IMP chairman Ken Rowe
He may be Canada's toughest manager, a battle-scarred survivor of the business wars of the past 45 years. At 76, Ken Rowe is still in command of his privately owned aerospace conglomerate, IMP Group International Inc. of Halifax, with annual revenues close to $1-billion and 4,000 employees - in activities from military helicopter maintenance to executive jets. On being inducted into the Canadian Business Hall of Fame, he talks of the perils of the airline business, his empathy for Porter Aviation Holdings Inc. CEO Robert Deluce, and what is left to do in his career.
Are you retired now?
You never retire when you own your own business. I moved the CEO role to my No. 2 and I became executive chairman. But it just allows me to do the things I want to do, rather than be everything to everyone still.
So what exactly do you do?
Obviously I control the finances and really the M&A activity - where the company is going, or wants to go. And generally speaking, I oversee the senior management, along with the board.
Do you have a board with some authority?
We have three outside directors and five inside, which is the [non-family] CEO, myself and the three senior executive children that I have in the business. So we can have independent audit committees with three outside directors. We run it like a public company with the best corporate governance practices but without the frills and costs of being a full public company.
Have you still got some things you want to do?
I'm in the seventh inning and I know they are only nine, unless there is overtime. I've got a lot of things to do. When you've got a big group like mine, you can't stop it. If you stop it, you will go backward.
Will you ever go back to running a scheduled airline service?
No, it's the worst business. I've been exposed to all sorts of business and I am in a lot of businesses now, and it's the worst I've ever seen.
Yet it's a business you have entered and exited three times. What happened?
I bought Air Atlantic … in 1995 but it didn't work [as a regional carrier] with Canadian Airlines because they were failing. We got rid of it. Then we started CanJet One, when government regulations changed to favour more competition … We got hammered by Air Canada ... They just pounced on us. It took time to get through the Competition Bureau. IMP is a big company; if it had been any other company, it would have been gone.
I went back to CanJet Two when we won [the dispute]and the government assured us it would be different. CanJet Two stopped scheduled service and changed to [a charter business.]They're doing quite well. If it lasts, fine; if it doesn't, we'll move on to something else.
Do you ever talk to Robert Deluce about his plans for Porter Aviation, which is going public?
I know Bob Deluce very well. I've seen his numbers and I think it is the same … business. He runs a great show, he is a good friend. He is a good operator, and runs a good company, but he is up against these big guys.
I just see where WestJet put $49 fares on one of [Porter's]routes. If Jazz gets into Toronto Island airport, they only need a few slots to drag all the prices down, and Porter]has lost, what, $30-million already. You can't make money in that business.
WestJet's earnings are coming down, and they've got the best-run operation. Air Canada is the usual screw-up it's been for years, and will probably sooner or later be back where it was before, because they don't make any money either. So I don't want to go back into that.
Don't you just want to get back at Air Canada because you feel it hurt you?
They did indeed, but I don't get mad at people, I just get even. [Laughs]But look around the world. Even our old friend [Warren]Buffett got into airlines and he says it is the worst business he's ever been in.
So what's the appeal of airlines for otherwise smart people?
Airplanes are sexy; they get in people's blood sometimes. But we're not like that - we've been in it. We're the biggest maintainers of military helicopters and fixed-wing aircraft; we're the biggest general aviation company; and we fly 25 business jets. And if we can't make money doing what we're doing, we're not in it.
Will your children take over?
I don't know. That's for another day. Each one is capable. The two boys are presidents of core groups; the girl is head of HR, properties and stuff like that. But we restrict family members coming into the company unless they have a passion to come in and they bring something. We are pretty professional, tight, not a loosely run organization.
I have seen in our part of the world [Atlantic Canada]where too many family members are involved and it becomes a headache. I said to my children: "You have the privilege that I never had, of inheriting a dynamic company, a family business. But you don't have to be the be-all, end-all, or work like a dog. Before my No. 2 retires, some of you will be close to your 50s. You may want to continue having an experienced outsider and you may want to control them from the board and enjoy your life somewhat."
But you had to be the CEO?
I built the business. Now I'm giving them the choice. They don't have to be the CEO, producing numbers for the board, with all the pressure and stress and strain.
You're not going to let go?
No, but I am a great delegator. I delegate to the level of people's competence. So if they see a lot of me around, they should get their résumés up to date.
Do you practice the Atlantic Canadian style of business?
I am not a born Maritimer, but I am a Maritimer. One cultural difference is that some Maritime families never sell anything - they are always buyers and holders. Yet sometimes, there is a business case for selling something and moving on - particularly, a mature business - and putting the money into something with more growth opportunity. That's not meant as a criticism - there are some great family stories in the region.
But my background is more as a corporate manager. I look at things from a distance, instead of getting emotionally involved too much. I look to deploy our resources where they can grow at a maximum rate, instead of saying, 'Oh, I like that business.'
With airlines, I invested because I was able to do it financially. If I had been CEO of a public company, I would have most probably dumped that, and not had the hassle. You can get beaten by that business. If I can find a formula to succeed - and right now, we have - that gives me some sense of accomplishment.
Any unfinished business?
We're in a lot of industries. My challenge is to decide what businesses we really want to grow internationally, and perhaps spend less attention and resources on the ones that don't have that type of growth. The rationalization process may be on my agenda in the near future.
Are you still the biggest shareholder of Royal Bank?
I don't know. People tell me I am. I never bother too much to look at the rest.
How do you like the banking sector?
Canada has stood up well. I hope these [international]banking regulations don't get to the point they put a stranglehold on Canadian banks - to where they are penalized into being too restricted in lending to Canadian industry.
You still like Canadian banks as an investment?
I do. If you have money in banks, at least they pay dividends. Nothing is guaranteed in life - but the [dividends]are fairly pretty well assured with the money they are making. The returns of between 3 and 5 per cent are reasonable. Sooner or later, as things settle down internationally, the Canadian banks always have a mandate to make enough money, particularly in Canada. Earnings will continue to grow and the stock price will rise again.
Business is still a passion?
I've got more money than I need. So I'm not in business to make money - it's just that smart business makes money. But I sure the hell enjoy the game of winning because I'm very competitive, whether at tennis or golf. I'll play anything that moves. I don't want to fight anyone, but if I do, be prepared that you are going to have some opposition.