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Entrepreneurship is a journey, not a destination, and few have been on that journey as long as the Oland and Stanfield families. In this episode, Eric Morse speaks to QuantumShift alums Andrew Oland, CEO of Moosehead Breweries, and Jon Stanfield, CEO of Stanfield’s Ltd, on how the long history of their business impact how they view, and handle the current disruptive landscape.
Listen to the fascinating histories of two pre-Canadian institutions, and how they continue to balance history, innovation, business, and family.
The Ivey Entrepreneur Podcast is sponsored by Connie Clerici, QS ’08, and Closing the Gap Healthcare Group, Inc.
Transcript
You're listening to the Ivey entrepreneur podcast from the Pierre L. Morrissette Institute for Entrepreneurship at the Ivey Business School. My name is Eric Morse, and I will be your host for this episode.
Eric Morse
I'm really happy to be trying this. Today we are I've started a series of podcasts. And we're gonna give this one a shot, I thought it was a great opportunity to have two of Canada's oldest businesses, oldest family, private run businesses with us today. And we heard from Charles 100, your business almost. And today, this afternoon, we're going to hear about a couple more that are even older, I'm going to let them tell their stories. I'm not going to steal that. But I'm really happy that both Andrew and John agreed to be with us today to talk about their business. And my idea behind it was when you are able to get to an age of business that long, you've been through a lot. Whether it was the Great Depression, World War two World War One, I mean, your companies survive that. And those were times of huge uncertainty. And I'm sure there's probably half a dozen or other episodes. So I was reallyinterested in the in the idea of family lore, and some of those things around how do we deal with these situations. So I'm putting a lot of pressure on them. But that was one of the things that I thought would be interesting to explore, and how they've dealt with uncertainty over the years. So what I'd like is I'm gonna have Andrew start just to tell the story of his family business. And you know, what are some of the stories you remember about how the family's dealt with uncertainty in the past, and maybe if there were decisions made during those times that change the course of the business, that would be interesting for us to understand as well.
Andrew
So thank you very much, Eric. It's a pleasure for me too, to be here this afternoon. And I just thought I'd start with a disclaimer. Sometimes when you get off on these panels, you portray that sort of everything is perfect in your business, and everything's perfect in your life. And I want to be very clear, that is not the case with my business or with my life. But I'm looking forward to offering some nsights. So moosehead breweries, multi generational family business, started about a kilometer from here from right where we're sitting just across from Halifax shipyard on the darkness side of Halifax Harbour, by my great great great grandmother woman named Suzanne Olins moved from England to Halifax, in 1865. A family of very limited means her husband, john was a bit of a man about town, but didn't do much about town. And she was she was a home brewer, as many women were at the time, she was able to secure some capital. And they started in 1867. And what I thought is that it takes you through four stories, sort of between 1867 and in about 1978. Because I think in any multi generational family business, there's one or two big events or big decisions that define that that generation. And as I've been going through, this is reflecting on this in advance of the remarks this afternoon. What occurred to me was, they often occurred when the next generation was relatively young in their tenure. So it was the next generation coming in and saying, Yeah, this may be your company today, but it's mine tomorrow. And this is what we need to do today to pivot or to adjust to go forward. So, Susanna, relatively successful business from 1867 on to when she died in 1885. In addition to starting the business and running it for almost 20 years, she did something very unusual for the time, she left the business to her youngest son when she died. And that was in 1885. And I think it turned out to be a pretty good decision because her son George ran the business until 1933. And that included by far the most traumatic event in the history of what is now moosehead breweries and the old family. That would be the Halifax Explosion. So I think most people in this room would know about the Halifax Explosion. At that time the burger was in the north end of Halifax brewery was completely destroyed a member of the family died and that's where you had the split between all called the Halifax Olins and the st. John Owens, so George olan was still very much in charge. He in some of his son stayed in Halifax and rebuilt tear in Halifax. My great grandfather, another George George, Bill went to confuse things move to St. JOHN in 1918, purchased a brewery there and continued the family business. And the idea in 1970s 1980s that a business that a brewery in St. in Halifax would compete with a brewery in St. John New Brunswick would be like us going to the moon tomorrow. It just was not in anyone's could no one could have foreseen that. In 1937, my grandfather, Philip Poland had graduated from UNB had gone off to Europe to Copenhagen, to brewing school. And this was his first export exposure to lager beers. So prior to 1937, as a brewery, and most breweries in Canada, all we brewed were ales, stronger, darker, in 2019 terminology, less drinkable, less sessionable than lagers. And my grandfather came back created a lager which is which we're still selling today, Alpine lager. It's actually our number one seller seller to this day in the province of New Brunswick. And his insight was just this, this, and I'm trying not to speak beer sort of commercial terminology to you all. But his insight was just refreshment. And the consumer. And I don't think too many people were thinking about the consumer, and our family and our business in 1937, or the previous 60 odd years. It was brewed a beer, get it to the market, and that was it. But he had the first insight in terms of what does the consumer want, and where where's the consumer going. And then the fourth story revolves around my father, again, a young man, early 1960s. So father's Born in 1939. So he's sort of 2324. And a federal cabinet minister was in St. JOHN for a speech. And behind the podium is a banner and the banner says, export or die. And my father tells this story this day, he had never thought of exporting. Now it was it was a business that was in a sold beer. And at that time, Nova Scotia, New Brunswick MPI, under rules at the time, you had to actually have a physical brewery in another province to sell beer there. And he would have family discussions with his father about the merits of exporting, but eventually did export starting in 1978, to the United States. And so we were selling in California long before we were selling in Ontario, which is sort of classic Canada, again. So if you think about my grandfather and the consumer, and my father thinking about where is growth going to, to come from? So I'll pass it over to john.
