It is rare for the chief executive officer of a company to also be its chief fire officer. But Northwest Fire Rescue and Training, an Onoway-based emergency response outfit, is not a typical company, and David Ives is not a typical CEO. Northwest, which has been offering emergency fire and medical services to the oil patch for about seven years, shifted into the public space this past January to become the first private company in Alberta (and possibly in Canada) to offer fire services to municipalities. The unprecedented shift raises questions. First, can a private company be effective in offering public services? And furthermore, can it turn a profit doing so?
Ives says he had numerous reasons for entering the public sector. For one, it has cushioned his company against falling revenues from its clients in the oil and gas sector, which have slashed expenditures on fire and medical services amid an oil price plunge that began in late 2014. “The timing has definitely benefited us,” he says. “We feel we can survive the ups and downs of various markets by staying fluid and shifting from one to the other.” In January 2016, Northwest signed five-year contracts with nine Albertan municipalities, including Onoway, Silver Sands, Castle Island, South View, Yellowstone, Val Quinten and Nakamun Park. The company took over the existing fire stations in Onoway and in Alberta Beach as part of the deal. They’re 50 kilometres northwest of Edmonton (the company also has four satellite offices in northwestern Alberta to service oil and gas). But Ives, who spent five years pitching various municipalities in Alberta’s Lac Ste. Anne County, says the shift is also about trying to solve a long-standing problem that has plagued small communities. “Rural municipalities struggled for decades to try to deal with the financial realities of what it costs to provide a quality level of service related to fire and rescue,” he says. Typically, municipalities set aside funding for fire and rescue services that is then allocated toward buying equipment, training volunteers and paying a few full-time responders. That structure has been adequate for larger municipalities, but for smaller villages and hamlets without dedicated emergency response services, it has created a system of dependency. Small towns and villages struggle to properly budget for emergency response services because they are forced to outsource those services to a county or a larger municipality, meaning costs can fluctuate without warning. For his part, Onoway mayor Dale Krasnow says Northwest offered a more predictable cost structure as well as additional medical services. “After many years of him coming to the municipalities [with his business idea], we felt we were getting better service for about the same cost.” The lingering question is whether Ives can turn a profit in the municipal market. The downturn in Alberta’s oil patch burned a hole in Ives’s bottom line, forcing him to divest $5 million in firefighting and medical equipment (call it a fire sale?). That amounted to about half the company’s assets. And firefighting equipment, it turns out, isn’t cheap. A fire engine, also known as a ladder truck, can run between $350,000 and $1 million. Northwest sourced its ladder truck from Sault Ste. Marie, Ontario, and its water truck from Floyd, Oklahoma. “Searching coast to coast for the right machine to do the right job at the right price is something that private interest is way better at,” Ives says. He’s the first to admit that revenues are limited, considering they only expect about 100 emergency callouts over their first year. “A lot of our revenue comes from callouts; it is very much a feast or famine business – or it can be if you look at it from the numbers point of view,” he says. The downturn also cut into the company’s labour force, particularly in the oil and gas division. Today the company has about 16 full-time members compared to over 35 full-time employees one year ago (the department also employs over 40 part-time and paid-on-call members). Ives says the human resources aspect is actually the most challenging in the business – as well as the most vital. As a result, his pitch to the communities wasn’t to slim their budgets. Instead, he saw municipal contracts as an opportunity to recruit and train local firefighters, which would in turn bolster their ability to deliver quality emergency response services. “We didn’t come in to save the communities a bunch of money; our draw and our commitment was to do our best to come in at a similar pricing but extend that service to grow value,” Ives says. The central challenge in providing fire services, whether for communities or for private companies, is to retain workers – particularly volunteers with little incentive to stay with their local fire department for long periods of time. By straddling both the public and private sectors, Ives says local firefighters are both better trained and more likely to stick around. “They want to grow with the company into full-time positions,” he says. “They want to work under a hybrid model where they can both work in the oil and gas industry as well as serve the community.”
Despite reassurances, Northwest’s pivot into the public sector caused alarm for some community members. The notion that public services would be provided by private interests was met with skepticism. “There was a perception issue for sure with the municipalities because it’s different and hasn’t been done here,” Ives says. “So there was this, ‘Oh, what’s he after’ kind of point of view.” A story published by Reuters in January further fanned the flames when it was suggested that Northwest could be legally restricted from responding to fires located outside of the technical town limits, even if they were only a stone’s throw away. Buildings or land that is located outside of the town limits fall inside Lac Ste. Anne County, which has its own emergency response units. Ives says that is technically true, but could be solved through an agreement with the county fire office. Randy Schroeder, the county’s fire chief, declined to comment on the matter. “Lac Ste. Anne County has not had the opportunity to evaluate any pros or cons regarding a privatized for-profit fire service delivering a public service,” he told Alberta Venture in an email. Schroeder reportedly questioned what would happen if a private company offering a public service was to go bankrupt, according to the Reuters story. Ives, for his part, is the first to admit that his foray into the public space is unlikely to be a lucrative one. But he hopes it will at least give him more profile to attract new clients in the private space – if not in the public space as well. “It’s the spinoff, frankly, that we’re after.”