Canadian Bank Note Company poised for further diversification with $220-million nanotechnology R&D project

The Canadian Bank Note Company (CBN) has secured $40 million from the Strategic Innovation Fund (SIF) to launch a $220-million, five-year R&D project to commercialize technology underpinning atomically precise manufacturing. The largest R&D initiative in the Ottawa-based company’s history, the project holds the potential to revolutionize CBN's business offerings, enable its transformation into a world leader in atomic-level manufacturing and improve its competitiveness globally in several business sectors.

CBN is a low-profile, privately held firm established in 1987. In addition to its historical focus on printing paper and polymer currency, the company is currently active in several business segments, such as border security, lottery and gaming, driver and vehicle information, excise control and national identification and registry. The new technologies could be used for nano-based security features to eliminate counterfeiting of bank notes, lottery tickets, secure documents and the like.

[rs_quote credit="Gordon McKechnie" source="Canadian Bank Note Company"]It’s a very complicated project but we’re going to do it. People have been talking about the possibility of this since the 1950s, yet no one has been prepared to throw the money at it to see if it will work.[/rs_quote]

"Out-there" research

To facilitate its expansion into nanotechnology-based manufacturing, the company launched CBN Nano Technologies (CBNNT) in 2017 and made the application to SIF through its wholly-owned subsidiary, says Gordon McKechnie, CBN’s chief counsel and senior VP of corporate affairs, in conversation with RE$EARCH MONEY.

“We wanted to keep the project separate from our core business. It’s easier to explain for our core business clients that we’re still focused on what’s important to them, as opposed to this rather out-there research,” says McKechnie. “It’s a very complicated project but we’re going to do it. People have been talking about the possibility of this since the 1950s, yet no one has been prepared to throw the money at it to see if it will work.”

Described as an “intensely private, family-owned firm,” CBN is located in a 69-year-old facility in Ottawa’s west end, where it conducts the bulk of its printing business. More recently, the company acquired another similar facility nearby that had been vacated by a competitor, German-based BA International. The purchase was made in 2013, the same year CBN was awarded a $396-million contract by the Bank of Canada to print polymer-based currency series until 2022. That contract has since been extended with an additional $63-million order.

Evolving beyond printing

With the advent of electronic payments as alternatives to cash, technology has played an ever-increasing role in CBN’s business — a trend that began when its current owner, Doug Arends, bought the company in 1976 and diversified into other business lines, boosting revenue since that time from $7 million to well over $300 million. As a result, CBN is now a research-intensive technology company requiring hundreds of software developers and chemists, as well as systems architects, security analysts, engineers, and design, production and printing specialists.

Much of this research has focused on biometrics to provide national and international customers with passports that feature chips with digital images of the passport holder and other information. CBN anticipates entering or expanding its current presence in other sectors, including health care treatments, pollution reduction, high-performance computing and solar energy.

“Doug Arends … decided, quite wisely, that the world was not going to need just secure documents for very much longer. We had to get into systems and solutions for our customers for them to be really prepared to deal with us in the future,” says McKechnie. “It was a conscious decision that it was necessary for the company to become a technology company and not be a printing company anymore.”

[rs_quote credit="Gordon McKechnie" source="Canadian Bank Note Company"]That’s the thing about R&D: you don’t know when you start whether it’s going to achieve what you’re hoping for. But if it does work, it will revolutionize the business. We’ll go from being a small player in the industries we’re in, to being a very large one.[/rs_quote]

To facilitate the new R&D project, CBN will construct a new laboratory — adding to its complement of three other labs built recently to service its core businesses — and hire 212 researchers and technicians over the next five years. Growth in the core business lines will push new hires to 469. The project will also include co-op placements, collaboration with post-secondary institutions and new intellectual property to add to its already formidable IP portfolio. To prepare for its entry into the nanotechnology space, CBN last year purchased a California-based company, with many of its employees transferring to Ottawa.

Embracing opportunity

The nano project will allow CBN to develop 3D atomic structures to address customer needs, though McKechnie acknowledges that there is a level of uncertainty common to all R&D activities. He adds that the research is still in its infancy, meaning CBN will be performing fundamental research based on theoretical applications that could yield solutions not yet even considered.

“That’s the thing about R&D. You don’t know when you start whether it’s going to achieve what you’re hoping for,” he says. “But if it does work, it will revolutionize the business. We’ll go from being a small player in the industries we’re in, to being a very large one.”

With SIF providing $40 million, the balance of the project’s cost will be sourced from CBN’s internal resources.

“Whatever the company is going to generate for the next little while in the way of excess cash will be devoted to the research project,” says McKechnie. “The support from the government is really important to us because it’s giving us the additional flexibility to be sure we’re not handcuffed in our ability to invest in the core business. As new opportunities come up, they tend to be capital intensive. When we get a new country for a lottery, we have to shell out a lot of money to set it up and this (SIF funding) will give us extra room.”

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