Four years ago, Jim Shepard was putting the finishing touches on a children’s novel he had co-written with his grandsons when the business community came knocking.
The former chairman and CEO of Finning International (TSX:FTT) was told B.C.’s forestry industry was on a steady downward slide, and Canfor (TSX:CFP), one of its major players, needed a leader who could turn the company around.
“I walked in here and basically what I saw was a lack of urgency,” Shepard said.
The “roller-coaster ride” B.C.’s forestry industry was about to take was the result of the collapse of the U.S. housing market, which is the province’s primary market for lumber products.
“The first thing I had to do was instil a sense of urgency, and I think that’s probably the first step in any turnaround. People have got to understand the situation isn’t normal and significant changes need to be made.”
He adopted a plan he had earlier used to transform Finning into the heavy equipment giant it is today.
He immediately cut his pay 25%, his executives’ pay 15% and management’s pay 10%; compensation for all other employees was chopped 3%.
And then he sold the company jet.
“It’s very difficult to fly into an operation in a corporate jet and say we’ve got to cut our costs … what I wanted to do was quickly make sure that everybody understands this misery was going to be shared by all of us, including me.”
Shepard was hired in 2007 as an interim CEO.
He decided to stay on for a year to get the business in line, but the downward spiral continued and one year turned into nearly four.
While Canfor diligently worked to get its costs in line and conserve cash, Shepard and his executive team focused on developing long-term relationships with buyers in Asia, specifically China.
It paid off.
“If you go back to 2004, 2005 … 0.2% of our market was going to China, about enough to build a couple cigar boxes,” he said. “Today, we are shipping to China the equivalent production of four of our sawmills, so … hundreds and hundreds of our employees are working today because of our sales success in China.”
In February, Canfor released its year-end results for 2010. The company’s net income for the year totalled $161.3 million, or $0.49 per share, compared with a net loss of $62.8 million, or $0.50 per share, in 2009.
Canfor has also announced a three-year strategic plan to invest $300 million in sawmill improvement projects.
And Shepard has decided to retire on a high note.
“When I knew we were going to be declaring our fourth quarter of consecutive profits, it seemed to me this was a good time to make my exit,” he said, adding that he plans to finally publish the children’s novel he set aside when he joined Canfor.
Don Kayne, Canfor’s vice-president, wood products marketing and sales, will take over as CEO in May.
John Winter, president and CEO of the BC Chamber of Commerce, described Shepard as a “hard-nosed” leader who will be missed by the business community.
Said Winter: “He seems to be always in a position to move things from bad to good, and I think that’s one of the characteristics he’s epitomized.”