August 21, 2017

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Made in Manitoba

Province's business and innovation sectors enjoy rich history, promising future

From grain handling to e-commerce, business innovators keep pushing Manitoba to the fore

The history of Canada’s largest grain-handling company doesn’t begin at Portage and Main. Instead, it starts at a modest tailor’s shop in Kingston, Ont., in the 1840s.

The proprietor was a haberdasher to area businessmen and farmers and, at one point, he began taking grain instead of cash in payment.

Deciding there was more potential in Upper Canada’s grain trade than in clothing, he founded James Richardson and Sons Ltd. in 1857 — setting his descendants on a path that would one day weave them into the fabric of Winnipeg’s business community like few other families.

SUPPLIED</p><p>The Richardsons' grain business building in Kingston, Ont., in 1982</p>

SUPPLIED

The Richardsons' grain business building in Kingston, Ont., in 1982

The man who moved the company to Winnipeg — the founder’s grandson, James Armstrong Richardson — would go on to build networks of grain elevators, shipping terminals and radio stations and founded a national airline that would become Air Canada.

In 1969, his son, George Taylor Richardson, operating the controls himself, would break ground on a 31-storey skyscraper that stood for years as the city’s tallest.

As Canada celebrates its 150th birthday, the Free Press will reflect on Manitoba’s place within the nation. In this installment, we look at the rich past and a promising future for Manitoba’s business and innovation sectors. Specifically, three companies, though likely not household names, that are leaving a footprint across Canada and around the world

Some interesting parallels:

In the late 1800s, James Richardson and Sons became one of the first grain companies operating in Western Canada. In 2017, the Composites Innovation Centre is dedicated to creating a new business sector focused on producing composite components from agricultural byproducts. (Think bio-fibre instead of carbon fibre.)

From 1916 to 1941, Ford Motor Co. built cars in what is now the Robert Fletcher Building on Portage Avenue. In 2017, DMT Development Systems Group Inc. is helping dealers around the world connect with customers and sell more cars.

In 1955, Winnipeg businessman Albert Cohen brought Sony to Canada, securing distribution rights and marketing a small transistor radio through Eaton’s stores across the country. In 2017, Bold Commerce is helping online retailers around the world sell Sony and other products to thousands.

 

● ● ●

Supplied</p><p>George Richardson sits on the auger at the groundbreaking of One Lombard in Winnipeg.</p>

Supplied

George Richardson sits on the auger at the groundbreaking of One Lombard in Winnipeg.

At the turn of the last century, railways were opening up Western Canada’s fertile farmlands to world markets.

Sensing a need to be at the centre of Canada’s new agriculture economy, the Richardsons pulled up stakes in Kingston and set down roots in Winnipeg.

The official year of the head office move is said to be 1923, but the family had been in Manitoba long before, building the company’s first country elevator in Neepawa in 1890 and establishing a presence in Winnipeg in 1896. The firm’s first office was on Princess Street, in a building that now forms the facade of Red River College’s downtown campus.

Supplied</p><p>James Armstrong Richardson</p>

Supplied

James Armstrong Richardson

Today, James Richardson and Sons is the parent of a vast array of enterprises, from agriculture powerhouse Richardson International to Tundra Oil & Gas to wealth managers Richardson GMP Ltd. to real estate holdings, including its 31-storey headquarters and a portion of the Portage Avenue and Main Street underground complex and a stake in True North Square, under construction at Graham Avenue and Carlton Street.

Hartley Richardson is the sixth-generation Richardson who holds the title of president. He attributes the company’s longevity — in a world where family enterprises often fail in the second generation — to the constant inclusion of all family members, even those not directly employed by the firm, and steadfast devotion to putting the company first.

"We meet four times a year... if a member of the fifth or sixth generation isn’t involved in the business, and many of them aren’t, they still feel connected to the business and have a sense of responsibility for it," he said.

He’s unable to pick one watershed moment for the company, beyond the initial decision to enter the grain business and go on to become Canada’s largest grain handler.

