Refining the Royal Canadian Mint
by Chris Thatcher
TURNING A $3 MILLION DEFICIT INTO AN $11 MILLION PROFIT IN JUST ONE YEAR IS A REMARKABLE ACCOMPLISHMENT, AND WOULD BE HERALDED WITH MUCH FANFARE IN THE PRIVATE SECTOR. BUT AT THE ROYAL CANADIAN MINT, THERE WAS ONLY MINIMAL FLOURISH. THE ABOUT FACE WAS DUE IN PART TO EXPANDED BUSINESS LINES AT FACILITIES IN OTTAWA AND WINNIPEG, BETTER MARKETING AND A GREATER USE OF PARTNERSHIPS. UNDERLYING IT ALL, HOWEVER, WAS A CHANGE IN LEADERSHIP SUPPORTED BY A SOLID CORE. THE MINT, A CROWN CORPORATION, MANAGES CANADA’S COINAGE SYSTEM, PRODUCES CIRCULATION AND COLLECTABLE COINAGE FOR FOREIGN MARKETS, NUMISMATIC OR COLLECTABLE COINS, AND OPERATES A PRECIOUS METALS REFINERY FOR USE BY THE MINT AS WELL AS THE MINING AND INVESTMENT COMMUNITY. OVER THE PAST 25 YEARS, THE MINT HAS MANUFACTURED CIRCULATION COINAGE FOR MORE THAN 50 COUNTRIES, AND RECENTLY WON CONTRACTS FROM THAILAND, NEW ZEALAND AND THE DOMINICAN REPUBLIC. BEV LEPINE, CHIEF OPERATING OFFICER, SPOKE WITH US ABOUT CHANGES, CHALLENGES AND LEADERSHIP AT THE MINT.
CHALLENGES: The Mint has a tremendous reputation worldwide, especially within the minting community. Our biggest challenge right now is our dramatic growth. We’re excited about it, but obviously it puts pressure on all parts of the operation – people, equipment, facilities. Each business line is a small business in itself. It sells to a different customer, from a retail store gift buyer to a central bank, to a mine processing ore, to an investment banker. All require a personalized approach, a different strategy, which adds complexity to the business.
In several of our business lines, we compete with other large mints of the world; 12 of the 48 mints are of our size. Like us, most are government-owned so to compete, we need the confidence we offer customers as a crown corporation. We deal in gold and precious metals; reliability and credibility are important. Yet we have challenges similar to a private sector company: we own all of our assets, we have no government subsidization, we pay income taxes, and we pay dividends to our shareholder, the Government of Canada.
REASONS FOR SUCCESS: Open communication was one of the initiatives we brought in and it is one of the hallmarks of the Mint. Constant communication within the corporation is absolutely instrumental to our success and our turnaround from previous years. It has been a part of every executive’s performance measurement. We share our financial results, the good news and the bad. And we do frequent post mortems. We also celebrate projects that come in on time, successful wins in the marketplace, customer satisfaction letters. For me, the celebration has been something visibly different from my previous 18 years. I think we’ve always done it but now we’ve really put an emphasis on it.
TRAINING: You have to ensure employees understand the objectives and the vision and are trained – practical on-the-job training. You have to spend a lot of time on training. Our union is a key partner.
That partnership and the focus on open communication and helping our people deliver is a very significant reason for our accomplishments.
LEADERSHIP: I’ve been with the Mint for 18 years, so I know all parts of the business. My style is certainly open door. I believe the glass is always half full, never half empty. There is a solution to every problem. There are contingencies, compromises – there’s a way to work through a situation. That’s how I manage and I expect my managers to demonstrate that kind of an approach to their people. I’ve always been willing to do whatever it takes – inventory, photocopying or pulling together a presentation. Every member of the team needs to look at all aspects of what will make us successful, and whatever it takes, they should do it, job descriptions notwithstanding. I believe you should have fun at what you’re doing – and being positive is a part of that.
LESSONS LEARNED: There’s value in patience. Organizations don’t always buy into something on day one, so perseverance is a very important asset. And if you can be happy with small moves in the right direction, that’s far more valuable than a huge win instantly. Have a vision, know where it is you want to go but if it takes a little more time to get there, don’t take that as a negative. Patience and perseverance on that front is very much rewarded. You need to be able to drive the revenue and the sales and the volume, all of those important targets, but if you do it in an iterative fashion, you’ll succeed. At the Mint, we’ve got a good sense of what this amazing corporation has to offer. It is an organization that offers employees the chance to work on all kinds of things, wider than job descriptions. We aren’t a large organization but we offer challenge and change and excitement that you don’t often get in other organizations.
MANAGING THE MINT
PARTNERSHIPS: A very important reason for our success in 2004-2005 was our focus on the customer. Partnerships are a key part of our strategy. Seventy percent of our product is metal based, so by partnering with a metal supplier we can deliver a more cost-effective product. I don’t have the space to back up a twenty-two wheeler, but if I can partner with a company that has retail expertise in big box stores, then I can offer our products to a broader customer base. If I can partner with a technology company in the collector gift market to add laser, selective plating, holograms and colour, then we can expand our product line. It wouldn’t be wise for the Mint to invest in all those technologies. When we produced the world’s first coloured circulation coin, the poppy coin, in October 2004, the Mint used several companies to design a high speed colouring process. Learning from this will permit us to produce other interesting designs, which promote awareness of Canadian history and Canadian heroes. We’re building relationships with the National Research Council and Foreign Affairs to be able to do something we wouldn’t have been able to do before. With NRC, we’ve been working on dye coating technologies. For distribution, financial institutions are a perfect example of a combination customer and partner. Working with them we can get far more effective distribution. We’ve also worked with Canada Post, and, for greater circulation of the poppy coin, with Tim Horton’s.
CONTRACTING AND PROCUREMENT: Remember the basics. You need to be clear on what your business objectives are. Our process is to have a number of suppliers bid on any particular contract. I think it has resulted in very effective pricing, but price is not the only criteria. High quality and on-time delivery as well as a consistent approach is critical. Our suppliers are all partners; we believe if we can have a relationship with a supplier who delivers on all of those aspects, it’s a better strategy than a one-time win because of price.
COMPETITIVE ADVANTAGE: Coinage in many countries is made from a copper based alloy and very expensive.
Since 2000, we have been using multi-ply plated steel. It’s a layered process on top of a steel core. It does not use cyanide, so it’s environmentally friendly, it has far higher quality and life than alloy coinage, and the cost is significantly lower. In 2000, Canada saved over $10 million. We’ve removed the price fluctuations that accompany metallic coins, which appeals to central banks around the world.
GROWTH: In 2000, we completed our plating facility three months ahead of schedule and $1 million under budget. I’m proud of that because there are often comments that projects are not well run in government. We are now doubling our capacity. By the end of the year, we will be doing two billion plated coins. At present, the project is significantly under budget and on schedule. Our silver refinery process, a new refining process authorized by our board for 2005, is also coming in on schedule and on budget. We’re very pleased with our capital projects, all of which contribute to an increase in our staffing. We have increased by about 200 employees over the last year.
Beverley Lepine was appointed chief operating officer of the Royal Canadian Mint in 2003. She joined the Mint in 1987following four years with the Treasury Board Secretariat of Canada's Office of the Comptroller General. Ms. Lepine is a vice-chair of the Board of Trustees of SCO Health Services. For further information, visit www.mint.ca.
