Are they worried about industrial espionage?

The bosses soft-pedal such unpleasant language. But in cutthroat times, it pays to tread softly through the closely watched corridors of product development.

So don’t bring your Instamatic through the door of Dynetek Industries Ltd. and expect to be escorted on the grand tour.

“Even Mitsubishi, an investor of ours, never saw our manufacturing equipment for the first two years of our association,” shrugged Robb Thompson, who doubles as Dynetek’s CFO and COO.

David Lazarowych, Business Edge
Robb Thompson of Dynetek with company's flagship lightweight CNG cylinders.

Dynetek (DNK-TSE) develops and manufactures lightweight aluminum storage cylinders for compressed natural gas (CNG), as well as for hydrogen.

For the moment, CNG is the Calgary company’s bread and butter. But the hydrogen cylinders have recently put a rosy glow in the cheeks of Dynetek execs.

Since the Bush administration extended a hearty thumbs-up to hydrogen fuel-cell technology, the U.S. president’s approval rating has soared to 100 per cent at 4410 46th Ave. S.E.

And the need for secrecy behind the doors of Dynetek’s manufacturing facility has become even more of a priority.

“We don’t allow photographs of our machines,” said Thompson. “Most people aren’t even allowed back there to see what goes on.”

Nor is the brass a believer in patents. Patent details enter the public domain, laying bare specific processes for the world – and competitors – to see.

“People can find ways around patents by making small changes to processes. They’ll get no help from us,” Thompson’s eyebrows arched skyward.

Then there are the confidential agreements Dynetek has signed with seven other – often competing – original equipment manufacturers (OEMs).

“Right now, we’ve got 16 in-house hydrogen programs we’re working on,” Thompson added. “These companies are in competition. They don’t want to share their secrets.”

Last year, the company sold about 4,000 CNG cylinders to European and U.S. customers.

But particularly since Bush’s endorsement, hydrogen fuel cells have become the futures commodity of choice for alternative-fuel buffs.

Companies including Ford, Toyota and Ballard Power Systems Inc., of Burnaby, B.C., are among those experimenting with Dynetek’s hydrogen cylinders, still wending their way through the certification process.

On that score, it’s so far, so good.

Dynetek hydrogen cylinders recently received upbeat reviews from a third-party testing agency, after a two-year trial period aboard fuel-cell-powered buses in Chicago and Vancouver.

Now Ballard is preparing to place 30 more zero-emission, hydrogen-jacked buses in European cities this year. Each will be fitted with Dynetek containers.

Most insiders believe hydrogen fuel cells will render the internal combustion engine obsolete. But it won’t happen tomorrow.

And Thompson, a realist, can’t foresee motorists tooling around in fuel-cell jalopies any sooner than 2010.

“The big issue to be resolved is infrastructure,” he said. “What’s a corner-store type hydrogen station going to look like? How do you store it on site? How do you transport it to the site?”

But these folks are patient. And while they wait for the inevitable, Dynetek bosses believe CNG cylinder sales will generate enough cash flow to keep wolves from the door.

Meanwhile, execs of the 11-year-old company watch with pleasure as U.S. and European environmental regulators lean hard on diesel-powered buses.

Ever-tougher emission standards are motivating bus companies to switch to low-emission, relatively low-cost CNG, transported in Dynetek cylinders.

What sets Dynetek’s product apart is the construction: a one-piece stainless-steel/aluminum one-piece liner, covered by a carbon-fibre overwrap.

“The proprietary process is our thin wall,” he said. “We can put more gas into our cylinders than competitors can, because we have a thinner wall.”

Testing has also proven hydrogen is unable to permeate those cylinder walls, as it can plastic and even steel.

Alternative-fuel boosters may be bullish for the long term, but the markets remain skeptical. As high as $8 apiece two years ago, Dynetek’s TSE shares hovered in the $3 range last week.

“We’re not as far off as some other companies,” Thompson said.

“But the market’s back to fundamentals: revenue, cash flow and earnings. That’s what you get measured on, and that’s what we’ll have to address.”

A year-end report is due soon. However, Dynetek revenues climbed 77 per cent in the first nine months of 2001, though holders of common shares absorbed a net loss of three cents a share.

Investors inclined to take a long view could probably do worse. Just don’t ask for a peek at the back shop.