by Paul Martin
What I discovered in the coming years, as I moved from company to company, was that somewhere in senior management there were almost always people who knew what the problems were — and, more importantly, what the solutions were. It was just that they didn’t have the authority to make the hard decisions, they couldn’t convince the shareholders, or they were split among themselves about how to go about it. So my first job was simply to listen. Massive debates would break out around the table. I’d poke and prod, and I’d gradually come to a conclusion about what had to be done.
I extracted three simple rules from this experience. First, listen. Second, act. And third, don’t get distracted by non-essentials; get the core issues right and the rest will take care of itself. Occasionally, as a result of impetuosity to get to a decision, which was my natural inclination, I made a mistake and got myself in a hole. But not too often. When I became prime minister, I was accused of taking too long to make a decision, which gets me exactly wrong. I believe that you should take all the time available because it leads to a better outcome; but my weakness was and is to rush to a decision, not to worry it. There is a larger point to be made, though, about modern decision making, whether it is in business or government. There is a view that strong leaders in both fields make decisions and impose them from on high through a well-established hierarchy. There may have been a time when this worked, but rigid hierarchies don’t function so well in the information age, when lines of communication are no longer strictly vertical: they are horizontal and diagonal and every which way. Whether in business or in government, rigid now also means brittle. A leader needs to know where he or she wants to go but needs to consult widely before forging a path — both for what can be learned and to rally support. Consultation works not just because it gives the folks at the top a fuller picture of the information and ideas available; it also helps get buy-in where it is most needed. Some see listening and discussing as signs of weakness. I don’t! The way we shaped our budgets at Finance when I was minister and the way we got Aboriginal groups and the provinces and territories onside with the Kelowna Accord when I was prime minister are good examples of where reaching out worked superbly. If we learned anything from the experience of the Meech Lake and Charlottetown accords, it has to be that the old model of leaders deciding and citizens meekly following along needs to be junked.
When I joined the Department of Finance and sat round the table with my officials, they didn’t need to hear from me; they were the experts. I wanted to hear from them, and I wanted to challenge them to refine their positions — or change them if that was appropriate. At Finance, we had meetings where there would be long, bruising debates about policy direction, where everyone would argue like hell. Sometimes if I wasn’t getting the advice I thought I needed, I got mad. But by the end of it, I had heard all the arguments, probed all the weak spots, listened to all the advice, and was ready to take up my responsibility to make a decision. Just as in business, I usually found at the end that I had complete loyalty from the people around the table — not just to me but to the decision I had made.
When I was prime minister, some people said this style was too consultative: that my job was to lead, not to listen. I don’t believe that. Of course, the job is to lead, but listening is part of leading effectively. Throughout most of my life, in whatever position I’ve held, I’ve been lucky enough to have the final decision. I know what I think, but I have never believed myself to be an expert on everything, and I have always appreciated hearing what the best minds had to offer before making a decision.
CHAPTER FOUR
My Own Boss
Some of the most important lessons I learned at Power early in my career were about corporate vision and corporate responsibility, and I learned them in significant part because of the example of Paul Desmarais. He was very much at the centre of Quebec’s Quiet Revolution, an immensely successful businessman at a time when francophones in the province were only beginning to take their place in the corporate boardrooms. But it is important to remember that he was originally a Franco-Ontarian. I believe that this had something to do with his confidence in taking on the anglophone business establishment and also his willingness to look beyond Quebec’s, and Canada’s, borders for opportunities.
I remember one occasion when he told me over a drink that his biggest challenge as a businessman in Quebec was not penetrating the anglo establishment: it was breaking out of the psychology of the francophone business community, whose inclination was to work within their own closed circuit of friends and business partners. “Don’t take on the English” was the implicit message: “they’ll eat you up.” Desmarais was ready to take on not just anglo Montreal but Canada and the world. He was among the first Canadian businesspeople to recognize the rise of Japan, for example.
It was in Japan that I was able to demonstrate my own incisive grip on managing global business negotiations. Desmarais and I were there to meet with the huge investment house, Nomura Securities. The negotiations between the Nomura people and our group were conducted through a translator. When we were discussing our respective positions internally, however, we rarely felt the need to leave the room. They would speak among themselves in Japanese — which of course we could not understand — and we would speak in English. At one point, it occurred to me that they might actually be able to understand our internal conversations, so I suggested we switch to French. Desmarais thought that was a great idea, and that’s how we proceeded. That evening, there was the usual lavish dinner thrown for us, and our Japanese host began by toasting us in perfect English. I looked at my fellow Power Corporation executives and acknowledged their silent applause. Then, with a twinkle in his eye, our host turned toward me and concluded his toast in flawless French.