"I like to think it’s been a continuation of innovations. I mean, this is a company that’s gone through two world wars, depression, droughts, market crashes and throughout that, we’ve been able to invest and grow and develop, so it’s hard to pick one innovation or one milestone that stands out."

In the last five years, the firm has invested billions of dollars, including the $900-million purchase of the grain-handling and food-processing operations of Viterra Inc. in 2012, the $1.075-billion purchase of pipelines in southeast Saskatchewan from Enbridge Inc. in 2016, and buying Macquarie Private Wealth Inc. in 2013, 500 oil wells in Manitoba in 2014 and Wynward Insurance Group in 2015.

It continues to invest heavily in new technology through Tundra Oil & Gas, which Richardson said bodes well for Manitoba’s oil and gas sector. He said new technology — water flooding and CO2 injection — will drive efforts to extract as much oil as possible from the Bakken oilfield, which Manitoba shares with North Dakota and Saskatchewan.

RUTH BONNEVILLE / WINNIPEG FREE PRESS</p><p>Hartley Richardson in the boardroom on the 30th floor of the Richardson Building. </p>

RUTH BONNEVILLE / WINNIPEG FREE PRESS

Hartley Richardson in the boardroom on the 30th floor of the Richardson Building.

Going forward, Richardson said, expansion of the company’s value-added food-processing capabilities is a priority. And while he can’t foresee any expansion beyond the company’s current collection of enterprises, he’s not ruling them out.

"We’ve got lots to keep us busy and we want to focus on those opportunities rather than go out and put another leg on the stool," he said. "That day may come, and we’re very opportunistic in that way and if something comes along, we’ll certainly look at it.

"We want to be a leader in the businesses we’re in. We think we can do well if we stick to our own sandbox, so to speak."

From the Richardsons to infomercial pioneer K-Tel Inc., Manitoba’s economy has long punched above its weight class. It’s home to North America’s largest bus manufacturer (New Flyer Industries Inc.), it has been a pioneer in satellite and rocket technology (Bristol Aerospace, now known as Magellan Aerospace Corp.) and lays claim to a number of medical breakthroughs.

Innovations in medicine include the development of a serum — WinRho — to battle Rh disease, which can be fatal to unborn babies whose blood contains a different Rh (or Rhesus factor) than their mothers’ blood.

As well, the National Microbiology Laboratory has been a leader in research into HIV and a promising cure for Ebola (a cocktail of monoclonal antibodies called ZMapp).

There’s Oakbank electronics firm iders Inc., which produces an array of technology that allows trains to communicate with each other and with their owners. The company was recently bought by American giant GE Transportation but remains in Oakbank.

There’s MicroPilot, a company based just north of Winnipeg and founded in 1994 that bills itself as a world leader in supplying electronics for unmanned aerial vehicles or drones. According to the company, it has 850 clients in more than 70 countries.

RUTH BONNEVILLE / WINNIPEG FREE PRESS</p><p>Michael Benarroch, dean of the Asper School of Business at the University of Manitoba says Manitoba has created an environment where entrepreneurs flourish.</p>

RUTH BONNEVILLE / WINNIPEG FREE PRESS

Michael Benarroch, dean of the Asper School of Business at the University of Manitoba says Manitoba has created an environment where entrepreneurs flourish.

Michael Benarroch, dean of the Asper School of Business at the University of Manitoba, credited the province’s stable economy — no booms but also no busts — for allowing Manitoba to foster a stable labour force of skilled workers that in turn has translated into success for its many companies, large and small.

Manitoba doesn’t have thousands of oil workers, for example, rushing in when prices are high but fleeing when the market crashes.

"We’ve created an environment where homegrown entrepreneurs can flourish," Benarroch said. "You have a whole generation — the Richardsons, Cohens, Pollards (of Pollard Banknote) — who were really innovative and took some risks and made some real commitments to the province.

"And they stuck with it here and became world leaders in their industries."

Most importantly for the local economy, he said, "They hire Winnipeggers. They succeed in that way, and they have a very steady supply of skilled workers."

The steady economy has also created a low-cost environment for business, Benarroch said, with reasonable real estate costs that not only provide less expensive office and factory spaces but also reduce pressure on wages for employees who don’t have to pay Vancouver or Toronto prices.

