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Posted Nov 21, 2007, 7:03 PM
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Join Date: Jun 2006
Location: Grand Bay-Westfield :: NB
Posts: 3,088
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Irving brothers look to break up empire
Canada's third-richest family at a crossroads as impasse over succession fuels 'friction' in New Brunswick business clan
GORDON PITTS AND JACQUIE MCNISH
From Wednesday's Globe and Mail
November 21, 2007 at 1:00 AM EST
The legendary Irving family is moving to break up its $6-billion business empire as it struggles to accommodate the demands of new generations, thus ending a 125-year-old Canadian dynasty.
Sources familiar with the sprawling family conglomerate say the three principal owners, brothers J.K., Arthur and Jack, all in their 70s, are engaged in tense discussions that will see the various Irving businesses split among family members.
Most important, the energy business, managed by Arthur and his sons, would become independent from the forestry business, operated by J.K. and his children.
The reason, as in most family splits, is a succession impasse, the sources say. Decision making was manageable when there was one owner, the patriarch K.C. Irving, and even three owners – in the person of his three sons, who operated for years on a close collegial basis.
J.K. Irving of J.D. Irving Ltd. attends the Canadian Business Hall of Fame induction ceremony in Toronto on Tuesday. (Ashley Hutcheson for The Globe and Mail)
Maintenance contract for submarines likely to be cancelled, sources say
But there are now five younger Irvings working in the business, led by two strong-willed cousins: J.K.'s son Jim, day-to-day manager of the forest products business, and Arthur's son Kenneth, who handles the fast-growing energy business in Saint John.
The tension was underlined yesterday when only one of the three elder brothers, J.K., now 79 – flanked by his sons Jim and Robert – attended the Toronto lunch marking the announcement of their induction into the Canadian Business Hall of Fame.
J. K. Irving confirmed in an interview Tuesday that the structure of the family business is evolving.
Asked if the different arms would become independent of each other, he said, “that's the evolution taking place today, and we're just in the process.”
But he then added, “I wouldn't say it's making things more separate – it's evolving.”
People familiar with the discussions say the central focus of the planned reorganization is a holding company founded by K.C. Irving in Bermuda at about the same time he moved to the southern tax haven in 1971. It is understood that an international team of tax, corporate and restructuring lawyers and financial specialists are currently working on a plan to carve up the company, and that it is unlikely that changes will take effect until at least next year.
“The ownership structure that was put in place by K.C. can't survive. What we are talking about is bringing the Irving business we know today to an end,” said a person familiar with the matter.
Sources involved in the discussions said the family first began moving toward a breakup a few years ago, when tensions began to mount over succession and strategic planning.
“There is friction, but it is not unworkable friction,” said one person close to the family.
It is understood that the restructuring will involve several jurisdictions, tax rulings and other court approvals because of the families' intricate corporate structure which involves Canadian, U.S. and Bermuda law.
“Unscrambling the eggs is very complicated,” this person said.
The Irvings' business interests, which consist of forestry, retail, trucking, media and energy properties, represent Canada's third-largest fortune, estimated at about $6-billion.
The business began as a single sawmill in Bouctouche, N.B., built in 1882 by J.D. Irving, grandfather of the three brothers. But under K.C. Irving, their hard-driving father, the family diversified into car dealerships, refineries, service stations, and a vertically integrated conglomerate based on tight financial discipline.
In recent years, the major parts of the empire have been going in different directions. The energy business is booming, propelled by a soaring oil price and Kenneth Irving's plans for a major energy hub in Saint John, led by a new liquefied natural gas terminal and a refinery expansion.
Meanwhile, the forestry division is being hammered by a rising Canadian dollar. “The dollar is a disaster in the forest products business,” J.K. Irving said. “When the dollar is up where it is, it's devastating. What more can you say?”
He said he has no doubts that the family forestry company, J.D. Irving Ltd., will survive this shock but it has to stay flexible and keep investing in its mills. “There is always a turn in the road – the main thing is to stay on the damn road,” he said.
He said J.D. Irving Ltd. is determined not to downsize further but conceded that there have already been cuts. “I think that's been done – we're down to bare bones now.”
J.K. Irving said he still likes to know what's happening in the business and often gets out to visit his forests and paper mills. He can get plenty riled when he reads a story he doesn't like in his family owned Saint John Telegraph-Journal – but insists he doesn't meddle in the newspaper that is managed today by his grandson Jamie.
“Some mornings I get up and read the newspaper and I say ‘What in blazes!' Mr. Irving said Tuesday. “But I do not interfere. I never interfered with anybody that is doing the job in newspapers,' he said, responding to the oft-expressed criticism of the Irvings' dominance of New Brunswick's print media.
News of the Irvings' induction comes in the wake of a legal dustup between the family's media interests and a former employer who is launching a weekly newspaper in Woodstock, N.B., that challenges the family's hegemony. At one point, the former employee's house was raided to obtain confidential data that was allegedly taken from the Irvings' news operation.