John
Thanks, Andrew. I'm happy to be here. I'm going to share a little bit of story about underwear. It's an exciting topic. So our would be my great great grandfather emigrated from England to Prince Edward Island in 1856. and built a factory there that basically made woolen blankets and such along the way, he eventually sold the business to his two sons, Frank and john. And Frank and john moved the business to Nova Scotia, they first went to St. Croix, which is down in the valley. And then they settled in Truro in the 1870s. And built a factory where we manufacture our product today. So we moved into that factory in 1882. And that's where our head office is. That's where the factory is. That's where we make today roughly, you know, 70% of our products are not really white anymore, we do import. And when I think of the generations, probably where Stan fields first got its name was in the 1890s, which is you know, amazing when you think of it, it was during the Klondike Gold Rush. Obviously, these people who are participating in that were running for money. They were probably taking their lives in their own peril. And we were able to provide a one piece combination made, of course wool that would not only help them survive the climb, survived the weather, the rain and everything else that went along with that. But when they found the gold, Stanfield was synonymous with, you know, that particular product that went up the mountain with them. And the great story of that today we still have the same shirt that they used when they went on the Klondike Gold Rush other than it's not 100% wool anymore, it's like 8020 so it's not as kind of itchy and scratchy. But that is something that is very symbolic in our company, and special In the Western market is still a very popular item which is amazing. They call it the island tuxedo now. So those that was probably where Stanfield got its name, Frank and john, were also political in nature. The stanfill family also has either its underwear, it's politics. So we'll be my great grandfather was an MP for our area for lots of years. JOHN Stanfield went to World War One, and he came back and he became a senator. So his brother Frank of, you know, eventually took him out and, and then we get on to the third generation. And that generation created, you know, they had patentable one piece, what we call in Canada combinations, what they call the United States is union suits. So we had the patent for that, which was basically taking a shirt and a bottom and connecting them to one piece. And of course, patents last for X amount of years today, it will be probably worth money, but back then it was part of what we think around our place as being innovative in underwear product. So back then that was quite an innovation to be able to put one piece underwear together. The other thing that would have been in my grandfather's generations, this is a third generation was the shrink proof like that was on the outside of the building used to stay Stanfield on shrinkable underwear, right? Like, there was a process that in the time was environmentally okay to do. It's not today. So we had to take on shrinkable off the building and painted a black paint over but that is innovation as well. So that is separating, differentiating your products in the market versus what others are doing. Because at the end of the day, it is underwear. There are other people who make underwear and there's choices. My grandfather, who I never met, he died in 1967 have a heart attack. And my father took over the business at the age of 22 years old. He was just a recent graduate of Tuck School of Business. I know it's not Ivey, but talk was pretty good in the day. And I remember the story that he told me about his process and his process say like, geez, Tom, why are you going back to Truro Nova Scotia to run your little family business that he should be going to Wall Street you should be doing this and that and he said, well, this is sometimes family duty family calls and unfortunately year after he got home his father passed away he was thrust into running the business and being handed the keys by his mother. One of the biggest impacts of the my fatherhood on my career would have been my grandmother. So my my grandfather's Stanfield wife, she lived next to me growing up, I spent a lot of time with her. When I was born, I was born when Robert Stanfield was in Halifax that his speech and everybody in the family was there except for my mother was in the hospital given birth to me. So I'm not sure if the next underwear anointment was was was occurring. But certainly, in Charles lives and Charles so he knows a lot about the family story in our area. So my grandmother was a heavy influence on really my participation and passion towards the business. I really didn't get that from my father when he was young, because he was very busy. He was at work 16 hours a day putting in all of that time. Whereas today, like, I don't have to do that, because we have people that can actually help. But you know, it came on later in life, my passion for the business. There was a you know, a couple of things that in my time, so I would consider my time I started in the business when I was 13 years old. I just completed my 35th year of being in the business. So and I'm still young, under 50. But one of the things that I remember the most I would have been in college and my father and the VP of sales at a time similar to maybe what Andrew store was around, you know, Canada only had so many people on so many restrictions in terms of where he could go with your business. And we felt Well, we'll just be smart, we'll get down to the US, we'll just take our products and replicate ourselves down there. We'll hire Salesforce and do this and that. Well, the sample order was about the biggest order we got. And it was it was as we talked about there maybe, maybe, you know, a flawed strategy, but really was testing. Because of our presence at the shows we recognize that we might not have been able to just to take our brands there and be successful. But what we did have expertise in is manufacturing, finance, capital, branding, understanding how the markets work, which led to the next year at the show a little bit more eyes open about who might be available for us to acquire so we can build a platform we can start with that. So in 1993, which would have been my last year university that's what we did, we went down and acquired a company which started the geographic expansion of forever business today 1997, we acquired another American company in the Snowsports specialty business. And today the revenues are about split. Actually, we probably have more us revenues than Canadian revenues. So if we didn't, if we hadn't have deployed that type of strategy back in the early 90s, we probably would be in trouble today, because of what's going on in the retail market in Canada. Well, I'm sure we'll get to some of the disruptive things that have happened to us. And these are the things like free trade agreement came in NAFTA came in, we went from 900 employees to 600 employees, we re engineered the firm again in 1993, and went to 500 employees, we're roughly a little bit over 300, today, that are still selling product and trials. So that to me, and that was maybe at the front part of mine, like Andrew refer to a lot of stuff gets out the front. And it was probably in the middle of my father's but it was a real turning point for our business when we point it so. And today, these types of things really get you thinking about what is next? What is next for the company? In terms of where are we going to grow? We'll talk about a bit of what happened to us in our Canadian market and how business evaporated, essentially. But to that is a little bit of the history line of where we came from.
