How one Windsor-based company has been able to expand while still feeling small
Like a fine wine, or more appropriately a vintage car, Colonial Tool Group Inc. has come of age. In its infancy during the 1930s, it was the Canadian branch of Michigan Tool. During its adolescence it was owned by a number of multinational companies through mergers and acquisitions.
But in 1993, the Windsor, Ontario-based company gained its independence when a group of determined managers with a vision, bought the company and built its own identity and culture.
Fast forward 21 years to 2014 and sales have increased fivefold. The company has expanded with new facilities in the United States and Mexico, and has become a recognized world-class manufacturer of customized machine tools, used for the construction and maintenance of auto parts. They also offer a variety of services from tool sharpening to retooling, retrofitting, and re-manufacturing.
“Colonial is a good example of a true ‘one-stop-shop,” said Brett Froats, Vice-President of Colonial Tool Group. “We do everything in house, including engineering, manufacturing, and heat-treating. We control every step of the process so we can manage the cost and quality of our products. It is our attention to detail and product accountability that keeps long-time customers satisfied, and attracts new ones to try us out.”
Colonial was able to grow while still maintaining the quality and values of a small company. But the machine tool industry is shifting: increased global competition and the emergence of new consumer markets are now factors that even smaller manufacturing companies need to address.
Photo courtesy of Colonial Tool Group
To adjust to this new reality, Colonial started to grow export sales to new markets and build their global supply chain. Expanding in this way, however, is not without its challenges; the global marketplace can be a difficult place to navigate alone. This is where Export Development Canada (EDC) was able to provide support.
“Anytime we can help a small Canadian company like Colonial Tools succeed on the international stage, it fulfills a top priority of ours,” said Bruce Dunlop, EDC’s Vice President of Commercial Markets and Small Business.
“SMEs are the heart of the Canadian economy and it is our goal to provide solutions that remove the barriers faced by companies like Colonial, and free them up to expand their businesses abroad.”
In 2013, EDC was able to leverage its financial relationship with one of Mexico’s largest auto parts manufacturers, Nemak, to increase its business with Colonial. Prior to EDC’s involvement, the Canadian manufacturer was selling about USD $200,000 per year to Nemak, but in the last year that business has more than tripled to USD $635,000, and continues to grow. In this way, EDC was able to use its financial resources and influence in the market to strengthen the relationship between Nemak and Colonial.
Today, EDC also provides Colonial with insurance products to protect against the risks of buying and selling to international customers. Before 1993, Colonial’s exports were limited to mostly the U.S., but with EDC’s help the company now exports to markets like India, Sweden, China, Hungary, South Africa, Poland, Germany, and Mexico. In fact, export sales to countries outside the U.S. have since grown by about 150 per cent.
“EDC’s products made business transactions with foreign companies smooth and less stressful. It gave Colonial an advantage over many of our competitors as we could offer more reasonable commercial terms to offshore customers,” said Froats. “This helped us build trust with customers and that goes a long way in this business.”