Rex Power Magnetics Announces Plans and Progress Towards Expansion of Production Capacity
Rex Power Magnetics is building on its momentum for enhancing productivity and overall capacity.
This year, a new 60,000 square foot facility is being brought online. This factory is immediately adjacent to our main plant in Concord, Ontario. This addition will enable greater throughput and shorter lead times for Medium Voltage Power Transformers, as well as for Low Voltage Distribution Transformers.
The new space will also update and enhance the technologies and automation within our processes, enhancing our production efficiency and product quality. Much of the space will be devoted to an advanced sheetmetal fabrication space, complete with an all new environmentally friendly automated 5-Stage Powder Coating Paint Line.
In 2023, Rex had already announced the opening of a dedicated 50,000 square foot plant in Etobicoke, Ontario, devoted exclusively to the production of Standard Specification Commercial-Use transformers. That plant continues to ramp up this year, as more equipment comes online and our floorplan reaches its final form. In this space, Rex produces high quality, Made in Canada transformers, in common North American 1-phase and 3-phase specifications. Transformers are produced to be in stock, ready for immediate shipment.
Pending Tariff Action
Information regarding pending Canadian protectionist measures & the effect on transformer prices
The Federal Government of Canada has announced that it intends to apply a 25% surtax on imports of steel and aluminum from China, effective October 15th, 2024. This bulletin covers the effect this will have on transformer pricing and Rex’s measures to mitigate the effect.
The Government’s measures are intended to react to the “unfair, non-market policies and practices” of China, primarily for the Electric Vehicle (EV) industry; a 100% surtax will apply to selected automobiles. However, a 25% tax on Aluminum and Steel products is planned as well, to harmonize with recently adopted measures of Canada’s key economic partners.
Rex’s supply chain for raw material inputs such as Aluminum and Transformer Core Steel is diversified to include numerous global partners, including China. While there may be a net economic benefit to Canada, for Transformer manufacturers it will result in increased costs. The precise details of the trade action are not yet finalized. Precisely which commodities are included will be known on October 1st. In the meantime, Rex’s management highlights the following:
- A material shortage condition is not anticipated to arise from this action.
- Depending on which commodities are included in the action, and the Rex product under consideration, price increases may range from 1 – 7%.
- Rex Power Magnetics has leveraged its recently acquired additional factory floor space and strong financial backing to accumulate an abundance of raw materials that will allow a phased, managed transition to the higher cost basis, should it be required.
- In the past 12 months, Rex has increased its production capacity substantially; for Low Voltage distribution transformers, lead times are in the range of 2-3 weeks. Rex can respond to new inquiries to secure new transformers at present price levels.
- As always, for orders that are already released to production with a set ship date, pricing is fixed and not subject to change.
- For orders that are on hold for approval: Following October 1st, Rex will review the final ruling of the Government of Canada, and accordingly contact order administrators regarding possible price increases with the following options:
- The order may be released within 30 days without price impact.
- The order can be amended to a new price that will account for the tariff condition.
- The order can be cancelled subject to the applicable cancellation terms.
Rex Completes first phase of Operational Scale Up
With Government of Canada support, through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), Rex Power Magnetics has reached its first major milestone in its planned Operational Scale-Up. In 2022, Rex decided to endeavor to significantly expand its manufacturing capacity by investing in additional factory space and innovative productive technologies. As of August 29, Rex’s new “Leading Road” factory in Etobicoke, Ontario, received CSA and UL approval for manufacture of Dry Type Transformers. As of September 4, Rex considers this factory to be online and operational, producing transformers at an initial pace of 20 units per day.
This 50,000 ft2 facility is dedicated to producing standard transformers. The machinery, tooling, and material flow is designed for efficient and streamlined production of large runs of such transformers. This will permit Rex to have most standard transformer models in stock and ready to ship, while reining in the problematically long lead times that are prevalent in the transformer market of late.
Announced September 15, at our Concord facility, by Francesco Sorbara, member of Parliament for Vaughan—Woodbridge, on behalf of the Honourable Filomena Tassi, Minister responsible for the Federal Economic Development Agency for Southern Ontario, FedDev Ontario’s investment of nearly $4 million will help the Leading Road factory bring more facility services and equipment online in the weeks ahead, broadening the range of transformers that could be manufactured there. As more personnel are trained, Rex expects daily output to reach 50 transformers. However, this will still be only the beginning.
FedDev Ontario’s investment will facilitate the next phase of this Scale Up, which involves the implementation of more advanced innovative manufacturing systems at Rex’s primary factory at “Basaltic Road,” located in Concord, Ontario. With the nearby Leading Road operation producing standard transformers, our larger Basaltic Road factory will be retooled to permit greater capacity, operational control, and responsiveness for special-specification transformers, as well as Medium Voltage (MV) power transformers.
With this Scale-Up, Rex believes it is better positioned to support commercial and industrial growth throughout Canada, USA, and export markets. This will enable Rex to better support the North American transition to renewable power infrastructure. With Rex’s efforts to keep its expanded operations local and within the Greater Toronto Area, Rex will uphold its high standards for design integrity, quality manufacturing, and customer service. Rex continues to pursue a strategy of vertical integration and centralized control of its operations, taking full responsibility for product quality and integrity. At the same time, Rex remains committed to investing in the local economy, talent pool, and community.
