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In running for mayor, Councillor Ford has worked to make the ballot-box question about private-sector experience.
In running for mayor, Councillor Ford has worked to make the ballot-box question about private-sector experience.

Doug Ford at Deco: The inside story Add to ...

If you weren’t specifically looking for it, you’d never spot Wise Tag and Label.

On a recent afternoon, the reception desk stood empty and no one was in any of the offices. A reporter, looking for someone to speak with, eventually found a manager near the back printing press.

This is Deco Labels and Tags’ New Jersey division – and according to mayoral candidate Doug Ford, one of the company’s “most vibrant locations.”

On his newly launched candidate website, the councillor offers up Wise Tag and Label as an example of his savvy business instincts. He writes that he purchased the “failing company” in 2008 and then turned it around. But former Deco employees say that the only thing the Wise Tag venture is an example of is Mr. Ford’s impulsiveness and inability to plan.

Wise Tag is a case study of how Doug Ford operates, said one of his close business associates.

The Fords’ foray into New Jersey has been a drain on the company, former Deco employees with knowledge of the acquisition told The Globe and Mail. Wise Tag has not been turned around and Mr. Ford turned to his family for a cash infusion to keep it afloat, according to one source. Also, the son of Wise Tag’s former owner is suing Councillor Ford for $179,654.27 related to alleged unpaid loans, credit-card debt and compensation.

Two former Deco employees likened the situation in New Jersey to Councillor Ford’s 2011 ambitions to build a giant Ferris wheel along Toronto’s eastern waterfront: grand plans, poor execution.

Last month, Councillor Ford entered the mayoral race after his brother Rob Ford was forced to withdraw for health reasons. Since then, Councillor Ford has worked to make the ballot-box question about private-sector experience.

He held a press conference on Wednesday  to accuse mayoral candidate John Tory, a lawyer and former Rogers executive, of hiding unflattering periods of his career, including time spent on the board of a struggling U.S. cable company. The councillor unveiled a new attack ad.

“You say you have the business experience to navigate this city’s budget, but weren’t you intimately involved with Charter Communications, one of the largest bankruptcies in American history?” it began.

(The co-founder of Charter Communications has since said that the company’s financial issues predated Mr. Tory’s tenure.)

By contrast, Mr. Ford has styled himself as an entrepreneur who expanded his father’s small printing company into an international brand with 250 employees and offices in Toronto, Chicago and New Jersey. He says he is a keen businessman whose real-world experience as president of Deco best qualifies him to manage public money.

However, since the recession in 2008 – the year Mr. Ford bought Wise Tag – Deco Labels and Tags has struggled, both financially and from an operational standpoint. As a privately owned business, Deco is under no obligation to disclose internal financial information. But an ongoing court battle over child support between Randy Ford, the elder brother of Councillor Ford and Mayor Ford, and his ex-partner has provided a glimpse behind the curtain. Between those court records, documents obtained through the Freedom of Information Act and interviews with 11 former Deco employees – including staff from the Chicago and New Jersey offices – working in a variety of roles, many of whom spoke on condition of anonymity, The Globe has composed a portrait of the company that Doug Ford has steered for more than a decade.

(Councillor Ford and the manager of the American division of Deco, Larry Wells, did not respond to interview requests. In a letter, Randy Ford’s lawyer, Colin Still, said any court records obtained by the Globe are confidential, although they are public documents.)

Deco Labels and Tags was co-founded in 1962 by Councillor Ford’s father, Doug Ford Sr. As young adults, Doug Ford Sr.’s four children started working at the family business, although it was apparent early on that Doug Ford Jr. would be the one to take over the company. Rob was focused on politics. Randy and Kathy Ford struggled with drugs and were in and out of the business. Their personal issues sometimes spilled over into work.

According to company lore – a story that was confirmed by a police official with direct knowledge of the incident, a former Deco employee and a source close to the Fords – about two decades ago, police officers spotted Randy walking out of Deco holding a garbage bag in one hand and a weigh scale in the other. They suspected the bag was filled with marijuana. When Randy Ford spotted the officers, he ran into the office. The officers chased after him and wrestled him to the ground. But when they turned to collect the evidence, the bag was gone. Police believe someone disposed of it during the commotion.

