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Rich 100 2008

The Top 200 stocks - Growth

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Rich 100: Inside Irving

Dean Jobb
Canadian Business

When Jim Irving accepted a lifetime achievement award bestowed on legendary New Brunswick oil-and-forestry mogul K. C. Irving last May, he imagined the advice his late grandfather might have whispered before he took the podium. “If he was here tonight and heard about the request to talk about him and the lessons I’d learned,” he told businessmen gathered in a Halifax ballroom for a $200-a-plate gala to honour Atlantic Canada’s top CEOs, “he would reach over and quietly pat you on the arm and say, ‘Jimmy, don’t say too much.’ That,” said Irving, a tall, imposing chip off the K. C. block, “is the way it was.”

It’s the way it still is. The Irvings have amassed one of Canada’s largest fortunes, and rank among the wealthiest families in the world, claiming the 140th spot on Forbes magazine’s latest list of the world’s billionaires. But they remain as secretive about their businesses and their bottom line as their notoriously tight-lipped patriarch — especially now, as rumours and headlines predict the breakup of a conglomerate worth what we have estimated to be $7.1 billion.

The Irvings have built a network of more than 250 privately owned companies that operate in Atlantic Canada and New England. Their name adorns hundreds of service stations, as well as a string of pulp and paper mills, sawmills and shipyards. Irving-flagged tank trucks rumble along East Coast streets and highways to deliver gasoline and home-heating oil, past construction sites where Irving cranes do the heavy lifting. Irving-owned brands provide a dizzying array of products and services: facial tissues, French fries, long-haul trucking, office equipment, marine towing, building supplies, translation services — even the day’s news.

It’s estimated the Irvings employ one in 12 workers in their native New Brunswick, population 750,000. In Saint John, where many Irving enterprises operate and almost all have headquarters, the concentration of employees is far higher, earning the venerable port city the unofficial title of Canada’s largest company town. Forget six degrees of separation — you would be hard pressed to find anyone anywhere in Atlantic Canada who has not been an employee or customer of the Irvings at one time or other.

Sound like a business empire? Not to the Irvings, who bristle whenever the E-word is tacked onto their surname. “They don’t like the term ‘empire,’” cautions one New Brunswicker who has known the family for decades and asked not to be named, to ensure that relationship continues. “They think it’s a family business.”

It’s a family business on a massive scale, yet one that thrives under the radar of much of corporate Canada outside the Atlantic provinces. Jim Irving’s Halifax speech was a rare foray into the spotlight for a family that’s traditionally been reclusive to the point of obsession. But expansion plans on the energy and industrial fronts, both in Canada and New England, are making the Irvings harder than ever to overlook, let alone to ignore. And the empire — sorry, guys, the word fits — is restructuring to accommodate the ambitions of a new generation of Irving owner-managers.

The best way to understand where the Irvings are headed is to take stock of where they are and how they got there.

Let’s start with Irving Oil Ltd., founded when K. C. opened his first service station in small-town New Brunswick in the early 1920s. Its Saint John refinery is Canada’s largest, producing 300,000 barrels of gasoline and other petroleum products each day. More than half its output is sold in the northeastern United States, accounting for more than 40% of the country’s petroleum exports. Irving, working in partnership with BP PLC, plans to build a new $8-billion refinery in Saint John, doubling production capacity to 600,000 barrels a day. Irving Oil boasts 700 filling stations in Eastern Canada and New England, a fleet of tankers and 13 marine terminals, and employs 7,000.

Jim Irving is president of J. D. Irving Ltd., often dubbed “the woods” side of the business. J. D. was James Durgavel, Jim’s great-grandfather and a first-generation Scottish immigrant who operated a sawmill, general store and farms in Bouctouche, a community overlooking the Northumberland Strait. From these humble beginnings, J. D. Irving has amassed 1.4 million hectares of forest land in New Brunswick, Nova Scotia and Maine and manages another one million hectares of Crown land in the region. Irving’s 11 sawmills have an annual output of close to one billion board feet of lumber. Each year, Irving’s New Brunswick fibre mills produce 335,000 tonnes of wood pulp, 420,000 tonnes of high-quality paper and 210,000 tonnes of cardboard. At Irving Tissue in Saint John, 75,000 tonnes of fibre is transformed into paper towels, toilet paper and facial tissues.

Yet “the woods” accounts for only one corner of this empire-within-an-empire. J. D. Irving is a major player in shipping, shipbuilding and ground transportation. It operates the 364-kilometre New Brunswick Southern Railway, which shuttles freight between Saint John and Maine, and Kent Line’s 12 cargo ships. Another subsidiary, Atlantic Towing, operates a fleet of tugs, barges, dredges and offshore supply ships out of five East Coast ports. Three trucking firms — Midland Transport, RST Industries and Sunbury Transport — fall under the J. D. Irving umbrella and have hundreds of 18-wheelers on the road. Jim Irving’s empire includes Irving Shipbuilding, which constructed the Canadian navy’s fleet of modern frigates in the 1990s and operates four shipbuilding and ship-repair yards in Nova Scotia and Prince Edward Island.

There’s more. Chandler, an office-supply wholesaler, sells everything from desks and uniforms to sanitary products. Kent Homes builds pre-fab homes. Kent Building Supplies goes head-to-head with Home Depot and other home-improvement centres at 33 locations in Atlantic Canada. Atlantic Wallboard produces enough wallboard at a newly opened $90-million Saint John plant to build 35,000 homes a year. Irving Equipment operates 136 cranes, the largest fleet in the region. Cavendish Farms competes with McCain, another New Brunswick success story, and lays claim to the title of North America’s fourth-largest French fry producer.

In addition, Jim’s father, J. K. Irving, owns Brunswick News Inc., publisher of all three New Brunswick dailies as well as more than 20 English and French publications in a province with a large Acadian minority. A Senate committee that recently probed media ownership in Canada expressed concerns about the family’s near-monopoly over the province’s print media and “the implications of a dominant media force linked to a dominant industrial base.” While a Brunswick News official denied any pro-Irving bias in the papers’ coverage, the committee’s 2006 report cited other witnesses who feared that Irving journalists exercise restraint and self-edit when writing about the family — “unconscious loyalty to the parental control,” as one put it.

The media-shy Irvings turned down Canadian Business’s requests for interviews with the men who have built, and who operate, this regional juggernaut. “To be honest, they don’t do a lot of media interviews,” says Jennifer Parker, the media contact for Irving Oil. “We do appreciate the opportunity,” she added, but “as a private company, we don’t typically participate in rankings.” J. D. Irving spokesperson Mary Keith conveyed the same response. “There is a choice that is involved, in terms of whether to participate or not,” she said, “and so that’s where we are.” Speculation and news reports of internal struggles over succession have met with official denials. Irving Oil has been “separately run and managed for decades,” Parker assured a wire service reporter last fall. “Succession planning is a normal and necessary process in any family business and has been ongoing for some time,” Keith added at the time. “It’s business as usual.”