How Racking Regulations Have Evolved

[00:00:05.160] Hello, Gilles. How are you?

[00:00:06.850] Good, and you? Good.

[00:00:07.750] Good. It’s the end of the week. It’s actually really the end of the week because sometimes we film these things. It’s like Wednesday morning, and we say it’s the end of the week because that’s the name of the podcast. But it’s actually 04:00 p.m. Four even past 04:00 p.m. On a Friday. So the beer is closed. Yeah, it’s getting close. Getting close. All right, so, Gillespie, for everyone listening, Gilles is the president of a material handling equipment provider called Struixerac. We’ve worked together for many, many years. Our teams have collaborated, so we solicit the help of different vendors in the industry. As I said, our teams have worked together on numerous projects, very successful and interesting projects. And so we thought that we would invite you on our podcast today to talk about something that is quite specific in the material handling equipment, and that is the norms. The norms and the laws surrounding the type of system that you sell to your clients. And for those who think that this sounds boring, well, it’s still important to pay attention because it does involve a lot of things and people who need to put systems up, whether it’s in existing buildings or new buildings, there’s a lot to consider, and it has impacts on people’s lives.

[00:01:34.520] Obviously, there are huge safety elements. Different jurisdictions will have different norms. But overall, we may talk about some specifics today, but ultimately, we want to help our viewers to kind of think through some of these elements when they’re faced with decisions to be made around, you know, these. These large investments in equipment. So I’ll let you. First of all, that will be the topic. I kind of skip, though, maybe present yourself so that it gives credibility to what you’re gonna say.

[00:02:06.310] Yeah. Yeah. Well, thank you for inviting me. That’s so nice to be here today, especially. I know there’s a beer waiting for me afterwards.

[00:02:13.460] Yes.

[00:02:13.950] And maybe a ping pong game.

[00:02:15.580] Yeah, we could do that, too.

[00:02:17.470] So, yeah. So we’re gonna try not to be boring today. Ranking is not that glamorous, but we’ll try to do something nice.

[00:02:26.030] And just a quick thing on your background.

[00:02:28.080] Right.

[00:02:28.290] You’ve been doing this for a very long time in different roles.

[00:02:32.360] Yeah. So I fell in love in that business in 1986, so I’ll let you do the math, but it’s quite some time. I’ve studied in civil engineering. I knew I would work in steel. Really? Like working with steel. I just didn’t know in Watt and I didn’t know racking at all. I mean, racking for me was like non existent. They were not teaching anything about racking or storage system at school back then. So I started in 86 as a young engineer working in design department. And one day I had an opportunity to buy some share of a company and always been involved. I’m a passionate guy. I’m here because I’m passionate. Always been involved with different committee that defines standards. So I was in the first CSA committee in Toronto back 1990 or 1995, something like that. Then with CNN, SsT here in Quebec, involved with RMI as well. So, yeah, just passionate. Still involved today with Carfoli at the ashesa. I’m passionate, trying to hire just passionate people and. Yeah, and I think it’s glamorous, in fact.

[00:03:48.530] Good, well, good. Some people have to think this way, right? All right, so yeah, let’s get into the topic. So, like in a nutshell, what do warehouse managers or people, as I said, that need to put together either to transform, to update, to replace their material handling equipment within the warehouse, whether it’s racking or even mobile equipment, trucks and that kind of equipment, have to think or be careful not to, you know, and what are the pitfalls that exist that you currently see? Because this is a changing environment.

[00:04:26.170] Right. It’s even difficult for us to follow. There’s so many standards now. I mean, when I started, there was no standards in Canada, so we were following the United States standard back then, back in 86, but now there’s all sorts of standards. So, you know, let’s talk about, let’s say two different types of projects. Like the brand new distribution center would be something, and all the other projects that are in existing buildings or people are just remodeling. So the standards are the same, though. Whatever, it’s an old building or a new building, you’re not going to have a freebie with the standards because you are in an old existing building. So when it’s a new building, it’s pretty straightforward. Almost every engineer is involved in the project, from the concrete slab to the steel structure. They know the new standards and they’ll conform to it. Now we have to conform to it as well. For all the equipments that we’re selling and storage systems, well, they need to be designed to resist to seismic event. And this is something pretty new here in this province. So in Quebec, it’s part of law. And what I’m saying it’s part of law, it’s because it’s been incorporated to the Quebec National Building code, which it was not the case forever.

