Q&A with new PCL head Paul Douglas
Published: Tuesday, November 03, 2009
After 12 years at the helm, Ross Grieve stepped down today as CEO of PCL, Canada's largest construction firm.
He leaves behind a legacy of spectacular growth at the iconic, 103-year-old firm, including five straight years of record financial results.
Grieve's successor and longtime protege, Paul Douglas, is a Metro Toronto native who joined the Edmonton-based giant in 1985, after a stint with EllisDon Construction, a major London, Ont.-based builder.
Douglas, who is married with three grown children, has served as COO (chief operating officer) of PCL's Canadian operations since 1997.
Journal Business columnist Gary Lamphier recently sat down with Douglas, to discuss his background, his management style, and his outlook for Canada's most successful builder.
Below is an edited transcript of their hour-long conversation:
Journal: In your own words, can you tell our readers a bit about your background?
Douglas: I grew up in Ontario, in a suburb of Toronto. I went to the University of Toronto and studied civil engineering, specializing in construction engineering under the civil branch. At the time, in the 1970s, PCL didn't have a presence in Ontario, So I worked in the summers with EllisDon, and after I graduated, I moved west and continued on with EllisDon. I started as a labourer, and came up through field engineering. I did a couple of jobs as superintendent. Then I moved back to London to become chief engineer of the company at a very young age - too young, probably. I graduated when I was 23 and by the time I was 25 I was chief engineer of the company. Then in a few years, I took over as district manager for Southwestern Ontario, and within a year of that, I came out to run their northern Alberta division in 1981, at the ripe old age of 27.
Journal: When did you make the move over to PCL?
Douglas: I had an opportunity to meet with (former PCL CEO) Bob Stollery on a number of occasions. I had been promised (share) ownership at EllisDon, and I really liked the PCL model (of employee ownership). So I made the move in September 1985 to come and join PCL. I came over to the Edmonton branch as a construction manager, and later moved to Calgary in 1987 as a construction manager, so I got to experience both branches. I came back in 1988 to Edmonton as the corporate business development manager, and near the end of 1988, I went off to run my first PCL branch, in Regina.
Journal: How long were you there?
Douglas: I stayed in Saskatchewan for 18 months, and that being the birthplace of PCL, if you don't go in green and white, you sure come out green and white. That year the Riders won the Grey Cup. They beat Hamilton, and I became a Riders' fan, for the 18 months I was there.
Journal: Where did you go next?
Douglas: I moved to Ottawa, and that was probably the biggest challenge of my career, setting up a new branch for the company in the Ottawa Valley. I did that for three years, and I became a Senators fan. It was Sept. 6, 1990, that Ross (Grieve) and I were both down in Florida at the (NHL) board of governors meeting, when they allocated two new teams. Twelve cities were vying for the two open spots, and Ottawa and Tampa Bay got chosen. We were there with the Ottawa contingent supporting the bid, trying to convince the board of governors that we could build a new arena for the Senators, on time and on budget. It was very exciting to be down there when Ottawa was awarded the team, so we became very close to the whole organization. We built their arena, so we've got some unique ties to the Senators.
Journal: When did you return to PCL's head office in Edmonton?
Douglas: I went from Ottawa to Toronto, following Ross, and in 1997, when Ross took over as CEO, I moved from Toronto to Edmonton, to take over his (previous) role running PCL's Canadian operations. So I've been mentoring under Ross for the last 20 years, and now I'm following in his shoes again.
Journal: What did you learn about leadership under Ross?
Douglas: When you spend a lot of time together you both end up having an influence on each other, and you both become more and more alike over time. So I think I've evolved to have a very similar leadership style to Ross, and I think if there was anything that I've really learned from Ross, it's that Ross is probably the best people person I've seen in a CEO - just his authenticity. People trust and believe in him. He has great compassion for people, he cares about people and as a result, people will do anything to support his leadership and his direction.
