McCoy Corp. and CanElson Drilling look beyond the U.S.
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When Canadian oil and gas service companies are looking to expand abroad, the first place they often turn to is the United States. The proximity to the market, a well-established trading relationship between the two countries and a similar business culture make the U.S. a good fit for expansion seekers. If a Canadian firm finds success on American soil, it can provide lessons that can be used in other parts of the globe. Two Alberta-based services firms – CanElson Drilling and McCoy Corp. – explain how they took what they learned in the U.S. and applied it (or didn’t) in foreign locales.
When the Calgary-based company was in its first year of business, it decided to deploy a rig in Texas. But just before CanElson started drilling for black gold in The Lone Star state’s Permian Basin in 2009, it also dipped a toe into a market a little further south – Mexico. “We took a different approach in Mexico and entered through a 50-50 joint venture with a services company,” says Randy Hawkings, CanElson’s president and CEO. “The advantage of a joint venture is it’s easy to know that everyone involved is aligned on all the objectives.”
CanElson later used its Mexican experience and entered into a joint venture with a company in Texas to expand its U.S. operations. Having used both a joint venture and a greenfield approach (growth by acquisition is another strategy CanElson has deployed) to entering new markets, Hawkings says the company could use either one as it continues to expand, with an eye on South America, particularly Brazil. Either way, he says the real key to a successful expansion in foreign markets is adapting to local culture. “Canadians as a rule are well-regarded and as a result we are able to take guys down there and train locally,” Hawkings says. “Going into any market, training local guys with our guys is the secret to longevity.”
McCoy Corp. has been manufacturing stuff for nearly a century. Although the Edmonton-based company was selling products in other parts of the world, it wasn’t until 2007 that the company expanded its manufacturing operations outside of Wild Rose Country. Increasing its focus on making drilling and completions equipment, the company acquired a manufacturer based in Louisiana and between the two facilities, McCoy was able to sell product in 47 countries in 2010.
With that type of reach, McCoy’s chief executive Jim Rakievich says his firm will have to look at adding a manufacturing or service component outside of Canada and the U.S. at some point. That could mean a foothold in Latin America, the Middle East or Great Britain. Although the location and timeline is far from decided upon, Rakievich says there will definitely be a focus on finding the right people to lead the operation.
“You really have to make sure you have good management and make sure they understand the company,” he says. “Make sure it’s clear what the goal is and how we get there. What we’re doing, why and what’s my part; if everyone knows those three things the success rate is much higher.”