Evolution of a Dynasty |
Nancy Southern fashions a family-controlled conglomerate for a new era
by Wes Lafortune
As Alberta grapples with the worst – certainly the quickest – commodity bust in a generation, it’s comforting to look upon an old standby like the Atco Group that has been through cycles before and persevered. As the need to diversify the province’s economy once again comes to the fore, the seemingly old-fashioned conglomerate is itself a model of diversification, both sectoral and geographical.
While pure-play resource companies took a hit in 2008, Atco posted a 13% increase in revenues and 20% earnings growth. That’s not to say the company hasn’t been hit by the sea change in the economy over the last 12 months – 2009 results so far aren’t so pretty and its stock value has suffered. But president and CEO Nancy Southern has a plan to combine the company’s time-tested Prairie values and willingness to take risks with a futuristic vision fuelled by green energy to uphold the company’s relevance in the new century.
We’ve been very fortunate to grow our company in the Alberta environment,” says Southern, giving a rare interview to Alberta Venture. Settling into her spacious 16th-floor office at the Atco Centre, Southern surveys the looming highrises in downtown Calgary before speaking.
“It’s been very prosperous for us as the result of the prosperity of the province,” she says with the unvarnished pride of a native daughter.
A legitimate Alberta dynasty, Atco was founded by Nancy Southern’s grandfather and father, Donald and Ron Southern. As the now legendary story goes, the elder Southern, a Second World War veteran returned to Calgary from overseas duty, joined the Calgary Fire Department and together with son Ron pooled together $4,000 in 1947 to purchase 15 utility trailers, which they rented out for $2 a day. That small business was incorporated in 1951 as Alberta Trailer Hire Co. and as Atco Industries in 1962.
“I grew up playing in the trailer lot and factory,” says Nancy Southern. At the head of the company since 2003, she is now responsible for more than 7,700 employees and assets of nearly $10 billion. Atco’s tentacles extend to more than 100 countries, with its core business divisions focused on power generation, utilities (natural gas and electricity transmission and distribution) and global enterprises (industrial manufacturing, technology, logistics and energy services). In July, the company announced a reorganization that could ultimately see the enterprises component spun off as a separate company, leaving the rest of the company a pure utility play more comprehensible to investors.
Though long associated with its home province, Atco’s appetite for international business can be traced to the vision of its co-founders. In the early years, they rapidly moved the company from trailers for hire to building mobile home units to expanding operations to Adelaide, Australia, where in 1961 the Southerns opened a 60,000-square-foot manufacturing plant. During this same period, Atco also supplied prefabricated homes to the Mangla Dam project in Pakistan.
Today the company has operations in South America, the Middle East and beyond. One of the Group’s proudest achievements right now is its work for NATO (North Atlantic Treaty Organization) in Afghanistan. There, more than 650 Atco employees toil in harsh, sometimes deadly conditions to deliver a range of services including ground support, baggage handling, security, water treatment and waste management. “It gives us great pride to be on the ground, in theatre, side by side with the Canadian soldiers,” Southern says before mentioning her own plans to visit Afghanistan later this year. Nonetheless, she says, the foundation of the company’s success remains in Alberta, where 80% of its employees are based.
“That model still works really well and that’s how we look at our international strategy,” she says. “Can we actually be successful here? Then we start to look at opportunities outside of Alberta.”
Even that historically sound tenet was sideswiped at Atco’s home base when, in December 2008, the company was forced to lay off more than 400 employees working at its Calgary manufacturing facility. They were constructing housing units that were to be installed as part of a massive camp owned by Petro-Canada and its partners at the Fort Hills oilsands mine near Fort McMurray. “That hurt us quite a lot,” says Southern. “Because we had ramped up in our manufacturing business, particularly here in Calgary, up to 650 personnel that were just building the units for the camp that was supposed to house just over 2,000 people.”
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