It was an emotional appeal from a distraught father. The three confidential letters, personally typed on beige manila paper, expressed the frustration and disillusionment of Alfred J. Billes, the 84-year-old cofounder of Canadian Tire Corp. Ltd. (CTC). The letters were hand-delivered late last week to each of his children—Alfred William, David George and Martha Gardiner Billes.
The entreaties represented a final and desperate attempt by Alfred J. Billes, better known as A.J., to convince his children not to relinquish control of the company he helped to found 64 years ago.
That the appeals were delivered in letters underlined the strain on the Billes family ties that has been generated by a months-long power struggle for the giant Canadian retail institution. The pressure was mounting when the family members gathered six weeks ago in A.J.’s North Toronto apartment.
That meeting, initiated by the eldest Billes, quickly degenerated into a verbal brawl and ended abruptly when Martha stormed out of the apartment. Since then, with the exception of a few curt words exchanged in the news media, the family members have maintained an icy detachment from one another.
Cut: Their dispute hinges on the children’s decision to sell their 60.9-per-cent controlling interest in CTC and their father’s desperate attempts to keep the firm within the family. The younger Billeses decided to cut their links to the $2-billion hardware and automotive goods firm and sell out to 348 of the independent owner-dealers who run Canadian Tire retail stores. A.J., who first learned about his children’s plan through the corporate grapevine last fall, says that he is furious with them. During a lengthy interview in his Toronto CTC office, A.J. told Maclean's that his children were not selling for sound financial reasons. Rather, they were attempting to resolve irreconcilable differences be-
tween Alfred and Martha over how CTC should be managed. “I am disappointed,” said the family patriarch. “I expected more of them.”
A.J. cofounded the company with his older brother, John William Billes, in 1922, with $1,800 in savings. The two men had shared responsibility for the firm since its beginnings as an automobile service garage and
parts store on Hamilton Street in Toronto. John William was the financial brains behind the company, then known as Hamilton Tire and Rubber Co. In his cramped corner office above the store, John William often worked until late at night while the younger A.J. worked in the garage below. By the time the company was incorporated as CTC in 1927, A.J. said, “We were really quite wealthy. But we were greedy.”
That greed fuelled the Billes’s expansion. They moved to nearby Hamilton during the 1930s Depression. It
was during that time that the brothers developed what A.J. describes as “a bad-boy reputation” by selling tires and automotive equipment at deep discounts. “We could have made a barrel in those days,” said A.J. “But we felt that a normal profit was all we wanted. It wasn’t because we wanted to be good guys but because it was longheaded.”
But perhaps the main reason for the Billes brothers’ success was the trust and respect they developed from the company’s owner-dealers. Dealer Arnold Leslie, who with 40 years experience is CTC’s longestserving store operator, told Maclean's that John William signed a $10,000 promissory note for him to help raise the initial capital for his dealership in Amherst, N.S. Said Leslie: “We were never intimate, although I had an awful lot of respect for them.”
Although the brothers maintained
good relations with the dealers, relations within their families have often been argumentative during the 30 years since John William’s death in 1956. Although John William bequeathed his CTC stock to a trust that was established to benefit a group of 23 Toronto-based charities, his son, Alfred Dickson, exercised his father’s voting rights and assumed that he would inherit the company presidency. And A.J. alleges that while he was away on a vacation in the Caribbean following his brother’s death, his nephew tried to impose his will on the company by acting as president. The two men confronted each other in a stormy meeting which ended with Alfred Dickson —now 58 and a Canadian Tire store owner in Scarborough, Ont. —leaving the company. But Alfred Dickson told Maclean's that he was vice-president of the company and was supposed to fill in when A.J. was unavailable. He left the company in early 1961, he explained, because “I just got fed up with [A.J.].”
Load: The next 10 years were prosperous for the company but physically debilitating for A.J. During that time, CTC expanded into Quebec while solidifying its dominant position in Ontario’s automotive parts industry. But as the company expanded, the burden of A.J.’s family commitments proved to be overwhelming. He and his brother had been supporting their mother and three sisters after their father died in 1913. After 1956 that burden
fell squarely on A.J.’s shoulders, and at the same time he was also providing for his three children and his first wife, Muriel. But the load grew too heavy and he stepped down as company president in 1966. A.J. passed the reins of power to Dean Muncaster, the son of a Sudbury-based CTC dealer, who was then vice-president. During Muncaster’s tenure as president, CTC continued to reap handsome profits in Canada. But he spearheaded abortive expansion efforts into Australia and Texas and was unceremoniously dismissed from his post in June, 1985.
Influence: Still, even after Muncaster’s departure, A.J. did not return. But the Billes children—who in 1983 inherited what had been their father’s 30-per-cent interest in the company from his mother and his two sisters —now began to exert their
influence. A.J. had given the shares to his mother and two of his sisters who had no other source of income so that they could live off the earnings. When they died, the shares were bequeathed to Alfred, David and Martha. But, said A.J., “those shares were never given to them to cash in but to run the business. They have no right to take the money and run.”
While industry analysts said that they thought A.J.’s influence over the company had waned, he dramatically reasserted himself during a takeover bid by Montreal-based Imasco Ltd. in 1983. At the time, he mounted a defence to ward off the $1.1-billion offer for the charities’ shares. He brought the family together and convinced them not to sell out to Imasco.
A former Imasco executive told Maclean's that the cofounder played a pivotal role in the deal. “We didn’t give enough weight to his importance,” the former executive said. “He wanted control to stay in the Billes family and he didn’t want any of his kids participating in the Imasco offer.”
Also in 1983, the children increased their CTC votingstock interest to almost 61 per cent when they purchased their late uncle’s charitable bequest—a sale instigated by the charities—by outbidding their cousin, Alfred Dickson. After that A.J.’s three children played varying and sometimes conflicting roles in the company. The eldest, Alfred William, also owns CTC’s flagship store on Toronto’s Yonge Street. Martha lives in Calgary with her husband and son and is the president of Albikin Management Inc., an investment holding company. David lives in Barrie, 100 km north of Toronto, with his wife and three children and is the president of Performance Engineering Ltd. in that city.
Despite their divergent interests, A.J. blames much of the current problems on personality conflicts among his children. He said that Martha, whom he referred to as “always being a little red-headed devil,” has fixed ideas about the way she wants the company to operate. He added that Alfred William insists that he • ■ • • is the most experienced because he has been involved with CTC as a manager and dealer. According to A.J., David is somewhere in the middle, and has in the past preferred to dodge the management disputes. Said A.J.: “This business doesn’t interest him one bit.”
Still, the dispute about the future of the Toronto-based retail goliath heightened last week when the Ontario and Quebec securities commissions blocked the dealers’ bid to buy control of the company. A.J. said that despite the rebuff from the commissions—and his letters to his children —he does not hold out much hope that they will change their minds about selling control of the family firm eventually. Said a rueful A.J.: “Legally they have the right to sell, but morally they do not.”
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