Cliff Hatch Jr. weaves his Mercedes in and out of London traffic snarls. It seems like a million miles away from Walkerville, Ont., where he and his family lived just a year ago when Hatch was named chief financial officer of Britain’s 21st-largest corporation, Allied-Lyons PLC. Now Hatch lives in London, working in the low-rise world headquarters of Allied, which in 1986 gobbled up part of one of Canada’s greatest multinationals, Hiram Walker Resources Ltd., built by Hatch’s family. Hatch now functions as a private-sector chancellor of the exchequer over Allied’s sprawling empire, with annual sales of $10 billion—greater than the combined annual tax revenues of Canada’s four Atlantic provinces.
Allied is pure British Establishment. Its chairman, Sir Derrick HoldenBrown, is a member of Margaret Thatcher’s inner circle. Annual report photographs are by Lord Snowdon, Princess Margaret’s former husband. From within such a rarefied atmosphere, Hatch is uniquely suited, as a major player in the world’s foremost financial capital—and one who has lived in five different countries—to comment on Canada’s economic future.
He appears to be a worried man. “Canada has real problems,” he said. “We have been very successful at creating a fair and good society. But things have changed, and no one owes Canada a living. We have been a nation of real estate speculators for 100 years, sitting on a land mass which contained things the world wanted: trees, oil, copper and natural gas. Now there are alternative suppliers, and we still have this concept that we don’t have to work very hard.” Hatch is right when he says that the political debate in Canada concerning economic issues has centred on naive notions about our place in the world. He vehemently agrees with the idea that we must enter a free trade deal with the United States because, he said, “for better or worse, Canada is dependent upon the United States.” He also agrees with the Europeans who are upset with Canada’s discriminatory restrictions against wine and beer from abroad.
Hatch says that he even disagrees with Canada’s past policy of foreign ownership restrictions—even though the loosening of them by the Tories in 1985 made it that much easier for Allied to take over Hiram Walker’s distillery operations. “We built Hiram Walker into
a major world-scale corporation, and I think it is very sad that it is no longer Canadian-owned,” said Hatch. “But that is the world in which we live.”
The Hatches had been in charge of Hiram Walker ever since Prohibition, when Hatch’s grandfather and greatuncle began running booze to the U.S. border (“We were in the import-export business,” he said with a wink and a smile). His father, also named Cliff and now 72, built the business into a multinational out of a modest head office in Walkerville. Along the way, Hiram Walker joined forces with Home Oil Co. Ltd., The Consumers’ Gas Co. Ltd. and Interprovincial Pipe Line Ltd. to form a gigantic conglomerate.
Ironically, Hiram Walker fell into foreign hands as a result of a sneak takeover attack by Toronto’s Reichmann brothers. The besieged team at Hiram Walker brought Allied in as a bidder because Allied was willing to pay con-
With its protectionist policies, Canada cannot expect its products to be welcomed in other countries with open arms
siderably more than the brothers. What ensued was a bitter battle of words and writs that lasted for months. “If the Reichmanns had walked in on Day 1 with a bid of $40 a share instead of $32, the board of directors would have had a lot of trouble dealing with that,” Hatch said. “As it was, we had only 11 days to respond to the Reichmanns.” He added: “We needed more time. If we had gotten it, we had a strategic plan to expand to another area—and would have become too large to take over.”
But things turned out fine anyway. “Canadian shareholders got another $1 billion than they would have got,” Hatch said proudly. The Reichmanns ended up getting Home Oil and Consumers’ Gas, plus 49 per cent of the distillery operations. Allied-Lyons got 51 per cent, and last November the Reichmanns agreed to swap their 49-per-cent stake for $472 million and 10 per cent of Allied-Lyons itself, becoming its largest single shareholder. The brothers agreed to limit their interest to that percentage and to remain off Allied’s board of directors for at least five years. “It is in our joint interests to get along with one
another, and there is a great deal of mutual respect,” Hatch said.
As a director and as one of Allied’s five key officers, Hatch is now one of the most successful Canadians in Britain. (Among the others making equally high-profile marks are the Reichmanns, through their multibillion-dollar Canary Wharf project near downtown London, and Conrad Black, who has turned around the once-faltering Daily Telegraph, Britain’s biggest-circulation broadsheet newspaper.)
Hatch says that Canadians would do well to take note of the changes that have taken place in the old country. “It is little short of a revolution,” he said. “Margaret Thatcher has changed the attitude of the British toward themselves. Twenty years before, the chat among people was that the country was going to the dogs. Now, whether it’s from waitresses or businessmen, you don’t hear that negativity anymore. And that is important.”
Meanwhile, though, Hatch says that Canadians remain smug. “They tend to think that the British are lazy, but they are not,” he said. “They are extremely hardworking and very disciplined.” Canadians are also smug when it comes to weighing up rivals. The Europeans are no longer hoodwinked by Canada’s discriminatory provincial taxes on imported beer and wine, which make the prices artificially high in comparison with Canadian products. This year GATT (the General Agreement on Tariffs and Trade) condemned our practices and asked that we make changes by the end of the year—or face retaliation. And rightly so. “I am astounded that we got away with the beer and wine thing as long as we did,” Hatch said. “I think Canadians sometimes operate under the assumption that the Americans or the Europeans are stupid.”
No one would argue with Canada’s right to establish any policies it wants, including ones designed to keep others out of our boardrooms and markets. But Canada cannot expect its tycoons or products to be welcomed elsewhere with open arms. Our interview finished, Hatch drove off to what he calls his “shockingly overpriced” Hampstead Heath home. His career symbolizes how the world has changed. Much as this scion of the Canadian Establishment would have liked to have continued running an empire out of inexpensive and uncongested Walkerville, it simply wasn’t in the cards. He adapted—and so must Canada.
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