2003 business of the year: Brandt Group of Companies.

TWO YEARS AGO, WHEN WE FIRST CAME UP with the idea of saluting a Saskatchewan business which exemplifies the best characteristics as a model for others to follow, little did we know how much of a challenge this would he. Not because of the lack of qualified candidates, however, but rather, to select just one. This year, though, once all was said and done, we were able to find a company that blazed a path that made it difficult for even the highest and most competent of companies to keep up to.

Brandt Group of Companies, based in Regina, has earned the distinction of Saskatchewan Business Magazine's 2003 Business of the Year by contributing to our province in the criteria set forth by our panel of judges. This criteria states the SBM Business of the Year must have a proficient track record, must have experienced an outstanding turn of events in the current year, must be innovative, well-respected and as important as anything else, must be a good, benevolent corporate citizen.

Using each successive criteria as a barometer, Brandt began to leave other Saskatchewan companies in its wake. Therefore, as difficult as the decision was in its initial stages, it soon became quite evident who the dear-cut winner was. As such, we salute the Brandt Group of Companies as the 2003 Saskatchewan Business Magazine Business of the Year.

Though proud of its history, which began in 1932 by electrical contractor Abram Peter Brandt, the company of today holds little or no likeness to its predecessor. Brandt's founder passed away in 1957, at which time he left the company to his family. It remained largely this way, as a multi-shareholder package, until a young, competent, ambitious and visionary salesman by the name of Gavin Semple came to work for Brandt in the early 1970s.

Growing revenues five-fold by 1976, Semple, by now president and general manager, acquired a 15 per cent share of the company. He parlayed that into a majority shareholder position by 1982.

Today, Brandt Group of Companies consists of. Brandt Agricultural Products Ltd., Brandt Engineered Products Ltd., Brandt Equipment Inc., Brandt Road Rail Corporation and Brandt Tractor Ltd.

Brandt's well-established history has made it a constant fixture in our annual Top 100 Companies of Saskatchewan listing. But its presence over recent years has been most impressive. Indeed five years ago, Brandt sat in 24th place with revenues of $153 million. The 2003 Top 100 saw Brandt Group of Companies achieve its highest ranking ever of 16th place, based upon gross revenues of $402 million, a 28 per cent jump from the previous year. Their current year's revenues are expected to approach the half-billion-dollar mark

So from a perspective of a proficient track record, Brandt Group of Companies leaves little doubt. As for the outstanding turn of events in the current year, this remarkable revenue growth surely qualifies in its own right, although there are other outstanding events the company experienced this past year.

And when it comes to benevolence and philanthropy, Brandt Group of Companies set a standard this past year that may well never be reached again from the perspective of a SBM Business of the Year. Among the more notable of the many charitable causes that Brandt championed was a $750,000 donation to the Vancouver Children's Hospital.

* Experienced a rebirth in 1972

Paul Henderson wasn't the only person making a name for himself in 1972. Though the Canadian star of the 1972 Canada-Soviet Union Summit Series certainly became more renowned than did a certain farmer-turned-vacuum-salesman who was looking for winter employment, Henderson capped his career that year, while Gavin Semple was just beginning his. When Semple began with the company, it had 25 employees and sales of $1 million. Admirable numbers they were, but they weren't exactly what Semple had in mind.

"I pulled up in front of the place looking for a job in 1972 and got a territory in southwest Saskatchewan" recalls Semple. "I was traveling, calling on dealers that sold our augers, golf courses--because at that time we had golf course equipment--and we had trenchers, so I was calling on electrical contractors"

"My pre-history with Brandt, I sold everything from vacuum cleaners to insurance to whatever,' Semple recalls. "So when I started with Brandt, selling real, tangible products, I found it easy by applying what I had already learned in sales. So it started to take off."

Semple, always one to deflect accolades, showed his business acumen in more ways than just his ability to close a deal.

"I've always felt--and I feel more strongly today than I did then--is you've got to get the people part of the formula right," he says. "In other words, you've got to pick good people, capable people, motivated people, and obviously competent people, and you have to compensate them in a way that allows them to achieve their goals."

* Family business

Although Brandt Group of Companies originated as a different family's business, during the 1980s it still was a family business, as Semple's family carried on the tradition. Gavin was joined by son, Shaun, and brother, Jim, in the mid- and late 1980s respectively.

It's been like father, like son in terms of a development strategy within the company. Like his dad, Shaun started at the bottom and worked his way up. Beginning in the sales department of what was then known as its custom machining and fabrication business, Shaun also worked as a sales manager and manufacturing manager before taking on his present-day duties as president of Brandt Tractor, the largest of the five Brandt companies.