[00:06:03.400] And are you saying that Quebec is the first or some of the first or. Actually, they’re lagging.

[00:06:08.390] Yeah, they’re lagging. They’re one of the last, I’d say. Yeah. Ontario, for instance, or BC. You know, it’s a fact for so long that they need to confirm it’s part of law, but here it’s only since January 2022. And what about the states? States is for quite some time as well that they need to confirm. They need to follow RMI. And RMI is asking to design for a seismic event as well. Okay. Slowly but surely, Canada and United States are really working hard together to make it more similar, because up to today, the differences are very different in design. It’s complete different approach. So. So for us, we need to know the standards in Canada. We need to know the standard in the states. While sometimes most manufacturer in the states believe that the standards in Canada are the same as in the states, but it’s not the case at all. Okay, so. So going back to Canada, let’s. Let’s finish that portion. So. So now it’s. It’s law in Quebec. It’s got to be designed to withstand seismic event.

[00:07:17.060] And.

[00:07:18.330] And if we were looking at the country seismic wise, the worst place to be is on the west coast, as everybody knows, Vancouver area and all that. But the second worst place is here in Quebec. So there’s a fault in the St. Lawrence river, which means that the greater Montreal area is highly at risk. And the second worst place in Canada is rumorski, in fact. Oh, really? So, fortunately, not many people are living there. Yeah, but it’s very severe, so. And since it’s severe and since we’re going higher and higher, those racks are taller and taller with more loads, it’s transferring those loads to the concrete slab. So it’s impossible to install racking without looking at a concrete slab. So it’s part of our mandate to look at that as well when we’re.

[00:08:14.480] Working with a customer and just doing aside, because that could be a long conversation as well. But just in what you said, meaning that the racking equipment and the slab, the design of the slab and the specs are interrelated, but when you think of a typical project of putting a new building where there is actually a slab to be built and designed, and when you select your equipment vendor, those can happen at very distinct time.

[00:08:43.880] Right.

[00:08:44.320] And I’m sure poses a lot of challenges as well.

[00:08:47.970] Yeah, it’s a lot of challenges for us. And for you as well, because you’re preparing a bid package, you don’t know the type of soil. I mean, you haven’t done the geotechnical study. Maybe someone did that. You don’t know, but you’re preparing this bid package, you’re asking for pricing, but all those pricing could go in another direction. Once we know the type of soil, the type of. Because it varies, all those acceleration in case of a seismic event varies by zip code.

[00:09:28.980] It’s that granular.

[00:09:30.610] It’s that granular. So you go for bed, you select a vendor, then this vendor can realize afterwards that there is a zero technical study just being made saying that that soil is type e, which is the worst, and then suddenly it’s affecting how much steel we need to put in our system. It’s affecting the concrete slab, could affect a lot of things.

[00:09:55.140] And the amount of steel you put in your system directly affects cost.

[00:09:58.300] Obviously, it’s really directly proportional. So that’s a new world. So now it’s slow in Quebec, it’s slow for the rest of the country, but it’s pretty easy when it’s a new project, when it’s an existing system. Customers saying, he’s hiring you guys, you make the study, you bring down the racking, you put up a new type of racking system, and we’re supposed to do the same exercise. So this means that we should ask for someone to do a survey to study the loading capacity of the soil, the concrete slab, and to do it right. So it’s adding a level of difficulties that people don’t know, that people don’t put any cost on. Yeah, because they just. That racking is easy. You know, I’m always fighting against that. Like, racking is easy. There is no such thing. Like racking is easy. To give you an example, at the beginning of my career, it was just calculated with static load. There was no seismic seismic. You cannot calculate by hand.

[00:11:09.010] You have, you need advanced tools in.

[00:11:10.840] Simulation, advanced tools to do the engineering. So as soon as you’re moving a beam up, a beam down, you’re changing the whole behavior of the system. So it’s pretty complex. There’s no such thing like saying there’s easy rack.

[00:11:27.770] And so recent the evolution of the norms are, how are they changing the game? If I could say it this way, or like, what do you need to do? Or what? Again, those that live in those buildings operate need to consider when. When they know a change is coming, they need to augment their capacity or whatever the reason is, but they have to think about this and say, I’m going to do some changes and maybe some of them say, do think it’s simple. I say, I’ll move XYZ, but what should they be thinking about?

