Kenneth Colin Irving

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Kenneth Colin Irving

Kenneth Colin Irving (1899-1992) was an industrialist who built a cluster of interrelated regional businesses into a massive empire that straddled virtually every aspect of his native New Brunswick's economy. He became the "Paul Bunyan of New Brunswick," purportedly one of the wealthiest men in the world by the late 1980s.

Kenneth Colin Irving was born into a fourth-generation Canadian family of Scottish descent on March 14, 1899, at Bouctouche, New Brunswick. While never especially religious in later life, young Irving was clearly stamped by his father James' ardent Presbyterianism, with its emphasis on frugality and hard work. The family capitalized on the strength of the 19th-century maritime economy, sawing timber at their sawmill and purveying dry goods at their local store. Ken displayed an early appetite for work—threshing grain and performing odd jobs—but little enthusiasm for study. After two lackluster years at a university in Nova Scotia, young Irving's jingoism got the better of him and he joined the Royal Flying Corps in 1918, returning home the next year without having seen action.

By the 1920s the 19th-century "wind, water, and wood" glory of the Maritime Provinces' economy was fading; the Irving family sawmill would fail within a decade. At the same time, the region was losing its economic autonomy, as central Canadian capital, technology, and managerial expertise infiltrated the area. Thinly-populated Atlantic Canada lacked the economies of scale and capital pool to independently sustain the growth industries— metalworking and manufacturing—that marked a modern industrial economy. Automobiles were at the heart of such growth. A born tinkerer, Irving was fascinated by the car and in 1920 augmented the faltering family store by grafting a service station onto it. He became an agent for Toronto-based Imperial Oil, the Canadian subsidiary of Standard Oil. He soon added a Ford dealership and repair shop. In 1925 Irving's commitment to expansion was evident in the opening of a service station in Saint John, New Brunswick's leading commercial city.

From the outset Irving sensed that he, like his region, was vulnerable to the whims of outside control. In 1927 he created K.C. Irving Gas & Oil Ltd. and then, in 1929, Irving Oil Ltd. He distanced himself from Imperial, introduced his own brand of gasoline—"Primrose"—and vigorously expanded in the region. Volume sales gave him better leverage over his suppliers; he built bulk storage facilities and struck separate deals with New England suppliers. In 1931 he moved his operations to Saint John, establishing himself in the Golden Ball Building. For the next 60 years the man in the Golden Ball Building would be the most influential factor in the provincial economy.

Two unshakable instincts shaped Irving's entrepreneurship. He believed in "hands-on" control; he distrusted partnerships and maintained tight family ownership and an intrusive presence in the day-to-day management of his enterprises. There was a secretiveness in Irving that would shield his activities from public scrutiny throughout his life; he consequently acquired nicknames—"the Baron of Bouctouche"—that underscored his aloofness. Irving also sensed that success in a region of marginal economic importance was best secured by clustering similar industries, thereby capturing synergies and economies of scale hitherto enjoyed only by large outside corporations such as Ford and Imperial. When later asked the secret of his success, Irving would curtly answer, "Expansion is the thing."

Building an Empire

Expansion began for Irving in the early 1930s when he began to supplement his service station operations with ancillary transportation enterprises—bus manufacture and operation, shipping, and trucking. This transportation net made movement of oil products cheaper and prompted Irving to enter other industries in which transportation loomed large. He reawakened the family's timber traditions by assembling timberlands and venturing into new forestry products. In 1938, for instance, he gained control of Canadian Veneers Ltd., the supplier of high-quality veneer for aircraft production.

Such expansion, coupled with lean management structures, allowed Irving to weather the Great Depression and then to capitalize on the wartime economy. It also put him in an increasingly powerful position in terms of exacting concessions and incentives from the New Brunswick government; Irving's enterprises had become a key ingredient in local growth, and provincial logging legislation, for instance, reflected this fact. Irving's strength in the Maritimes also provided the foundation for expansion into Quebec and Ontario—gas stations and forestry—and south into Maine, where forest lands were acquired.

The postwar boom offered new scope for Irving's strategy of expansion. Newspaper publishing seemed a natural complement to his pulp and paper operations, and beginning in 1944 he began to acquire the leading dailies—the Saint John Telegraph-Journal, for instance—of the province. With the newspapers came radio stations and, by the 1960s, television stations. Other expansion projects included a heavy construction company, an ocean towing company, and the purchase of new oil tankers. In the 1950s Irving determined to diminish his dependence on outside suppliers by building an oil refinery in partnership with Standard Oil and through acquisition of the Saint John Drydock Company. He could now take a small part in the international oil trade and, with his own tanker fleet and over 3,000 service stations, had the dominant oil company in the Maritimes. To achieve these gains, Irving was prepared to surrender a degree of control. Partnerships with the American papermaker Kimberly-Clark and with Standard Oil gave him access to capital and larger markets/production runs. Over time, Irving usually managed to buy out his partners.

Irving rounded out his empire in the 1960s and 1970s with more newspapers (e.g., the Fredericton Gleaner in 1968), refinery expansion, a deep-water port for supertankers, Cavendish Farms (a food processing conglomerate) in 1979, and the building of naval frigates in Saint John. By the 1980s the Irving companies—some 300 in total— employed 25,000; one out of every 12 New Brunswickers (1986 population 709,000) drew an Irving paycheck. The close-held nature of the Irving empire made valuation of its net worth a tricky proposition, but in 1988 Forbes magazine ranked Irving as one of the wealthiest men in the world, with assets of $9 billion in U.S. dollars.

The Family Comes First

Irving's monopoly position in many spheres of the Maritime Provinces' economy and his insistence on tight family control often strained his relations with his workers and with Canadian governments. To many he was the economic savior of the province; to others he was a monopolist, hostile to unions and quick to use his economic clout to influence political decisions. Irving's paternalistic management style bred loyalty in many workers in the Irving "family" of companies; unions had their difficulties penetrating the Irving empire. The dominant market share of the companies also attracted the critical attention of government; from 1971 to 1974 Irving successfully defended his near-monopoly over New Brunswick newspapers against a government charge that his chain operated to the "detriment of the public interest." Irving also battled with large central Canadian corporations (e.g., with Noranda Mines over control of a New Brunswick smelting venture).

In 1971 Irving shifted his legal domicile to Bermuda, a mid-Atlantic tax haven beyond the reach of Canadian authorities. There control of the Irving companies was vested in a new echelon of Bermuda holding companies. Irving California Co. Ltd., for instance, controlled the transshipment of oil destined for his Saint John refinery; the Canadian Government unsuccessfully alleged that this allowed Irving to skim another layer of profit from his trade in oil. In Bermuda, Irving became increasingly reclusive. While remaining intimately involved in his companies' management, he shifted much operational oversight to his three sons, James (born 1928), Arthur (born 1930), and John (born 1932), all from his 1927 marriage to Harriet McNairn, who died in 1976. Each assumed responsibility for a section of the Irving empire (e.g., Arthur for Irving Oil). K.C.'s grandsons were being eased into Irving management. Unlike so many entrepreneurial patriarchs, Irving had engineered a smooth transition of executive control to his heirs.

Irving died on December 13, 1992, in Saint John and was buried in Bermuda. He was survived by his second wife, Winnifred, and by the legacy of what an aggressive strategy of vertical and horizontal integration can achieve in an economy on the margin of North America.