Succession Success

Handing the business off from one generation to the next is neither easy nor obvious these days, and northwestern Ontario contractor Leon DeGagne knows this as well as anyone. Still, thanks to a long-term plan, his son Blaine is well on his way to taking over the reins.

Leon DeGagne has seen his share of the forest industry's notorious business cycles over the past 40 years. While the industry is in a clear slump just now, he's hoping that as markets settle down and an ageing contractor workforce retires, there will be plenty of opportunity for his 28-year-old son Blaine. In fact, he's betting on it.

"It's nice to have him coming up behind me," the easy going logger says over breakfast in Atikokan, a small town about two hours west of Thunder Bay, ON. "But I never pushed him, and in fact it's a bit of a gamble these days, as it is basically your retirement you're gambling with. Many loggers aren't willing to do it with the way business gets leaner ever year, or they don't have kids wanting to take over anyway. It's a big challenge the industry is facing - finding the next generation - and so far I don't see anyone doing a lot to make it easier. It's a little short-sighted of the companies if you ask me, but I suppose they'll learn in time."

No doubt they will, but Leon is already doing his part by carefully bringing his next generation into play. His son has been in the business full time for seven years, and had worked as a summer student for several years prior to that. Still, before Blaine made any commitment to joining the business, Leon wanted him to see first hand what he was getting into.

"I wanted Blaine to work three or four years before deciding anything, so he'd have an idea of what's involved - the hours, the stress, the environment, the business pressures. He did it, 14-hour days and all, and now I know he's committed."

Or perhaps should be committed? Leon himself admits to doubts even now, but says his son's endiusiasm, hard work, and an impending shortage of quality contractors are all helping to ease his mind.

"Yes, I wonder at times whether it makes sense for the whole family to be in the fight if it turns out to be a losing battle, or if it's going to get worse before it gets better - that's just the state of the industry over the past while. But we're in it, and I've shifted more and more of the daily responsibilities to Blaine, and am getting the guys to go to him with problems. He's putting in the long days, he's getting the calls at night or on the week-ends when he's supposed to be off," Leon says with a knowing smile. "To be honest, he's handling it all very well."

Full phase, full tree

What Blaine is handling is a 100,000 m^sup 3^/yr stump-to-dump operation in a part of northwestern Ontario that features extreme weather, uneven ground, scattered timber, and now a chronic shortage of skilled operators thanks to Alberta's oil sands. The day CFI dropped in, Blaine has just received news that one new operator had quit before even working a shift ("You want me there at what time in the morning?"), and was in the midst of arranging for another operator to start up.

"For years we've had the same people," Blaine explains. "Forever, really, but within the last five years we've seen a complete turnover, except for one guy."

Welcome to the business, Blaine. In a company that employs 15, including office staff, maintaining and managing staff under such conditions can be a full-time job in itself. Turnover on this scale obviously affects production and costs as well, but to date the crew has been managing.

The operation has been built up over the past 40 odd years, as Leon acquired timber allocations from smaller contractors, adding gear and crew along the way. What began as a singletruck log hauling operation in 1968 now spans five separate licenses and daily activities that range from road building to log hauling. Products are now manufactured and sold to a variety of local mills that includes Buchanan's Atikokan Forest Products (jack pine), Ainsworth's OSB mill in Barwick, ON (poplar and birch), Columbia Forest Products' veneer mill in Nipigon, ON (poplar peelers), and Abitibi-Consolidated's pulp mill (small volumes of spruce).

Leon says they average about 35 km of new road per year, of which 15 km are what he calls "good quality summer gravel road" and the rest are winter access roads. The crew uses three 30-ton excavators from Komatsu and John Deere to handle it, with one of the Komatsu 300 HDs (400 bottoms) floating between loading and roadbuilding as needed. Like many contractors, Leon used to use dozer-hoe tag teams, but now finds the dozer is rarely used.

"I found it was tough to get guys who could run both dozer and excavator well, and in the rough ground and shallow soils here, the excavators do a better job. The 300 size is a little big, and you use more fuel, but the pay-off in production is well worth it. The ability to reach out and handle more material and side cast without repositioning the machine is huge."

The two full-time road builders boast thumb attachments, which Leon says is not an option.

"Since we started buying thumbs, we quit buying windshields," he says with a grin. "Otherwise, the operators are always trying to get that last little piece in the bucket and then, boom, out goes the windshield. I bet we bought a thousand of those little bottom windows if we bought one."

The crew also run two Volvo articulated dump trucks, throw backs to the days when they used to build a lot of road for the larger Crown operators. Leon says the combination can build a lot of road in a day. Given the sparse timber, that efficiency is welcome.

