BC Business
Can entrepreneurism succeed in B.C.’s hinterland where big government and big resource companies have failed?
Once in a while, someone literally crashes into a business opportunity. That’s what happened to Tom Teichroeb when he glanced a rock cut with his blade while grading road on the outskirts of Vanderhoof. In the process, an exquisite rock slab calved away from the cut and landed in the ditch. Intrigued, he backed up and tried to replicate the effort, resulting in another slab of almost equal dimensions. His mother had recently passed on and the family was pondering an appropriate memorial, so he decided to truck the rough-cut slabs to his backyard workshop and try his hand at engraving.
“Something inside me just said that I should give this a try,” says the plainspoken 57-year-old, who was born and raised in Vanderhoof and has lived in this community 95 kilometres west of Prince George his entire life. Teichroeb’s amateur attempt 15 years ago at headstone engraving proved successful and, in typical hard-working Mennonite fashion, a business was born. “It just started to spread, word of mouth. At first it was about eight headstones a year – now I do that in a week,” says Teichroeb, who subsequently hung up the keys to his grader and now runs Northern Monumental Ltd. with his wife and one of five sons, producing thousands of different headstone designs.
Teichroeb’s is a small and unconventional business success story in a part of B.C. accustomed to economic fortunes and failures of spectacular proportions. Indeed, big is traditionally what sells in central and northern B.C. Prince George has its outlandishly towering peg-legged Mr. PG, Mackenzie boasts the “world’s largest tree crusher” and Houston touts a giant fly fishing rod. Everything around here is monumental: the sky, the landscape, the dreams as well as the problems. There was a time not so long ago when it seemed the green gold of the vast Interior lodgepole pine and spruce forests would fuel the good times forever. But a little creature called Dendroctonus ponderosae – the mountain pine beetle – coupled with the recent collapse of the U.S. housing market has quickly put the lie to that delusion; by the B.C. Ministry of Forest and Ranges’ own estimates, the beetle alone could reduce the output of the traditional Interior forest industry by as much as 40 per cent over the next 25 years. Last year alone not one, not two, but four forest mills closed in Mackenzie, evaporating 90 per cent of the town’s high-paying manufacturing employment base, while Fort St. James, north of Vanderhoof, lost two mills in 2008, leaving more than 100 workers unemployed. [pagebreak]The regional population statistics are telling. Between 2002 and 2007, the population of the so-called Nechako Development Region – to which towns such as Fort St. James, Vanderhoof, Burns Lake and Houston belong – dipped by 3.2 per cent while, over the same time period, the provincial population grew by 6.4 per cent; a collapsing forestry sector is largely to blame. And then, just as people started looking to mining and mineral exploration as a potential salve, the worldwide economic crisis broke out. Even before the meltdown, in 2007, Nova Gold and Teck Cominco pulled the plug on their Galore Creek copper-gold property in Stikine River country, citing construction costs that had ballooned from $2 billion to $5 billion. In November Western Canadian Coal Corp. suspended operations at the Willow Creek Mine near Chetwynd because of sagging demand for metallurgical coal, putting close to 100 people out of work. With the big boys of raw resources no longer galloping to the region’s rescue, northern government and business leaders are scrambling for ways to build a sustainable and diversified economy.
As I fly into the Prince George airport, the devastation is immediately apparent. The rolling central Interior plateau unfolds below in a shocking quilt of moonscape clearcuts, interlaced with swaths of yet-unharvested timber rendered crimson by the ceaseless work of the mountain pine beetle. This is the self-proclaimed “hub of the north” and the place I’ve come to meet Janine North, CEO of Northern Development Initiative Trust Inc. (NDI) – an economic development corporation formed by the Gordon Campbell government in 2005.
The NDI office sits on 5th Avenue in Prince George’s downtown of low-rise buildings, where numerous vacant storefronts stare hollow-eyed at the street. While the city of 70,000 has undoubtedly seen better days, Prince George’s economic spokes reach out to some 40 communities that, while representing only nine per cent of B.C.’s population, are still responsible for an estimated 30 per cent of the province’s exports. With an initial budget of $135 million, drawn from the proceeds of leasing B.C. Rail assets (the budget is now closer to $200 million), NDI’s explicit goal is to diversify the fragile resource-based economies of central and northern B.C.