Desmarais was also quick to recognize the significance of the avalanche of petrodollars in the 1970s, establishing a relationship with Saudi Arabia’s oil minister, Sheik Ahmed Zaki Yamani. I did not play any role in his business dealings with the Saudis, but I do remember one related incident worth recounting. Consolidated Bathurst, which was a subsidiary of Power Corporation, leased a fishing lodge on Anticosti Island in the mouth of the St. Lawrence. Several of us, including John Robarts, the retired Ontario premier who was then on Power’s board, went up to the lodge for a few days of fishing just before an important Saudi visitor was being hosted there by Paul Desmarais. We were given one simple instruction: to stay away from a crate of especially fine French wine that was being held for the visit. That wasn’t a particular problem since there was another case of perfectly splendid wine that we made our way through. Except … As we were preparing to leave, someone realized we had emptied the wrong crate. The next couple of hours were spent in panic, rummaging through the garbage cans for the discarded bottles, into which we decanted the cheaper wine that had been intended for us. We never heard any complaints so I guess it passed muster, but I will never forget the sight of the former premier of Ontario piling into the Dumpster with the rest of us.
In 1971, Bill Turner left Power Corporation to become president of Consolidated Bathurst, in which Power had a 35 per cent stake. “Connie Bathurst,” as it was known, was one of Canada’s most important pulp and paper companies and, like the industry as a whole, was in the doldrums. Turner asked me to help him work on the turnaround — an offer I gladly accepted. He was one of the giants of the Canadian business community and working with him was going to be worth several MBAs. I was put in charge of five tissue mills in New York state and California, which were not part of Connie Bathurst’s core business, with the object of making them profitable and then selling them. It was heavy sledding against the more well-established brands such as Scott and Kleenex, but in the end we got the mills onto a better footing and sold them off. Turner, who was very much a modern business manager, then asked me to establish a planning department along the lines of one that had been pioneered at General Electric. It was a learning experience for me, but I must admit I preferred the crisis-filled
days of managing the tissue plants.
Turner had a rare insight into the workings of the Canadian as well as the global economy, and I learned an enormous amount from him. Looking back over my business career, I realize how lucky I was to have mentors such as Maurice Strong, Paul Desmarais, and Bill Turner as well as friends such as Ladi Pathy, who later became my business partner. It is no accident that I’ve wanted my sons, early on, to meet people such as Wallace McCain, Jimmy Pattison, Murray Edwards, and Gerry Schwartz — successful entrepreneurs with strong social consciences and a healthy pride in their own country. This is also one of the reasons that in my post-political career I have devoted so much energy to encouraging a sense of entrepreneurship in Africa and among Aboriginal Canadians here at home, giving promising young business people the chance to learn from the experience of others.
In 1973, Paul Desmarais asked me to take over as president of Canada Steamship Lines. CSL was a Power subsidiary at the time, and its chairman was Paul Desmarais’s brother, Louis, who later became an MP under Pierre Trudeau. Once again I jumped at the opportunity, this time because it was not just a fix-and-sell job but rather a chance to guide and build a company that I believed Power intended to hold on to over the long term. For me, with my passion for everything marine, it was love at first sight.
My first challenge was to deal with the troubled Davie Shipyard on the south side of the St. Lawrence River within sight of Quebec City’s walls. Among its many problems, the shipyard had a history of bad labour relations. So I hired a new labour lawyer by the name of Brian Mulroney.
My experience with the Davie Shipyard also gave me new insight into Paul Desmarais. He never forgot where he came from. Soon after I arrived at CSL, I toured the shipyard and discovered that an expensive new ventilation system that was supposed to suck fumes out of the paint shop didn’t work. Unless we ripped out the system and put in a new one, the workers were going to be breathing toxic fumes. The tricky thing was that as the new president of CSL who just been hired to turn the Davie Shipyard into a money-making operation, my first order of business was going to be to ask the board for money to dismantle a costly new system and make another huge investment to replace it.
Sure enough, the issue blew up at a board meeting. As I knew they would, some of the board members asked: “What is the return on investment?” My answer was: “There is a financial return, but the main return on investment is the health of the employees; this is the right thing to do.”
The discussion was not going well. In the midst of this debate, Desmarais arrived at the meeting late and asked for a summary. I explained my proposal, and that it was an issue of the health of the workers. “Good enough for me,” he said. And that was Paul Desmarais.
Canada Steamship Lines is the oldest shipping company in Canada, with a historic legacy. It is an amalgam of several predecessors, one of which had its origins in the mid-nineteenth century, when farmers on the Richelieu River in Quebec banded together to get their produce down the river and along the St. Lawrence to Montreal. By the time I took over, the company had sprawled into many areas. In addition to its shipyards, it owned one of Canada’s largest trucking companies, Kingsway Transports; the Voyageur bus line, which was the main passenger carrier in and out of the province of Quebec; and shipyards in Quebec and Ontario. But the core business was the transport of grain from what is now Thunder Bay to the elevators in Montreal, Quebec City, and Trois Rivières and the carriage of iron-ore back from Sept-Îles to the steel mills of Hamilton and the American industrial cities on the Great Lakes.
