An Interview with Mr. Victor Oreskovich, CEO of Can-Eng Furnaces International, Ltd.

Victor I have been looking forward to asking you some questions about your background, how you became CEO of Can-Eng and what your plans are for the future-I am sure I am not the only one in the industry who has an interest. So I appreciate the time today.

The number one burning question I have for you is how did you become CEO of Can-Eng Furnaces, one of the largest furnace builders in North America? In other words what is your background and how did you end up where you are today?

Gord I was born and raised in Niagara Falls and have always had a great love for the area and the people. After high school I attended McMaster University and graduated with a B.Eng in mechanical engineering then went off the grad school at Western for a master’s in business administration. My first job after university was at General Motors Oshawa as a manufacturing engineer. I was fortunate to have exposure to mergers and acquisitions and financings in my last position as an investment banker which provided me the experience to begin acquiring companies. The first purchase was JTL Integrated Machine Ltd Port Colborne Ontario, followed by Trenergy Inc St. Catharines, Ontario and then CAN-ENG in Niagara Falls. All three are in the Niagara region and I knew each of them growing up. It was just coincidental that these businesses were all located within close proximity to one another.

I have known the senior executives at CAN-ENG for close to 15 years and so when I contacted them to get a sense for what the current shareholders intentions were, they felt that there would be an interest in a sale. I then made contact with the Owners, and we were able to come to an agreement.

It is important to understand that all my life I have admired CAN-ENG and what they have achieved since 1964. They have extraordinarily creative and knowledgeable engineers and a superbly efficient manufacturing strategy. What has thrilled me more is that the staff and capabilities are far better than I could have imagined. With the combined resources of all three enterprises (250 staff and over 270,000 sq ft of manufacturing and office space), we will be able to execute virtually any order of magnitude project without straining resources.

Going forward our intentions are to expand our footprint in North America with appropriate partnerships/ownerships in the USA and Mexico. We believe that a service network as well as manufacturing capacities in certain regions, will allow us to maintain close contact with our customer base and provide them geographic and cost advantages for new installations or refurbishments. In fact, we are in discussions now with several parties to accomplish these objectives.

Tell us about the history of the company. In what year was Can Eng incorporated, what products do you offer and what industries you are involved with?

CAN-ENG was founded by the partnership of Art Neufeld and Wally Bamford in 1964, but the origins of the Company as a manufacturer of Industrial Furnaces can be traced back more than 120 years. Early contracts were secured in the local automotive and steel industries and by 1965 CAN-ENG had an order for five (5) complete Walking Beam Quench and Temper Lines for automotive leaf springs. The founders had a passion for growing the business and expanded to Mexico in 1965 with the creation of SELMEC, then the first manufacturer of comprehensive furnace lines in Mexico. Growth and diversification lead to the founding of commercial heat treating operations including CAN-ENG METAL TREATING in 1968 (Ontario), and Temple y Forja Fortuna de C.V. in Mexico in 1972. In the 1970’S CAN-ENG had its own Alloy (Heat Resistant) Foundry, Air Pollution Controls Division and even a Poly-Urethane manufacturing operation. Throughout the nearly six (6) decades CAN-ENG has been in business, the Company has been known for many thermal processing innovations including high volume energy conservation Porcelain Enameling systems, Fluid Bed Technology, and in 1988 the introduction of the first continuous mesh belt quench and temper lines in North America. Acquisition of HARPER ELECTRIC FURNACE CORPORATION of Buffalo, NY in 1989 brought one of N. America’s oldest industrial furnace companies under common ownership and resulted in synergies in both Engineering and Manufacturing. The Company had the early foresight to recognize the transition from Iron Castings to Aluminum Castings for automotive Power Train applications and in 1993 one of the first high volume aluminum T6 systems was installed at the Ford Motor Company. The introduction of the BHTS – Basketless Heat Treatment System technology for Aluminum Castings in 2005 revolutionized the production of high-volume aluminum automotive castings, slashing energy consumption and overall footprint, while improving mechanical properties at the same time. Post Millennium, the Company saw renewed demand for furnace contracts all over the world with a focus on developing new technologies for the Railway, Aerospace, Forging, Military, Steel and Automotive sectors. The acquisition of CAN-ENG in March 2021 opens a new chapter of manufacturing capabilities and facilities, positioning the business for even greater growth.

How large is the company in terms of number of employees and annual sales? I certainly understand that as a privately held company you might not want to share sales figures-if that is the case perhaps you could give us a hint.

