BC Business
THE BUILDER Amar Doman
THE SCRAPPER David Yochlowitz
THE TECHNICIAN Glenda Dorchak
THE HEAVYWEIGHTT Douglas Whitehead
stories by Peter Mitham photography by Phillip Chin THE HEAVYWEIGHT Douglas Whitehead, president and CEO, Finning International Inc. Finning International Inc. boss Doug Whitehead has spent a lifetime in the forest industry. He entered the sector in 1971, joining what would become Fletcher Challenge Canada Ltd. He took the helm of the company in 1992 and, for the next six years, guided the company through an era of low pulp prices, an ambitious restructuring and a rancorous strike. The importance of keeping close tabs on company finances is just one of the many lessons that stayed with him when he joined Finning in January 1999. “The forest industry is an extremely tough industry. It really sharpens your skills. There’s not much room for error,” says Whitehead, 60. “To be successful, you’ve really got to be a good executive.” The experience was good preparation for Finning, a heavy-equipment reseller that deals exclusively in Caterpillar equipment. The forest industry was one of Finning’s major markets, and Whitehead’s familiarity with its troubles gave him a strong grasp of how to negotiate the challenges confronting the company. “Coming to Finning, I understood intimately the problems and issues faced by one major customer segment, the forest industry, and that was very helpful.” When Whitehead joined Finning in 1999 as president and COO (he became CEO the following year), a tide of cheap equipment was flooding North America as a consequence of the economic downturn in Asia. New equipment was difficult to sell, and the inventory that did move was facing stiff price competition from used items. “We were in a downturn, so those survival skills I learned in the forest industry were put to good use,” Whitehead says. Today Finning’s challenge is not finding customers for its equipment but just the opposite: supplying a heated market. Diversification has reduced Finning’s reliance on forestry and boosted its presence in the mining and oil-and-gas sectors, and these industries are experiencing a boom that is testing the ability of Caterpillar to keep up with demand. “We can’t get enough equipment out of Caterpillar to meet the customers’ demands,” Whitehead says. “Things are so red hot, we can’t get enough people, we can’t get enough equipment, we can’t get enough parts. We’re unable to meet our customers’ needs.” Finning’s revenues soared to more than $5 billion last year, and profits hit $240.7 million, a 47-per-cent increase over the previous year. But Whitehead knows competition is fierce. Unless Finning can deliver, it stands to lose market share to distributors of Volvo, John Deere and Komatsu equipment, all of which are competing in the same sector. To address the challenge, Finning is tapping used equipment and even renting items to serve clients. It is also rebuilding components rather than ordering new ones. In 2005 it built a 250,000-square-foot remanufacturing facility in Edmonton to serve clients in the northern Alberta oil sands, one of the two main areas driving its growth. BIGGEST CHALLENGE Securing enough equipment from Caterpillar to supply a heated market. WHAT TO WATCH An expansion into remanufacturing is helping Finning address a shortage of equipment. THE TECHNICIAN Glenda Dorchak, chair and CEO, Intrinsyc Software International Inc. Glenda Dorchak has come full circle. Born in Vancouver, the 50-year-old board chair and CEO of Vancouver-based Intrinsyc Software International Inc. began her career with IBM Canada in 1974, providing administrative and business support in the company’s Vancouver offices. Rising through the ranks, she steadily acquired the executive experience that led her to Charlottesville, Virginia-based online retailer Value America, whose spectacular rise and fall became emblematic of the dot-com boom and bust. Backed by financiers including Sam Belzberg and Paul Allen, Value America racked up revenues of US$182.6 million in 1999 before its demise a year later, which saw the sale of its assets to Merisel Inc. Dorchak became president of the company in 1998 and CEO in the following year, charged with the grim task of overseeing its final days. Dorchak’s role in Value America’s development won her a place beside Amazon.com Inc.’s Jeff Bezos in trade magazine Computer Reseller News’s list of the top 25 executives of the new millennium in 1999. “It was a wonderful personal experience for me,” says Dorchak. Dorchak’s work with Value America introduced her to Intel Corp., and the company subsequently hired her to lead its communications group. She moved to California in 2001, where she still lives. (She also maintains an apartment in Vancouver, where she has spent much time of late.) While at Intel, she became reacquainted with Vince Schiralli, a former IBM colleague who was then serving as president and CEO of Intrinsyc. An appointment to the board of Intrinsyc followed in 2004, and two years later she succeeded Schiralli as CEO. Last year’s appointment came as Intrinsyc was about to launch its Soleus software plat-form for mobile handsets. Dorchak’s experience with start-ups was considered critical in helping Intrinsyc evolve from what Dorchak describes as “an unprofitable engineering services business” to a software company with strong profit potential. “The company has the raw assets to sell, but has not got the international business experience to know how to sell to companies like Toshiba or Sony,” Dorchak notes. The release of Intrinsyc’s Soleus software in November 2006 was followed by a design contract in March 2007 with a major cell-phone manufacturer. Dorchak is reticent to give details, but notes that the buyer ranks among the industry’s major players. The deal has stirred high hopes for the future. “With the trend toward wireless devices, it’s got a huge market opportunity in hand-held consumer software platforms,” Dorchak predicts. “The biggest challenge facing the sector is to deal with the increased pace of the deployment of wireless technology and continue to hit consumer price points.” Though Intrinsyc lost $16.4 million last year, more than three times the $4.9-million loss posted in 2005, Dorchak is confident that Intrinsyc stands to reap healthy rewards as it works to meet the wireless sector’s demands. BIGGEST CHALLENGE Developing an international market for Intrinsyc’s software. WHAT TO WATCH Analysts say