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The Path of Change

Rod Graham transforms Horizon North

Rod Graham, president & CEO of Horizon North Logistics Inc. Photo by Ewan Photo Video.

Major change is rarely easy. It often demands time, patience and perseverance; tests the limits of adaptability; challenges old norms. Those undertaking it must have vision and, just as importantly, the ability to convince others of that vision. When implemented for the better, it can bring new beginnings, reinvigoration and greater opportunity – the difference between surviving and thriving.

Major organizational change – one that transforms a business into something greater and altogether different from what it once was – is all of this, and then some. Just ask Rod Graham, president and CEO of Horizon North Logistics Inc., a full-service camps and catering, manufacturing, transportation and logistics company headquartered in Calgary. Since taking the helm of the 10-year-old public company in early 2015, Graham has led it through transformational change – from a decentralized holding company with multiple, stand-alone operating entities to a centralized organization operating under a common vision, mission and value set – and he’s just getting started.

“For 25 years I have wanted to change the way energy service companies and exploration and production companies deal with each other,” Graham explains. “It is, in my mind, a counterproductive, power, pendulum process that advantages the service company in a high commodity price environment or advantages the exploration companies in a low commodity price environment.”

He is now orchestrating that change at Horizon North. A service company at its core, Horizon North’s base business is providing workforce accommodation solutions – it has 10,000 workforce accommodation rooms – to the oil and gas, energy, mining/exploration, forestry and construction industries across Western and Northern Canada and Alaska. Accommodations range from single-person solutions to 3,500-plus bed lodges, for short- or long-term rent or purchase.

The company carries out the design, manufacturing (at plants in Grande Prairie, Alberta and Kamloops, B.C.), quality assurance and control, and project management in house. It also provides transportation, site installation, soil stabilization, matting, power systems and utilities services.

Graham’s resumé leaves no doubt as to his qualifications for creating change. With an HBA from Wilfrid Laurier University and a CFA and MBA (Ivey Scholar) from the University of Western Ontario, he cut his business teeth at ARC Financial Corporation. “I wouldn’t be doing what I’m doing now without having spent 11 years at ARC,” Graham says. “It really built a foundation for a lot of the skills that I’m levering off of for rolling out Horizon North.”

After ARC, he worked at Peters & Co. and then co-founded Northern Plains Capital Corporation, a private equity firm. “Over the course of my career I’ve looked at 800 different companies in the energy infrastructure business and have been part of an investment thesis for 40 of them,” Graham says. “I’ve sat on 15 different corporate boards in that process.”

Horizon North is not the first company he’s transformed. In 2010, he stepped in to lead the turnaround of Edmonton-based ZCL Composites Inc. “It was a very complex turnaround,” he says. “The company went from being very close to bankruptcy to one that is now extraordinarily flush with cash and has very strong margins.”

Graham originally joined the Horizon North board of directors in 2007 and served as chairman from May 2012 to January 2014. When the previous CEO decided he wasn’t up to taking Horizon North to the next level, Graham agreed to step in. “I sat down and built out a five-year plan for where I want the organization to go,” he explains. “The intent was to build it into a chronology of steps.”

The first step was examining the industrial business and its customers – who changed dramatically during the recession. “Customers are looking for a cost structure that fits and a quality offer that still allows them to maintain talent,” Graham explains. A focus on the best quality and cost structure was needed. “This then affords tremendous pricing latitude in terms of the way we deal with our customers.”

A change in the approach to sales was also prescribed. “I wanted a highly-technical, cerebral approach to selling,” Graham says. In place of hockey tickets and golf games, the sales team examines reserve profiles and production plots to figure out where to position camp assets and how to pitch certain customers.

Integral to this change was Graham’s approach to human resources and his belief in business as a team sport. “We utilized non-traditional hires as the basis for pushing forward,” he explains of his hand-picked team. “A co-mingling of traditional energy people with individuals who have come out of industries that have suffered extreme duress.” Included among these was a senior quality manager from Lexus and Horizon North’s new VP of sales and marketing who came from outside the energy business. “Our VP of manufacturing was at one point running 14 plants for Honda in Japan. He has a PhD in lean manufacturing and supply chain management.”