The CAN-ENG team consists of just under 70 people, made up of a dedicated group of skilled and talented Industrial Furnace Professionals. We are proud of our team at CAN-ENG, some of which have over 30 years experience. Sales bookings in our business is cyclical and can vary from year to year based upon project timing, project size and activity in the market. For general purposes Sale Figures for the year range in the $25M to $40M Range (however have been greater than the high range in the past).

Can Eng is a Canadian company but having said that I have seen examples of your furnaces all around the world-as a matter of fact you had a recent announcement about a large order from a customer in Italy. What % of your products are shipped outside of North America and how do you handle sales and support?

CAN-ENG is a truly global provider of Industrial furnaces systems and have supplied equipment to 17 different countries around the world. With that being said, annual installations outside of North America can range between 10% to 40% of our annual projects which varies based on the project sizes.

Customers today demand local support and as such, over the last twenty years CAN-ENG has developed a team of Sales and Engineering professionals to deliver this level of service. CAN-ENG has developed and assembled a team of technical experts that spend considerable time on the road meeting and working with our customers. In addition to this, CAN-ENG has specialized resources embedded in certain geographies to augment this customer support.

Lets talk mesh belt furnaces and I will get started. Roughly 35 years ago as a young, very inexperienced salesman I can remember trying to sell Can Eng air cooled quench oil coolers. At the time I was dealing with Mr. Wally Bamford, owner and Mr. Pete Mackenzie, Chief Engineer. I remember very clearly them telling me the future of processing fasteners lay in mesh belt furnaces, a brand new concept in North America at the time. As it turns out everything Wally and Pete told me about mesh belt furnaces turned out to be absolutely correct. Would you care to share with our readers the history of mesh belt furnaces and how Can Eng was the pioneer in this technology?

In the early 1980’s CAN-ENG recognized there was going to be a great demand for domestically produced High Quality and Critical Automotive Fasteners. It was this foresight that began the development of the CAN-ENG Mesh Heat Treatment System. CAN-ENG evaluated competing technologies that included Shaker Hearth, Rotary Drum and Cast Link Conveyor designs and found them all to be flawed of one reason or another. Understanding these deficiencies, CAN-ENG sought out to develop a new concept that would overcome these deficiencies that yielded improved mechanical properties results, minimized opportunity for part damage and mixing, greater size range of products which can be processed, increased system throughput efficiency and equipment uptime.

As part of these development activities, in 1988 CAN-ENG built the first of four continuous mesh belt carburizing furnaces under a licensing arrangement with KYK of Japan. These systems were of low capacity and as such, the license was subsequently cancelled and CAN-ENG developed the next generation designs which is now the major player in this niche of the industrial furnace market.

Today CAN-ENG routinely engineers 1,000 to 7,500 lb/hr capacity neutral hardening, oil quench lines utilizing the mesh belt technology developed in the 1980’s. Efforts are constantly being made to integrate design improvements for energy consumption reduction, product quality improvement and equipment reliability and uptime features. Recent system developments include:

• CAN-ENG’s Energy Reduction System(ERS™) features that recuperates waste energy from the furnaces burner flue gases and atmosphere discharge.
• Enhanced Temper Furnace Forced Recirculation System for Improved Temperature Uniformity and Accelerated Cool Down Features
• Integration of Automated Rotary Drum Phosphate Removal Washers
• Austemper Salt Quenching Systems with Salt Removal and Reclamation Systems

This question is quite closely related to the one above and related to austemper furnaces. I have seen several examples of your mesh belt furnaces being used for austempering, is this a large product offering for you?

Actually, Continuous Mesh Belt Austempering Systems have been an active product for CAN-ENG since the early 1990’s. Generally, we would build on average One or Two lines every year. Thus far, CAN-ENG has supplied systems ranging from 150 lbs/hr to 3,000 lbs/hr capacity, processing a wide array of parts requiring a tough bainitic microstructure. We have found that after we engage and consult with our customers and share the depth of process know-how and integrated equipment features there is a realization and appreciation by the customer with added value CAN-ENG provides with this niche product.

A topic of a great deal of interest to all furnace builders is the potential transition from Internal Combustion engines in vehicles to electric. The concern of course is that there are far fewer parts in an electric vehicle to be heat treated as opposed to ICE systems. Is this an area of concern for Can Eng and if so what steps are you taking?

