Born Dec. 18, 1934, in Calgary • Oil industry mentor • World traveller • Philanthropist
One of the toughest positions to fill in the oil business is vice-president of exploration, because a lot of the people on that side of the business are true scientists. They want to be geologists, they want to find a big oilfield, and often they don’t particularly want to move up.
If you can’t pick people who other people will follow, it’s a disaster.
Believe it or not, and a lot of people used to joke about me being an accountant, but I never really wanted to practice accounting, but it was a helluva thing to have in your kit bag.
The point of Northern Tigers was not to stop takeovers, but to point out to Canadians that there are very good companies here. There are seven railroads in North America, and the two best railroads are right here in Canada. The two best pipelines in North America in my view are arguably TransCanada and Enbridge.
A northern tiger is a Canadian company, headquartered in Canada, that is capable of competing globally without the support of governments.
Everybody has to live by some sort of guidelines. The pipelines live by the National Energy Program; everybody has to live by the Competition Act. I don’t see that as government support. If you go back to the Dome Petroleum days, they were, for all practical purposes, getting government handouts by virtue of tax incentives only for them. It was not equal across the board.
If I learned anything about business, I learned as much from my old dad — and he came here from England in 1913 with a Grade 8 education — and his butcher shops, as I ever did after that with a B.Com, a CA, business school and so on.
We had to make a living, we had to make judgments on buying cattle, and decisions on credit and on and on — all fundamentals that many kids don’t have a chance to learn today.
Sometimes butchers didn’t have the greatest ethical standards, because if you’re cutting beef up for somebody on a contract basis, it’s very easy to take a couple of those steaks and put them in your own counter. I’m not saying people do that, but my dad was so damn ethical that he insisted we keep the bones, trim them all out properly, so anybody could check them in any way. Not many people would do that, so you learn that as a kid. It was a pain in the neck, keeping all these bloody bones and packaging them up.
My dad, God bless him, said I’d better go to university. Well, I didn’t even know what to take, because none of our family had ever gone to university, and a teacher said to me, “If you don’t go to university, you know what you need?” I said no. And he said, “You need a good swift kick in the ass.” That was language I understood. Teachers are so critical.
For some people, particularly business people, success is what’s your title and what’s your role, and, No. 2, but every bit as important, how much money you made. Those are obviously not bad measures, but I developed my own set of guidelines, and my definition of success is broader than that.
I have seven benchmarks that I talk about all the time, and these are things that must be in balance: family, friends, finances, career, health, infrastructure — meaning community or support systems — and, finally, your reputation. If those things aren’t in balance, you’re not successful.
You can make a helluva lot of money, and if you’ve done it at the expense of your family or your health or done it in an unethical way, that’s not success. When you leave this planet, the only thing you really leave behind is your reputation.
You never know who’s looking at you. Having gone through hiring lots of people and sitting on panels, you never know where information is going to come from. It may come from somebody who knew you in some other capacity years ago, and it can be either good or bad.
After my wife died, I met and married Lois, who is exactly my age, and she had been divorced for 16 years and raised five kids, all of whom are well educated. When I married her, I inherited these so-called kids, who a dozen years ago were ages 30 to 40, and nine grandchildren, and two more grandchildren arrived just weeks after we married.
By not having kids I seemed to have adopted a lot of people, or they’ve adopted me, maybe. I never had any kids, but I somehow have 11 grandchildren. I’m very blessed by that.
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As an investor, and as a Canadian, you don’t want to turn away foreign investment, but what’s happened in this country is that people don’t seem to recognize the issues with respect to, say, the mining business. This was a mining country. We had the resources, and we had financial resources structured around it, like the TSX, which was one of the great mining trading exchanges in the world. Today, our big mining companies aren’t even here anymore. They may be here in some of the mines, but they sure as hell aren’t here as corporate entities.
Takeovers are not unique to Canada. Every country in the world has gone through it, including the U.S. It used to be that in Canada when we talked about foreign takeovers, the average Canadian would almost put a bracket, America, bracket; but, today, that’s not the case. The steel industry was taken over by the Indians. Falconbridge by the Swiss. The one that really gets me is Inco. I’ve nothing against Brazil, but to effectively have a government-controlled company take over our big nickel company, but… Commodities are hot around the world, and we happen to be a commodity country, so our takeovers are more accentuated than others.
Something that won’t work, no matter how you put in some restrictions, are things like the Foreign Investment Review Act. That was crazy. I can go back to 1980 when I was at Hudson’s Bay Oil and Gas and we got taken over by Dome, even though we had a higher Canadian content than they did, but because one of our shareholders had 50% and the maximum under FIRA was 5%, it was ridiculous. They tried to identify where every share was. FIRA was dumb to start with, and it had many unintended consequences.
We already have the mechanisms in place, and we have Investment Canada, which has approved literally hundreds of these takeovers. I think they do quite fairly extract some “what’s good for Canada,” but I have a helluva time trying to understand how a government-controlled company from Brazil in the nickel business can take over Inco. I don’t think that’s good for Canada.
