony to founder Brian Peterson’s Scandinavian heritage and to Scandinavia in general where forestry began.
Brian and his wife Mary own the company and both are actively involved in running the business. Two areas where the 15-year-old company has shown significant leadership are in how it has chosen to maintain its logging fleet as well as how it has diversified its logging operations into other industries and forestry services. It’s rare to see the word “technologies” in a forestry company name, but in this case the terminology fits very well.
Over the years, Vidar has expanded into contract layout work for local sawmills involving global positioning systems (GPS), conducting mapping and cutblock layouts, and has experience in site preparation and planting, as well as private woodlot management. “Diversification was a strategy,” says Peterson. “We could see where a lot of the smaller segments in the industry were causing a lot of inefficiencies. By putting them together in our operation, we were able to produce efficiencies.” Of late, the operation has been achieving greater efficiencies on the equipment front with some new iron.
Within the past year, Vidar has put three new John Deere 853 feller bunchers with Gilbert Tech heads into production in the bush. It also operates two John Deere 748 skidders, and a Tigercat 635 six-wheel drive skidder in its harvesting operations. On the processing end, the company uses two John Deere 270 carriers equipped with Hornet processors, a John Deere 270 with a LogMax head and a Komatsu 250 carrier with a 2100 Lim-mit delimber.
The switch to Gilbert Tech heads has increased production by seven per cent. The main reason for this production increase is the additional rotation that the head offers. When a company operates seven days a week, 24 hours a day, year-round like Vidar, a seven per cent increase can rapidly add up over time. Vidar spent two years negotiating a deal with local John Deere supplier Brandt Equipment to lease its new feller bunchers, with equipment replacement after 5,000 hours and guaranteed equipment availability on a cost per hour basis.
“That is exactly what I wanted,” says Peterson. “It was just a matter of convincing someone else to accept it.” Brandt provides a full-time mechanic to maintain all of Vidar’s equipment—including competing brands—as part of its maintenance agreement with the company. “When we first negotiated the deal, everybody thought we were nuts,” says company controller Jim Walker. “Now that they see how well it is working, pretty much everyone we deal with wants to get on board with the same deal. Our motivation for signing the agreement was to create some cost predictability.”
In addition to predictable costs, Brandt has agreed to provide Vidar with a replacement feller buncher if a leased unit requiring repairs is not back in operation within 48 hours. Vidar has been able to reduce overhead by eliminating three in-house mechanic positions as well as the need for two service trucks. “We concluded that equipment suppliers are better at repairing equipment than loggers,” says Walker. “Plus, it puts the onus on Brandt in the event of downtime. This type of arrangement allows us to be more cost competitive, and so far we are very satisfied with the savings we have realized.”
Peterson adds that the company also benefits from knowing upfront what its equipment will be worth when it is ready to turn it back in. This is especially important for a company like Vidar, which turns over its equipment quite quickly by industry standards. “I think it’s been very successful,” he says. “The key to making it work is developing a good working relationship with your supplier.” Sales representative Lyle Dalgleish says Brandt’s objective with Vidar is simply achieving availability through a “fix before failure” maintenance program. “We have been able to deliver availability at between 80 to 90 per cent,” says Dalgleish. “Ten years ago, a lot of contractors would have been satisfied with 70 per cent. These days, it’s possible to achieve 90 per cent availability because of how much better current equipment is engineered and manufactured.”
While Brandt operates a number of full service contracts with contractors working in the oil and gas industry, Vidar was one of the first logging contractor clients to sign up for this service. Part of the reason why the arrangement makes sense for Vidar is because most of the company’s logging activity is reasonably close to Grande Prairie. It might not be as beneficial for logging contractors working longer distances from Brandt’s dealership because of costs associated with travel.
The dealer benefits from this arrangement, says Dalgleish, because the data it gathers from the unit’s maintenance history has a positive impact on resale value. One reason why some contractors have opted for this type of service contract arrangement is because of the growing complexity of the equipment. “The technology is hard to keep up with,” says Dalgleish. “When the dealer is fixing it, it gets fixed right the first time, plus we keep track of its maintenance record.” He adds that these days a properly equipped service truck costs between $80,000 and $90,000 and needs to be outfitted with a lot of computer diagnostic equipment. There are also side benefits to this type of contract. “It’s positive from an environmental standpoint,” Dalgleish says, “because we collect all of the waste oil and dispose of it properly off site.”
The equipment approach is part of a larger effort to remain cost competitive—and maintain a reputation for quality—that has allowed Vidar to maintain good relations with its high profile Grande Prairie clients. At present, it harvests 225,000 cubic metres of softwood for Weyerhaeuser and Canfor, and another 125,000 cubic metres of deciduous wood for Ainsworth Lumber. A growing part of the company’s business and a key component of its diversification strategy is the log harvesting it does for oil and gas industry clients on pipeline right-of-ways, lease sites and access roads.
When the company first ventured into this new business direction in 1996, it cleared 10 oil field leases. Now Vidar does about 150 oilfield-related projects per year. “The oilfield logging is kind of a bonus for us,” says Vidar operations manager Duayne Peterson, Brian’s brother. “We’re not putting ourselves out on a limb by working with forestry companies exclusively.” Vidar has to plan its equipment scheduling carefully.
While it is a balancing act to keep clients from both industries satisfied, the company gains a significant benefit on the employment front. With very high equipment utilization, the company is able to keep its operators steadily employed. The result is low staff turnover and greater job satisfaction. The arrangement of working for both industries works out well because it’s all about location.
About 90 to 95 per cent of Vidar’s oilfield work takes place either within Weyerhaeuser’s or Ainsworth Lumber’s forest management areas. A number of other factors have also worked in Vidar’s favour in building this branch of its business. The company employs full-time safety personnel and it has earned a reputation for delivering its service on time and at a reasonable cost. Changes to environmental regulations regarding timber salvage on right-of-ways have also put more pressure on oil companies to better manage this resource, creating more business in this area. Randy Matson, harvest supervisor for the oilfield division, says that Vidar has harvested right-of-ways on a number of high profile pipeline projects.
They included 32 kilometres of the Alliance Pipeline right-of-way, requiring the company to harvest 17,000 cubic metres in eight days. Vidar has also benefited from harvesting wood from a number of lateral line right-of-ways leading to the Alliance Pipeline. More recently, it harvested 100 kilometres of the Grizzly Valley pipeline extension for Duke Energy from Alberta to BC over a 32-day period. With the project extending across two provinces, Vidar needed to follow much more stringent National Energy Board regulations related to pipeline right-of-way clearing. This included higher environmental, safety and aesthetic protocols, even going so far as to working with an expert to identify possible archeological sites along the way. One was in fact discovered—a long-abandoned access trail to a specific area of the Rocky Mountains.
The combination of industry experience and attention to environmental details continues to pay off for the company. “There’s no doubt that it helps to have experience in logging as well as the respect of both the forestry and oilfield industry to earn this type of business,” says Matson. And it would seem that there is further growth in the future for Vidar Forest Technologies. The company recently gained a higher profile by moving from the smaller community of Hythe to Grande Prairie. Given the level of resource development growth taking place in the Grande Prairie region—a regional centre for the energy industry and forestry—Peterson has developed strategies to take full advantage of the opportunities in both industries.
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