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Pumping iron

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  • SIMA
- Posted: February 15, 2017
By Cheryl Higley

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Fleeting fancy: Jean-Luc Sigouin (right) and Cedric Desrosiers have amassed more than 200 pieces of equipment for their commercial and residential snow and ice management operations.

A few years after launching a small landscaping business in the early 1990s, Jean-Luc Sigouin surveyed the landscape in his greater Montreal market and decided it was time to turn up the volume and make some noise.

Identifying a gap in the market, Sigouin thought it was a good time to jump into the snow industry. He started with some used equipment and a little money and was promptly initiated into the snow business by a weeklong ice storm in January 1998 that remains one of the worst natural disasters in Canadian history.

“It was a nightmare! By the end of the winter, my equipment was destroyed. I spent all summer working to rebuild, but I made it,” he recalls. Fortunes turned in 2002 when Cedric Desrosiers, who had worked for Sigouin, bought a share in the company and became a partner. Desrosiers’ investment and landing famous singer Celine Dion as a client were turning points for Sig-Nature. They finally had the financial ability to put their plan in motion to add equipment and secure more clients.

A different approach
Residential snow removal is big business in Canada, with many companies embracing the use of tractors and heavy-duty snowblowers for maximum efficiency. Sigouin followed that business model. What set him apart, however, was not the equipment itself but how he landed new clients and grew his fleet.

“We thought, ‘Why should we work so much in the summer? Why not go big in snow and work in the winter when there’s nothing else to do?’ ” Sigouin says. “Everyone told us we were crazy, but we bought two major competitors who wanted to get out of the market, and we went from four to 18 machines overnight.”

Starting in 2003 and for several years after, Sig-Nature would buy another competitor, which grew the residential and commercial sides of the business and added equipment.
In 2010, Sigouin and Desrosiers partnered with Daniel Peloquin to form Chasse-Neige and shifted all residential work to this new company. Sig-Nature would continue as the commercial operation.

Peloquin spent hours working one-on-one with clients to build the residential side of the business.

“Without him, Chasse-Neige would not be what it is today,” Sigouin says.

The companies share nearly 200 machines, including 70 tractors, 70 loaders, 12 spreaders, pickup trucks and sidewalk machines. Sig-Nature generates about $7 million in revenue while Chasse-Neige pulls in $3 million.

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Software Entrepreneurs: Daniel Pequion (left) and Jean-Luc Sigouin helped develop a proprietary software system that has helped streamline operations and increase revenue. Other companies are now interested in purchasing the software.

Equipment carousel

A key component to making Sigouin’s approach flourish was not just to build a huge fleet but also to have the best equipment available to minimize downtime and maximize the comfort and safety of his team.

Early on when Sig-Nature would purchase a competitor’s portfolio and equipment, Sigouin would turn to Laval Trac’s Martin Leclerc, a dealer who would take the old equipment on trade and sell Sig-Nature new equipment. With the cost savings gained from increased buying power and continual reinvestment, the company now turns its equipment over every two years.

“We buy 20 to 30 loaders each time. We sell them for a bit less than what we paid new. Without that buying power, it would be impossible to do those deals,” he says, adding that his dealers will often contact him when they need a used tractor or loader because they know the equipment will still be in top-notch shape. He also purchased a Bobcat dealership this past summer, which will give the company another means to buy and sell machines.

Sigouin extensively researches new equipment that could help increase efficiency. It’s his favorite part of his job, he says.

“Every year, I buy three to five machines only to do some testing on (them) for next year. We use the machine for the whole season in different places and in different applications. We hire people and guarantee them pay just to demo the equipment,” he says, adding that he’s in the process of testing skid steers, which are not common snow removal tools in his market.

“You need to work with the machines to make sure they’ll do what you need them to. Buying something you didn’t test and then asking your employees to deliver their best effort with them isn’t fair,” he says.

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Sidewalk support: Sig-Nature’s sidewalk teams are supported with equipment that will keep them safe, dry and efficient.

First-rate setup
To achieve a maximum return on investment, Sigouin has also invested thought and effort into his mechanical/maintenance operations. Since the equipment is new, the dealer completes any large repair work under warranty. However, Sigouin has found it is cheaper in the long run to keep the rest in house. His team manages all routine maintenance, installations and minor repairs.

“Accidents happen, but we need our equipment on the road. We have four trucks fully equipped with mechanical and welding equipment ready to come and get the machine back into operation,” he says.

The rule is if it will take more than an hour to repair the equipment, a replacement is sent. The broken equipment is transported to the shop, worked on and immediately sent back into the field as soon as possible.

