Evolution of a Dynasty
Nancy Southern fashions a family-controlled conglomerate for a new era
by Wes Lafortune
That “shock wave” prompted Atco to do some navel-gazing and scrutinize all of its operations to create a corporation that’s leaner and with fewer redundancies. An example is the recent combining of Atco Structures Inc., Atco Frontec Corp. and Atco Noise Management Ltd., now known collectively as Atco Structures & Logistics Ltd. “I think the Fort Hills project really gave us the impetus and momentum. We got traction within all of the companies to say, ‘Oh, this is very serious,’” says Southern.
Another recent setback for Atco has been the province’s decreased appetite for electricity. Southern says demand in Alberta is off nearly 3% year over year. “Just to give you a feeling for how big that is, in the early 1980s when the NEP [National Energy Program] was introduced, we still had 2% growth in our utility business,” she says. “And that’s not happening right now.”
Although Atco received an undisclosed payment from the Fort Hills partners for cancelling the camp project, the outlook remains tentative. In a May research report, CIBC analysts Petro Panarites and Osvaldo Matias of CIBC World Markets warned of “considerable” downside risk to the Atco Structures business and complained of the tightly held company’s “comparative lack of disclosure” that failed to put their fears to rest. (The company retains a two-tiered share structure, voting and non-voting, that is the bugbear of corporate governance purists.) Panarites and Matias further commented that “the impact of negative regulatory decisions [related to subsidiary Canadian Utilities Ltd., also helmed by Southern], weak power prices, poor spark spreads, low manufacturing/development activity in the energy and commodities sectors, and potential environmental expenditures that are not recovered through higher rates” weighed on the company’s stock valuation.
Despite all the doom and gloom, Southern, like her father and grandfather before her, is a calculated risk-taker; she believes the next great opportunity for Atco is the development of clean energy. “We’ve been working very hard on a number of environmentally friendly projects and developing our green energy strategy,” she says. “And that really kept us going and I think will position us well for the future.”
Atco recently resurrected studies the company had commissioned two decades ago about the potential of hydroelectric energy on the Slave River in northern Alberta. Using that data as a springboard, Southern says the company now envisions a “Green Corridor” that would extend from the Northwest Territories and Yukon all the way down the eastern edge of Alberta to the Montana border.
The green initiative is something of an about-face for a company that lagged its power-generating peers at climate change mitigation measures such as buying emissions credits. Perhaps recognizing a tantalizing business opportunity more than embracing environmentalism, Atco nonetheless has both expertise and infrastructure in place to make a real difference to Alberta’s greenhouse gas emissions. “When we look at our transmission in the province of Alberta [and] the fact that we have distribution and transmission and some generation in the Northwest Territories as well as the Yukon, then how do we optimize that? What’s that going to look like in the future?”
Atco estimates such an eco-corridor could harness more than 25,000 megawatts of energy created by the currents of the Peace, Athabasca, Slave, Bear and Mackenzie Rivers. “We actually have an incredible franchise to go open up Canada’s North and deliver what looks to be the product of the future, which is non-emitting electricity,” says Southern, who sounds ready to leave her own mark on the company and on the province.
Still relatively new at running the show, Southern admits she has given little thought to succession planning. She says the door is open for one of her children (or sister Linda’s) to play a future role in what is arguably Alberta’s best known corporate brand but she indicates that no firm plan exists because of the young age of the children. “This business has become very complex and it has many facets to it,” she says. “I can certainly see participation at the board level as a principal shareholder but I’m not sure they have to be involved in the day-to-day operations. They may show some desire at some point in time.”
One thing’s for sure: Atco will remain a family business. “This company isn’t for sale,” says Southern. “I’ve had this passed down from my grandfather and father. I feel a very strong commitment to the people of Atco and to our privilege to operate in the communities of Alberta, anywhere we do business.”
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