“I’m not looking at MacMillan Bloedel again until they’ve sorted out their act,” declares one security analyst at a Toronto brokerage house, who normally follows the unhappy Vancouver-based forest products company. His attitude is wide spread in the Canadian investment community: MacMillan Bloedel stock, long a favorite of money managers because of the large scale on which it can be traded, has slithered from $40 in 1973 to around $20 recently. Act-sorting, accordingly, is under way. Denis Timmis and George Currie, president and chairman respectively, were forced to resign in March. Now, after repeated waves of speculation about possible successors, the uncommunicative interim chairman and acting president Ernest Richardson and his board of directors are reported to be trying to focus on a select few candidates for the $200,000-plus job of president and chief executive, with some help from the consulting subsidiary of company auditors Price Waterhouse & Co., although they’re still far from a decision. An early appointment is important in order to stop the erosion of morale among MacMillan’s respected lower management. But the board must choose carefully because of the company’s startling consumption of two presidents and two chairmen in four years.
MacMillan Bloedel’s current difficulties arise from efforts it made to lessen its dependence on the boom-and-bust nature of the forest products business. As well as establishing real estate and venture capital operations, it decided to go into ship chartering. This looked to be a logical move, given an anticipated worldwide capacity shortage and the fact that MacMillan Bloedel must charter 500,000 to one million tons a year in the course of its own forest business. But it was an unmitigated disaster. The unpredictable shipping market turned stormy, and last year the company’s transportation division had losses of more than $46 million, with the promise of more to come.
Combined with the overall North American recession, this meant that MacBlo, Canada’s sixteenth largest corporation, showed its first-ever loss in 1975: nearly $ 19 million, compared to a profit of $72 million in 1974, and $81 million in 1973. Corrective action was taken as soon as the problem surfaced, including summary firings in the transportation division, 10% salary cuts for executives, and the elimination of the company’s dividend. (MacBlo is widely expected to restore its dividend shortly, however, to maintain legal qualifications for admission to the portfolios of some government-regulated institutions such as insurance companies.) Obviously, these measures did not satisfy MacBlo’s notoriously strong-willed board, which stars Ian Sinclair, 62, the chairman of Canadian Pacific Ltd., and J. V. Clyne, 74, MacMillan’s former chairman, since they insisted on the ritual sacrifice of Currie and the popular Timmis. Ironically, some critics are still unappeased and even blame Clyne himself for the company’s failure to expand sufficiently into the forestlands of the U.S. south, for the company’s allegedly noncommercial approach to some investment decisions, and for his second-guessing of management since he retired as chief executive officer in 1972.
Speculation about a new president originally centred on Ian Barclay, 55, who was then in a similar position at British Columbia Forest Products Ltd. but he has since been elevated to chairman and chief executive officer in what was seen by some as a preemptive strike by his employers. Other names discussed are Alex Hamilton, 58, president of Domtar Ltd.; Adam Zimmerman. 49, executive vice-president of Noranda Mines Ltd. and in charge of their forest product subsidiaries; and Ronald Longstaffe, 42, executive vice-president of Canadian Forest Products Ltd. Zimmerman has long been regarded as a potential king in a monarchy firmly ruled by Alf Powis, Noranda’s president; Longstaffe is married to but separated from his chairman’s daughter. It’s possible, though, that the appointment may be made from outside the intimate world of Canada’s forest industry, perhaps even from among the division heads at a big U.S. forest company such as Weyerhaeuser Co. or Boise Cascade Corp.
“It’s hard to make a company with $1.2 billion assets change direction,” says one observer dolefully. But already it’s clear
that MacBlo will be concentrating on its basic forest business, extending it geographically in the United States, and eschewing the exuberances of recent years. This strategy has been laid down by the board, which is expected to intervene more frequently in the company’s affairs even after the new president has been selected. With the exception of an expansion planned for California, there are few major issues left unresolved, which is one reason why the hunt for a new president could be so painstaking. Some West Coast brokers are still advocating the purchase of MacBlo stock, arguing that the results for the first quarter ending March 31, although showing a profit down 90%> from the previous year, in fact concealed a recovery in the company’s non-shipping business, artificially depressed by strikes and foreign currency fluctuations. Others are still unenthusiastic, partly because the crucial U.S. housing market is expanding only slowly, although there is a consensus that MacBlo will earn up to $25 million in 1976, and three times that as the economic upswing carries over into 1977. One of the company’s strongest advocates, Robert Duncan of Merrill Lynch-Royal Securities Ltd., now says that he favors buying the stock only “on a long-term basis.” MacMillan Bloedel will be bowing before the wind for some time. PETER BRIMELOW
The story you want is part of the Maclean’s Archives. To access it, log in here or sign up for your free 30-day trial.
Experience anything and everything Maclean's has ever published — over 3,500 issues and 150,000 articles, images and advertisements — since 1905. Browse on your own, or explore our curated collections and timely recommendations.WATCH THIS VIDEO for highlights of everything the Maclean's Archives has to offer.