Journal: Are you a big believer in empowering your people and delegating decision making?
Douglas: Yes. You really do have to go and work in various markets. You can't stay in one marketplace and learn to become an effective CEO of this company. Every market is different, and you cannot sit here from head office and dictate how things should be done. You need a bunch of entrepreneurs out there who are empowered to go out and figure out their marketplace, and how to succeed in their marketplace, and then to come back and tell us what can we do to support them. So I think from the time you move above a district manager's position, and from the first time you become a regional vice-president, you sure have to learn to delegate, and to empower people. There's no way you're going to run a $6-billion company if you think you're going to be hands on in each and every branch.
Journal: The last time I sat down to interview Ross, last January, PCL had just reported five straight years of record results. Obviously, a lot has changed in the global economy since then. How would you describe the situation you're walking into now, as you become CEO?
Douglas: As I said to Ross, ‘Your timing is impeccable' (big laugh). I'm a firm believer in cycles, and we've been on a ride - the entire economy has been on a ride - for an extended period of time. And we've certainly positioned ourselves well, under Ross's leadership, to ride that wave very well. As we turn (PCL) over to a new generation (of leadership) we are in that down part of the economic cycle. But what we've done in the past is a great model to use to move forward, and that is, to not look at that down cycle as an excuse for (poor) results, but to look at it as a challenge and an opportunity.
Journal: Can you elaborate on that?
Douglas: It's really the strategic plan that we set out in March of 2008, prior to last September's (global financial) collapse. And that was to continue to expand our footprint, to continue to grow in the civil and industrial marketplaces throughout North America. And when you think of that plan, what better time is there to do that than during a downturn? Trying to grow your geographical and sectoral footprint in a booming market is next to impossible. You can't find good people outside the company, or they're very difficult to find. And acquisitions are very expensive, so there's no better time to go out and find good talent and good companies that are affordable than during a downturn.
Journal: PCL's fiscal year-end is Oct. 31, so I realize it's too soon to have final year-end financial results. But in general terms, can you say what kind of year this has been?
Douglas: We're continuing to move forward with good backlogs. The huge challenge is wondering which projects are going to continue, which projects will be capped, and what owners aren't going to be able to pay their bills when we do get the project completed. We've done a good job managing the situation and we've been very fortunate. The receivables that are still outstanding are very very minor, considering that we're a $6 billion company, and that some of our projects were financed by Lehman Brothers and a number of the institutions that went under. But we worked with the owners to work through those issues and get paid. And our district offices have done an amazing job of reacting to the marketplace, with commercial and residential work virtually drying up.
Journal: What have they done in response?
Douglas: They've adjusted and figured out what they needed to do with their resources to move into other sectors, whether it's military, manufacturing, waste water, roads, bridges or whatever to secure profitable new work. As a result, it appears - and the numbers are all preliminary - but we are probably going to have a better backlog this year than last year. So we've continued to grow. And while most companies are laying off staff, we are still hiring as a whole. So our people count continues to go up, and we are projecting that to continue. And our three-year plan is to continue to grow, on an annual basis. We should be over a $7-billion (revenue) company over the next three years, up from the $6 billion we are right now. So it's not nearly as significant a growth rate as we saw over the last five years, but it's still growth. Considering that most others are shrinking, I'm quite pleased with that.
Journal: So when you look at your order books, where are the biggest problem spots? Is it in U.S. commercial construction?
Douglas: Both commercial and residential. So if you take a branch like San Diego, where quite a bit of their volume was in residential, (that's changed). So we went through a bit of an adjustment period, and the biggest backlog now is our work at San Diego (International) Airport. So again, whether it's airports or getting into bridges, hospitals, universities or the military, there's still building projects that we're able to do, that are outside the normal private commercial builder or developer sector. Historically (when they're down) they'll go into the tank for two to five years. So in places like Hawaii, we were building huge resorts and now we're focusing on, and acquiring, all the other types (of projects) such as universities, hospitals or road work projects. Being sectorally diverse has always been a great strength of this company,
Journal: And is the growth in the public sector driven mainly by government stimulus spending?
