Hindsight is 20/20

Hindsight is 20/20
Photo by AIL

A trio of New Brunswick’s longest-running companies reveal lessons they’ve learned through decades of success

Many of New Brunswick’s most iconic companies are also among its oldest businesses. The most obvious examples include: the Irving empire (which K.C. Irving built in the early 1900s); McCain Foods (founded in Florenceville in 1957 by brothers Wallace and Harrison McCain); and Ganong Bros., Limited, which brothers James and Gilbert Ganong founded on June 5th 1873, in St. Stephen. But New Brunswick is also home to a slew of lesser-known businesses of impressive age and experience. In this article, they share their stories — as well as their secrets to surviving the long haul.

Barry Kyle joined Industrial Rubber Company in May 1978. Back then, the Bathurst-based company (started in 1975) was a three-man operation focused on retreading tires. This year, 2015, marks Industrial Rubber’s 40th anniversary. The key to the survival of this now 100-person operation, argues Kyle (the company’s owner since 1986), is diversification.

The company initially expanded beyond tires by moving into the mining sector, coating pipes, pumps and other mining materials to prevent corrosion. At that time (in the late ‘70s and early ‘80s), northern New Brunswick was home to a half dozen mines. The sector has since cratered. Last year, Xstrata Zinc shuttered its Brunswick Mine, part of a larger trend of closures.

Fifteen per cent of Industrial Rubber’s business came from the Brunswick Mine, located just outside Bathurst. Thankfully, its closure was announced far in advance of the mine’s final shift. Thus Kyle had time to concoct a plan for replacing a large piece of his revenue.

“We had to make sure we had something to fall back on, and to make sure we could keep our guys employed here,” he said.

The first component of Kyle’s plan involved expanding into St. John’s, a move intended to attract some of that area’s lucrative oil and gas business. Shortly after, Industrial Rubber opened a plant in Labrador City. The 12,000-squarefoot facility is used to manufacture rubberized pipe coating for the mining sector.

The company’s push beyond northern New Brunswick has proved successful. Overflow work from Newfoundland and Labrador is providing additional activity at the home base in Bathurst.

Yet Industrial Rubber’s continuous adaptation is perhaps best illustrated by its jump into the defence sector.

They are partnering with a German company to build armored vehicles for the Canadian military. The $110-million joint venture will see Industrial Rubber and its partner construct 14 vehicles. Kyle expects defence contracting to be a growth area for the company, possibly by cooperating with a major manufacturer or by securing another joint venture.

“The companies that are still in business are the ones willing to change. We started as a little rubber company and we’re into the manufacture of army tanks,” he says with obvious pride. “If you don’t change, you won’t be in business.”

Kyle pauses before adding: “Change is inevitable. If you don’t do it, you’re toast.”

At Atlantic Industries Limited (AIL), longevity has been achieved by securing contracts far beyond its southern New Brunswick base.

“We realized a long time ago that we couldn’t survive just on what we could sell in New Brunswick,” says Mike Wilson, AIL’s co-owner and chief executive. Despite five decades in New Brunswick, AIL only derives one to two per cent of its sales from its home province.

“We had to go out and look for business.”

AIL makes walls, pipes, bridges and other items for railway, mining and forestry clients. The company has production plants in Texas, Colorado and Virginia.

Incorporated in 1965, AIL now does half of its business outside Canada, selling in the U.S., Africa, South America, Australia, New Zealand, Europe and Russia. International sales are the fastest growing part of AIL’s business. “You know there are opportunities elsewhere. You just have to go find them. That’s what we’ve done,” Wilson says.

AIL was started 50 years ago by Wilson’s father, John. The company made corrugated steel pipe in Dorchester, N.B. and started with a single tender.

“It was a very small shop,” Wilson recalls, noting his father shared a small office with a secretary, while a lone salesman sought business on the road. “That was the extent of it.”

As business increased, AIL set up plants in Eastern Passage, N.S. and Deer Lake in Newfoundland. In 1981, Wilson (then a young engineer working in Alberta) decided to join his father’s company. He was partly inspired by the drop in oil prices that slowed work in Western Canada. By 1988 he had taken over the president’s post from his dad.

The years since have delivered plenty of challenges.

Recent years have seen many governments cut spending on road construction, a main source of AIL’s work load. The company was forced to become leaner by laying off some workers and amalgamating two of its U.S. divisions. More recently, the company’s business in West Africa has been slowed by the Ebola outbreak.

So what explains the company’s survival? Wilson, in part, credits the fact that AIL is a family-owned business. (His four brothers are all shareholders.)

“You’re really afraid of failing. It motivates you,” he says. “You have to do whatever it takes to keep the business going. If you’re a hired hand with a business, I’m not sure you put as much effort in.”

Wilson’s father died in 1999. “He was almost 75 years old and he was getting dressed for work when he passed away,” Wilson says. “Even though I was in charge at that time he’d come in every day just to see what was going on. That was perhaps the greatest satisfaction of my life: working with my dad.”

Jean-Claude Savoie started Groupe Savoie in 1978 with his father, Hector. Savoie had been a chemistry and physics teacher, but shrinking enrollment forced him to teach subjects out of his comfort zone, such as geography and history.

“We had talked often about acquiring the mill he was working at. He couldn’t do it on his own because he didn’t have the cash,” Savoie says. So the father-son duo mortgaged their houses to secure the necessary funds.

“That’s how we did it,” Savoie recalls. “When you’re 35 you don’t think anything bad will happen, so you go ahead and do it.”

Today, the hardwood-processing company boasts a handful of plants and three sawmills, including two in Saint-Quentin, Savoie’s hometown. The company has more than 500 employees and recently added weekend shifts to keep up with demand. Its customers range from Korea to the U.S. to Europe.

The fact that Groupe Savoie exists at all is a testament to Savoie’s leadership.

Mills have been disappearing in New Brunswick for some time. The process accelerated during the Great Recession.

“For us, diversification was the key,” Savoie says. “Most of the other mills that went down were just sawmills. If you’re just a sawmill and lumber prices tumble, you follow down the hill. But if you add value to that product and you manage to get better value out of a lower-price item, then you’re ahead of the game.”

Groupe Savoie started out by making maple components for multi-layered fl ooring. “We couldn’t make them fast enough,” he recalls.

Changes in European wood availability after the fall of the Berlin Wall reduced prices, however, so Savoie moved into the production of components for kitchen cabinets. “We went that direction in a big way. Now that’s our biggest market,” he says.

The company also pushed, two decades ago, into making the rough and ready wooden pallets used for moving heavy loads on to trucks and into warehouses. “It started with two nail guns and now we have an army of guys nailing a million or more pallets a year,” he says.

Groupe Savoie also started making wood heating pellets and fi re logs from scrap wood and saw dust.

The key to survival, Savoie argues, has been found in drawing maximum value from raw materials. For years the company simply sawed wood and shipped it to other companies for finishing. “Now we take that wood a few steps closer to the consumer. Instead of shipping green lumber we dry the wood, we dress it, we cut it,” he says. “And we turn all the byproducts into a valuable product instead of giving it away or burning it like we did in the ‘80s and ‘90s.

“We squeeze every penny we can out of a piece of wood.” Obviously, these are words to live by.

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