Date: March 15, 2012
Venue: Renaissance Vancouver Harbourside Hotel
By Jerrie Lynn Morrison
The story of Ridley Terminals Inc., as told by chairman Bud Smith to members of the The Vancouver Board of Trade, could be described as no less than win-win for the crown corporation and the province of B.C.
Smith’s address, held at the Renaissance Vancouver Harbourside Hotel and presented by WorleyParsons and SMIT, covered the success of Ridley Terminals since 2006, the role the corporation plays in the local Prince Rupert community and beyond, and the company’s strategic importance to Canada.
With private enterprises as well as the provincial and federal governments making significant investment in Canada’s Pacific Gateway, Ridley Terminals Inc. is well-positioned to meet the booming growth of B.C.’s mining and energy sector spurred by the demand from Asia-Pacific countries. Expansion plans for Ridley Terminal, a federal crown corporation which opened in 1984, are currently underway to double annual shipping capacity from 12 million tonnes to a projected 24 million tonnes by 2015.
According to Smith, “no taxpayer money was spent” to pay for the terminal expansion. Instead, Smith said that the capital spent so far, “has been 100 per cent funded by our own cash flow.”
This is a remarkable financial success for Ridley Terminals, especially since the terminal had been a tax burden and a financial failure for most of the time between 1984 and 2006. In 2005, Ridley Terminal was on the verge of being sold for only $5 million. By 2006, the terminal had accumulated a deficit of more than $200 million.
However, a key change took place that brought the terminal from an operating loss of $900,000 per year in 2005, to earning a net profit of $100 million in 2011. The key to this turnaround was a 2006 government mandate to operate Ridley Terminals in a commercial manner. As a result of the change to operate in a commercial manner, the debt that had accumulated as of 2006 will be paid off by year-end 2012, and replaced by retained earnings. According to Smith, by year-end 2012 the projected net worth of the terminal will be $750 million, and $1.5 billion with the anticipated completion of the terminal expansion by 2015.
The second point Smith touched upon during his address was Ridley’s social license to operate in the Prince Rupert area. “Jobs, growth and responsible enterprise are welcome,” said Smith. “At Ridley, we understand our greatest long-term risk comes from taking for granted that social license entrusted to us by neighboring communities.”
Operating the crown corporation in a commercial manner has allowed Ridley to support its social license by creating 88 new full-time, high income jobs since 2006, and enter into a benefits agreement with local area First Nations communities to support art, culture and career growth with Ridley Terminals and other businesses that partner with Ridley.
Like many businesses faced with the challenge of an aging boomer population, Ridley Terminals will see the retirement of many highly skilled workers in the near to mid-term future. They’ve taken this opportunity to start an initiative that will support the economic growth of Prince Rupert and surrounding communities, including training for First Nations youth. Smith stated that Ridley has hired an area First Nations professional educator as part of their senior management team to work with Ridley and help identify youth in high school, “with an aptitude to do our jobs.”
The third point Smith touched upon is Ridley Terminals’ strategic value to Canada. Smith pointed out that the Vancouver port is serviced by road and rail service through a vulnerable area, namely the Fraser and Thompson valleys. And while infrastructure efforts have been made to make the passage safe from natural disasters such as avalanches, Smith pointed out that Canada needs two ocean exits to ensure that trade is not hindered and ensure Canada’s competitive position in shipping resources to Asia-Pacific countries.
By the end of the session, members of The Vancouver Board of Trade had an appreciation for Ridley Terminals, not just as a world leader in the efficient and reliable movement of coal and other bulk commodities to Asia, but as a key building block in the province’s comprehensive strategy to create jobs and support industries that lead to healthy economic growth.