[00:12:02.570] Well, basically, I mean, starting hiring you.

[00:12:05.250] Guys is once this is done, this is obvious.

[00:12:13.330] Basically, once we know the design, once the vendor has been chosen, then on our side we’re going to tell you exactly all those loads, because seismic is not about just loads that push the concrete slab, but loads that are pulling up the concrete slab. So once we have all those loads, it’s a matter of sitting down with a specialist that can test the concrete slab of the customer with the soil underneath. And he’s going to tell us if it works or if it doesn’t work. If it doesn’t work. Well, we have a lot of imagination. Sometimes we could put a very long or channel underneath the racking, putting grout underneath that channel to distribute properly the loads to the, to the slab. So this is something we’ve done a lot, but sometimes it could be much more difficult than that.

[00:13:11.040] So you’re saying there are solutions, but those solutions will add both cost and time. Right. Because sometimes, also there are lead times, obviously, for sourcing the components and to put this in place. And so you can have some bad surprises that can actually changed when a project is going live because some checks were not made in time.

[00:13:37.880] Exactly. So the thing is, once there’s a vendor selected, there’s kind of a sprint to do to give those loads to a specialist to do the test and to say, okay, we’re fine with the concrete slab and the soil because most of the time is the soil the problem? It’s not really the concrete because you.

[00:13:58.480] Could build what you want. Then again, it has a cost depending on the thickness of that slab.

[00:14:03.730] Right, exactly.

[00:14:04.450] But the soil is driving more of the issues.

[00:14:07.460] I mean, you could build a twelve inches concrete slab on jell O still going to be jello. Yeah. So, I mean, that soil is so important, so it’s just a matter of doing that. The thing is, it’s adding to the, to the length of the project and that’s really the part that people are not aware of. And we had a case recently about that we were the successful vendor and then everybody wants to go fast because like, you’re saying there’s lead time, 18 weeks to manufacture racking and all that, but I mean, we have to stop from there and say, okay, someone has to look at those lows and is the concrete slab okay or not? And if not, yeah, there’s solutions sometimes. Again, there’s, we have imagination, we can create things, but it’s got to do, it’s got to be done right.

[00:15:01.280] But those solutions can become cost prohibitive or change the ROI on a project. Or if you don’t do it, then you may have a reduced capacity or ultimately you do not get what was originally designed.

[00:15:14.690] Exactly. Yeah, exactly. And that’s why it’s important. I mean, if I was going to make you a recommendation, if it’s a new project, try to find out right away if there was a geotechnical study, if there was one, they know the type of soil. Just putting this in the tender would help us out a lot. Because we would design, at least right away, we would design at first glance the right way, if not because, I mean, we can look at those tools that we have that can say, okay, in that area, it’s soil type d. But I mean, soils vary every 10ft. And then someone did a specific study for that area, and soil is e, it’s not the same structure design at all. So if you can get that, that would be very helpful.

[00:16:09.800] You were telling me also about sometimes some norms that I’ll say depend on the other or have relation with other norms. I think we’re talking about racking mobile equipment. Can you elaborate on this?

[00:16:21.540] Yes. Yeah, I mean, this is so funny, because when we do a project, we, even though we’re never going to sell any Lyft trucks, we need to be pretty good about lift rocks. Because I mean, we cannot design anything without knowing about Lyft trucks. We’ve always been pretty good and pretty informed with lyft trucks. Now the other way around is untrue. The guys selling the lift truck don’t know much about racing system. So those. Canada is looking at this now saying, okay, guys, I mean, there’s two standards.

[00:16:56.290] And, sorry, you say, just to clarify, you say, you, as racking providers, you need to understand lift truck because it impacts your design. You’re saying on the other side, it’s not as true because how racking is designed does not impact that much. How you design a lift truck, is your point.

[00:17:16.550] Exactly. That’s what everybody was thinking. But there was a case, there was an accident at one point that a lift truck was able to go underneath a very low beam level, something like 96 inches high. And it was an accident because of that. So basically they were saying, well, you know, the rack was not designed properly. On the other hand, the lift truck provider knew that he was going to do that maneuver. So now, I mean, when you think about that, for Canada to say, you know what, guys? You got to talk together and make sure that it’s safe for everyone, makes sense. It just makes sense. And it’s just going to force everybody to do it.