By the time Doug Ford Sr. won a seat with Ontario’s Progressive Conservatives in 1995, Doug Ford Jr. was essentially running Deco, although he would not officially become president until about 2002.

In the interim, Doug Ford Jr. set out on his own and launched the Chicago branch in 1999. As far as anyone can tell, Councillor Ford didn’t do any significant market research before heading south of the border. He showed up and just started “pounding the pavement to get clients,” said one former longtime Deco employee.

“He’s a people person. … He knows what he’s selling – whether it’s labels or what he’s selling right now,” said another source who has worked with Doug Ford in sales. “I’ve been with him at trade shows where he literally took people out of the aisle into our booth and did a sales pitch to them. And it worked.”

The Chicago branch started to grow. By the time Mr. Ford became a councillor, it was generating around $11-million in annual revenue, two sources with knowledge of the operations said.

Mr. Ford split his time between Toronto and Chicago, typically flying to the U.S. on Tuesday morning and returning on Friday. Sources close to the family say it was always Mr. Ford’s hope that he would take over Chicago full-time, add offices in Florida and perhaps California, while maintaining a financial interest in the Toronto operation.

Mr. Ford struggled to work with his siblings, especially Randy. Neither man has a business degree, but former Deco employees say Councillor Ford, at a minimum, was aware that successful businesses measure productivity, monitor inventory and plan incessantly.

The pair often yelled at each other in front of employees.

Though Mr. Ford was the company’s president, Deco was still owned by Doug Ford Sr. in 2006, when the Ford patriarch was diagnosed with colon cancer. Before he died, he sat down with each of his sons to ask what they wanted in life. Both Randy and Doug chose Deco. Rob picked politics.

Doug Ford Sr. didn’t want to divide up the company by location. Instead, he split ownership – 40 per cent, 40 per cent, and 20 per cent – with Rob Ford receiving the lesser percentage. A copy of Randy Ford’s pay stub, which was filed as part of the child support litigation, shows that he makes about $200,000 annually. Doug collects a similar salary, one source said, although he’s paid out of the Chicago office. (Rob Ford receives commissions when one of his accounts places an order, but no salary. All three receive shareholders’ bonuses during profitable years).

After his father’s death, Mr. Ford concentrated even more on the American side of the business.

He is well liked in Chicago. Amy Devitt worked at the branch as a graphic designer for four months between 2008 and 2009. Mr. Ford left an impression.

“I absolutely loved Doug. He was a great guy … a wonderful guy to work for,” she said. She thought the office was a “very well run machine.”

But the success of Chicago was not easily replicated.

He tried to launch a Florida division, but the office was described as little more than “a desk and a phone.” No former Deco employees interviewed for this story could remember if any orders were placed from that location – or any staff working there.

In late 2011, Deco set up a satellite office in Ohio. Ken Jakubek was the lone salesman there for nine months. He said his experience with Deco was positive, but landing big clients was difficult because the printing plant was seven hours away. To the best of his knowledge, he said in an interview, he wasn’t replaced.

Then there was New Jersey. In 2008, Mr. Ford learned about a distressed plant in Pennsauken, a suburb of Philadelphia. One source said Mr. Ford described it as “the deal of the century.”

The owner, W. Sprague Wise, was suffering from heart problems. The family was looking for a partner or investor, but Mr. Ford wanted to buy them out. Back in Toronto, his staff warned him to go slowly. Wise Tag was in trouble and would need a significant cash investment to get back in the black.

“It looked like there might be an opportunity, but we needed to do more work,” said one former Deco employee.

Mr. Ford didn’t follow the advice. He bought the company and promptly fired Mr. Wise’s son, Kevin, who was the acting manager. Former Deco staff say other Wise Tag staffers were let go too.

Tinavalen Nguyen worked as an account executive for a little more than a year in 2010 and 2011.

“Deco had great intentions, was probably a fantastic company. It just didn’t translate well when it came time to merge it with Wise Tag and Label,” she said, adding that it was never clear for whom she was working – Deco or Wise Tag.

“I was hired by the name Deco Labels and Tags, yet every paycheque I got was Wise Tag and Label. My business cards still said Wise Tag,” Ms. Nguyen said.

A well-placed source said Doug Ford turned to his family to ask for extra money. He said without the additional investment, Wise Tag would fail.

Meanwhile, by that point, business at the Toronto office was slowing.

