By Graham Hicks
Growing to becoming a major player in your industry … isn’t for the faint of heart.
As this series of Hicks on Biz columns have shown, inherent disadvantages in growing non-oil/gas Edmonton manufacturing companies to regional, national or international proportions are usually off-set by advantages.
But there’s one factor nobody can control. It’s called recession.
Ever since Blaine MacMillan took over Cowan Graphics, started by his uncle in 1945, he planned on growing the graphics company, which manufactures all kinds of large-scale advertising images. The huge Lexus ad covering the Edmonton International Airport administration building is made by Cowan. The giant Wayne Gretzky photo at Rogers Place – made by Cowan. Canada Post’s branding images on mail boxes across the country – produced and installed by Cowan.
By 2008, MacMillan had 100% ownership of Cowan, having bought out remaining family shareholders. “By 2010, I set a goal – of increasing our revenues by 400% in eight years.
“In general, the graphics industry had been small scale,” says MacMillan. “It was ready for major players and consolidation. Expansion made sense for us. We had a great company team, a strong legacy and reputation. We are early adaptors, with state-of-the-art machinery. Cowan had increased its revenues every year since my uncle founded the company.”
Decision made: Using retained earnings to expand, MacMillan set out to grow Cowan at a brisk pace, to become a leading graphics manufacturing and production house for all Western Canada and to expand into the northwestern United States.
The years quickly went by, and they were good. Cowan Graphics kept growing – $12.5 million revenues in 2010, $15 million in 2012, $18.5 million in 2013. Major expansion kept playing on McMillan’s mind.
Then, mid-2014, the bottom fell out of oil, affecting the entire Alberta economy. Advertising is the canary in the retail industry coal mine. With belt-tightening, advertising budgets were being slashed.
“In 2014, we dropped to $16.5 million,” says MacMillan. “But I was optimistic. I thought it would be a fleeting recession, like 2009. And by our 2015 year-end, we were back to $17.7 million.”
Expansion: Cowan Graphics had long been shoe-horned into two neighbouring buildings in an east-end industrial park.
Then the Edmonton Journal’s enormous printing plant, around the corner, became available. “It was bigger than I had envisioned – at 135,000 square feet, almost double what we had. But it was designed for printing, with the air quality, humidity and power we needed. A friend had bought the building. He very much wanted us as a lead tenant.”
In the spring of 2015, MacMillan stood outside the former Journal building, took a deep breath and made his decision. “Cowan Graphics had to consolidate under one roof. The building had what we needed. Our revenues were still growing.”
The toughest two years of MacMillan’s entrepreneurial career followed. The move was more expensive than had been planned. New production machinery for the expansion cost an additional $2 million.
Cowan’s 2016 year-end revenues, at $19.5 million still represented growth.
But 2017 was brutal – the entire sector in Alberta was shrinking. “We dropped to $16 million,” says MacMillan. “It was all recession. Our customers were holding pat or spending less. All of them.”
Today, Cowan Graphics has passed through the storm. “The industry is recovering,” says Blaine. “We are tracking 25% over last year. It’s our best start in six years. We had a state-of-the-art facility. We’ve digested the moving costs and machinery reinvestment.
“Cowan Graphics is now the second-biggest printing operation of its kind in Canada, the largest outside Toronto. We’re setting up sales strategies for new markets, like Seattle and Portland. We have the equipment and in-house expertise to double production with what we have.
“What we do is very much in demand. Fleet decals, architectural landscapes (i.e. entire buildings with advertising skins), way-finding signage, indoor and outdoor advertising …”
There have been bumps along the way, but MacMillan is right.
Branding and marketing have become as important as the products themselves. In the long term, large-scale advertising – covering the International Airport building, buses and LRT cars with advertising “skins”, adding decals to all manners of commercial vehicles – will do nothing but grow.
Growing isn’t easy, especially in the volatile Alberta economy.
But if Edmonton-based manufacturing companies like Cowan Graphics can achieve economies of scale, more and more of them should be able to grow into national and international ranks — ever so slowly balancing our current over-reliance on the carbon-fuel economy.