{"id":436482,"date":"2026-01-27T12:59:26","date_gmt":"2026-01-27T12:59:26","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/436482\/"},"modified":"2026-01-27T12:59:26","modified_gmt":"2026-01-27T12:59:26","slug":"how-a-small-town-company-that-can-trace-its-roots-to-1917-is-helping-fuel-the-ai-boom","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/436482\/","title":{"rendered":"How a small-town company that can trace its roots to 1917 is helping fuel the AI boom"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Adrian Thomas, chief executive officer of Hammond Power Solutions, at the company facility in Guelph, Ont., on Jan 16.Nick Iwanyshyn\/The Globe and Mail<\/p>\n

The question of whether artificial intelligence<\/a> is caught up in a financial bubble arises a lot for Adrian Thomas, the chief executive of Hammond Power Solutions Inc. HPS-A-T<\/a><\/p>\n

Like anyone with a stake in the outcome, he\u2019s listened to an inordinate number of podcasts and assessed the occasional personal opinion. A recent conversation with his adult son, who has a fintech startup that leans heavily on AI for its operations, added reassurance to the notion that adoption of the technology is just beginning.<\/p>\n

But Mr. Thomas has a clear sight line into the AI boom through his role at Hammond, a manufacturer with deep roots in Guelph, Ont. Though it\u2019s some 4,000 kilometres from Silicon Valley, the company\u2019s products are proving crucial for AI development.<\/p>\n

The race to build more powerful AI models and support growing adoption has kicked off a data centre construction spree. Meta Platforms Inc. is a building a facility in Louisiana that\u2019s roughly the size of Manhattan, while OpenAI has plans to invest some US$500-billion in data centres, to take two examples. <\/p>\n

These facilities require large amounts of electricity, translating to more demand for the kind of transformers built by Hammond. These are unglamorous but indispensable pieces of equipment that convert the high-voltage electricity flowing through transmission lines into a lower-voltage for the servers housed inside data centres.<\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Mital Patel cleans up leads on a final assembly hookup at the Hammond Power Solutions facility.Nick Iwanyshyn\/The Globe and Mail<\/p>\n

Hammond can trace its history in Guelph back more than 100 years, and its share price was fairly sleepy before the release of ChatGPT in late 2022. Since then, it has surged some 600 per cent, catapulting Hammond\u2019s market cap to close to $1.5-billion. The stock hit a high last fall when Mr. Thomas disclosed on an earnings call that Hammond had received \u201cseveral large orders\u201d tied to data centres after the quarter closed. <\/p>\n

The wild gains have cooled in the past couple of months as more skepticism about the sustainability of AI infrastructure construction has set in. Hammond\u2019s stock has fallen about 20 per cent since its peak in November. But Mr. Thomas hasn\u2019t seen any pause in demand yet. \u201cOur business is now just starting to see the real uplift,\u201d he said. <\/p>\n

\u201cAll the big names that you think of as large hyperscalers would have our products,\u201d he said, using the term for large cloud service providers such as Microsoft Corp., Amazon Web Services and Google.<\/p>\n

Hammond has spent $80-million in the past four years to bolster manufacturing capacity, including $20-million for expansion in Mexico that is mostly tied to its data centre business. The company expects capacity at that facility to fill up quickly.<\/p>\n

Which brings us back to the AI bubble. <\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Raw bus bar stock of conductive metals, copper and aluminum, used in transformer units on the shop floor at Hammond.Nick Iwanyshyn\/The Globe and Mail<\/p>\n

Ted Simpson, the company\u2019s vice-president of global marketing, said during the past few months the company has received some of its biggest orders yet. But even people on the team have had questions about how long the demand will last.<\/p>\n

\u201c\u2018What if it stops next year? What are we going to do with all this capacity?\u2019\u201d some employees have asked, he said.<\/p>\n

Mr. Thomas said the company\u2019s growth prospects are not solely tied to AI, and renewable energy development and electric-vehicle adoption are also increasing demand for transformers. \u201cWe have a lot of flexibility,\u201d he said. <\/p>\n

Indeed, Hammond was growing at a healthy clip even before the AI took off. Revenue totalled $270-million in 2019, and the company is on-track to bring in more than $800-million for 2025, according to Mr. Thomas. <\/p>\n

Cormark Securities analyst Nicholas Boychuk said sales tied to AI account for a relatively small part of Hammond\u2019s business. \u201cEven if they were to taper off a bit, it won\u2019t have a debilitating impact on the company,\u201d he said. Hammond\u2019s facilities in Guelph, which build products for the construction, mining and oil and gas industries, would continue operating as usual should AI spending slow down. <\/p>\n

Opinion: We can\u2019t let Canada\u2019s AI moment slip away<\/a><\/p>\n

Moreover, Hammond has no long-term debt and the potential to make acquisitions. \u201cI look at it trading like an average business,\u201d Mr. Boychuk said, even though it has \u201ca very resilient and visible growth profile.\u201d<\/p>\n

Hammond employs close to 2,500 people, including more than 650 in Canada. Chairman William Hammond, who owns nearly 27 per cent of the company, is a third-generation executive whose grandfather started a small manufacturer in Guelph in 1917 to build tube radio sets, battery chargers and other equipment. <\/p>\n

His sons later incorporated as Hammond Manufacturing and expanded into building transformers. The company spun out the transformer division as Hammond Power Solutions in 2001, with Mr. Hammond as CEO. Mr. Thomas, meanwhile, joined as CEO in 2023 from French multinational Schneider Electric SE.<\/p>\n

Building for AI data centres has necessitated a few changes. The energy capacity of an individual transformer has more than tripled, for one thing, while customers are demanding products under tighter timelines.<\/p>\n

Since the fall, however, concerns have been rising that the hundreds of billions of dollars tech companies are spending on data centres is unsustainable and bound for a correction, partly because of the debt some companies are amassing and the lack of clear financial returns from AI. Peter Berezin, chief global strategist with BCA Research in Montreal, wrote recently<\/a> that estimates for AI infrastructure spending in 2027 and 2028 appear to be flattening, suggesting it\u2019s close to the peak. <\/p>\n

How AI is both hurting and helping the next generation of workers<\/a><\/p>\n

Technological changes can throw a wrench in things, too. This month, Santa Clara, Calif.-based Nvidia Corp. said its next chip will be less reliant on specialized cooling equipment. As a result, shares in businesses that make cooling equipment for servers took a hit<\/a>. Similarly, if building and running AI models becomes more energy efficient<\/a>, the huge, power-hungry data centres of today may fall out of fashion \u2013 and hit Hammond.<\/p>\n

But the trends are only working in Hammond\u2019s favour so far. Nvidia\u2019s latest chip actually requires more power than its predecessors, and data centres need to be refreshed every few years or so, translating to a potentially strong outlook for transformers and other equipment. <\/p>\n

\u201cWe\u2019ve been building one model of data centre for a long time. Now we\u2019re going to start building a different data centre model,\u201d Mr. Thomas said.<\/p>\n

Even steel and aluminum tariffs, which hit Hammond\u2019s products, have not slowed sales. It helps that its competitors manufacture abroad, too, and have been similarly affected.<\/p>\n

Whether the AI bubble bursts or not, Mr. Thomas sees only more need for transformers. \u201cThere\u2019s a huge demand for electricity,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Adrian Thomas, chief executive officer of Hammond Power Solutions, at the company facility…\n","protected":false},"author":2,"featured_media":436483,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,901,276,277,888,902,879,877,903,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-436482","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-alberta","tag-artificial-intelligence","tag-artificialintelligence","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/436482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=436482"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/436482\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/436483"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=436482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=436482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=436482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}