"When Shaun came into the business and went out selling, we had never, ever had a salesman sell those (custom machining and fabrication) services before," Semple recalls. "It was Shaun's idea to do that and he was 17 years old at the time."

"I thought that this was really either throwing him to the wolves or it was giving him an opportunity to grow," Semple continues. "He went out and built the business such that I brought my brother Jim in to help manage it because it was a growing part of the business."

* Growth Strategy--divided we stand, united we grow

Though they had many things going on, and many things that were going well, Semple says that this was more a result of good fortune than good management skills. Or, as he likes to put it: "We were growing, all under one roof. But we were a jack of all trades, master of none."

"The custom business was good, the distribution side of the business was good, the ag side was growing" he con cedes. "But it was becoming increasingly difficult for management to maintain focus on our business because we weren't real sure what our business was."

"So we did a lot of soul searching about where to take this business," continues Scruple, adding that this occurred in the late 1980s when the company was achieving about $9 million in sales revenue. "And we decided that if we were going to grow the business, we wanted to be diversified."

"We believed that we could only continue to grow the business with that diversification strategy if we specialized. In other words, if we took each of these businesses and put them into separate facilities with a separate management to specialize on that business, have their own business plan and budgets, and their own financing, and for all intents and purposes, they would operate as individual businesses."

Semple reasoned that such a strategy would allow each of the companies to have the added strength of being part of a diversified Brandt Group of Companies. The first to take flight on its own was the industrial turf division. A building was purchased at the corner of Winnipeg Street and Ross Avenue, and that's where the golf course and trenching equipment came to call home under the management of Shaun Semple, who was the driving force behind the company's new strategy.

With that model in mind as a template, ironically, the next opportunity for a business to be established as its own entity was one that came from outside the Brandt umbrella.

"In 1992 we read an ad in the paper by John Deere, who was looking for a John Deere construction equipment dealer," Semple recalls. "We had talked before, saying that if a main fine ever came along for a dealership, we'd like to take a look at it."

"We felt that we had real good success with our industrial turf dealership, so we felt that maybe this could be a real good opportunity for us," he continues. John Deere also obviously recognized the opportunity Brandt presented, and awarded the contract accordingly. In 1992 Brandt Equipment established its first two dealerships, one each in Regina and Saskatoon under Shaun's leadership.

Fastracking ahead 11 years to the present day, that number has grown to 21 under the revised name of Brandt Tractor across Western Canada. This growth has largely been the result of an acquisition strategy that the company has undertaken since 1995, culminating in its largest acquisition in British Columbia in the last year-and-a-half (hence another of the 'outstanding turn of events' criteria and subsequent significant revenue growth).

In 1994 the custom machining and fabrication business had been growing under the direction of Jim Semple. "We were busting at the seams," Semple concedes, saying this brought about another fundamental, visionary decision for the company. "A large, relatively new building came available in Regina. It was about 50,000 square feet on 10 acres of land."

"It was a beautiful building, perfect for that business. But we thought, 'This is really stepping out (on a limb) because it's way bigger than we need.' The costs are going to be much higher than what we were accustomed to, and so it led to the usual question, 'Can we make this pay, or are we expanding beyond our capability and our ability to make it work?'"

"We bit the bullet and we bought it," Semple continues, implying with his tongue firmly planted in his cheek that he felt all along that it was a no-brainer. "This was in '94 and we've expanded that building three times since, the most recent being just finished this fall."

Similarly, Brandt Agricultural Products Ltd. moved into a new 110,000 square foot building just west of Regina in 1998 to keep up with the domestic and international demand for agricultural equipment. Today this company employs 150 people and ships products around the world.

* Good things come to those who wait

Meanwhile, in 1991, Brandt's custom machining and manufacturing division bid on a provincial government project to build what is called a road railer, a tractor-powered locomotive that runs on both roads and railways. Once again, Brandt was the successful bidder on the tender. Despite the project being of the one-of-a-kind variety, a specialty of the custom machining and manufacturing division, the potential for mass production was evident early on.

"About two-thirds of the way through this (prototype's assembly) my brother Jim came to me and said 'I think we need to look at this--this product has commercial potential.' Jim became convinced of its commercial potential and ultimately within a year or two, we negotiated a deal with the provincial government to have the manufacturing and marketing rights for that product."

The next 10 years saw sporadic sales, at best, despite the overwhelming support of its customer base. Admitting a little 'thinking outside the box' was required, Semple says Brandt's marketing endeavors have taken off of late, with export sales comprising most of the company's revenues. Twelve of the $800,000-locomotives were sold to Union Pacific and nine to Burlington Northern last year alone, along with another dozen to CP.