Of course, there is a concern however CAN-ENG has been actively addressing this for some time and is well prepared to support our existing and new customers with the technologies that will be coming down the pipeline. This is why, CAN-ENG routinely invests in our Research and Development Center. CAN-ENG’s R&D center is made available to support customers and augment their in-house development capability resulting in a true partnership. Our world class customers have found CAN-ENG’s R&D capabilities of significant value that includes: High temperature processing (direct fired or atmosphere), low temperature aluminum component heat treatment and heat processing development, Quench technologies that include Oil, Polymer, Salt, Spray, Precision Air Quenching (PAQ™), Hybrid Quenching and Integrating Automatic Part Handling. CAN-ENG employs sophisticated R&D Engineering tools that include CFD modeling, Physical Part Testing and Measuring Equipment, Atmosphere Sampling Meters and Time Elapsed Thermal Imaging to name a few.

A hot topic these days is how difficult it is to find and retain good workers. Does Can Eng have solutions to reduce the dependence on human interaction?

As you know, furnace engineering is not an elective available when completing secondary education and of course brings together a wide array of engineering applications. For this reason, CAN-ENG invests considerable time with on-the-job development and mentoring of our staff. We find that our people enjoy what they do and want to grow within the organization. Some of these positions require direct human interaction and some do not. As a global provider of Industrial Furnaces, CAN-ENG values the need to have local support and as such, has developed a key group of Furnace Advisors located in key Geographies around the world. With the growth that we are now experiencing, a number of new engineers have been brought on to commence training and knowledge transition.

We’ve covered two of your product lines, mesh belt furnaces and austempering systems, however I know the company has other product lines-perhaps you could share with us what other innovative products the company has to offer.

CAN-ENG is well know for its Aluminum Heat Treatment Technology which has been an active and growing product group for CAN-ENG since the late 1990’s. In the early days, CAN-ENG’s name was synonymous with Continuous High–Capacity, Roller Hearth Basket Style Cylinder Head and Engine Block T-6 Heat Treatment Systems (Solution Treatment, Water Quench and Artificial Aging).

As part of CAN-ENG’s continued product development, we introduced our Basketless Heat Treatment System (BHTS®) in the 2000’s and realized significant interest as a result of the benefits that include reduced $/pound and capital costs to process, improved product quality associated with individual part handling and reduction equipment floorspace requirements. BHTS® processing was made possible via the integration of robotics within the heat treatment cell. Robotics Integration has become an area of specialty today, after having integrated well over 200 robots into our Heat Treating Systems.

More recently, CAN-ENG is widely recognized with the development of Aluminum Heat Treatment and Heat Processing Systems required by the mobility industry in applications of light weighting components. This includes Thin-Walled Structural Aluminum Casting Heat Treatment Systems that are integrated with Precision Air Quench Technology as well as Aluminum Sheet Hot Forming and Quench systems used for Body in White component manufacturing.

Lightweighting. I have heard the term used by various individuals including yourself but I have to confess I am not entirely sure what it means-would you care to elaborate?

Lightweight is a term used in the mobility market as any manufacturing process change that can be applied to reduce the overall weight of a vehicle. Vehicle weight reduction is something that is continuously sought after as a means or improving fuel consumption or vehicle range. Examples include integrating aluminum castings in place of iron castings or fabricated metal assemblies and integrating carbon fibre over traditional metals or plastic components. Of course, the economics of these manufacturing processes provide the direction on what is economically feasible and what is prohibitive.

One of my favorite questions and the one which is probably the most difficult to answer is what does the future hold for Can Eng and the heat treat industry in general? Since it is rather an unfair question let me make a couple of suggestions. When Can Eng first introduced mesh belt furnace lines they were relatively small-1,000 pounds per hour was typical. We are now at the stage that 6,000 pound/hour lines are not uncommon-how far can you push this? Are we going to see 12,000 pound/hour lines at some point? Another question about the future-salt. It is not uncommon to find companies mandating the elimination of salt for quenching on the basis that it is not environmentally friendly (whether this is the case or not is open for discussion). On the other side of the coin salt is one of the best quenching mediums out there. Do you feel that salt in heat treating applications is going to slowly disappear from the industry?

We see a great future for CAN-ENG in the Heat Treating Industry. As mentioned earlier, with CAN-ENG’s prepositioning for future technology and R & D capabilities we are uniquely prepared to support the current and future needs of the industry. CAN-ENG has identified tremendous opportunities in the EV sector and future mobility market , and are actively pursuing them. In addition to new technologies, CAN-ENG will continue to enhance our existing product value proposition. This may take the form of increased capacity, reduction in cost of ownership or both.

We see salt having a home in the future and would dare say that as engineers push the limits of material engineering properties, the need for salt quenching will become greater! What is important is the continuous development of Austemper system such that we can eliminate wastewater discharge through improved cleaning and diversion systems while also ensuring the systems provided eliminate any risk.

Victor I very much appreciate the chance to speak with you today and look forward to visiting your plant in the near future.