BUSINESS

The Branch Plant That Took Root

BRUCE YOUNG June 1 1973
BUSINESS

The Branch Plant That Took Root

BRUCE YOUNG June 1 1973

The Branch Plant That Took Root

BUSINESS

BRUCE YOUNG

Quadra Manufacturing is building chain saws at the rate of 25,000 a year at its fledgling Trail, BC, plant and has finally climbed out of the red. It wouldn’t have meant much, except for the irony that British Columbia, where an entire provincial economy depends on the forest industries, was having difficulty producing its own chain saws. Quadra’s modest success — survival in this case meant success — is what can happen when a group of Canadian businessmen decide that their American head office has underrated them. That they can go it alone.

But it wasn’t mere flag-waving that prompted James Hutchinson to quit a more or less comfortable job as general manager of Power Machinery Ltd., three years ago. He was simply incensed at what he thought a stupid and wasteful and totally arbitrary decision made by his owners in Chicago, the mighty Skil Corporation.

Power Machinery Ltd. was never a high-profit company, although it did employ 140 men, and its Canadien line of chain saws was gaining respect. But according to Hutchinson, Skil had a bad year in 1970; sales of its own electric tools were down and there were layoffs in the Chicago plant. One way to cut down on layoffs affecting good American workers, the Skil executives decided, would be to transfer the struggling Canadian subsidiary down to Chicago. They’d have to absorb a few of the 140 Canadian workers who might be willing to expatriate themselves, but it would be a small price to pay.

That was when Hutchinson got a memo from Chicago instructing him, in his words, “to pick up the plant, put it in a basket and take it to Chicago.” Hutchinson refused, and quit. He admits that if he had been convinced it was a sound business decision he’d probably have done it. “I’m a businessman. If it had been desirable to leave Vancouver we'd have gone. The people in Vancouver would have deserved to have lost their jobs.” But he felt it was a bad move, merely a cynical scheme to buffer layoffs in Illinois. And when he quit his job, 11 other men — from the level of foreman up - quit too, in sympathy. They did what men everywhere do under the circumstances: they held a wake.

It was at Hutchinson’s home, and as the men drank and griped among themselves they began to realize that they were missing the point. There in that house, grieving over self-inflicted loss of jobs, was a group of men whose expertise and experience was a valuable, marketable commodity if they stuck together. It was at that instant that Quadra Manufacturing, and its Frontier chainsaw, were conceived.

Now that Quadra’s in the black, Hutchinson explains it all with engaging

simplicity. “Skil bought a loser,” he says. “We turned it into a moneymaker.” What had come from that wake in his home three years ago was the realization that “you could never replace the working relationship that had been built up. The tooling could be duplicated but not the 140 people. You build a business with people. You build the people, and then the people will build the business for you.”

The men formed a company, and agreed not to look for long-term employment, but to take only jobs that would free them on 30 days notice to join Quadra. That meant some of them took on janitorial duties and stuck with them for two years. It was important that the whole thing be done without pretense, without deceit. “BC is a small business community,” says Hutchinson, “and it pays to keep your affairs in such a way that you can view them in public.”

But there they were, with no money, no luck getting any, and an idea that really didn’t look all that attractive viewed through the cold eye of the investor. Skil did eventually move its machinery down to Chicago, of course, and they even started producing a chain saw. All Hutchinson had to offer was an idea, a group of men who had once worked together. Finally he gave up on Vancouver. Then he discovered Trail, a company town in the Kootenay country which is the only area in British Columbia that qualifies for federal regional economic development grants.

It was the Kootenay Industrial Development Association (KIDA), a public

Bruce Young is a freelance writer living in Vancouver

body sponsored by Trail area businessmen, which brought Hutchinson together with the government. KIDA had been set up with the intention of getting new industry to locate in Trail, and Hutchinson — potentially — was new industry. Ottawa approved a $176,000 grant providing KIDA and Hutchinson could raise another $225,000 and KIDA’s go-getters went to work. Some 250 "Trail citizens, in the next few months, acquired $225,000 worth of shares, at $500 each, for a 45% interest in the firm. Long-term non-equity financing was arranged through the Kootenay CreditUnion. Businessmen bailed Hutchinson out at one point with a straight loan of several thousand dollars. “They just gave it to me,” says Hutchinson. "I had full control of the money — I could have taken off to Bermuda. I could have gone anywhere. There were no legal agreements — just handshakes.”

By March, 1972, it was time to break ground for the new plant. The tooling program was in its final stages in Vancouver and it was time to get into production. There were more problems during the building of the plant but these, too, were resolved: suppliers extended unheard of lines of credit. One corporation even loaned executives from time to time.

All of this means that it’s nice if a community is behind you in business, and Trail was certainly behind the Quadra venture. Comineo had turned Trail into a factory town of 13,000, with a captive labor force that couldn’t grow. Production has been automated over the past decade, meaning loss of jobs by attrition: when men died or retired they simply weren’t replaced. Employment dropped by close to 1,000, leaving 2,900 employees still with Comineo. The young were leaving town. The town seemed doomed to shrink.

Quadra employs only 55 (including 10 of the original 11) and it has brought badly needed diversification. Mayor Francis “Buddy” DeVito, the town shoemaker, explains that “we don't want to become another Kamloops.” In other words, diversification, not the type of boom-or-bust growth another primary industry might bring.

What does it all mean? All that fuss and financing over a six-and-a-half pound chain saw that isn't big enough to cut down a respectable BC fir?

Well, for a start it means 55 men are working at jobs they themselves created. But beyond that is the lesson they learned about foreign ownership: it isn’t infallible, and it isn’t unbeatable. That we can buy Canada back from the Americans but that the decisions which make it possible will be made not in Washington, New York or Boston — but in Ottawa, Toronto, and Trail. ■