CELEBRATING THE REUCASSEL FAMILY

Family Profile | September 2018 | by Gordon Pitts

In this series, Creaghan McConnell Group captures important lessons learned – and some inspiration – from Canada’s most accomplished ‘families in business.’ We believe these stories need (and deserve) to be told in order to support other families in their own journey.


When a family company charts the road ahead, it usually tries to spot the potential perils — from markets and financings to shareholder relations and unforeseen events. But there is one intensely personal calamity that can upset the best laid plans — the rapid onset of illness and death for the family member who drives its strategy and vision.

The International Group Inc. (IGI), a Toronto manufacturer and distributor of waxes, has faced that tragedy twice in its 75 years and each time the ownership family — the Reucassels — rose to the occasion.

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THE INTERNATIONAL GROUP: A CASE STUDY IN MENTORSHIP AND PERSONAL GROWTH IN A FAMILY BUSINESS

The resilience of both the family and the business has allowed The International Group to survive and prosper as an independent player in the midst of giants, as a global leader in the niche industry of making and selling waxes — from candle wax to floor wax to packaging sealants.

The key has been its ability to manage succession in the midst of sorrow — first, on the founder’s death, by transitioning to a non-family executive who guided the company for decades, building a management team and mentoring family members.

Then, when a beloved son got sick, the magnetic pull of the family business drew another son back into the company, putting him in place to guide the enterprise when his brother’s illness proved fatal.

Today, the founder’s son Ross Reucassel, 80, can look out the window at the 14-acre site — a bustling beehive of refinery, technical labs, vats and head office — in the Toronto community of Agincourt, knowing his son John is down the hall, running the enterprise that John’s late brother, Ken, had shaped.

The result: a little-known gem of Canadian industry has been able to grow and prosper. “We’re a big company now,” says Ross, the chairman and second-generation builder of an enterprise with $800 million in annual revenue, about 650 employees, and operations throughout Canada and the United States — indeed, with the majority of personnel and sales in the U.S.

It might not have turned out this way, but for entrepreneurial moxie combined with adaptability to shifting markets and changing family conditions. The IGI story is a case study in mentorship and personal growth in a family organization.

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GLOBAL AMBITION FROM THE VERY BEGINNING

The story starts with Ross’s father, William “Bill” Reucassel, a son of Scotland who emigrated to Canada at age 21 in 1929. Bill had limited education but he was a born communicator with a quick mind. He knocked around various jobs in Toronto until finding a good sales position at Johnson’s Wax.

Nobody remembers exactly what happened — he may have been fired in a dispute with his boss — but he left Johnson’s and ended up at home in the early 1940s painting his house. His wife, Dora, suggested he wasn’t cut out for making a living as a house painter. But he did know waxes and seeing the wartime need, he started his own business in Toronto’s east end with three small vats for mixing floor wax and cleaning compounds.

As the war ended, Bill did two visionary things. With the help of his lender, the Bank of Nova Scotia, he acquired a couple of acres of land out beside a railway track, near the gravel road that is now bustling Sheppard Avenue and amid the farm fields of Agincourt, then northeast of Toronto. By the late 1940s, that ground had sprouted Canada’s first paraffin wax refinery, enabling Bill to increase production dramatically in the markets of post-war Canada.

The second big vision: also with the help of BNS, Bill saw opportunity in the building of a new British American Oil Co. (BA) refinery in Clarkson, west of Toronto, that produced lube oils for the automotive industry. One residual output was a low-value petroleum by-product known as slack wax. BA needed a market for its slack wax, and Bill Reucassel could use the stuff as raw material for his newly expanded production of fully refined paraffin waxes.

Bill (and IGI) became an essential customer for the BA refinery.

GROWING THE BUSINESS WITH OUTSIDE TALENT

But Bill also needed stable markets from which to build a fledgling industry in Canada. He sought protection from the big multinationals, mainly based in the United States. Always persuasive, Bill journeyed to Ottawa to lobby for a protective tariff — and he got it, a 17 per cent levy on imports of finished wax, while slack waxes were allowed to enter the country tariff-free.

It was an amazing coup for a rising entrepreneur. That tariff protection lasted for decades, and when it disappeared, IGI was thriving with operations on both sides of the Canada-U.S. border. From the beginning Bill had a global ambition — after all, the company was first called International Waxes, then International Group. It had grown under protection but no longer needed that umbrella.

“My dad was a tough individual,” Ross recalls, and when he wanted something he wasn’t afraid to take risks to get it. The family was mortgaged to the hilt to pay for the business. “He didn’t have two nickels to rub together — but he was great at sales. He could get along with people and he was very fair — you could trust him all the way.”