North points to a skilled workforce, low energy costs, bargain basement prices for serviced industrial land (less than 10 per cent of the Lower Mainland’s cost per acre, according to NDI) as well as a new spirit of co-operation between native and non-native people – as shown in the 2006 Haisla First Nation-Kitimat LNG Inc. deal to build a $500-million liquid natural gas import and regasification port facility in Kitimat – as key selling points for the region. Since its inception, NDI has been busy, investing $42 million in a range of transportation, tourism, community infrastructure, industry and small business projects from 100 Mile House north to Chetwynd and McBride west to Kitimat (including $11 million in loans to the Prince George Airport Authority as part of a $36-million plan to turn the terminal into an air-freight logistics hub). North says she expects the trust to have contributed $250 million toward some $2 billion in new economic investment by 2020, with the creation of 10,000 new jobs. “Business creates jobs, not communities,” says North, who has lived and worked for 27 years in the B.C. Interior.
Which is not to say NDI isn’t trying to create jobs. The organization has opened its chequebook and contrived numerous schemes to stimulate business and investment, but the success thus far is quite limited. The Capital Investment and Training Incentive Rebate, for instance – which offers up a $10,000-per-employee rebate for eligible companies – has so far assisted three companies: DelTech Manufacturing Inc., which makes biomass energy systems for the forest sector and will receive $120,000 for spending $131,000 in training; Asia Canada Forest Products, which will be cashing a $300,000 cheque from NDI because of its promise to modernize and add a second shift to its sawmill; and Conifex Ltd., a new player in the B.C. forest sector that scooped the Fort St. James sawmilling assets of bankrupt Pope and Talbot last September for $12.8 million and will receive a rebate for an undisclosed amount. [pagebreak]Success on the First Nations front is similarly muted. A little over a year ago, the Tsay Keh Dene helped to quash Northgate Minerals’ plans for a massive copper-gold mine in remote wilderness 400 kilometres northwest of Prince George, while David Luggi, tribal chief of the Carrier Sekani Tribal Council, says his people remain vigorously opposed to the federal-provincial review process for Enbridge Inc.’s controversial Northern Gateway proposal, which would see twin pipelines linking Edmonton and Kitimat and passing through the heart of Carrier-Sekani territory. Kitimat LNG has also readjusted its construction schedule from a definite start date of 2007 to a very tentative 2010 groundbreaking.
North and the folks at NDI, despite the small-is-beautiful focus of many of their programs, are clearly still holding out hope for a few massive resource projects to inject high-paying jobs and dollars into the economy, such as the $4-billion-plus Northern Gateway pipeline and GeoScience BC’s $5-million ongoing exploration of oil and gas potential in the Nechako Basin (with an estimated, but unproven, reserve of nine trillion cubic feet of gas and five billion barrels of oil). Terrane Metals Corp.’s proposed Mount Milligan gold mine, some 95 kilometres west of Mackenzie, is another hopeful on the horizon. But Terrane, which hopes to create 700 short-term jobs and 400 full-time positions once Mount Milligan is up and running, still has to plod through environmental reviews. And even if Mount Milligan gets the green light, there is looming anxiety over financing, with a massive $900 million initial capital outlay required to get things started. “Of course we’re worried. There’s a capital crisis in the world right now,” says Glen Wonders, Terrane’s vice-president of corporate affairs and sustainability.
Indeed, in the current economic climate, few projects are expected to get off the ground any time soon, as investors have become increasingly cagey. As for publicly funded schemes such as those cooked up by NDI or the Omineca Beetle Action Coalition (a regional economic think tank that’s cashed more than $2 million in government cheques since 2005), it remains unclear what their long-term success is – and whether, with declining budget surpluses, they will continue to be considered a sound investment of taxpayer dollars.
With all this in mind, I decide to head next to Vanderhoof – a town in the heart of the pine-beetle-ravaged Nechako Valley with an abiding entrepreneurial spirit – to see how the private sector has responded to current economic challenges.