Lean manufacturing is a core tenant of Graham’s leadership ethos, stemming from his time in Japan where he completed his MBA. “I fell in love with the concept of lean manufacturing and process,” he says. “And it always stuck in the back of my head that if ever there was an opportunity for me to effectively template transformational change it would have lean as its core.”

Graham’s “right arm” is Scott Matson, senior vice president finance and CFO, who commends Graham’s leadership skills. “Rod is inspiring and leads from the front, setting a strong example of what is required and expected both for his direct reports and for the rest of the organization.”

Despite all the progress, Horizon North has nonetheless faced serious challenges over the last two years. The transformational process combined with Alberta’s recession took a toll, and roughly 900 people were let go. However, Graham highlights the silver lining of low oil prices. “It has been the collapse of the commodity price that has allowed me to get personnel and customers to listen to the argument for driving our industry to maturity and professionalism between supplier/customer that all sectors of our economy (except energy) has experienced.”

Matson notes other reasons for Horizon North’s resiliency. “We are focused on maintaining the health of our balance sheet to ensure we have adequate financial flexibility to both survive and to take advantage of opportunities that present themselves.”

The Fort McMurray wildfire in May 2016 was another setback. The company’s flagship 665-room property, Blacksand Lodge, burned down. This was after it had served as a respite for almost 1,250 evacuees during the first five days of the fire.

Graham is quick, however, to focus on the good news: the acquisition of Empire Camp Equipment Ltd. in August 2016. “It brought 1,700 rooms to our fleet and allowed for us to get some diversity,” he says. “They had a couple of contracts for completely non-energy related activities, which is where I’m driving our business.”

He also highlights Horizon North’s dedication to safety, put to test by the wildfire. “We’ve got world-class safety statistics because we invest and it truly is part of our culture and DNA. That allowed for us to have no injuries when the fire occurred.”

One key area Graham has continued to focus on is community relations, in particular with First Nations. The organization is partner in 17 First Nations joint ventures and roughly 12 per cent of its 1,100 employees are of First Nations descent. “A lot of people talk about having a First Nations file, but we live it,” Graham says proudly. “We have had tremendous success in working with First Nations people.”

With 2015 and 2016 – and the focus on operational excellence within the base business – behind him, Graham is now looking to continue to build out Horizon North’s permanent modular construction business in 2017 and beyond. The company builds both commercial and residential modular structures in controlled plant environments.

This business, he explains, began with getting the right quality and cost structure in place, as well as the right software – such as 3D virtual reality software, provided by Calgary-based DIRTT Environmental Solutions, which enables customers to experience the environment and design of a property before it is laid to ground.

To augment its permanent modular business, Horizon North acquired Karoleena Inc. in May 2016. The company designs and manufactures designer prefabricated homes at its plant in Okanagan Falls, B.C. Homes are ready in six months. “We had the quality, the cost structure, the software but we didn’t have the architectural flare and that’s truly what Karoleena brought to the table,” says Graham.

Since acquiring Karoleena, Horizon North has developed a lower-scale brand, in terms of fit and finish, called Kadence. Graham has big plans for Kadence in the rebuild of Fort McMurray. “There certainly is the demand for this type of square footage at the pricing point we’re looking at,” he says. “We can build a house in roughly one month.”

Outside of Fort McMurray, Horizon North’s permanent modular division has already had some impressive wins including a hotel in Revelstoke, a transitional housing project in Vancouver and a First Nations multi-family home project.

For 2018, 2019 and 2020, Graham plans to expand Horizon North’s utility capabilities, especially in remote areas, and its building maintenance division. He’s optimistic about Alberta’s future, noting the federal government’s approval of Kinder Morgan’s Trans Mountain pipeline and Enbridge’s Line 3. He cautions, however, of potential headwinds like the provincial and federal carbon taxes. “Business is tough, there’s no doubt about it, but I believe we’ve got the right people in place, the right balance sheet, the right board and the right product offering.”

If there was ever a man to effect both organizational and industry-wide change, Graham is he. With his grand plans, solid leadership and dedication to excellence, Horizon North’s transformational journey has good odds. The final destination appears bright.