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Saving the bacon.

SAVING THE BACON

How Sid Gordon, a Neepawa farmer and farm-economics consultant, pulled Springhill Farms hog slaughtering plant out of the fire, helping its Hutterian owners save face at the same time.

In the stale, tense air of a Winnipeg hotel suite Sid Gordon's confidential struggle to keep a slaughterhouse alive took a hammer blow. It was late Friday afternoon, January 26 and after months criss-crossing Canada on 15 plane flights, enduring hours on the telephone looking for a corporate savior for Springhill Farms' 180 jobs, his efforts seemed futile. Olympia Meats Ltee, of St. Hyacinthe, Quebec, who he had sought to rescue Springhill and its Hutterite owners, was turning tough, very tough. The negotiations, which started with great hope, hadn't found enough common ground.

"In the end, though, it was better for Springhill," Gordon recalled of the break-up. But at that grim moment when the talks withered, he was like a man contemplating repairs to a shattered Ming vase. Gordon, a farm-economics consultant, had brought together the Hutterite owners of the $7.8 million Springhill Farms Ltd., and the executives of Olympia.

Springhill's position was not good. It had been bleeding financially since its opening in 1986 and in the fall of 1989 had announced publicly it would close Feb. 28, 1990, because it was strapped for cash. The Manitoba hog industry is strong and has excellent growth potential. Closing the plant would drastically affect provincial slaughter capacity. The provincial government stepped in behind the scenes and Gordon was asked to pursue at full-bore, a solution to keep the plant open. He had done that with vigor.

When the Olympia executives and the Hutterites started talking in the Sheraton Hotel on the 26th, it appeared Gordon's four months of intensive searching was finished.

Around the table were the principals of Springhill: Rev. Mike Wollman, 64, and his son Mack, 44, representing Hutterian interests; their accountant, Donald Penny of Brandon, and David Martin, the manager of the HB Credit Union, the Hutterian bank. On the other side were the executive of Olympia, from St. Hyacinthe, Quebec, the fourth largest pork and beef processor in Canada. On their team finance man, Jacques Foisy; sales manager, Serge Michel and Robert and Jean Bienvenue, representing the company's owners.

Olympia is owned, quasi-communally, by three Quebec French Catholic families, known corporately as Gestion O. Bienvenue Ltee; Le Groupe Paul A. Bonneau Inc., and Le Groupe Ouellett Inc. The Springhill proposition is their first foray outside Quebec. They obviously had some long range plans or they wouldn't have been at the table.

There it was in its reality; a deal to be carved--between successful French meat merchants and German protestant-fundamentalist hog-farmers with no television or radio on their colonies. They had dived into the capitalistic commercial meat business and belly flopped. It hurt.

Yet, the Hutterites are no small force in the hog world. Amongst 70 colonies with about 7,000 members, they command 35 percent of the hog production in Manitoba. They have perfected pig farming but were far from perfect in the butchery business and the Olympia people knew it.

Although details of the cash offer and arrangement of the deal remain confidential, Gordon described the face to face meeting as brass tacks business talk. Serge Michel said Olympia's offer was fair, while the Hutterites considered it tough. All day the negotiations rolled on in a forthright fashion. But in the end they couldn't agree. The deal, it seemed, was dead. Or was it? Serge Michel recalled his frustration.

"We felt that they didn't know their costs of operation that well," he said from his office in St. Hyacinthe. "We offered them a good deal but they didn't recognize it."

The Olympia team flew back to Quebec and the Hutterites went back to their colony. The Feb. 28th closing date was ahead.

But all the cards hadn't been played yet. As Sid Gordon drove the familiar highway back to his Neepawa farm he was thinking; deeply.

TROUBLED PAST

A litany of troubles brought the Springhill Colony's dreams of a new industry to a dreary end. The plant, built in 1985-86, with ultra techno-slaughter and processing equipment, was a calculated business venture backed by several parties. The Town of Neepawa had issued a $1.7 million debenture to construct extra sewer capacity to serve the plant. Without the tax income from a healthy operation the town would have to foot the bill through residential tax revenues.

The federal government had a $3.9 million regional industrial expansion grant at risk and the Canadian Imperial Bank of Commerce was also involved along with the Hutterian Credit Union.

At one point before closure was announced Springhill was able to get a $6 million line of credit from the Manitoba Hog Producers Marketing Board, the monopoly buyers of all hogs raised for sale in the province. However, the board said it wanted security--and it got it. The line of credit was backed by a $2.75-a-hog check off from all Hutterite-delivered hogs. The surcharge was ordered by the head of the Manitoba Hutterian Church, Jacob Kleinsasser, a religious superpower whose word is law.

But despite the line of credit, Springhill couldn't iron out its operational wrinkles. Meat markets were soft and even the big guys, like Canada Packers Ltd., and J.M. Schneiders Inc., of Kitchener, Ontario were hurting. In an industry with profit margins thin enough to see through, Springhill just kept losing money.

Gordon, who farms with his two brothers on six sections of land near the Springhill Colony, was asked by Rev. Wollman to take a cursory look at the books. He spent the entire summer trying to figure out what was needed. In the end he thought the best solution was a management contract with Fletcher's Fine Foods of Vancouver. Processing was turned around from skinless hams to skin-on hams, but after 18-months Fletchers bowed out or were forced out. No one knows.

When the plant initially opened Rev. Wollman had these words for publication: "Everything is up except the farm economy, which is down. How can you exist? We can't make a living from farming anymore. I'm serious."

