Ron McNeil and Ivan Harmatny
Lower Mainland Steel
Lower Mainland Steel owners Ron McNeil and Ivan Harmatny have come a long way since they started out as what McNeil describes as “two guys in a pickup truck” 21 years ago.
The company was originally called VanRon Construction and it generated a modest $300,000 worth of business in its first year. Two decades later, Lower Mainland Steel has firmly established itself as one of Western Canada’s leading rebar supply, installation and fabrication companies, with projected revenues of $160 million for 2008 and about 500 employees.
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The company’s history spans two distinct chapters, starting in the early ’80s when Harmatny and McNeil, both journeymen ironworkers, met on a Vancouver-area job site. “His dad was in the crane business and through a mutual friend we got these summer jobs installing reinforcing steel,” McNeil recalls. Five years later, the two men went into business together.
After a reasonably successful decade running VanRon, they concluded the industry was suffering from a fragmented business structure and what McNeil describes as a “conflicted culture of entitlement.” Their response was to create an integrated, non-union business model that put the company in control of materials brokering, fabricating, installation and all other aspects of project delivery.
The turning point came in 1998 when VanRon bought the assets of the original Lower Mainland Steel in Delta and adopted the LMS name. Then the newly expanded company began to look overseas for a steady supply of quality low-cost steel.
McNeil’s father, Wally, a former vice-president with Lafarge, and Stan Rutledge, another retired industry executive, helped forge a long-term relationship with a Chinese steel mill that continues to supply the bulk of the company’s raw materials.
McNeil and Harmatny shielded the firm from swings in the commodity market by signing fixed contracts for guaranteed future purchases. Further savings were achieved by outsourcing estimating work to India. Under the streamlined model, Lower Mainland Steel generated $14 million worth of business in its first year.
By 2002 the province’s construction market was beginning to explode and the company moved to expand once more, buying the assets of Raymond Steel for $3 million, along with a 1.6-hectare yard in Surrey where Lower Mainland Steel’s head offices are now located. “At that point we were looking at the sheer volume of projects coming online,” McNeil says. “We were about a year ahead of everybody in seeing the labour shortage coming.”
In the last five years, Lower Mainland Steel has supplied rebar to a vast and impressive portfolio of major projects, but McNeil points out residential highrises have been a major component of the business during the recent building boom. In addition, the company has opened an office in Calgary and now does upwards of 15 per cent of its business in Alberta. “At any given time right now we’ve got between 60 and 80 projects on the go,” McNeil says.
The challenge in recent years has been containing the company’s growth and making sure there’s a healthy balance between income and overhead. To manage their increasingly complex finances, McNeil and Harmatny, who have no formal business training, hired chartered accountant Darryl Hebert as CFO. “Ivan and I both have the philosophy: what we don’t know, we’ll hire the best for,” McNeil says.
But the heart and soul of Lower Mainland Steel remains the long-standing friendship between Harmatny and McNeil. “Our relationship is at least as difficult as a marriage at times, but we always find a way to work through the debate,” McNeil says.
AND THE JUDGES SAY...
“Ron McNeil and Ivan Harmatny have done a remarkable job of modifying their business strategies to capitalize on Asian sourcing and international labour pools”