Eric Morse
Thanks, john. So again, I'm going to ask both the following question is what's what's the biggest issue you're facing today or issues you're facing today? And maybe, given what we've been talking about today? What are some of the greatest uncertainties that you're thinking about? Andrew, we'll start with you again.
Andrew
So I've been I've been president now for 11 years. And I had to grin when you're doing the drug plan. I know about more about drugs than anyone we have some very generous drug plan offerings, particularly for our retirees that I had to deal with very early on in my 10 years as a new president, and I'll be dealing with those for the next 40 years from a cost perspective. So the reason I say that is, when I became president, the decisions that I had to make were very easy, executing them was difficult. So we've got to get out of the retiree health care business, we've got to get a defined benefit, pension business, we've got to modernize the facility, we've got to evolve the culture, from a culture of entitlement to culture of business, acumen, safety, things of those things. So we've made good progress on those. So now it's like, okay, where do we want to go today? got options, didn't really have options, just have to get this done. And it's all about growth. And where do we find growth in a category that is not growing. And that is under pressure from big small government, alternative products, such as cannabis, all those those type of things. And so you're dealing with all of these sort of uncertainties in your day to day business, or how you go to go to market, while you're still looking to to try to try to uncover those opportunities for growth?
Eric Morse
So Andrew, can you can you tell me maybe a little bit, just follow up with that, when you think of the different opportunities in front of you, what are those things you're taking in mind in terms of making that decision to have a framework of some sort of family history or, you know, something that you've picked up along the line that's helping you frame those issues where
Andrew
I mean, ultimately, it comes down to the consumer, and where the consumer is going and what the consumer is looking for. But you also have to put that through the lens of the customer. So and you know, and people often get consumer and customer mixed up. And they use the terms of the consumers, the end user, the customer is the buyer, it's the bartender, it's the bar owner, it's nslc. It's the lcbo CBO, or things of that nature. And we have to be realistic as a smaller player in the category in terms of what are we going to be able to achieve from a customer perspective and actually be able to get it in front of our consumers?
Eric Morse
Thanks. Enter john.
John
So I'll go with three. I probably have a list of 12 but I'll go with three main issues that have affected our business. I'm similar to Andrew I've been probably running our business for about 12 years as the lead. I've always been at the table so to speak, learning and understanding how the company made decisions and where not only the directors of the company thought we should go but you know, the family and management thought we should go solo lots of conversations in and around that. But I think my generation, even more so than my father's, my father would say, you know, we had the oil embargo, we had big time inflation in my time, we had kind of price controls that were in there, we had free trade. And after that came in there, he had to battle all those. But I think the deconsolidation of the retail channel, in the bankruptcies that occurred within our business, not only in Canada, but in North America, posed our biggest challenge and continue to pose challenges on our business as we have to remain very fluid through the process. And it's far from over. I don't want to wake up with that cybersecurity call, like, that scares the crap out of me. But I sat at my desk one day, and the first one to go was Sports Authority in the US. And that was our largest customer in our California business, and they were 25% of our business. And I said, Wow, I've never thought that I would have to deal with that. Because you just humming along, you're humming along, everything's kind of good, then 25% of your business is gone, the next day, not only gone, but in the US they sue for the receivable a year back, so you lost all the receivable that you collected to in that period leading up to that. So it was roughly $5 million that went out the door, which was an amazing amount of money. And our North Carolina company, the largest customer in the snowsport side went bankrupt as well, within six months. And when I was dealing with that, I was thinking about what's next. And I could just think of Sears Canada and started to prepare for the demise of Sears Canada inside of my own mind, even though they were our third largest customer. I was always at the table. So we must replace this customer, we must start now we must move on, they're going to be gone on Oh, john there, okay, that's gonna be alright. Well, it wasn't, they went bankrupt. So in that span of 18 months, we lost a sniff now in revenue for a company of which we also had to recover, we had to manage tour. So that was a significant challenge for us. And a little bit of a lesson learned for me on that was, we always were a lean company in terms of management and style. But I think keeping lean keeping very nimble keeping very, I don't like the word use agile loosely because it's a big word used in business. But being to be able to have a little bit of agility inside of your business is key. And from that, as the reason why consolidation occurred and bankruptcy happened is because consumer preferences were changing rapidly. And they're still changing, whereas it's the onset of, of online and e commerce businesses, the digital and social, how they change consumer preferences. And now it's all basically in your hand, which when you think about how you're running your life, you're running into your hand and the challenges that that poses for what I would consider ourselves as a manufacturer to bricks and mortar to the new world versus there's lots of underwear companies or just online direct, that's how they start their business. But we have to come from a different angle. So that really challenges our position in the market. So consumer preferences, and they're evolving rapidly and impacting everybody, they just shrink margins immensely because of that. And the third thing I would say, and it's really resulted to is the people inside the business, like I love our people, we have a great culture of our people, but they don't fit anymore with where we need to go. And some of these managers, it's not their fault. They've been with their business for 25 years, and they've served us really well. And it's not about having, you know, as they say that, you know, it's the wrong ass and the wrong seat type of thing. But it's not that they just the world has gone by them. And that is really challenging for not only our company, but for probably every employer as to how do you deal with a 30 year employee that very costly to get rid of you move them sideways? What can you get out of them. But that is one of the things that I'm really challenged with today, what I'm really struggling with internally is how to do the skill set realignment inside of our business. And a couple of guys are here at my YPO for me and and Charles, for disclosure in my forum group. So you know, they hear a lot about my kind of rants and rambles from time to time. So they have a little bit of personal knowledge of that,
Eric Morse
John, so the world is changing when you think about growth and where it might come from next. What are you thinking about?