There were two kinds of ships on the lakes at the time: the conventional bulker, which was essentially just a very long box, and the self-unloader, which, as the name implies, contained a series of conveyor belts and a long boom that enabled it to discharge its cargo without extensive port facilities. Although they were used elsewhere in the world, self-unloaders were particularly important on the Great Lakes. The reason for this was that although they could load and unload much more quickly than a bulker, the self-unloading apparatus took a big chunk of the cargo space. For ocean-faring vessels that sometimes travelled weeks between ports, it wasn’t worth sacrificing the carrying capacity. But on the Great Lakes where the distances between ports weren’t as great, it made economic sense to load and unload quickly so as not to tie up valuable shipping and port capacity sitting dockside.
When I became president of CSL, the company’s core Great Lakes shipping business was coming under a terrible squeeze. The American steel industry was being smothered by international competition, mainly from Japan. Every day, it seemed, another American steel giant was declaring Chapter 11, or bankruptcy. At the same time as our steel customers were going broke, changes in the customer destination meant that more Canadian grain was heading west through Vancouver instead of east through Thunder Bay. In the meantime, our trucking business was facing increasing competition from much larger American companies, as Canadian trade patterns shifted more north-south. The whole thing was a mess, and now it was my mess to clean up, beginning with its most important division, shipping. CSL’s decline was steady and relatively fast, but it still allowed time for adjustment. Through the 1970s, we continued to turn a profit but at a declining rate of return. It was clear to me that we needed to do two challenging things: upgrade the workforce and build new and more efficient ships.
The Seafarers International Union (SIU), which organized much of the CSL workforce, had a colourful and contentious history. It had been built by Hal Banks, an American labour leader later accused of being mob-connected, who had been brought to Canada by the government at the end of the 1940s to keep communist-led unions off the waterfront and who had forged a relationship, albeit a tense one, with the president of CSL, T. Rodgie McLagan. By the time Banks fled back to the United States in 1964 to escape charges of beating up another union leader, he had established a tradition of rough-and-tough unionism. When I arrived at CSL, some of this was history but not the troubled labour relations that were part of Banks’s legacy. The leader of the SIU was (and still is as I write) Roman Gralewicz. He is a huge man with gruff manners that belie a shrewd and subtle mind. He is smart and honest and totally dedicated to his membership, but dealing with him is not for the faint of heart. We fought like hell, but over time I acquired great respect for him. His members were lucky to have him, but the truth is, so was the industry, whether it realized it or not.
It was a difficult time in labour relations more generally. Inflation was running wild and workers started falling behind from the moment they voted to accept a new contract. Gralewicz came to the table with some outrageous demands, using even more outrageous rhetoric. We clashed and we went through several strikes. But he always understood something important, which was that the technology of the industry was changing, and that his members needed training in order to keep up with it. In one of the rounds of bargaining in the late 1970s, Gralewicz came to the table demanding, among other things, an extra cent an hour to be devoted to the training and upgrading of seamen’s skills. The ship owners association, or at least the majority of its members, said no. I thought Gralewicz was right, and though it took some doing, we eventually got the training fund in place. In retrospect, who would deny that it was Gralewicz and the SIU, not the owners, who were the visionaries?
At the same time, it was clear that CSL was not going to survive, let alone thrive, if it remained wedded to its declining core market. I believed that as markets developed globally, CSL was going to have to launch out beyond the Great Lakes and into the world. While we were a very small player from an international perspective, there was one area in which we could claim to be a world leader, and that was in self-unloading technology. I was convinced that this technology was applicable in niche markets around the world. The difficulty was that the conventional “lakers,” including our self-unloaders, were very much engineered for their environment on the Great Lakes: they were long, thin, matchsticklike craft designed to pass through the lock
s of the Great Lakes and St. Lawrence Seaway. Seagoing vessels, in contrast, were short, wide, and stumpy, which allowed them to withstand the buffeting of ocean waves. It was too risky for us to build dedicated ocean-craft right away, so we decided to develop an “ocean-laker,” which was a hybrid capable of going to sea but also narrow enough to operate on the Great Lakes. This meant a loss in cargo capacity. However, it would allow us to test new markets without gambling the company’s future.
The idea didn’t have much attraction to Power Corporation, which was shifting its focus toward the acquisition of companies in the financial sector. So every time I came looking for $20 million or $30 million to build a new ship, they balked. It meant $20 million or $30 million less for building up holdings in which Power Corporation wanted to grow. Moreover, the board was understandably dubious about sinking vast sums into Paul Martin’s vision of taking CSL global when the company clearly had difficulties maintaining profitability in its historic Great Lakes market. For them it was all a gamble and a distraction. The tension between my plans and Power Corporation’s came to a head in the early 1980s when Paul Desmarais decided he wanted to make a takeover bid for Canadian Pacific (CP). Like CSL, CP was in both shipping and trucking, and he was concerned that his bid would be held up because of competition legislation.
So, in June 1981, Desmarais called me into his office on the top floor of the CSL building, as he had done many times before. He told me that he wanted me to sell another company: this time it was CSL.
“Fine,” I said, “except that I don’t want to sell it. I want to buy it.”