Asked if the tactics weren't a little heavy handed, J.K. Irving insisted he did not know the details of the case, pointing out that the media properties are now controlled by his older son, Jim. “We like to get along with everybody down home,” he insisted. “Nobody likes to be nasty.”
He admitted the family has always exercised hands-on management, a tradition that began with K.C., who attended to the smallest details, including the exact placement of gas tanks in the family's service stations.
The values of K.C. Irving, who died in 1992, still permeate the organization, he said. His father was a stern taskmaster who insisted on perfection. The overriding objective today, as in K.C.'s time, is: “Do it right the first time and if it's not right, fix it fast.”
He said he pays little attention to what people say about the family, and rejects the idea that he and his family are powerful people who elicit awe. “No sir, we get up and do the best we can every day.”
The three Irving brothers join a group of 2008 Business Hall of Fame inductees that include John Cleghorn, former Royal Bank of Canada chief executive officer; Serge Godin, founder and executive chairman of Quebec-CGI Group Inc., and the late John (Bud) McCaig, who built Alberta's Trimac Corp
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Land deals: open the door
City Hall Councillor says making all potential projects public would be better for taxpayers
HELPJohn Mazerolle
Telegraph-Journal
Published Wednesday November 21st, 2007
Appeared on page C1
SAINT JOHN - Some common council members argue that leaks about the police-justice complex could increase the cost of the development, but Coun. John Ferguson believes he has the solution: Make all potential land deals public.
"It would be a better decision for taxpayers' dollars," Ferguson said Tuesday.
Like Deputy Mayor Michelle Hooton, Ferguson says the public should have been included earlier in the $75- to $100-million project, which will be paid for jointly by the city and the province.
And the councillor took his argument one step further during the discussion at Monday's council meeting. He says that taxpayers' dollars are actually at greater risk when meetings are held behind closed doors. If the information that the city is looking at a parcel of land is leaked, land speculators may purposely jack up the price.
But, Ferguson argues, if the city made its intentions to buy land known to everybody, then owners who artificially inflated the value of their land could be called out during expropriation.
The timeline would be clear and the price increase would be obvious, the councillor contends.
Ferguson's fellow council members say that the discussions happen in private because of the province's Municipalities Act, and as soon as actual purchases happen, they come to open session. With the police-justice complex, the city has spent funds publicly on such things as the Aliant parking lot, park-planning firm Daniel K. Glenn, and a company called TOSS Solutions Inc., which was hired to produce a land-use plan that would support additional development in the area and help the project "meet community expectations."
Concerns some people in the community have about the project include traffic patterns, architectural design and the impact on the Saint John Arts Centre. Hooton had said that if the police headquarters, provincial justice building, parking garage and public green space move too far forward in the process, the public will have no impact on the development outside of aesthetics.
The majority of council disagrees, and say it made more sense to involve the public once land was secured. They variously cite the benefits of the project, that public consultations are on their way, that neither council member had complained about public consultations until recently, and that closed-door meetings for land deals are laid out in the Municipalities Act.
The Municipalities Act is the provincial legislation that governs how cities are to conduct themselves, including what may be publicly discussed and what must stay in confidence. Put broadly, council members are prohibited from speaking about the contents of closed-door sessions, which typically involve the three L's - land, legal and labour. In closed session, common council can have discussions about land deals like this one, and council can give direction to staff, with any decisions involving money making their way to open session.
But Ferguson believes the Municipalities Act even allows for land discussions to happen in public. The section of the act that talks about what can be discussed in closed says: "If it is necessary at a meeting of a council or a committee of council to discuss any of the following matters, the public may be excluded from the meeting for the duration of the discussion:"
It then the lists the items that may be discussed in closed session, including personal information, information that could jeopardize negotiations, and proposed land purchases or sales.
Ferguson contends that because the act says "if it is necessary" and "the public may be excluded," it leaves it open for council to hold the discussions publicly.
Mayor Norm McFarlane and city manager Terry Totten could not be reached for comment.
Hooton has had some difficulties with the Municipalities Act during the police-justice discussion as well. She said last week that council was "manipulating" the act to keep the public out of discussions.
The problem, Hooton feels, is that while the rules say land issues can't be discussed in public, the land in question is so obvious that it's silly to fall back on the Municipalities Act. Everybody knows the city is trying to buy land in the area north of Union Street, across from the site of the former YMCA-YWCA, she said.
In early October, a political scientist and former Sackville town councillor argued that the Municipalities Act has led to problems outside Saint John, too.
Geoff Martin said there was dissatisfaction with the act across the province.
Complaints include discontent with rural policing, residents of local service districts not paying fair value for the services they receive, weak right-to-information and ethics provisions at the municipal level, and a lack of enforcement when municipalities fail to live up to their responsibilities.
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Project secrecy seen at odds with Vision 2015
Guidelines Final version of strategy slated to be presented to common council next week
Realtor Bob McVicar sees the potential for damaging the Vision 2015 process because of the city’s handling of the police-justice complex.