Dorchak’s expertise with tech start-ups bodes well for Intrinsyc’s future. THE SCRAPPER David Yochlowitz, CEO, ABC Recyling Ltd. Three generations on, ABC Recycling Ltd. continues to grow. It almost wasn’t so. When David Yochlowitz, 41, joined the family scrap-metal business in 1988, it was dogged by significant debt and poor management. Armed with a management diploma from the B.C. Institute of Technology and a sense of purpose, Yochlowitz swung into action. High interest rates, slack prices and fierce competition during the early 1980s had nearly pushed ABC into bankruptcy, but Yochlowitz’s business training helped the company turn around. Beginning in purchasing and sales, Yochlowitz learned the ropes and identified what ABC needed to do to thrive. “When I entered in ’88, we started to become a little more conservative,” he says. “We decided to pay off all of our debt and up till now we’ve been expanding only using reinvestment from our own profits.” Promoted to general manager in 1991 and CEO in 1998, Yochlowitz brought in outside expertise and began promoting from within the company. Staff were given more input into ABC’s operations and autonomy to run their areas of the business. Accountability measures ensured that people took responsibility for their decisions. The changes transformed the scrap-metal business Yochlowitz’s grandfather Daniel Yochlowitz had founded to buy and sell products for resale into a global player shipping scrap metal into Asia, where metals are in demand among manufacturers and builders. Building on his father Harold’s work, Yochlowitz has cultivated relationships with strategic partners and added non-ferrous metals such as copper and aluminum to ABC ’s offerings. Today ABC buys metals from across Western Canada as well as a small volume from the U.S. The metals are sorted at five facilities in B.C. and shipped to smelters and foundries across North America and Asia for transformation into items such as construction products and components for consumer electronics. Last year ABC’s revenues rose to $225 million, a 73-per-cent increase over 2005. And while complete financials for the privately held company aren’t disclosed, Yochlowitz proudly notes that ABC remains profitable. Yochlowitz’s reforms to ABC’s management have made him keenly aware of the importance of hiring the right people to steer the company, not an easy task in a booming economy beset by a shortage of skilled workers – even harder in an industry without a lot of glamour. More diversification is on the books, as is expansion of ABC’s markets. Rather than rest on the strength of its two biggest markets – the U.S. and China – ABC is scouting emerging low-cost manufacturing locales such as Vietnam, to whom it can supply metals. “We don’t want to be reliant on just a couple of markets,” Yochlowitz says. Nor is Yochlowitz content to stick with metals. Building on ABC’s connections, he wants to tap post-consumer waste for other products that are in high demand. Yochlowitz is coy but mentions plastics, and he says that’s the kind of alternative he envisions. BIGGEST CHALLENGE Appointing skilled managers to guide future expansion. WHAT TO WATCH Yochlowitz plans further diversification into products other than metals. THE BUILDER Amar Doman, president and CEO, Futura Corp. The Doman name is well known in the B.C. forest sector, but Amar Doman isn’t letting the family’s accomplishments grow old. With global competition and the mountain pine beetle putting the lean on the industry, the nephew of lumber baron Herb Doman is eyeing a future beyond forestry. Since completing high school in 1988, Amar Doman has steadily cultivated a stable of businesses that position him as a major supplier of building products to North America’s booming construction and renovations sector. Now 36, Doman got his start remanufacturing lumber for export. That first venture was the base for a string of acquisitions that led to the formation of Futura Corp. in 1999. More acquisitions followed, a dozen in all since 1988. The most important was Doman’s purchase, through CanWel Building Materials Ltd. (in which Futura holds a 40-per-cent stake), of the Sodisco-Howden Group Inc. in 2004. That acquisition drove Futura’s revenues above $1 billion and, more important, reduced its reliance on forest products. Overnight the company became a distributor of 40,000 hardware and other non-wood products. In the late 1990s, three-quarters of Futura’s revenues were from wood products. Now wood products make up just 30 per cent of the company’s takings. Doman is single, dedicating himself to growing his business. “We really want to remain focused in our building-materials sector. We just have a natural passion to keep growing it as long and as large as we can,” he says. But there are challenges, the biggest of which is downward pressure on pricing. Ready supplies of cheaply manufactured building products from Asia, a downturn in the U.S. housing market and the rush to rescue lumber from forests ravaged by the mountain pine beetle have conspired to lower prices and squeeze the margins of distributors. Doman says his biggest challenge is keeping business and investment costs low in order to compete on a global scale. “To address that, what we’re doing is trying to improve and grow our import programs in our distribution companies and explore manufacturing and production of certain product lines offshore, particularly China,” he says. Diversification away from wood products has definitely helped Futura survive, Doman says. He has less optimism when it comes to the local lumber industry. While he supports local producers, he sees a dark future for them. “B.C. is a high-cost zone for lumber production and plywood production, so I believe, longer-term, it’s more of a sunset business in B.C. than it is a growth business,” he says. Having said that, he does see growth opportunities for his own business. The downturn in the U.S. housing sector is creating the conditions for Futura to acquire companies south of the border. “We’re studying the U.S. very closely right now as valuations start to drop. That’s when we start to get excited,” he says, suggesting a deal could happen within 18 months. BIGGEST CHALLENGE Keeping product costs in line with those of the global competition. WHAT TO WATCH Doman is targeting U.S. companies for acquisition and is outsourcing production to China. RELATED STORIES: A View from the Top Mineral Explosion Missing in Action