“We pay good money for this equipment, and it costs more to outsource repairs and maintenance,” he says. “It’s our equipment, and we don’t have to worry about relying on outside sources being there when we may need them.”

His team will be able to better care for the company’s equipment when it moves into its new facility, which is under construction about two miles from the existing headquarters. The new 36,000 square foot building will include the garage and front-of-house operations. The facility will be large enough that they can store the loaders inside, minimizing damage from the sun, which will help increase the machines’ value upon resale.

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Master plan: Jean-Luc Sigouin’s big board allows him to manage his routes, 200 pieces of equipment and 300 employees during a winter event. His color-coded system allows him to quickly see who is servicing what property with what type of equipment. It’s an old-school approach that allows him to make decisions quickly.

Rental program

Sigouin offsets some equipment purchasing costs through a rental program that Peloquin took charge of six years ago when local farmers and construction contractors began inquiring about renting their machines. Last summer the company rented all 70 tractors and 10 loaders and generated about $300,000. The agreement caps usage at 200 hours for the season and adds on surcharges for those who exceed the cap.

“It was money on the ground that we could easily get our hands on,” he says. “The new generation of farmers are guys who want to pay as little as they can in equipment and are open to renting. The low hours that are put on them during the summer doesn’t affect the value of the machine.”

Loader (300x201)

It’s for the team
Sigouin’s approach to building his fleet not only makes fiscal sense for his companies, but he says it’s important for keeping his team happy. In the winter they staff over 300 people, dropping back to about 80 full-timers in the summer. Over 90% of their workers return year after year.

“You can’t force people out of their beds in the middle of the night in a snowstorm if they don’t like the work. We pay well and provide new machines that they like working in and that make their jobs easier,” he says. “A lot of people sacrifice a lot of hours for us. We’re not building a business like this with machines. It is the people who are the major reason for our success.” 

Challenges to future growth
Musing over the future, owners Jean-Luc Sigouin, Cedric Desrosiers and Daniel Peloquin foresee a mix of opportunities alongside obstacles that stand to hinder their companies’ growth.

“We’re entering the difficult part of the business. Competition is growing, but prices are getting so low. We’ll need to be more efficient, but we won’t work on price,” Sigouin says.

Changing weather. Over the past several years, Sigouin says ice events have become more prevalent. Although his companies are masters on the equipment side, he admits that they need to zero in more closely and quickly on ice management. “It’s easy to shovel a walkway, not so much to manage an ice storm. We need to be more intelligent in how we work in that area.” He is in the early stages of testing liquids for deicing but isn’t ready to pull the trigger yet. “The U.S. is so far in front of us in terms of liquids. If the price is lower and we can save money, we need to be faster to enact change in this area.”

Poor Canadian loonie
. In January, the loonie fell below the US70-cent level for the first time since 2003 and was hovering around 75 cents at press time. Forecasters expect further dips based on commodity prices and a stronger U.S. dollar. That’s bad news for Sig-Nature, which purchases a significant amount of equipment from U.S. manufacturers. A US$175,000 piece of equipment costs Sigouin more than CA$230,000. “We’re earning the same amount of money for our contracts, and have the same salaries; but our money is so poor compared to the U.S., that when you buy in volume like we do it has an impact,” he says.

Regulations. Like in the United States, labor has become an issue. The companies pay very well, and Sigouin guarantees his sidewalk laborers will receive pay for 200 hours. But he says the companies can’t compete with the lure of governmental assistance. In the past, people could receive employment insurance (the U.S. equivalent of unemployment benefits), which would be reduced if you worked part time or seasonally. That has since changed, he says. “That cut a lot of our manpower. I can offer 10- to 20-hour weeks for about 20 weeks. I pay well, but a lot of people think it’s better to stay home than lose out on those benefits.”

Another issue that will impact the companies is new regulations that require weight permits and impose limitations on heavy equipment traveling on the road. “We want to be faster and more efficient. Our loaders can service 20 sites in a night. If we have to move equipment site to site by trailer, I don’t know how we can do that,” he says, adding that he has approached contractors in his area to encourage them to bring their concerns to the policymakers, but “no one wants to involve themselves in talking with the government.”
 

Learn more about operations at Sig-Nature and Chasse-Neige by attending the Preconference Facility Tour at their new headquarters during the 20th Annual Snow & Ice Symposium in June. Register online at www.sima.org/show.

Cheryl Higley is editorial director of Snow Business magazine. Contact her at cheryl@sima.org.Photos by 333photo.com.
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