Rock-solid perspective in the face of volatility

Across the broad expanse of Middle Canada, no name looms larger than James Richardson & Sons Ltd., a 154-year-old family business that spans agriculture, energy, financial services and real estate. That stature means enormous influence and responsibility for Hartley Richardson, 57, the Winnipeg-based president of the company, whose interests range from a big grain terminal in Thunder Bay to a canola crushing plant in Lethbridge, Alta. From his offices above Winnipeg's Portage and Main intersection, he describes the economic view.

Does the return of the NHL to Winnipeg have a business impact?

When we lost the Jets in the mid-1990s, there was a sense of moving down in significance as a major Canadian city and one that gets recognized by its name around the world. When people recognize you have an NHL franchise, it puts you in a different league. Now that it's back, it makes a difference in the ability to attract talent to the city, in the ability to welcome customers who are in town – it's another arrow in our quiver.

What is the economic outlook for the entire region from Thunder Bay to Lethbridge?

There are certain industries that will not escape the current volatility, but generally speaking, agriculture has a strong tailwind that will carry it forward for the foreseeable future. The demand is there; there's been strong movement of grain. And we continue to invest significant capital in infrastructure. That is through acquisitions – we just acquired a canola packaging company in Ontario – and through investments like our Yorkton, Sask. canola-crush facility. We just surpassed a million tonnes of canola crushed in our Yorkton and Lethbridge facilities over the past 12 months.

… And the manufacturing sector in Manitoba has made the changes necessary, and the capital investments, to be well-positioned even with the high Canadian dollar.

Are you investing in anticipation of higher grain volumes with the end of the Canadian Wheat Board next year?

It supports the decisions we've made. We recently acquired a producer facility in Wadena, Sask., a full agriculture-service centre called Northeast Terminals. It was a $25-million-plus investment, and two weeks later they announced the changes in the wheat board. That was timely, but probably more good luck than anything else.

So even without the wheat board announcement, we are strong believers in the industry's future. Now, this will unquestionably provide improvements to the efficiency of the grain handling system in Western Canada. I think we will provide better service for farm and international customers.

So is this unreservedly a good thing for you?

Yes it is good – we've been moving this grain but with one arm tied behind the back. You don't control the process and that has had its challenges. It will allow us to serve customers better.

Will you acquire more of the remaining independent terminals?

Some are pretty big facilities and they are well run, but to the extent there are opportunities such as with Northeast Terminals, we will be there. We're going to make some additional investment in Northeast and make it better than it was.

But isn't there still huge concern for the future of smaller communities and branch lines?

A lot of the rationalization in our industry has been accomplished. There are still a number of the older, less efficient facilities on some lines, in some communities. But at the end of the day we recognize we have to service our customers, so we'll have facilities where it makes sense to provide that service.

And there are some issues people should be talking about – such as producer-car loading and branch lines. The only way to solve these is to talk and unfortunately that just hasn't been happening.

Isn't this a case of the pro- and anti-board sides just yelling at each other?

A bunker mentality doesn't help. It is in everyone's interest to have constructive dialogue on the subject, both from the government and industry side.

Is your energy company Tundra ramping up production in the Bakken formation of southwest Manitoba?

The weather caused big problems for us in both oil and agriculture but this is what you live with. In southwest Manitoba, we have had a very active drilling program, and are expanding our Cromer blending facility. We consider ourselves a strong player in that area and we are sticking to our backyard. We are keeping five or six rigs busy, day in and day out.

Haven't you pulled back from a direct role in financial services?

Our focus is now our interest in investment dealer GMP [Capital Inc.]and we jointly own the wealth management firm Richardson GMP. We're very pleased how that has progressed. We still absolutely believe there is a need for an independent firm in the industry. We've seen our assets grow to over $14-billion and we are focused on continuing to grow that business. I wouldn't say we've pulled back; we've been a very active buyer of GMP shares. We think there is a good future there.

The last time we faced a financial crisis, you said, quite correctly, it was a time to buy. What about now?

We are seeing some of the same problems – they are structural in the U.S. and Europe. If there is the political will, the European situation can be corrected. I continue to be very concerned about the U.S. and the ability to come to terms with serious, serious debt issues.

But offsetting that we keep a close eye on China, India and emerging markets, and while there is talk of a slowdown we don't see that in too many of our industries. There is still tremendous demand. And what I said before is relevant again today: When everyone is heading for the door, that is usually when we like to look ahead and have the capital to make investments for the long term.

What makes you lose sleep?

The volatility. You hardly catch your breath and something else comes out of left field. We're all dealing with that. But what keeps me awake is just how the U.S. is going to get out of this situation – how they are going to have the ability, given a political structure that doesn't allow much to get done, to deal with the tough problems. It's still the major economy of the world and we need it to be healthy.

Can Manitoba get out of the situation where, as a have-not province, about a third of its revenues come from federal transfers?

That is something that the government has to come to terms with – because that party is going to end. It has become a dependency. At one point, it was almost a badge of honour as to how much in transfer payments they were able to get. That won't sustain us into the future.

[Premier]Greg Selinger was finance minister, he knows the numbers and he has to deal with that. That is one area of concern for business leaders in the community and they will be talking to the government about that with some vigour.

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Hartley Richardson

President, James Richardson & Sons Ltd., Winnipeg

Born: Oct. 16, 1954, in Winnipeg

Education: Bachelor of Commerce, University of Manitoba, 1977

Career highlights

- Seventh family member to run the business, whose origins go back to 1857 in Kingston, Ont.

- He represents a group of cousins in the fifth generation who now control the business

- As current chairman of the Canadian Council of Chief Executives, he recently hosted the group's first national meeting to be held in Winnipeg

- Richardson & Sons is one of Canada's largest private businesses, with annual revenues of more than $4-billion