John
So the The good thing that we've done is we've replaced all of that business over the two year period that we lost with those three bankruptcies, and largely or replace through similar channels, maybe close proximity channels. But I think our growth in Canada is very challenged because of it's just not a big place. I mean, it's a big place in geography, but it's 36 million people. We're already coast to coast. I think we can expand a little bit, maybe in channels, we can be a little bit better and industrial safety and those types of things. But I think our growth is probably going to come more from geographic expansion in the future versus kind of domestic expansion.
Eric Morse
Thanks, john. So, you know, one more question and then we'll open it up to the to the group here, but these are long standing company. So, you know, use your crystal ball where do you see the business 10 years from now?
Andrew
So, in Canada, there are four breweries who have a coast to coast operation sell across people in in all all provinces. Of course, Labatt, Molson Sleeman and lucette. mooseheads, the only one that's Canadian owned. So Labatt Molson and slim. Thank you. So we need to do a better job telling that story in a meaningful way that resonates with our, that resonates with our consumers. So from a branding point of view, we want to be in 10 years, we'd like to be Canada's brewery. And we're not there today. I would say that one of the challenges for Canadian companies is everyone knows what their first international or export market is going to be. It's easy. So the United States. What's the second one? Is it Mexico? Is South America? Is it Sita? Is it China, pick a spot, right? We don't have, as a country, a natural number to market. So we're gonna have to figure that out for musette. In terms of where that's going to be, it won't start with bricks and mortar. But it wouldn't surprise at some point if it evolved to bricks and mortar just because of the nature of particularly shipping beer, and the costs associated with that. That being said, In Canada, we have a nice business in Ontario, we continue to have a nice business in the Maritimes, lots of growth potentials, we would still see in Western Canada. I know the folks in Alberta say that it's tough times there. But when you grow up in Atlantic Canada, and you go to Alberta, it looks pretty good. And in classic Canadian fashion, we've only been shipping beer from New Brunswick to the province of Quebec for two years now. So, so cost 150 years to do that. And so we would still see, and there's eight or 9 million people live in Quebec. So Still, we still see opportunities in Canada, both from a volume but also from a margin play perspective. But we do need to find that either that one or that group of international export opportunities.
Eric Morse
Thanks, john.
John
So in 10 years, I'd like to still be on Earth would be the first thing I would like to be. Because my kids are both young. And this business is very challenging. It comes with a lot of heartache, and a lot of heavy thoughts about producing products in Canada, we have taken enormous amount of pride in saying we're made in Canada, and some of our marketing people and internal and external always say we got to put the flag up the pole and always say that and I said we can't say that 100% so we have to be a Canadian company first. That's how we have to explain our story and are talking about a story like we have, we have a fabulous story. And if people knew more about our story, I think they would resonate towards us as a company and us as a brand whether that brand is produced in Canada or produced in Vietnam or produced in the Caribbean base and wherever that might be produced. So probably our company is going to look a lot differently in where and how we make products in 10 years. All of our competitors are global we do not have a local competitor other than maybe socks apparel. Now who's has socks underwear out there and Vancouver they have done a really good job as a new entrant to the market. It's also allowed us to expand into a different price points so I welcome that right like they take a little bit of piece of the pie but it also extends our brand from into a different price point that gives us opportunity for the future as much as anything so I'm thankful for that but our main competitors are Fruit of the Loom, Hanes Calvin Klein jockey. I mean these guys are big companies compared to to us sitting in Truro Nova Scotia. So in saying that as retail consolidates, you know, pricing pressures come that forces you generally to go offshore to get production and to hire people in Truro to come in and be sowers, this generation just doesn't want to do it like the previous generation. And maybe they want to come in and run the ball in line for beer maybe a little bit simpler, like we don't have a problem running our textile division. So our bigger machines or knitting machines, or dyeing machines, these types of things, but to find people on the street to come in and sell product is very challenging. The other growth is going to come from our US businesses, management and my my father would have thought of he thought of it as a consolidated business. But how I'm structuring it where I'm going with my senior leadership team is, is these three businesses are the same, and we are working together. And the people that I put in place in those are going to help not only the company where they are situated, but they're going to provide insight and input to all three companies and help guide us to the future. Because the challenge that we face is a lot of the decision making was in one person. And I don't want to be that one person 10 years old, even today. So I think you need at least four or five people at your table who can help guide you like, I might be the CEO, I am the majority shareholder. I am the Chairman, I am a stakeholder. I am a director, I have all kinds of responsibilities. And these people in the management team are really strong help guide you for your next 10 years, you have to really find strong people to help guide you, you can hire external people, you can have sessions like this with your management team that could come in and help you get focused, and so on and so forth. But it always will come down to those who you surround yourself with to beat to be successful.