Bill needed one more cornerstone for his company. He was a great communicator, but he recognized his gaps in the technical areas of wax production. He also needed managerial depth in pushing strategy and organizing operations. His other asset came into play: he had a nose for talent.

Bill asked the dean of engineering at the University of Toronto to provide some names of bright graduates. The first name on the list was David Aziz, a PhD in chemistry, then working for the Eddy match company in Ottawa. Bill flew to Ottawa and met Aziz for dinner. The Toronto entrepreneur was impressed with the young engineer and began a full-court press to win Aziz over. Bill never looked at another name on the list.

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LAST VISIONARY MOVE

A couple of days later, when he flew back to Toronto, David Aziz was with Bill on the plane. Essentially, Aziz stayed with IGI for the rest of his life, up to his death in 2009, working first as vice-president, manufacturing and quality. He became president, chairman and a board member, but more than that, a loyal mentor and constant friend to the Reucassel family.

Aziz was put to the test early in his career with IGI. All was not well with the founder’s health. On a trip to Russia in 1955, Bill took seriously ill with the latest incident of heart problems. In London, he was shifted by stretcher to a Canada-bound flight, and ended up in a hospital in Halifax, where he died at just 47.

The company might have ended right there.

Bill left a widowed Dora and one child, Ross, a 16-year-old in high school and more preoccupied with playing hockey than the challenges of a great family business. But before his death Bill had composed a letter, naming David Aziz as his successor, bypassing two able managers who were ahead of him in seniority.

It was Bill’s last visionary move. “Without that letter, my mother and I would have nominated another person with seniority and it would not have been the right decision,” Ross says.

He epitomized the capable outside voice that any family business needs. He was comfortable in his own skin, knowing he would never really run the business on his own. He kept his ego in check — few even knew he had a PhD — and was utterly devoted. “He treated that family as if it were his own,” says his widow Lorna. And the family repaid him with similar allegiance.


TRANSITION TO THE NEXT GENERATION

Aziz’s mandate consisted of growing the company, serving the family and mentoring young Ross Reucassel. He did all three magnificently. Ross got to know the business and in 1967, at age 29, became president. Aziz stepped aside to be chairman.

“Think about that,” says Bill’s grandson John Reucassel, marvelling at Aziz’s modesty and integrity. “My grandfather dies and my father is 16. David runs it till Dad is in his late 20s; he literally hands it over to Dad.” And most remarkably, Aziz stayed with the family after the handover.

Ross was a sales guy and thrived on the outside contacts and the constant travel, always bolstered by a strong senior team of managers. Ross expanded IGI’s sales into new applications and geographic markets, particularly south of the border. This U.S. expansion was important for IGI, particularly with the adoption of U.S.-Canada Free Trade Agreement and the elimination of wax tariffs in 1987.

Ross had two sons, Ken and John, and a daughter, Cathy. All took a keen interest and would eventually join the IGI board. Ken in particular was interested in the operational/supply side of the business and, after a stint as a merchant banker, came into the company in 1992. IGI struggled in the economic slowdown of the early 1990s and, at 28, Ken provided fresh managerial vigour and discipline.

Under the guidance of Aziz and a seasoned board, Ken came on as President and led IGI through difficult economic times, focusing it back to its core business. Ross continued with what he did best, building IGI’s North American customer base and as an ambassador for the global wax industry. With Ken at the helm, it was the third generation of the Reucassel family to steer the company and continue to realize Bill’s vision of international expansion. Meanwhile, John was thriving in the investment business, rising to become a leading research analyst with the Bank of Montreal (BMO).

OVERCOMING A SECOND ROUND OF FAMILY SORROW

Ken’s operational expertise became critical in the early 2000s. As the wax market matured, IGI became an industry consolidator in purchasing the North American wax businesses of British Petroleum and Honeywell. Consolidation deepened the company’s refining capabilities and expanded its network of blending operations across the continent and as an international player. Ross’s long-time assistant Peggy Anderson marvelled that at the end of her 47-year career, there were days when the company booked as much in sales in a single day as its entire annual revenue when she joined.

All was well until 2013 when Ken was diagnosed with pancreatic cancer, beginning a series of treatments. The employees were devastated, both for the family’s sake but also in concern for the company’s future. “Talk about your whole world tumbling down. It was very, very difficult,” says Anderson, a typical long-term loyalist in a company full of veteran personnel.