 

● ● ●

 

ARCHIVES OF MANITOBA</p><p>Ford Motor Plant on Portage Avenue, circa 1919.</p>

ARCHIVES OF MANITOBA

Ford Motor Plant on Portage Avenue, circa 1919.

A little-known tidbit of Winnipeg’s business history is the operation of a Ford assembly plant on Portage Avenue.

Built in 1915 and opened in 1916, the 113,349-square-foot operation was spread over two buildings and, in 1929, reached peak employment of 470 workers.

It was shuttered in 1941 but stands today as the Robert Fletcher Building at the corner of Portage Avenue and Wall Street.

If Winnipeg’s automotive history was about moving metal and rubber, its future is about moving bits and bytes.

Today, Glen Demetrioff is considered a world leader in something called lead management, a software system that guarantees a 100 per cent response rate for consumers who reach out for quotes or sales information while browsing automotive manufacturers’ and dealers’ websites.

It wasn’t always that way.

In 1990, Demetrioff was working for Woodhaven Toyota (now Birchwood Toyota). Sales manager by day, amateur computer programmer by night.

"I didn’t have a university background in computer programming, so I was self-taught," said the president of DMT Development Systems Group, a multinational tech firm serving the car business. "At one point, I asked myself if I could write a program that would help my sales staff.

"That’s what gave me the bug to develop software for the automotive industry."

Eight years later, he’d leave car sales behind and forge on with DMT, a name for which he manufactured an acronym that really is just based on the three prominent consonants in his last name. DMT began by building websites and online solutions for automakers and dealers.

In 2012, Demetrioff struck on the software that would propel his firm to sign up 1,300 dealers in Canada and 400 in Europe as clients. It’s called Rapid Response and it elevates the collection and distribution of website-generated sales leads — when a consumer requests a sales quote — to a level that precludes any from getting lost in the hectic hustle of a modern dealership.

With Rapid Response, sales leads are flash distributed to a dealership’s entire sales force through smartphones or tablets. At that point, the lead becomes a jump ball: the first sales representative to respond gets it. If something comes up and that staff member is unable to respond within 20 minutes, the lead is redistributed.

"Car sales are often all commission-based, so it’s not like the salesman doesn’t want to respond," Demetrioff said. Instead of an emailed list of leads getting forgotten in a busy sales manager’s inbox, leads go straight to the staff most likely to respond.

BORIS MINKEVICH / WINNIPEG FREE PRESS</p><p>Sharon and Glen Demetrioff of DMT Technologies.</p>

BORIS MINKEVICH / WINNIPEG FREE PRESS

Sharon and Glen Demetrioff of DMT Technologies.

It’s been quite the ride. DMT is privately held, so revenue information is not available, but it currently employs 200, has clients and offices on two continents, has a debt-free balance sheet and recently signed on a new equity partner after a major but unspecified investment from Sageview Capital, an American private-investment firm.

"Every lead costs $50, $100 or $200, depending on the media used to drive that lead in, so there’s a real cost to lost leads," Demetrioff said. "And consumers are getting tired of coming into a dealership and not getting a proper customer experience, so this is meant to alleviate that."

The experience is further enhanced by the use of cloud-based resources that can deliver to customers either brochures or driving directions to the dealership. "The customer feels welcome and that’s the experience we deliver."

Also on tap from DMT is a product launched in 2016 called Digital Interview, which is designed to elevate what has been "a deplorable situation" in which potential customers offered the opportunity to chat are connected not with actual sales staff but with a chat agent whose primary role is to take contact information and pass it on to dealers.

Instead, Digital Interview operates much like Rapid Response: once a potential customer has been verified as seeking sales help, a page goes out to a dealer’s sales staff and the customer is then connected directly to the dealership representative.

The future holds at least two more products, Demetrioff said, including one he hints will involve two-way video communication much like the ubiquitous Apple app FaceTime. "I can’t give you too much information, but they will be industry turners just like the last two.