Eric Morse
Great. Thanks, john. So at this point, open it up to to any questions in the group? So let me just repeat the question real quick. The question was asked, how did you guys feel when you took the reins of the company? What was the relationship like with the family? And kind of how did you deal with that as you went forward?
John
I'll start. So we had quite a long succession plan. In 2000, I became Executive Vice President, the company that was really the onset of the succession plan to the presence role. I was appointed to the board at that time. So on our board of directors, we have independent directors, we have family directors, so those family directors were able to get exposed to me, my thinking, my participation. I was probably I had a couple of older cousins. And I have younger cousins, of course, and my siblings never were interested in the business. So they really didn't know me, so they had to really understand how we thought, john is just like the kid riding around his bike that was in his grandmother's yard is that that's how they probably thought of me at first. And they were probably skeptical. Like, it's John's Thompson. Thompson a great job like John's not gonna be able to do as well as his father. So it was a probably a lot of skepticism when it came, so I had to earn their and I really earned the respect through participation at the board level. And outside of that, trying to spend some time with them. The biggest thing when I kind of took over the whole thing was through all this bankruptcy stuff, and basically, they really understood the chops that you have kind of thing to be able to, like just put the machinations in place to survive that not only capitalized with your banking partners, your internal people like, Oh my god, we're gonna disappear, my job's gonna go, Well, no, it's not we're going to fix this gonna take time, but we're gonna do it right. And they were more worried about their investment, like, Oh, we got to sell, we got to move on from this business. And I'm saying like, No, we need to generate value, you know, we need to, there's gonna be time to recover. So I and through that whole process, they gained, you know, a lot of respect for me as a leader, a lot of understanding of work ethic. And I'm not just the, Tom's son from Churchill. I'm an individual who can lead a company, but I was probably greeted with a little bit of skepticism when I first started the, you know, the evolution of the process.
Andrew
So, I'm the eldest of four boys. My brother Patrick is our CFO and he has an interesting career. He was on the commercial side of the business brand management, and at an early 30s decided he wanted to go back and become a CPA at the time and went through the whole auditing thing and, and so went for there. My brother Matthew, who's currently running our cannabis business was started in sales in sort of multinational CPG and then went over to marketing. Brother Giles is a it entrepreneur here in Halifax, and my father was able to execute a buyout of my uncle and aunt in the mid 2000s. So my father had 100 Some shares. So in 1997, Father hired gentleman named Bruce McCubbin, to be the first non olan to be president moosehead. Bruce ran the company for about eight years. And then in 2005, Bruce was starting to ease into retirement. So our VP of Sales and Marketing at a time a gentleman named Steven pouria became president. And True story. I'm sitting in my office December, early, early December 2007. And I get a call from my father's assistant who's Janet, who's now my assistant. And Father wants to see you. Very unusual, I go down. It's father and Bruce, my immediate thought is, what did I do wrong here? And they said, Steve's resign, and we'd like you to become president. And all I could think of is don't say anything stupid, they might change your mind. How do you get? How do you get out of this office as quick as you can? So we sort of chatted for like, and and then they said, and we're not going to tell anyone till sort of January 15, or something like this. So this is like December 10. So it's like a five minute meeting, and I leave and sort of go back to what I was doing and get home that night. My wife says, anything interesting happened today at work? Well, and I think from the rest of the family perspective, I was the one they would have seen as becoming the next president. But this was this was premature. This was earlier than than we expected. And in hindsight, I if, if they hadn't made the decision, because I was I was very early 40s. If they'd made the decision to bring someone in for a period of time, I would that would, that would have been a great experience for me, and I would have been fine for that. And just one other thing I'll say is, so I'm heavily involved in in tech Canada, I think most of you would know it in my in my group and part of the tech experiences, the tech chair, you have a monthly coaching meeting. And I would say from the second meeting that I had with Mike Mauer, the tech chair is is he was saying, Andrew, you're the head of this family, know that you run the company, you're the head of the family. And I'm a family, I'm 44 years old, and I know you're the head of the family. And ultimately, when you are in that leadership position in the family business, you are the head of a family, there are lots of little decisions that if they go the wrong way, can disrupt the dynamics of the family. And it's not necessarily equal, but it has to be fair. And that's, that's a role that's that I've had to grow into, I would say and it's just to me, it's part of being a family business.
Eric Morse
Thanks, guys. Any other questions? So question is, will robotics help replace the need for labor on the sewing factory floor here in Canada?
John
Yeah, I think in time robotics can help support apparel manufacturers in throughout North America that are left. The technology isn't quite there in terms of USA with your own fingertips. The dexterity of robots to move things efficiently down a production line on the south side is not quite there yet. There are still multiple steps in sewing a T shirt or a pair of boxer briefs that the robotics can't quite do yet. But I do you think that someone is going to resolve that issue? That might be in the 10 year window where we could repatriate some of that product production back to Canada, if that happens to move offshore because of robotics, have a level of labor force and then have a level robotics and investment in technology and that should be able to support production.
