Mr. Penner picked a bad time to join the textile business. China’s entry into the World Trade Organization at the end of 2001, the Canadian government’s decision at about the same time to grant preferential access to imports from extremely poor countries such as Bangladesh, and the Canadian dollar’s steady rise from its trough of about 63 cents (U.S.) erased any advantage Canada had over low-cost producers. Richelieu moved all of its production overseas in 2003, shuttering factories in Quebec (Plessisville and Pintendre) and one in eastern Ontario (Cornwall). Other Canadian textile companies, including Montreal-based Gildan Activewear Inc., the T-shirt maker, were either doing the same or going bankrupt. Mr. Penner hates the memory of those days.
“I would rather kill myself than have to do that again,” Mr. Penner says of the experience of closing Richelieu’s factories. “We had no choice but extinction or change the business model. We at least wanted to keep the lights on.”
Mr. Penner sacrificed 117 production jobs to save 29 at head office. He vowed to those who remained that he would rebuild the company. Just give him time.
The Great Recession nearly destroyed that promise.
Richelieu had acquired the Canadian distribution rights for the popular Peds brand of women’s socks owned by a North Carolina company called International Legwear Group (ILG). The licence was an important source of income for Richelieu; without it, the company would be in trouble.
In 2011, Mr. Penner took his pregnant wife and four children on a trip to Greece. Before he left, he wanted to secure the renewal of his Peds agreement with ILG. No one in North Carolina was answering the phone. He boarded the plane without an answer. He abandoned proper channels and started calling ILG’s chief executive directly. Mr. Penner was at the top of the Acropolis with his children when he finally got through. ILG executives had been avoiding him because their company had been taken over by the bank and they were barred from making any future commitments.
“I finally said, `I’m coming over there,’ ” Mr. Penner says. “I just left my holiday. I flew from Greece to North Carolina.”
ILG was owned by a private equity firm that issued debt to buy a family-owned sock maker called Neuville Industries. The private equity guys never managed to generate enough cash to keep up with their debt payments. By the time Mr. Penner was looking to renew his agreement with ILG, the owners had effectively cut and run.
Mr. Penner acted quickly. He convinced the liquidator to sell him the entire company rather than sell it off piecemeal. He rushed overseas to reassure suppliers. He rehired many of the employees who had been handed pink slips by ILG. It was an entrepreneur’s version of triage. “We had to stop the bleeding and stabilize the patient.”
Rather than a mere license holder of the Peds brand, Richelieu now was in a position to become its owner. That left one more thing to do: Secure a sale. Mr. Penner called Wal-Mart. He was so nervous he was shaking. He needed a big order to keep his newly acquired business from sliding back toward the abyss. “They had nothing left,” Mr. Penner says of ILG’s order book. “They had one little program at Wal-Mart and if we lost that, we wouldn’t have been able to keep the business going.
In 2007, Mr. Penner had paid a visit to Wal-Mart’s Canadian headquarters in Mississauga. The place is so big Tim Hortons Inc. runs the coffee concession. While standing in line, Mr. Penner struck up a conversation with a man who turned out to be Duncan MacNaughton, one of the highest-ranking executives at Wal-Mart’s Canadian unit.