"Last year we built over 35 km of road to get just over 95,000 m^sup 3^ of timber - that tells you the kind of wood we have here."

The DeGagnes' newest excavators are the two Komatsu 300HDs bought in 1998. They have put in eight good years, but are due for replacement any time, Leon says. Any time the industry turns around, that is, reflecting a common concern among loggers with ageing gear.

"This is the year we were supposed to buy new roadbuilding gear, as our other gear is up to date. But it's been one of those years where the state of the industry makes us a little nervous, so we're re-building to last another year or so," he adds, citing a lesson in business caution that is not lost on Blaine.

Preferred Producer

For logging gear, they start the 100% full-tree operation off with a single Tigercat 860 buncher with that manufacturer's 300� rotation head. This is the crew's second Tigercat buncher, and they report very good luck with the machines. In fact, when it came time to replace their last one, they were talked into a demo on a competitive machine. Leon recalls that the trial was short-lived.

"We have two buncher operators, and the first day one ran the new buncher and the other the Tigercat. The next day they switched, but the big debate at the end of that day was who'd get to run the Tigercat the next day. That was enough for me, and I sent the other machine back."

He says factors include the longer tracks, which add stability and comfort, and the ER boom, which he adds is "a lot smoother than others we've tried." The buncher works single shifts in the summer using both operators (4 on/ 4 off), and then moves to doubles to pace the busier winter season.

Two John Deere 748GIII grapple skidders bring wood to roadside for a Deere 2054 Logger/Denharco monoboom delimber chosen to handle the steady diet of poplar and birch. When CFI was on site, Blaine was running the delimber to do a little catch up work, a hallmark of a good contractor in this neck of the woods, Leon says.

"When he worked for me as a student, it was one of the things I wanted him to do - to learn to run every piece of gear we use. He can run a buncher, for instance. He's not a great operator because he doesn't run it enough, but he knows the machine, what it can do, and he can run it in a bind."

One of Blaine's main duties, however, is to keep the gear running. He does the maintenance in the summer, and hires on another mechanic to "swing a wrench" in the busier summer months. The crew has two service trailers on site, one with parts and oils, the other with tools and workbenches. In fact, the tool truck is new, having just replaced another that was lost to fire, along with $100,00 in tools and parts.

"You don't realize what you've built up over the years," Leon says. "We spent the insurance money and never even came close to replacing what we had."

Slashing is handled by a new model Tanguay TS 15OB slasher, an upgrade that Leon says has a few nice features, like a catwalk that allows easy maintenance access but folds out of the way for transport. Both delimber and slasher were working nights on this site, which allowed them to work on the narrow roads without having to constantly move for trucks.

For loading, the DeGagnes need more flexibility than most operations. They have two log loaders, a Cat 320LL used for the bulk of the work and a Komatsu 300HD that runs as a loader or road builder depending on need. Both sport Rotobec by-pass grapples with live heels, a great option for handling a mix of log products, adds Leon.

"We may load tree length in the morning, and then 8-ft in the afternoon, and we can do both with that live heel. We need that versatility, as next month the mill may go to all 16s, which they've done in the past, and then change back overnight. You'll look pretty silly loading 8-ft with a butt-n-top," he adds with a smile. "The Rotobec by-pass clam has full sides on both sides, so it loads 8-ft reasonably well, it loads 16-ft beautifully, and it'll do tree length when needed."

The operation has two trucks of its own, and hires on owner-operators for the rest.

Lead by Example

In all this, Leon may be moving over as much as possible to provide Blaine management experience on a daily basis, but he's a long way from retiring. In the summer he runs the company's latest diversification, a two-truck dust suppression business that he says is working out well. In the winter, he lends a hand as needed, whether running a sand truck or plow. He's always on hand to discuss business decisions with Blaine.

As a founding contractor member of the growing Ontario Forest Business Association (OFBA), he is also showing the next generation the need for contractors to stay involved in the industry and the community. He originally joined the OFBA to help correct unfair WSIB compensation rates and inconsistent MTO (Ontario's Ministry of Transport) enforcement, but he adds the association is dealing with a wide range of issues, like where the next generation of loggers is going to come from. On that front, he remains optimistic, at least in his own case.

"It's a hell of a good job if you've got the right personality for it. You've got to get used to being away from home a good part of the time, the hard work, and you'd better like it. In these times, you can't be in it for the money, but it'll change. It has to if we're going to attract new faces. We've seen tough times before, and now Blaine has seen how tough this industry can be, which may be the most important lesson any new logger can learn. But I think the pendulum will swing back."