Eric Morse
There's a big question there. So microbreweries very prevalent in the in the markets today. And Andrew, do you have a plan for that? And what do you think the future holds?
Andrew
Great question. So I'm gonna take it from a couple of angles. So first of all, micro craft small, whatever you want to call it. breweries have been fabulous for the beer industry. If you look at the excitement in the interest of beer today versus 20 or 25 years ago, it wouldn't have been acceptable to in some cases to have a beer in your hand at a you know, high end cocktail party or something like that. 25 years ago, no, you have to have a scotch right. So now there's so much more offerings available for the consumer. And the tremendous styles that are available for beer, and it's done. Just a lovely, lovely thing and that is take a lot more money out of each of your pockets. Because it's premium eyes, the category and it used to be All on price. And now people don't think anything of going in and Nova Scotians, spending 450 or $5 for, you know, 473 mill 16 ounce can. And it's create a different competition because you have consolidation with the big guys. So the Anheuser Busch, so the bud lights of the world, and then and then the heinekens, and all those, there's massive consolidation there. One of the challenges in Canada that the small brewers face, is in most provinces, they're subsidized. And if they go above a certain threshold or volume threshold, they lose that subsidy. So you have a business, that's pick a number, Scott and EBIT da $400,000 nice business, and then we buy them, and now the VA does $150,000 or less, or they merge, and they lose the scale, they lose that markup advantage of both of those. And so that is, you know, that's something that they're grappling with is they're trying to figure out their exit strategies. You've seen a few instances where, both in Canada and the US where the big guys have come in, and they've absorbed that hit. And they've done it for one reason, and that's the brand. So they want the brand, because they think they can grow the brand. And because they think they need to keep that take up that shelf space. They'd rather have the shelf space from one of theirs than somewhere else. So for us, when we look at at those opportunities, and the reason that we we did one transaction, but it was really more for distribution reasons, then then for branding, you know, how do we overcome this small brewers tax advantage. And, you know, if you've got the business with the $400,000, EBIT, da you expect to be paid off the $400,000 EBIT, da not the $150,000 EBIT, da that you're going to have, that we're going to have, so that that creates an issue. And then ultimately, he comes, how strong is that brand? Because most of the brands are geographically constrained. So okay, I'm craft beer and pick a spot stewiacke, Nova Scotia. Now I'm not going to do I'm not going to go, you know, um, craft beer in Chicago, that's great. But when I go to Cleveland, I'm just the same as craft beer from everyone else. Why wouldn't I drink the Cleveland craft beer? Bose would be one of the ones that's been able to, I would say, do a good job as has steam whistle. They've gone beyond that. But most are very geographically limited.
Eric Morse
I'm not going to rephrase that one. Just go ahead.
John
I yeah, I think to a certain degree every day, those types of things that can impact your community creep into your thought process about, for instance, if if we all share more, what's the impact of that to our people, you need a you need a level of scale, inside your manufacturing operation to support the overhead and these types of things. People I think drive by our factory every day and say, there is Stanfield is still there, you know, john and Tom are still in the building things must be going swimmingly? Well, as Andrew alluded to earlier, it's not as it appears from the outside, on the inside of the battleground so to speak. When I was younger, I felt an enormous responsibility in my community. And that was bestowed on me at a very young age through my father, and would be my grandmother again, about having to give back to the community supporting the community. I did a lot of that. When I was in my mid 20s, to about the age of 40, before I had my first child where I backed off some of the community stuff. So I got a a rec center built in sureau. Stanfield was a big donor to that. And I was the energy behind getting $30 million dollars for that place through government and local. My father was instrumental in getting the new hospital built, and true and instrumental in raising money for the old hospital throughout the years. So there's there's always a face, there's a serious responsibility that you take on when you're CEO of a family business in the Maritimes. That has a significant size for that community. Now Trudeau has changed. There's a lot of good sized companies in Trudeau so there's a little bit of diversification that's happened. There's other people that can rise up and take on and bear some of that responsibility. But there's no question deep down inside and your soul in your heart. Some of these community impacts really impact your decision when you're because you're making a decision alone, really, it's your decision. So you can sit in a chair some night, you can be staring at a wall saying, when I make this call, it's gonna affect those 22 people over there and but at the end of the day, you're in business, you have to do the right things for your business to move it forward. And hopefully, you know, the decisions that you do make that are hurt first people in your community can get dispersed in a short period of time throughout the community.
John
Yeah, I've had to sort of, I've had to make an, you know, a number of tough decisions in terms of layoffs, restructurings and all that stuff, as I'm sure everyone else in the, in the room and had to and with my makeup, it's very easy, from not easy, but I quickly get to, you know, what's best for the long term of this business and generational. And, you know, it's better to have a business with x minus 15% employees and a community than x. So I don't, I don't struggle with that. long history, obviously, in the family in terms of of investing in volunteering in the community. I'm currently Chair of the economic development entity for St. JOHN, New Brunswick. So and that's giving back but it's also it's very much if St. John's not a competitive city or community for attracting human capital, then we're just not going to be successful long term. You know, capital, human capital is just so mobile. And there's so many opportunities for folks to go. And so that's, that's really part of how I got into that. I will just tell you a little bit, as I'm sure everyone here,you're sort of inundated with these requests for corporate donations and all that type of thing. And so we did an exercise about five years ago, where we did an extensive study, and we actually picked a corporate charity. And we wanted something that would go across Canada, but would have an ability to make a significant impact in St. JOHN, you know, some charities, the National offices in Toronto and you know, yeah, sure, Tim, so the money goes local, but most of its going to the national office for whatever they do. So we wanted that. We wanted something where our employees could actually volunteer as part of it. And then something connecting with families so and so we ended up picking Habitat for Humanity.