[00:18:03.280] Right.

[00:18:04.030] But, I mean, all those standards are so complicated. And, I mean, it’s. One is attached to another. So we can talk about, you know, national building code or in the states or in Canada that is pointing to a specific standard, and that standard is pointing to one other specific standard about how to calculate when it’s cold form steel hot roll section. And then it’s sending you to another standard. Even for us internally, you know, we’re building documents so our engineers and designer can follow because it’s not easy. So, yeah, so back in 1986 when I started, there was nothing. Now, my God, there’s so many standards. Gotta do it right. And it’s really to protect people. It’s all about that.

[00:18:55.340] And that’s why you said earlier in this, in this conversation that there’s no such thing as a grandfather clause anymore. It’s in this industry, we just cannot allow it because of the safety of people involved.

[00:19:08.420] So let’s say that you’re an owner of a distribution center. You’ve bottracking 30 years ago, you kept the racking in good condition, and you have not changed a damn thing. And you have your stamped engineer drawing in hand. You’re fine. Yeah. As soon as you change something, you got to adapt to the new standards.

[00:19:31.630] And, yeah, what are the chances that over a long period of time, maybe much less than 30 years, that a system won’t be adapted? Because, I mean, it’s a dynamic environment. Size products, sizes of pallet, whatever, or height of pallet, I should say, will have operators modified to adapt and optimize the capacity. I mean, even the work we do is about, hey, here’s how you could change things. So that situation is very rare where you say, well, this, I have my stamp engineer drawings, and here is how my system looks like. So I guess what you’re saying is there may be a lot of people that are out of compliance right now.

[00:20:12.010] I’d say about 80%.

[00:20:13.940] Yeah. You know. Yeah.

[00:20:15.590] It’s because people just don’t know and why I have this opportunity today. I mean, the first reason in North America why operators are getting killed is because they are moving beams around. And as soon as you move a beam up are down, you’re changing the whole behavior, and it’s killing people. People don’t know, I mean, they look at tracking like, you know, there’s holes everywhere. I can adjust like I want.

[00:20:47.640] Yes, like legos or.

[00:20:48.950] Yeah, no, no, no. It’s killing people. So as soon as you’re moving something, you’re changing the loading capacity.

[00:20:56.110] So have these norms. Are we able to see that these norms are actually having an impact or positive impact on the.

[00:21:02.950] That’s a so good question. So when I started my career, there was various k factor, and k factor is just going up and up, which means it’s more severe and more severe. And I’m always giving this example to young engineers we’re hiring. So when I started in 86, if you had a regular upright with beams every 48 inches, well, this upright could withstand about 25,000 pounds. That’s 86. So they’ve changed some factor in all those standards. So we’re, we’re in about mid 90, let’s say 93, 95. Well, that 25,000 is suddenly 20 and today that’s about 12,000.

[00:21:47.650] You’re saying that the same, the same.

[00:21:49.540] Components, the same components can withstand less.

[00:21:52.650] Because manufacturers are able to meet the.

[00:21:55.150] Standards with us still or not?

[00:21:57.170] I don’t.

[00:21:57.660] No, no, no. So let’s say we’re taking the same components as we had 40 years ago. Back then the standards were so much looser, if I can say, compared to today, that we could put more loads in those rack compared to today. So let’s say you haven’t touched anything, which like you’re saying it’s impossible. So we go in your facility, we do the new calcs, and then we tell you that’s not good. And let’s say you were there four years ago, so you would say, hey, wait, wait, wait, I’ve bought the tracking, you know, I’ve hired engineers and they told me I could put 2500 pounds at each pallet location. That’s what, that was true 40 years ago. Today that 25 is about 1500. Okay, so because those norms are much more severe. And why they’re more severe, my theory about that is people don’t do enough maintenance and all those safety factors are protecting the end user. Because what is really a safety factor? Well, safety factor is every time you hit a structure, since there’s safety factors, it’s not going to fall instantly. What do you do? Well, you basically eat a little bit of that reserve every time you hit.

[00:23:11.680] And since people are very bad with maintenance, the standards are more and more severe. It’s so funny. People are good with maintenance of their trucks on the road, their conveyors, their lift trucks, racking. I’m asking the question to all my customers and they don’t have that line in their budget. Maintenance of racking system. The line doesn’t exist. So $1,000 is too expensive. And that’s really the big problem that.

