A unique plastics venture on a First Nation reserve near Georgian Bay is slated to be closed this week after being caught in the crossfire of a furious legal battle between a prominent Canadian industrialist and his former company.
“Husky is getting back at me,” said Robert Schad, the 85-year-old founder of Husky Injection Molding Systems Ltd., Canada’s largest maker of plastic moulding machines.
Mr. Schad sold Husky in 2007, but he remained chairman of a plastics company called Niigon Technologies Ltd., which he personally financed at the Moose Deer Point First Nation in MacTier, Ont., and stocked with Husky machinery.
Days after he launched a separate plastics venture with an Italian partner in December, 2012, Mr. Schad said Husky told managers at Niigon that it was pulling out the plastic injection machines that the company had lent or leased to the facility years earlier. Husky has sued Mr. Schad and the Italian partner, citing violations of confidentiality agreements in connection with the Niigon operation.
Husky’s move to reclaim the moulding machines effectively forces the closing of the Niigon plant, eliminating 25 jobs in a community of about 450 residents.
The shuttering of the plant – a bright, modern facility surrounded by foliage in the centre of Moose Deer Point – is an abrupt end to a source of community stability and pride.
Sarah Middlebrooks, 38, a single mother of five, joined Niigon in 2006, starting as a janitor, and quickly moved up to be warehouse assistant, often managing shipping logistics. The company was far more than a source of income for her; thanks to its focus on education and robust benefits plan, she is less than a year away from getting her high-school equivalency diploma, and she has been able to afford dental care, including braces, for her children.
“I wanted to retire from here,” Ms. Middlebrooks said in an interview at the factory, fighting back tears. “I wanted to see my kids have the opportunity that I had.”
Niigon became a major part Ms. Middlebrooks’s family. Her mother, one of its first employees, worked there until her death earlier this year. Her brother once worked there, too, and her two sons shadowed workers in the factory, hoping to eventually get jobs there.
“Niigon gave me an opportunity to make a living,” she said. “I’m not living paycheque to paycheque – I have a bank account, I went on vacation. It gave me more than just a job.”
“I hoped to work here for the rest of my life,” quality technician Tori Cress said. “There’s a sense of family here you don’t get anywhere else.”
Mr. Schad donated $28-million from his charitable foundation and personal savings to launch Niigon Technologies Ltd., which is wholly owned by the First Nations reserve.
Niigon has been in business since 2001, making everything from tomato-vine clips for farmers to plastic moulds for manufacturers in the United States. It is one of a few manufacturing plants owned by aboriginals in Canada and it has been championed as a model of corporate and community partnerships.
“There is nothing like this in Canada. It was such a huge leap forward for this community,” said Bob Dickson, Niigon’s first general manager who is now the chief executive officer of Attawapiskat Resouces Inc., a First Nation mining services company in Northern Ontario.
Peter Kendall, director of Niigon, and executive director of the Schad Foundation, said the plant’s closing is “devastating for us. It’s not just about the company, it’s pride in the community about the company.”
The foundation, based in Vaughan, Ont.,has also financed numerous other ventures in Moose Deer Point, including $2-million for a child development facility.
Mr. Schad said it “is hard for me to understand” Husky’s decision. “Perhaps it is because they knew the importance of Niigon to me personally.”
Husky filed a lawsuit in May against Mr. Schad, his Italian partner SIPA SpA and other associates, seeking more than $100-million in damages for allegedly violating confidentiality agreements with the launch of their new venture. The claim alleges that Mr. Schad “improperly” used his position on Niigon’s board of directors to obtain confidential information about new Husky machine prototypes shared with the First Nation’s plant.
Mr. Schad and his partners have filed a counterclaim denying the allegations.
It is not uncommon to see companies squabble with former officials over the alleged misuse of proprietary information. What is unusual about Husky’s legal fight is that it pits Mr. Schad against his former son-in-law: Husky chief executive officer John Galt.
The collateral damage in the messy fight is a native community that struggles with 65-per-cent unemployment when its busy summer marina is closed after the summer season. Moose Deer Point owns two machines of the seven they previously operated, and might be able to use them after Niigon shuts down, but any new operations would be significantly scaled down.
Mr. Galt was not available for comment. In a statement e-mailed to The Globe and Mail, Husky vice-president and general counsel Michael McKendry said the company is committed to protecting its inventions and knowledge and its litigation against Mr. Schad involves Niigon.
“Husky has provided significant financial and technical support to Niigon over many years and regrets that its relationship with Niigon has ended in these circumstances. As this matter is now before the court, we cannot provide any further comment,” he said.
Husky is currently privately owned by a handful of institutional investors, including the private equity arm the of Ontario Municipal Employees Retirement System.
Mr. Schad said he is currently working with the federal and Ontario governments to help the community adjust to the loss of jobs. He said the Schad Foundation has paid most of the $4-million bill for severance payments to workers slated to lose jobs.
The Moose Deer Point employees, however, believe they are losing more than that. “What we have here is stability and comfort,” Ms. Middlebrooks said. “To us, it’s not just a job. It’s Niigon.”