Records show that the current acting head of the company, Randy Ford, has seen his annual income drop from $910,520 in 2007 to $225,543 in 2010. One source said the roughly $685,000 different was a bonus after a profitable year. By 2009, Randy Ford’s anticipated bonus was around $177,000. Internal Deco financial documents, obtained by a source and independently verified by another, indicate that in the years leading up to Mayor Ford’s victory four years ago, the Canadian and American sides of Deco were losing money. Between 2009 and 2010, Deco’s total losses were around $1.1-million. (Sources say the Chicago side has rebounded in the past few years.)

The reasons are varied. The recession played a significant role, as it did in many companies. Some of the biggest clients demanded discounts, according to sources. Others left because of the bad press around Mayor Ford, said one source who dealt with customers. Separately, another major client left altogether.

“The income of the corporation declined substantially for the year end February 28, 2009 and accordingly my bonus declined, due to the fact that one of the corporation’s best customers, namely Avery, decided to take their work to Mexico,” reads an affidavit filed by Randy Ford in his child-support case.

Former Deco employees say the real culprit was a lack of organization. The issues they point to seem to mirror the problems that plagued the Ford administration at city hall – before it lost control of the agenda. They say family infighting, little interest in details, and an inability to plan were constantly impeding progress.

Three former employees who worked out of Deco’s Toronto office say the best example of the dysfunction is Apollo Health and Beauty Care, which became a significant client in 2011. The Fords wanted to make Apollo happy – even at the expense, at times, of more longstanding clients.

For example, Deco would commit to a printing a major order of meat labels ahead of a scheduled sale. But then Apollo would demand that a comparatively small job be done right away and Deco would jump.

“So instead of making time for a big customer, who is the bread and butter of your company … they’d be like ‘we have to really get that Apollo job on,’” said a former Deco staffer.

This approach to production caused delays, missed shipping dates and ultimately, frustrated clients. Former employees said that the Fords’ focus always seemed to be on the thing in front of them and not the big picture.

Even the City of Toronto, which orders thousands of dollars worth of products from Deco – including tourism labels, bike signage, and permit tags – had problems.

One incident chronicled through an e-mail exchange between the city’s Randy Smith and Deco’s Angie Garcha was obtained by The Globe through a freedom-of-information request. In early 2014, the City of Toronto ordered 500,000 water-meter tags for $24,195.

Deco initially committed to shipping the order on May 12, but it was changed to May 20. Five days before that deadline, Ms. Garcha e-mailed with bad news. “Due to the long weekend holidays we are going to be a bit late as to shipping this order out. We will have it shipped to arrive there on Friday May 23rd for sure.”

Then it was changed to June 5. Mr. Smith, a supervisor with Toronto Water, waited all day and, when nothing came, e-mailed Deco: “June 5th has come and gone without any delivery.” The order arrived June 10.

That wasn’t the only issue with the job. At the time of invoicing, the city was billed an additional $2,419.50 charge for extra tags that came off the print run.

“We ordered 500,000 and I never even dreamed that we would need to specify no overs or unders,” Mr. Smith wrote to Deco. In the end, the city agreed to take the extras.

Back in New Jersey, Doug Ford is facing a deadline that he won’t be able to avoid. After he acquired Wise Tag and Label and fired Kevin Wise, Mr. Wise filed a civil action against Mr. Ford in the Superior Court of New Jersey. The lawsuit alleges Mr. Ford vowed to reimburse him nearly $180,000 in credit-card debt, loans and unpaid salary during the sale of Wise Tag. His complaint alleges that when Mr. Ford made “the promises … (he) had no intention of performing them.”

In a response, Mr. Ford denied making any promise, said he owes Kevin Wise nothing and has asked the judge to dismiss the case. “In the agreement, Kevin Wise and W. Sprague Wise promised to assume the $95,000 credit-card obligations. … Doug Ford would never have agreed to the financial and other terms had he known that the aforementioned clauses would not have been honoured,” Mr. Ford’s lawyer, Kevin Siegel, wrote in a January, 2013, court filing.

A settlement conference is scheduled for next Thursday. If unsuccessful, the case goes to trial on Nov. 10.

Robyn Doolittle hosted an Ask Me Anything on Reddit on Oct. 14

 

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Follow us on Twitter: @robyndoolittle, @McarthurGreg

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