Here we are with the biggest pools of capital this country could ever have imagined — Ontario Teachers’ $80 billion and CPP, we never had those pools before — and those pools are searching for investment all over the world, and their choices of investment in Canada are being limited. I don’t think people really recognize that.
We’ve lost investment opportunities, and these big pools of capital have basically only one big mining company to invest in, which is Teck, and the only reason it’s still here is because it has Class A and B shares.
We’ve got a great banking system, despite what some people say. We have one of the best banking systems in the world. It hasn’t precluded foreigners from coming in; you can deal with HSBC and others if you want. And, as far as performance in the stock market, they’ve outperformed virtually every other bank in the world. I don’t see how that isn’t a great model for us.
Having been on the other side and making foreign investments, all you have to do is tell people, Here are our guidelines: if you like ’em, fine; if you don’t, adjust to them or don’t invest. You need guidelines, but don’t try to put in a formula that multiplies this by that and divides by something else and so on, because the lawyers will get around it every time. Investment Canada must consider the strategic importance to Canada, the impact on people, the impact on how it will be financed, and a whole bunch of other things, and that should help.
I was the chairman of Fording, and when Sherritt came along with Ontario Teachers’ with a hostile takeover bid, we never would have been able to cobble together a deal if our objective had been to get the last, final, highest dollar. We would have easily sold it to BHP or Rio Tinto. They could buy it out of their petty cash. We worked our butts off, went through a lot of agony, offers, counteroffers, and finally got involved with Teck, and now we’ve created a joint venture with Teck and Fording, the second-largest metallurgical exporter in the world. And I must give credit to Ontario Teachers’. They stepped up and put a bunch of dough into this thing, and it’s been a helluva good investment for them. You don’t necessarily need another mining company to take over Teck; you can easily have combinations of others who would welcome that. It can be done.
We did the same thing at EnCana. We put together Alberta Energy and PanCanadian. We didn’t do what Falconbridge and Inco did by wrestling with themselves. We put the deal together privately, got shareholders to accept, and look what we have, the second-largest producer of natural gas in North America. Directors and management have a lot of responsibility. It’s the right thing to do for the country.
Having served on 20 public company boards, we, as directors, have an obligation to try to explain to shareholders what may be best for them long term.
People say you let Mac-Blo go. Well, we tried like hell to find other combinations that, quite frankly, wouldn’t work. And, finally, the best alternative was Weyerhaeuser for lots of reasons.
Dome took Hudson’s Bay Oil and Gas over, and it was entirely financed by debt. Sure, we got a big price, but they overpaid for us, and what the hell good did that do for Canada? Dome went broke. I was on the board of CIBC, and we lost about $1 billion; Dome didn’t pay the GST. You look at the losers around that thing, because of the stupid approach.
We’re pretty good at finding our faults, but, by and large, this country is in better shape than it’s been in my 73 years on the planet. The governments have their acts together, we’re one of the few in the G8 to have surpluses, we have low employment, we have lower interest rates than I ever would have imagined, lower than even the United States, and we’re even getting recognition around the world as a great place to live.
The thing I’m most satisfied with and proud of, and I can’t take credit for it fully, is that in some of the quite senior jobs I had when I was at a young age I was able to pick people and bank on them, and put them in positions of authority where they could demonstrate their ability. Some of them haven’t made it, but a bunch of them have and I’m so proud of them. I look at Pat Daniel who runs Enbridge. I took him with me from Hudson’s Bay Oil to Home Oil. Brian MacNeill, who preceded him at Enbridge, was with me at Home Oil, is now chairman at Petro-Canada. Charlie Fischer worked for us at Hudson’s Bay Oil and now runs Nexen. I can’t take credit for their careers, but I can take some sense of pride because those people are so influential.
When you get to the top, the CEO in a company can influence so many hundreds of other people’s lives. If they screw up, it’s a disaster.
Some have publicly called me a mentor. Well, I can’t find a better compliment I’ve received than those, and that’s after having received the Order of Canada and the Woodrow Wilson Award for Corporate Citizenship. The most touching is when a Charlie Fischer or someone like that says this guy was my mentor.
There are three things Warren Buffett has said when people ask him about what he looks for in people and he said it better than I can because he’s more articulate, but he looks for three things: one, they should know something about the business and be reasonably intelligent; two, and this was long before ethics, they should have integrity; and three, they have a lot of energy, because most people don’t realize how much physical and mental energy it takes to run a big company.
The most difficult time I’ve had in my life was when my first wife — we were married over 30 years — wound up getting sick and it turned out she had Lou Gehrig’s disease. I can tell you that’s not the best way to leave the planet. She was an attractive, vibrant woman who got this disease and later couldn’t walk, couldn’t talk, it was awful. The only benefit I’ve had from having extra money was being able to keep her home and provide all kinds of services. That’s the acid test of a whole bunch of things: a test of your own strength, and it also demonstrates who your friends are. It just about sinks you as well.
There is a human failing where people, unfortunately, tend to be greedy, and it doesn’t matter how much they seem to make, they always want to make more. It annoys the hell out of me, because 95% or more of the people in business are very ethical, honest hard-working people who are trying to do the right thing for their company or their family or their industry.