"Our mission isn’t to reinvent the entire dealership game plan, it’s to identify the pain points and find solutions to make those go away."

DMT has no plans to leave Winnipeg.

"We have great talent here," Demetrioff said. "I’d put our programmers up against anyone."

● ● ●

Jason Myers may have never met Albert Cohen, one of the entrepreneurs behind Winnipeg wholesaler Gendis Inc. and the man who brought Sony to Canada, but the two share a unique connection through the threads of time.

In 1955, Cohen and Sony Corp. co-founder Akio Morita shook hands on a deal that changed the face of the electronics industry in Canada. Cohen would found Sony Canada, and began by marketing the Japanese giant’s first transistor radio through Eaton’s stores across the nation.

 Sony of Canada’s Mark Saddleton said that simple handshake left a lasting legacy. 

"It launched with an initial order that was a landmark transaction and milestone, both as the beginning of an unbroken legacy of sales in Canada, and also as the first export of a Sony product to a market outside of Japan," Saddleton said in a statement.  

"Our long history with Gendis brought extraordinary growth and business success for both partners, and we strongly believe Sony in Canada would not be where it is today without the close friendship between Cohen and Morita."

Wayne Glowacki / Winnipeg Free Press</p><p>Albert Cohen</p>

Wayne Glowacki / Winnipeg Free Press

Albert Cohen

Gendis would later sell its 51 per cent stake in Sony Canada back to the parent corporation for $207 million in 1995. The head office for Gendis is still located at 1327 Sony Place.

Today, Myers and Bold Commerce are helping 185 customers, among many other clients, market Sony and other products online using some unique, made-in-Winnipeg software solutions.

Myers, Stefan Maynard and brothers Yvan and Eric Boisjoli co-founded Bold Commerce in Myers’ basement, essentially by asking a simple question: what element of in-person sales is missing in online e-commerce?

The answer, it turns out, was easy: upselling, where a sales representative suggests related items to customers in a bid to increase the value of the sale.

A salesperson who suggests someone about to buy a set of wheels might want to buy a set of locking wheel nuts, a waiter who recommends a particular wine with a meal or an archery outfitter who says, "Of course, you’re going to need arrows with that bow," are all upselling.

Such was born Bold’s first product, an application that could be added to a retailer’s Shopify-based website.

RUTH BONNEVILLE / WINNIPEG FREE PRESS</p><p>BOLD offers a unique in-video shopping experience that allows people to purchase desired products directly from videos they are watching.</p>

RUTH BONNEVILLE / WINNIPEG FREE PRESS

BOLD offers a unique in-video shopping experience that allows people to purchase desired products directly from videos they are watching.

Today, Bold is offering a unique product called Inviid, which adds an e-commerce component to YouTube videos or videos on a customer’s website.

Let’s say you’re watching a how-to video on carpentry and the host is using a tool you’re interested in buying. Instead of having to figure out what brand the tool is and then search elsewhere to find it online, Inviid places tags on items in the video available for online purchase. You click on the item, add it to your cart and can continue watching or end the video and go to the online checkout to buy the item.

Myers found the pain points in online selling the hard way, building up an online retailer through his father Ray’s Heartland Archery in Elmwood, selling bows, arrows and accessories online. Myers said a hardship at the time was dealing with an industry that hadn’t yet embraced the idea of drop shipping, where an online retailer would make a sale and have the item shipped directly to customers from the factory.

Bold Commerce markets its Inviid, Upsell and other apps, including ones that allow customers to compare items, to online retailers around the world. Like DMT, Bold carries no debt and has no plan to leave Winnipeg. They employ 170.

"What would we gain by moving to a more expensive city?" Myers said. "Instead, we can invest the money that would go into higher real estate costs in the business."

Myers said Bold’s vision is to expand — "We’ve stated we want to be a billion-dollar business with a staff of 500" — and build what he calls a high-tech campus in Winnipeg, where Bold can help incubate other software companies.

"Instead of investing cash, we’ll invest our expertise" in these start-up companies, Myers said. "We could have used something like that when we started and we can help them learn from the mistakes we made."