Eric Morse
Yeah, Keep going
John
It doesn't cause me any sleepless nights. There is not a logical succession plan in place. Currently, my kids are nine and seven, I did get a little heartstring the other night driving in the truck, Jackson, I were driving to hockey and he said, Dad, I'm thinking about coming into the family business. He said, I don't know what that looks like yet, but I'm thinking about it. And, and then he said, You can't sell the factory. And so you sit there in the front seat drive in the car, and you're going like, oh, man, if there's anything that could ever get you in a statement be that so, the the battle the the battle lines have been drawn. So the strategy needs to be mapped out for the next generation, but who knows where that will be. But from a from a fundamental perspective, it is the desire of the family to maintain the business in the family, whether that is a sixth generation leader in the future, hopefully we will get we would like to have that as a family always, as a head of the business via Stanfield or a generation of a Stanfield. It may happen to be that we need a transition we might need an external CEO president no different than Andrew referred to earlier that allows us to transition allows us to mentor that next generation. But on the radar today, it's not fully on the radar. If something were to probably happen to me, it would have to be an external CEO to come in place unless my father chose to come back into business which I would highly doubt that he would, but he would probably step back into a chairman type of role somewhere.
Andrew
So I used to be able to just say we have a role in the family business, you have to work outside the family business before you work in the business. End of answer. I now have three adult children. My eldest is an architect and so you never know but unlikely. ,y other one is a CPA with Ernst and Young and the other is a CPA. Well, I took the course the exams in in September, so let's just hopefully the bull CPA is or will be soon. And so it's becoming more of a topic. It's becoming more of a topic in my mind. I have had conversations with both of my younger children. So the accountants have out, you know, I'm not going anywhere, or hopefully I'm not my brother, Patrick is not going anywhere. And if anything sort of happened, if I get hit by the proverbial bus, he would be the next, he would go in there right away. And so you know, take some time, do some really cool things, you have just this incredible opportunity to work all over the world and really get exposed to things and stuff like that. And then it goes back to what I talked about earlier, right, in terms of the role of sort of leadership with a family, because I've got three kids, but my brother Patrick has three kids, and my brother, Matthew has four kids, and my brother, Charles, his kids are only like, one and two or something. But it's so there's, there's, there's not just my kids, it's and you get into really complicated, you know, well, whose kids can come and work in the business and what role and ultimately we have set up the succession planning, where I'm going to go on a little high horse here, but I don't believe cousins should ever own family business. I think siblings can own it. But I think when you get into cousins, I think they move from being owners to shareholders, and there's a completely different thing. And if they're going to be shareholders, somehow figure out how to give them some money. And then they can be shareholders a TD Bank Royal Bank, and get the dividends from there and go to the shareholders meeting once a year and complained to those folks. Right? And so we are because that's, that's, that's, that's what happens, right? They're like, well, I need the dividend of, you know, pick a number every year to support the lifestyle. And if it doesn't come in, well, I got this lifestyle to support right. And business doesn't work like that. And, you know, one of the things you know, about uncertain times, you just you don't know, I mean, john had the situation with, you know, the accountant, California, and then a couple more, I've had a similar situation where, you know, it was always there that we could lose this piece of business. But I think someone was talking about it here. It's like, but you know, what, we really don't want to talk about that. Because, you know, that's just, we're having a good day, and why would we spend the next five hours talking about and then it happens, and you got you got to deal with it. So that was a bit of a rant. But anyhow, we're trying to get to the point, we are going to get to the point where we will just it will go from generation five to generation six, just one family.
Eric Morse
It's your job to look after the family? Well, not the family business, the family wealth, well, not the family business.
Andrew
You know, talking about money in a family business, it varies from family to family, and it's like talking about sex in a family, like some families talk about it openly. And some it never happens, and you just appeared right. And each family is different. I would say that I'm perhaps more inclined to talk about those aspects. With the rest of the family than maybe previous generations, we're not sure if that's a if that's just a an advancement in time, or if it's my makeup versus the interests of various previous generations in terms of talking about it. But ultimately, it's just it's about communication. And I think about setting expectations, and really, you know, there's sort of two elements of this one is dealing with with children, you know, whether they're eight years old, or whether they're 58 years old, and what, what the what's the scenario there, what's going to look like, and then the other element is, is dealing with spouses. And that is that can be challenging, because, you know, everyone has expectations, everyone has a struggle, sometimes between a want and a need. And that's where as a as a family, there has to be some leadership. And again, it goes back to fair but not necessarily equal. And the littlest things can just be blown out of proportion, and can be caused a lot of angst. On the other hand, I would say that a family business that does have some wealth gives you the amazing opportunity as a family. And so one of the things that we've copied from another family, my parents are both in their early 80s is we now do every couple of years a family trip together. So I don't know it's all 23 or 24 of us, it's paid for by the business. And you know, CRA gets their 1,000% or whatever, but they're, they're awesome. And so, and that's a good way to have communication.