Vanderhoof, with a population of roughly 5,000, is home of Tom Teichroeb, the self-starting tombstone engraver – as well as another never-say-die entrepreneur and community booster who I meet, Len Fox. Fox first came to Vanderhoof in 1964 to play hockey and never left. Over the years, he has owned three Ford dealerships in town, helped to run a local trucking company and is now general manager of Premium Pellet Ltd., a firm that transforms sawdust once destined for beehive burners into wood fibre pellets for stoves. He has devoted the better part of 31 years to public life, including seven years as a Socred MLA and 17 years as the town’s mayor – a tenure that concluded last November when the 66-year-old decided to step aside and make room for new blood.
As Fox looks forward to a life outside of politics, he hands off a busy mandate to the new mayor and council, including a number of projects partially funded by NDI (including $480,000 toward a $1.6-million airport upgrade and $340,000 into the development of a new soccer pitch and running track). But even Fox, the seasoned politician, places more faith in small entrepreneurship these days than megaprojects and government-subsidized programs. “If anybody is banking on that big smelter and mill coming to town, those days are practically gone,” Fox says from his office at the Premium Pellet plant.[pagebreak]One quality that Vanderhoof has in its favour, unlike Mackenzie and Fort St. James, which are nearly 100 per cent forestry dependent, is a small but relatively diverse economic foundation. That foundation includes boutique operations such as Teichroeb’s tombstone start-up, medium-sized enterprises such as Premium Pellet Ltd. and larger homegrown enterprises such as the BID Group of Companies. While logging and milling are still undeniably important – Fox estimates that the Vanderhoof Forest District directs $85 million in stumpage fees to provincial coffers annually – these local businesses, as well as a small cattle ranching and grain farming industry that has grown since the 1970s, have helped smooth the volatile swings of the forestry sector.
Premium Pellet was founded in 1998 – a joint venture between Nechako Lumber Co. Ltd. and L&M Lumber aimed at capitalizing on the growing demand for cleaner-burning wood pellets. In 2007 the company produced 125,000 tonnes of wood pellets, with more than 90 per cent of that destined for Europe. “In the last four years, we have been concentrating more on the North American market,” Fox says. He estimates that the company sold around 40,000 tonnes into the U.S. and Canadian market in 2008.
The BID Group of Companies is another local bright spot. Brothers Brian and David Fehr, along with father Ike, launched a construction company in 1983 that specialized in sawmills and large industrial plants. Today the BID Group boasts a stable of six companies, including manufacturing plants in Vanderhoof and Prince George, an equipment rental company and several construction divisions. With anywhere from 220 to 300 employees on the payroll at any one time, the BID Group does roughly $70-million worth of business annually. CEO Brian Fehr doesn’t suffer doomsayers easily.
“I’m tired of the negativity. I think hustling and hard work, as well as having some very good people on staff, has been the key to our success,” says Fehr by cellphone, while dashing between business meetings in Prince George. “It’s definitely pretty tough in some of these towns like Mackenzie – it’s absolutely dead there right now. But honestly, I still see business opportunities around every corner.”
It was while poking around one of these corners that Fehr spotted a chance to purchase Prince George-based DelTech Manufacturing and expand the BID Group’s roster into the burgeoning biomass energy sector. Currently, BID’s construction and energy systems crews are collaborating on a $14-million energy retrofit of Canfor’s Fort St. John dimension lumber mill, which will see the mill reduce its reliance on fossil fuels and lower costs by converting wood waste into thermal energy for heating lumber kilns, board presses and buildings. The BID Group also plans to build a new facility in Prince George to construct boilers for DelTech’s thermal energy systems, a component the firm currently imports from Germany or Atlanta. As Fehr sees it, BID Group’s lateral expansion into biomass energy is a natural progression for the company – and a tremendous opportunity for future growth.
Back at Len Fox’s office, the former mayor shares Fehr’s optimism for both Vanderhoof and the north: “A positive attitude driven by entrepreneurs – that’s what will enable these towns to survive economic change.”
And economic times do change. It was only 40 years ago that we couldn’t be bothered to salvage the forests flooded by the W.A.C. Bennett dam on the mighty Peace River, sending a tree crusher out to do its dirty work instead. As institutions such as NDI dream up monetary incentives to lure companies north or encourage existing ones to stay and expand, it will be the unsung spirit and industriousness of entrepreneurs such as Brian Fehr – seizing the wasted thermal energy potential of an anachronistic beehive burner – or citizens like Tom Teichroeb – quietly chipping away at headstones for a growing (or, in his case, dying) market – that will prove the bedrock of a community.