’s Soheil Mosun Ltd., a custom fabricator of architectural metalwork, has started to introduce escalation clauses in its contracts for projects in the United States after “being punched in the stomach” early this year as a result of a weakened greenback.
Weakened greenback was cutting profits
By Patricia Williams
staff writer
Toronto’s Soheil Mosun Ltd., a custom fabricator of architectural metalwork, has started to introduce escalation clauses in its contracts for projects in the United States after “being punched in the stomach” early this year as a result of a weakened greenback.
“Over the past five years, about 80 per cent of our work has been in the U.S.,” said chief executive officer Darius Mosun.
“In the early part of this year, we got punched in the stomach quite a bit when the exchange rate changed.
“What we were lucky about was that we were just finishing up the last five per cent of those U.S. contracts. We still lost hundreds of thousands of dollars as a result (of the plunge in the U.S. dollar).”
The company recently completed a $1-million (Can.) contract at Chicago’s Midway Airport and is wrapping up a $6-million contract at the Renaissance Center in Detroit.
It designed and manufactured and currently is installing seven custom, stainless steel railway platform waiting stations for the Long Island Railway in New York City.
When customers are receptive, Soheil Mosun now is inserting clauses in new contracts that come into force when the exchange rate shifts three to five per cent in either direction from the level in effect at contract signing.
“These clauses allow us to go back to customers and ask for extra money if there is a significant change,” Mosun said. “A lot of customers are receptive to this and it is a fair way of dealing with this issue.”
He said the 30-year-old company has some clout in negotiating such clauses because there are only a limited number of companies specializing in custom architectural fabrication.
“In general, if you are a good supplier and you produce good product, your customers want to see you succeed,” Mosun said.
“They want to see you navigate through troubled waters.”
He said some U.S. customers also have agreed to pay invoices within 45 days rather than 90 days.
While Soheil Mosun still has “some irons in the fire” in the U.S. market, Mosun said the family owned company made a conscious decision in the spring “to point its guns” at a number of local jobs.
The company has won contracts for design and fabrication of bronze windows for the Library of Parliament in Ottawa and for entrance icons at the Vaughan Mills mall just outside Toronto. It also won work at Casino Niagara.
“We moved quickly to (secure) Canadian work,” Mosun said. “We’re now doing about 75 per cent Canadian and 25 per cent U.S. work.”
The company, located in northwest Toronto, fabricates everything from custom elevator cab interiors, signage, and railings to one-of-a-kind items such as the bronze windows produced for the Peace Tower in Ottawa, and high-security stainless steel entrances for the National Gallery, also in Ottawa.
Recent Comments
comments for this post are closed