Semple reports that now, "every railway in North America has one or more road railers." In addition to that though, metropolitan transit authorities have recognized the locomotive's potential as a rescue vehicle when electricity goes down, and the Brandt Road Railer is just beginning to tap an entirely new market, with sales to transit authorities in Los Angeles, Portland, Sacramento and Minneapolis, with many more sure to follow.

* Empowering managers benefits company

Maintaining a vision of delivering value, Brandt Group of Companies drives home four core values: quality, innovation, commitment and customer service. These four core values remain a constant throughout the five companies under the Brandt banner.

Using these core values as a guideline is extremely helpful, Semple says. But again he emphasizes that you need to have the right people in place to act with these core values in mind.

"You can't just write a formula for success in business, hand it to a manager and say, 'Just do this, follow this simple formula and it works every time.' Because the world is changing, circumstances change, competitive positions change and you have to have people that have that entrepreneurial characteristic that allows them to scope out the situation and be able to see the circumstances in front of them and in a proactive way, take action that is beneficial to the company. You can't wait until it's obvious to everybody what the situation is, because by that time the train has left the station."

"You have to have people who are able to see the changing circumstances around them, and to be able to react in a proactive way. People with entrepreneurial characteristics too are usually ambitious. They want to get ahead."

"In some ways they're harder to satisfy," he continues, "because they set their sights high. They want to accomplish a lot. So the company has to be able to provide the opportunity for that type of a person to excel. Because when they excel personally, they excel for the company if they're properly aligned."

With such a commitment to their staff, understandably Brandt enjoys a very low turnover rate. Semple says this low turnover rate is a credit to their managers in finding the right people for the job and maintaining a positive culture.

* Company culture delivers value back to the community

Semple is proud of the fact that Brandt employees are paid well. But it does so in a fashion that is unique. He explains his employees are paid competitive salaries and bonuses, which are based on performance.

"We focus a lot on culture in our company--the way people think. I really learned that a long time ago from the owner of an Oklahoma company; focusing on a positive culture within the company so that everybody feels that they're part of a winning team. It's not that they're there because they have to be there but because they want to be."

Semple emphasizes that the success of the company is a result of the personal commitment and dedication of every one of the 800 employees as well as the efforts of management, which goes far beyond the Semple members of the management team. Today Brandt has professional managers and partners who are responsible for the significant growth during the last decade.

This attitude of contributing positively has spilled over into a new program that sees the company match each participating employee's charitable contribution to the United Way. They have made the pro gram accessible through the employees' choice of payroll deduction, cheque or credit card contributions. Those contributing more than $100 are eligible for prizes from the company.

"I was amazed by the generosity of our employees in this year's campaign," Semple marvels. Combined contributions of the employees and the company totaled $55,000.

Other benefactors include the Canadian Cancer Society, for which Semple contributes annually, including as a past 10 Most Wanted Individual in the Jail and Bail program. The Food Bank also benefits from Food Bank drives at the company.

"Every company should have some corporate responsibility to give back to the community," Scruple says. "There are a lot of good organizations out there doing a lot of good work. Companies are in a position to make a difference."

* Committed to Saskatchewan

With companies that could justifiably have their head offices anywhere across Western Canada, it's both noteworthy and admirable that Brandt continues to call Saskatchewan home. Despite a desire for better taxation policies in many areas, Semple concedes that Saskatchewan has been very good to him.

"I've been asked that question several times, and I've asked myself that question several times," Semple concedes of why they remain in Regina. "The bottom line answer to it is that is nay home."

"I was born and raised on a farm 25 miles outside of Regina. All of our extended family is in Regina, and it's where our roots are."

"The other thing is, we've been successful based out of Regina," he adds. "In some ways, I like the quality of life in Regina, and in fairness, I guess, in manufacturing, Saskatchewan does have a good tax rate. So there's no beneficial reasons for the company to move those kinds of businesses."

"Saskatchewan land values are low, the work ethic in Saskatchewan is fantastic and that is one of our best kept secrets--well maybe it isn't so much of a secret anymore," Semple continues. "There are good reasons to have a business here and the work ethic is a very good one. A lot of costs are less here, land costs, maybe construction costs and so on if you were to compare Regina to Calgary. But property taxes and income taxes are a different deal."

Thankfully, visionaries like Gavin Semple and his competent management team at Brandt Group of Companies recognize that this province is a place to grow and invest.

The greater Regina area, province of Saskatchewan overall, and Western Canada as a whole, are much better places respectively thanks to the 2003 Saskatchewan Business of the Year, Brandt Group of Companies.

CONTACT

Gavin Semple

President

Brand Group of Companies

[phone]

[e-mail]