HELPSandra Davis
Telegraph-Journal
Published Wednesday November 21st, 2007
Appeared on page C1
SAINT JOHN - The final version of the Vision 2015 strategy will be presented to common council next Wednesday and Ross Galbraith, a member of the citizens' committee that developed the plan, is confident that the refined version and accompanying sustainability principles will set down guidelines that municipal leaders can use to help build the Saint John residents want.
"It appears that all of council is united in wanting to consult with folks on a go-forward basis," says Galbraith.
On Monday, councillors unanimously voted to have the city manager, in two weeks, bring in the public consultation plan for the development north of Union Street.
Over the past week, prominent Saint John citizens have expressed concerns about perceived secrecy surrounding the development.
Some believe the philosophy of collaboration, which Vision 2015 embraces, has gone out the window and could throw the whole concept into jeopardy.
"That's where the hypocrisy comes in," says uptown resident Jeff Roach. "The process is disgusting. When you throw in 2015, it just makes it 10 times worse."
Under Vision 2015, the municipality would become a consultative body run by public committees, giving people more say and making city business more transparent.
Consider one of six paragraphs that make up the draft vision statement drawn from the responses of more than 3,000 citizens given during a recent outreach campaign: "Our Saint John is a place where good governance means leadership built on inclusive participation, transparency, honesty and trust. Every individual and organization has a vital role to play."
The timing of the presentation to council couldn't be better, says Galbraith.
"I'm glad that, at this point, you're seeing the citizens and members of council really engaged in a conversation around what kind of development they want to see," he said.
"The public seems very engaged right now and seems to fit in nicely with the work we've done."
Leaders of Uptown Saint John Inc. agree that they way to the future is by looking ahead, not back.
"I think the city is probably in a transition period," says Peter Asimakos, general manager of the business group.
"The 'Vision' document is a working document right now and I think as they polish it and engage the community and community leaders, then processes and methods of operation will likely change going forward.
"We can only hope that this would be the case."
Public input is critical in any municipal project, he said. "In the end, it's always more beneficial to have the public input than not, and to have it early in the process."
It's important to not have public consultation so far down the road that backtracking is necessary, says Uptown president Dick Daigle.
"It becomes a self-fulfilling prophecy once you get so far down the road. That's a concern. But what we gathered from council (Monday) night is that public input will come early enough."
Citizens like Roach have been concerned that the community is being left out of a process that has included, according to city staff, purchase options being placed on about 90 per cent of land needed for the project without any public debate.
"The first thing they have to do is take Vision 2015 and start acting based on what they're promising."
To add insult to injury, technology has given citizens the ability to add their input more than ever before.
"We're living in the age of the Internet," says Roach. "We have incredible public dialogue on every issue under the sun.
"If this isn't the time to start consulting and getting people's opinion on what they want their city to be like, I don't know what is."
Judith Meinert believes very little "bears the light of day that is decided behind closed doors."
What is happening north of Union, she says, "goes directly against any kind of consultative process that we've had here in the last 20 years.
"They've taken a long time to build the 2015 process and I would hate to see it wiped out.
"Will we ever be able to trust the mayor and council?"
Realtor and concerned citizen Bob McVicar sees potential for damaging the Vision 2015 process.
"It could be discrediting to the whole open and collaborative nature of what's being attempted," he said.
"People have been excited about things like waterfront development and how that happened in such a public way.
Morgan Lanigan, chairman of the Saint John Arts Centre, attended a creative communities conference last fall during which the community consultation model was lauded as the way a successful project comes to fruition.
"Right from the outset, you go to the community and say 'here's what we're doing.'
"You find out what the community thinks and get a very good impression of what the attitude about it is in the first place."
Once the plan is released, public sessions are held to gain further input. "In the end, you have a community that has had input and is sufficiently satisfied with development."
The complete opposite model, he says, is a very narrow focus from the get-go.
"You have four or five people's opinions on what they think it should be, then you launch it and the community's in an uproar because they haven't had any input."
Neighbourhood activist Hazel Braithwaite, who organized a closed-door meeting last week to discuss the matter, says taxpayers have a right to a consultation process that they can trust.
"Many citizens have devoted their volunteer time to Vision 2015, the arts and culture policy, environmental policies and neighbourhood development.
"I believe that they will be looking for their shared vision in this," she said.
"We have all seen a good example of open and honest community participation in the waterfront development process. They have worked from broad general plans to establish priorities and develop trust. There have been many opportunities for the public to be engaged and participate and, as a result, they have overwhelming support.
"This is not about north of Union. This is about the process. North of Union is but one glaring example."
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New off-ramp opens this afternoon
November 21, 2007 - 12:26 pm
By: News 88-9's Denise Barkhouse
SAINT JOHN, NB - As promised, the new Ashburn Lake Road off ramp is open in time for the Christmas shopping season.
The ramp, designed to make it easier for people to navigate into the city's east side shopping district, will allow motorists to zip across the throughway and hop onto Rothesay Avenue near Consumers Drive.
The city is confirming the off ramp, leading from McKay highway to Rothesay Avenue will open at four this afternoon.
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.....my day turned out to be much busier than i had planned....i hope to be able to find out tomorrow what exactly is going on this site...
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