It was at this time of personal and professional crisis that Ken’s younger brother John joined IGI. It had long been Ken’s dream for the brothers to work together. Although these were far from ideal circumstances, John transitioned from a successful career in banking and joined IGI in Ken’s final months. The two brothers were able to realize Ken’s dream of a day-to-day working relationship as co-CEOs. Under John’s leadership, Ken was able to focus on his health, knowing his growth plans for IGI would succeed. Ken’s cancer eventually became acute, and he died in November 2015 at ge 51. He was a man who loved his family, his time spent at the cottage and his passion for the business. His wife Jane would take his place on the board.

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LOOKING AHEAD TO THE 4TH GENERATION

John’s education began in earnest as he leaned in to fill Ken’s void. The company was in the throes of continued expansion and a flurry of deals, which Ken had set in motion before his death.

Six years earlier, IGI had bought a Salt Lake City refinery — to refine a very waxy crude called yellow wax — to further its long-term strategy of vertical integration. Students of family business will recognize the trend — family companies embrace integration because they like to be in control of their long-term destiny. More than widely held firms, which tend to be more focused on short-term gains, they have the patience and broad perspective to consolidate their supply chains.

They can also deal with sudden shocks, as they arise. The rapid decline in oil prices in 2014-2015 led to a precipitous decline in the supply of key raw materials — slack wax and yellow crude — to all of IGI’s facilities. For a while, IGI made up the difference with purchases from outside suppliers. Indeed, it has always been a large buyer of wax, dividing its sales about equally between what it makes and what it buys.

But the future of IGI’s production capacity — from Utah to Pennsylvania and Toronto — was in peril, so Ken devised a strategy. The company partnered with a pair of drilling companies in Utah, looking to capitalize on low crude prices and opportunistically purchase land. Suddenly, Bill Reucassel’s wax business had become the world’s first fully integrated independent wax producer. In 2016, IGI completed the transformation with the acquisition of 100,000 acres of Utah land with first call on all crude production.


A STRONG VISION FOR THE FUTURE

When Ken died, John was left with the task of deal-finisher, and his analyst’s experience helped prepare him for his first hectic 18 months as president. He completed the two drilling deals, bought the land, acquired a natural wax producer in Long Island, plus another couple of U.S. businesses that extended IGI’s scope.

“If I had my druthers I would have spent five years learning the business before stepping in as CEO, but that’s not what happened,” John says. “My challenge now is: how do I best help the organization?”

And it is a sprawling organization, with the refinery on the Agincourt site, where IGI owns an entire block, now surrounded by strip malls and housing. There are refineries in Pennsylvania and Utah, as well as blending operations from New York and Texas to for opportunities to consolidate businesses in its sector.

The overhanging question is about the long-term future, and whether IGI will be sold, merged, or continue as a family enterprise. John, at 49, feels confident it can remain a Reucassel business. Ken left IGI in great financial shape and it has the capital-raising capability to continue Bill Reucassel’s dream. Occasionally, John calls on his father for insights but, as the fourth Reucassel in three generations at the helm, he has a strong vision for its future.

John and Ken had talked a lot about taking IGI to the next phase — to be family owned but professionally managed. John observes that “there is not a lot of sunshine between the Reucassels and IGI.” As the company expanded, the brothers saw more need to differentiate California. It continues to look between the two.

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READY TO LEAD

“To grow, we need not just an independent culture but to empower people so they don’t have to come to a Reucassel every time [to make a decision]. We are still in that process.”

The fourth generation consists of Ross’s 10 grandchildren, ranging in age from eight to 24. To date, few of the grandchildren have showed interest in joining in the business, and that is to be expected. “As teenagers and in their early 20s, how would they know what they want to do? But, if they are interested and have a sense of stewardship, I hope to see that interest grow in time,” John says.

The Reucassels have always supported getting out in the world. “My brother and I had careers before we joined IGI and I tell [the children] to have a career. They need to know what they can do, on their own,” he adds.

When the time came, John was ready to lead, as Bill, Ross and Ken were. It bodes well for the future. It seems good timing, along with embracing mentorship and a willingness to absorb non-family wisdom, are Reucassel traits that transcend generations.

QUESTIONS TO CONSIDER FOR YOUR BUSINESS:

       1. Do you have a plan for unforeseen circumstances — like the premature death of a

key leader?

       2. What governance structures do you have in place?

       3. What does the next ownership transition for your business look like?


Gordon Pitts is a journalist and author and currently holds the position of business writer in residence at the DeGroote School of Business at McMaster University. Pitts, who worked in Canadian newspapers for almost four decades, retired in 2013 from The Globe and Mail’s Report on Business, where he had been a senior writer.