John
I would say the same thing. I think communication is very key inside of family wealth and inside a family business. And I agree with the owner like the prior generation just didn't do it. They didn't structure themselves to do it. There. weren't as open to do it, it probably took me I think until the late 2000s, to get my father to the table with my mother to talk to the sisters about how it was structured because they never knew how it was structured. And back in the, you know, before the succession plan kind of started, I would have two sisters that would have zero interest in the business, no interest in maybe doing anything with it, I don't know. But what I said to my father at the time, was, if I don't have controlling interest in our family shareholdings, I don't want to go through the succession process, because I know where it's gonna land at the end of day, so at least I had 100% of my vote, our family side, but I'm at the board table deal with potential shareholder decisions. And we had shareholder decisions. In the end, when we were going through the big disruption process. And through that process, communication with the cousins, was key on the family wealth versus family business as CEO, I focus very much on the family business and building the business and moving it forward. Because at the end of the day, that's going to generate value and wealth for the family. And what I always think of, and I've said this to my cousins inside of our family meetings, whether right, wrong or indifferent, but I said, Listen, if it's good for john, it's going to be good for you, because I'm in the driver's seat. And I'm not trying to drive this business into the ground, I'm trying to make it work. So I can drive wealth for my children. So they would have an opportunity to do what you know what I had as a child, which was to be able to travel and ski and play hockey and do all those types of things that everybody does. But so I think it's a combination of both. Obviously, if succession is not in the family, and it becomes to a sale, then it's in my interest as CEO to drive the business to build as big as I can, which will also drive the family well side, if there is ever an exit strategy to the business from the family, just saying, let's just roll the flag up. We've taken this as far as we can, and let's carry on with life. So it's a bit of a balance.
Andrew
It's just a small addition, unfortunately, there's just a lack of financial creativity amongst many family business owners. It's, Oh, I got four kids. So every kid gets 25% of the business and, and it's like, well, no, I mean, if you gave me a million dollars at 32 years old, instead of you know, that these shares at 70? Well, guess what? You know, I'd probably take five or 10%. You know, there's lots of ways you can do that. And to John's point, at a certain point that next generation has to have control, they have to be able to make the tough decisions, the decisions are tough enough. But if you gotta be worrying about going to the family council to get the approval on the capex budget, then there's something wrong there
Eric Morse
is less less question.
Yes. So you know, when cannabis first came in, it was brass Canada is not stupid, you know, why are we going to do this. And part of it was because all of my customers time in Canada, liquor boards, saw this cannabis opportunity. And every time you went to them to sell beer, all they wanted to talk to you about was cannabis. And so we were a little late to the party. And it was because of me, because I was a little late getting on board in terms of, I think, the same issues as you just getting comfortable with what cannabis is it. And then And this, again, speaks back to the family. One of the few times we actually had a family meeting, which included my mother, on whether we're going to get into the cannabis business, because it's it's, it's a big deal. And mother was a, it was an interesting comment my mother made. My mother's a veterinarian. And if you think about the whole issues with oxy cotton, and the Sackler family and what they did, she said, boys, if 10 or 15 years from now, it's proven that cannabis is actually harmful. Will you shut the business down? Yes, no.
Eric Morse
That's great. Well, last question for john. Just to keep things fair. Yeah, that'd be
John
Yeah, I mean, it's we used to talk about share of stomach in terms of, I don't know what it is share a brain cells or whatever. But it's, it's, it's definitely, I would say, there's not enough data so far, to prove that it's affected the business are the beer business, but I see signs that it has, and it just comes back to the consumer, who at the end of the day, and this is probably the person who's working for you, who has 25 bucks for Friday night. And I used to get it all with a case of beer and now I only get a six pack because he's bought something else.
Eric Morse
Do we have questions for john? Canada's watching john?
John
Yeah, well, so no international expansion has not been a priority for the business. Our priority is to do what we do well in the markets that we know well, which is essentially been North America. So when you think of Stanfield underwear, you think of Stanford's, but we have the number one, ski baselayer brand, the United States market, hot chilies, we have the number one brand of I should say, there's not a US military base layer, Homeland Security, custom Border Patrol, annex geo out of North Carolina. So what we have done is we've tried to strategically build brands, in markets in North America that we know well, that we can manufacture here that we can deliver here. And we can expand that way it's in or should we be focused on international markets, it all comes down to people and process where you're going to get it made? And what's your priority, in terms of, you know, where you're going to go with your business, and we were very lean in our management and management style, it would be very difficult for us to execute what we need to do in North America and all three business units. And then think about Okay, well, let's go. Let's go to Europe, because we decided, Sita, and let's focus on, you know, these five or six countries, I think we probably have to get there at some point, we do show up in little bits and pieces, with our hot chilies brand and places like Japan and South Korea, with our fire retardant safety business in Norway, South Africa and Australia and their fire protection programs. So we we do it, we don't do it probably as in your faces. Maybe we should. And obviously our company could do that we would have to, you know, get a lot of help with doing that. Because our focus is primarily North American in the channels and categories that that we know well. But there's no question. We have to look geographically, it's just a matter of when and then how we're going to take that approach to protect the Stanfield brand so it can be legacy forever, and the building can still stand up and people can come and see it and so on. Alright guys,
Introduction/Outro
Thanks very much. Thanks to John and Andrew, would you guys join me in thanking him?
Introduction/Outro
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