When the plant closure was announced the reality finally hit him, hard. "I learned more in five years in the commercial meat business than I did in 40 years of farming."

When the plant seemed destined for no turnaround the Wollmans announced they would throw in the towel.

In the fall of 1989 it seemed as if business closings were an epidemic. Manitoba Industry Minister James Ernst and Agriculture Minister Glen Findlay told Bill Vaags, chairman of the Pork Processing Board, that the plant was not to fail. They wanted a full time man on the job. Vaags, who knew about Gordon's earlier involvement, reached him by phone.

GORDON ON BOARD

Vaags was direct about Gordon's role: "When he came in that's where the life started to spark with the Olympia group. That's when it all started to come together."

Gordon is a smoothie. He is a man with poise, tact and determination, like all good fixers. He has a soft, firm voice and speaks with a clergyman's cadence, as if he too has divine guidance.

Several suitors, both in North America and off-shore, were prospected as Gordon beat the bushes for the best deal. Joint ventures, buy-outs, equity positions were all entertained. He insisted on closed book talks. No one but Sid Gordon would know who he was talking to and what offerings were involved. All parties agreed.

"It sounds a bit cloak and dagger, but this is a very secretive business," he says.

One interested company representative flew in discreetly and toured the plant incognito on a weekend without anyone knowing who he was. Telephone numbers on Gordon's bills to the province were omitted for privacy reasons.

"All the participants were good about the privacy factor," says Gordon, whose reputation is clean and above board. He wanted to save the 180 jobs in an area where jobs don't grow on trees. But more important, he was aware of the Hutterian pride that had started the plant and he was mindful of what a successful deal would mean to them--and what no deal would mean.

As he drove back to his quiet farm house and his wife Rita, after the failed Friday meeting in Winnipeg, his mind drifted back to other tight corners of his life. He recalled one incident in particular when he had been on a hunting expedition with Quebec's James Bay Cree.

ON THE ICE

Gordon was 25 years old at the time and working as a general administrator for the Department of Indian Affairs at Fort George, where he met and married his wife, a French nurse. They had spent their honeymoon in a teepee on the northern tundra. One spring he was returning from a 10-day goose-hunting expedition with some friends. As they crossed the frozen Fort George River with three dog teams and sleds, a massive, lightning-like cracking noise pierced the air. The ice shuddered and broke away from the shore behind them. The dogs whimpered and the teams stopped.

"I'll never forget that day," he says. "We couldn't go back to the shore and the ice kept breaking up in large sections. George Snoboy, the `Basty Dowchinow' (phonetic Cree for `leader of the hunt') came to me. He said I was not to be scared, but I was to do what I was told. He said if my sleigh went into the water, I would lift it out like one man, and if there was no one to help me, I would lift like three men. I wasn't afraid after that because we all stuck together. I knew I had backing and I wouldn't be left behind. That kind of event changes your approach to life."

He had heard the ice breaking when the Olympia deal fell through and he knew he had to get to shore on this one or the plant would close.

AGREEMENT

On Saturday morning, Gordon got the Wollmans and their accountants together in Brandon for a chat. He also talked to the Manitoba Pork people who he knew had been in conversation with Olympia about hog supplies.

Olympia sales manager Serge Michel said before the final talks with the Hutterites started, a handshake agreement was reached to sell 1.6 million hogs, valued at $200 million, over a three year period. It was ready made work for the Springhill plant--a constant workload at agreed prices.

"But there still had to be a deal with the Hutterites," Michel said. "They would do the slaughtering for us and we would send out trucks to get them for processing in St. Hyacinthe."

Gordon's Saturday morning calls to both Manitoba Pork and Olympia improved the deal for the Hutterites. But on Sunday, to give his clients an option, Gordon flew out of town on one final trip -- he wouldn't say where -- to solidify the next best offer from another suitor for the Wollmans' plant.

On Monday afternoon he arrived back in town and gave the Wollmans several options. At midnight Monday, (1 a.m. Tuesday in Quebec), Gordon called Olympia's finance executive Jacques Foisy and got him out of bed. They talked about Springhill.

Said Foisy: "Sid told me if I could pull Olympia's guys together in the boardroom for 4:30 that afternoon, his clients would sign the deal." That morning, Gordon, the two Wollmans and their lawyer flew to St. Hyacinthe where, in the sanctity of the Olympia boardroom, the French-Hutterian connection became official. On February 14 the first test load of slaughtered hogs was shipped by truck from Neepawa to Quebec. On March 5, the deal was sealed.

Springhill had won an honorable reprieve and a leg up in the business world. The plant was still theirs; even though 80 jobs would go, 100 were saved. Olympia had shored up a vital part of Manitoba's hog industry and the Bienvenues said they were interested in the future use of Springhill's processing capacity if things went well.

There was a fine dinner that evening with the Olympia people, with all the Gallic charm an evening in St. Hyacinthe can bring. It was smiles all around and no more business talk. Sid Gordon, the "Basty Dowchinow" of this corporate hunt, had got his people off the ice.

PHOTO : Rev. Mike Wollman in the Springhill plant.

PHOTO : Bill Vaags, chairman, Manitoba Pork Processing Board.
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Title Annotation:Springhill Farms Ltd.'s Sid Gordon
Author:Gage, Ritchie
Publication:Manitoba Business
Article Type:company profile
Date:May 1, 1990
Words:2079
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