[00:23:40.110] We shouldn’t there be norms around the need to inspect?

[00:23:43.530] And it is in those standards in Canada and in the USA, it’s hard to control. You’re supposed to inspect, each end user is supposed to select someone to inspect their structure. So you’re supposed to do something internally, supposed to be trained to do it with your own staff. But at least every year you need to hire a specialist to walk around and, and make sure that it’s safe and sound. So this is part of law in North America, those people do inspection? Not that much.

[00:24:22.460] Well, I think we’ve covered a lot. Thank you. I hope the viewers will get them thinking and think about their own operation. Before we say bye, I’d like to take a few minutes to change the topic and talk about steel price volatility because we do a lot of selection, vendor selection and racking for our clients. And obviously we have benchmarks, we have a lot of historical data, but especially with COVID in the past few years, we’ve seen huge swings like many other parts of the industry. But can you speak a little bit about how that price of steel, because as well. No, I don’t think we’ve said it here, but the steel in itself is the most, is the factor that influences the price of a solution, by far is the greatest component. But how does those steel price fluctuation impact your ability to be competitive and sell storage systems?

[00:25:27.290] Okay, so there’s many questions in your question.

[00:25:29.610] Yeah, I know I was trying to get a little something at the end, but tell me about steel prices.

[00:25:35.440] Let’s try to be pretty clear and.

[00:25:39.890] Let’S try to be structured, not all messy like I just was.

[00:25:43.680] So basically, steel is, you want to build a distribution center. The structure of the building is steel, the lift trucks are steel, all the equipment is steel. So when those steels are just going to the roof, I mean, it’s killing project. I mean, it just killed some project for us or the customer had to change so many things. So it’s so interesting because up to about four years ago, that was a very stable market. So most of my career it was stable. We had priceless internally we could say to our customer that those prices were good for 90 days. So most of my life it was stable. Since four years is just crazy. In four years, it quadrupled because of steel. Fortunately, in our products, there’s a lot of. There’s a lot of. I’m searching for made of labor. Labor. There’s so much labor in our product that it’s not four times the price. It’s about two times the price still. But still. And up to today, you know, like, I’m looking at this every two days, and past few weeks, you know, it’s up 3% and it’s always going up. But not as crazy as a year ago, let’s say.

[00:27:07.250] Or two years ago, or three years ago. But it’s very volatile, which means that we’ve lost our reflex as well. For so long, it was stable. So we had budget numbers that we could reuse. I mean, you would ask me for budget. Now we really have to take a close look at it, because we. It’s just so volatile. So let’s say you’re working on a budget with a customer. You know, I would say, I mean, you’re going to call some vendors, some lifter guys to get some ids. And I would save the project is in a year at about 10% because we’re still in there. And the biggest problem is there’s less and less steel manufacturer on this planet. The largest arslr metal is basically buying everything. So it’s really like the price of gas. You know, there’s not many manufacturers making gasoline, so they basically do what they want. And steel is becoming pretty much the same thing. Canada, we make less and less steel. United States is in the same vein, but they’re opening up again now. But, yeah, I mean, volatility is just crazy. So we have to be very, very careful, because, again, it’s not just all the storage systems, lift trucks, structural steel of the building in itself, still everywhere in the building.

[00:28:37.090] So we, sadly, in the past few years, you know, some projects were cut down because the customer really wanted that building, and the building suddenly is 20% more expensive to build. And here we are. We were the first one affected. Sadly, we don’t see the end of it. And again, I’m studying this basically, like the exchange rate with the United States. Every two days I’m looking at it, and it’s always a bit up 1%, 2%, 3%, but there is no stability, sadly. So sometimes, you know, we’re asking customers, you know, where you got your price. Well, I bought some racking ten years ago and. No, no, no, you cannot use those numbers. So, yeah.

[00:29:24.370] Okay, well, thanks for those insight again, Gilles. I appreciate you coming in? Thank you very much. I think it’s time for beer and ping pong. Or beer pong. We’ll see.

[00:29:32.970] No, no, no.

[00:29:34.930] We’re not that young.

[00:29:35.870] No.

[00:29:36.290] All right. Thank you so much. Thank you, Gilles. Thank you.