RUTH BONNEVILLE / WINNIPEG FREE PRESS</p><p>Bold owners Jason Myers (front right), Eric Boisjoli , love to play as hard as they work.</p>

RUTH BONNEVILLE / WINNIPEG FREE PRESS

Bold owners Jason Myers (front right), Eric Boisjoli , love to play as hard as they work.

Myers said from the start, Bold’s vision was of a workplace that inspires creativity, saying the company is about 80 per cent invested in ROWE — Results-Only Work Environment — thinking. In other words, if you get the results expected, on deadline, how or where you achieved them is of little consequence.

"If our staff think they can be more productive working in a Starbucks, away they go," Myers said.

Also unique are daily catered lunches. They are expensive but have returned their costs repeatedly in enhanced creativity and results, Myers said.

Foosball, table tennis and video games are available at all hours to staff to not only decompress but also to capture those "a-ha" moments that often elude someone trying too hard but magically appear once the brain releases some of its pressure.

Barriers are few, with staff encouraged to cross-pollinate ideas across various departments and the founders as accessible as anyone. For a recent interview, Myers was dressed in jeans, a T-shirt, red hoodie and red Bold baseball cap. Instead of putting up a barrier with a three-piece suit, he’s fitting in as one of the staff.

● ● ●

PHIL HOSSACK / WINNIPEG FREE PRESS</p><p>Composites Innovation Centre CIC's President/CEO, Sean McKay.</p>

PHIL HOSSACK / WINNIPEG FREE PRESS

Composites Innovation Centre CIC's President/CEO, Sean McKay.

If the Richardsons are devoted to turning agricultural products into food, Sean McKay wants to turn what’s left over into new opportunities for Manitoba’s economy.

McKay is president of Composites Innovation Centre, a government- and industry-funded research group dedicated to finding new ways to turn agricultural waste, and at times purpose-grown crops, into new forms of composite components.

"In the simplest terms, we’re trying to create a business sector," he said.

As the name implies, composites create items out of a variety of components. In layman’s terms, the most well-known composite is carbon fibre, where strands of carbon are woven into mats and then set with resins into incredibly strong structural components.

Instead of carbon, McKay’s team turns strands of flax or hemp or other crops into similar components. The centre’s lobby highlights several examples, including half of a prototype for an electric car, a gas tank and fenders for a motorcycle, ceiling tiles and a hood and wheel fenders for a farm tractor produced by Versatile.

"We use the tagline ‘Grow your own tractor,’" McKay said with a chuckle, clarifying the use of those particular composite components is for now still limited.

The challenge for McKay is encouraging changes to farming practices such that farmers find it profitable to process waste into a raw material for use in composites rather than simply tilling it in or burning it. The catch-22 is making it expensive enough to be worthwhile to farmers, but not so expensive the materials become too costly to use.

The centre is non-profit and earns its money through government grants and in contracts with industry. New Flyer Industries is one such client, as the centre develops designs and processes for bio-fibre body parts for electric buses and then turns the designs and processes over to New Flyer’s suppliers.

Research at the centre is focused not only on using agriculture products for the underlying fabrics of composite panels, but also for the resins that lock those fabrics into place. McKay said work towards soybean-based resins is promising and will help displace some of the harsh chemicals currently in use.

The key breakthrough will come when a bio-fibre composite rivals carbon fibre for strength.

● ● ●

PROVINCE OF MANITOBA</p><P>A bus is manufactured in Winnipeg in 1968.

PROVINCE OF MANITOBA

A bus is manufactured in Winnipeg in 1968.

As head of a company older than Canada itself, Hartley Richardson has a unique perspective on the province’s past and its future.

"I would say the future looks bright for Manitoba, and I think that’s evidenced by the fact young people are graduating in the province and staying, rather than looking for opportunities somewhere else," he said.

"I’m well aware that when we’re looking to fill positions, we look across the country and we’re having no difficulty bringing people back to Winnipeg. In fact, they’re quite enthusiastic about coming home.

"I think that base is fundamental to the well-being of any province."

 

kelly.taylor@freepress.mb.ca

Read more by Kelly Taylor .

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