Douglas: I think it's more mixed than that. Yes, the stimulus packages have created some confidence in the cities, states and provinces to continue to move forward on a number of initiatives to correct the infrastructure deficit. In previous recessions, governments would have pulled in their horns and said revenues are down, therefore our capital program is stopping. But as an industry we've been trying to convince governments to do counter-cyclical spending - to buy when the market is down - and for the first time in my career we're seeing that happen. So most projects, in hopes of getting infrastructure stimulus funds, have continued to move forward on design and continued to make their case for funds. But also what's out there now is a private-sector solution to funding this infrastructure through the P-3 process. So one way or the other it's happening. The stimulus funds are helping as well as the P-3 delivery model.
Journal: What's your outlook for oilsands construction?
Douglas: It is definitely way down from what was going on, and what was anticipated back in 2008 prior to the downturn. But it's still very active. To think that it's dead is far from true. The fact is, the entire industry was way over capacity, and trying to find solutions to build what was being contemplated at the time was extremely challenging. But we're (still busy). We're completing the Shell upgrader. We've negotiated a substantial portion of (Imperial's) Kearl Lake project, in Fort McMurray. We've been in Saskatchewan for 103 years but we want to expand our industrial presence there. Premier Brad Wall's government is actually creating some business optimism for the first time in many years, and Saskatchewan has a very bright future. So our industrial division has moved in there. At the Co-Op refinery in Regina we've secured a major opportunity, and we've recently received a letter of intent for a huge expansion to the Agrium potash mine in Saskatoon. So we're increasing our industrial footprint and we're ready to take on all the opportunities that are available.
Journal: Let me ask a couple of personal questions. What do you like to do when you're not working?
Douglas: I enjoy all sports. A lot of the sports (I played) when I grew up were team sports - football, hockey and those things. And (as I got older) I switched over to more individual sports like golf and tennis. So I enjoy activities, working out regularly, trying to stay healthy and fit. And I really enjoy people, and getting together to enjoy meals and talking and having fun.
Journal: Outside of PCL, are there any particular business leaders you admire?
Douglas: Well, there's certainly been some great external mentors of mine, or people I've certainly learned a lot from. One was Rod Bryden. He was the owner of the Senators at the time when we were building the Palladium, or what is now called Scotiabank Place. And I feel the education I got from him when he was trying to finance that stadium was great. I flew with him around North America, trying to convince financiers that investing in an arena was a good thing to do. Our role was to go with him and convince them that we could build this project on time and on budget. Just watching the way he would take what seemed to be insurmountable problems and break those down into manageable bit-sized pieces and then allocate the risk to everybody else but himself, he was amazing. He just never said die. There would always be a solution, and he made it happen. At the end of the day, no one else would have pulled that off, but he did. So I gained a tremendous amount of respect for the man.
Journal: When you look ahead to 2010, what are the biggest risks that PCL faces? What keeps you awake at night?
Douglas: In this position, you could worry yourself to death pretty quickly. And if I'm going to get a good night's sleep, I just try to reassure myself that we've got a great executive management team, and such a culture within this organization that (we'll succeed). Yes, there's going to be bumps, there's going to be challenges. But if anybody is willing to overcome those challenges, it's going to be our team. So that allows me to get my good, solid sleep at night, and get ready to tackle the next challenge when it comes.
Journal: PCL is now a major North American company. Will PCL's head office remain in Edmonton?
Douglas: Definitely, for a number of reasons. But yes, definitely.
Journal: As you know, Edmonton Oilers owner Daryl Katz is pushing for a new downtown arena, as part of a major urban redevelopment plan. If an acceptable financing plan can be worked out, do you believe such a project would be good for the city?
Douglas: Definitely. One thing my job does is provide me with the ability to travel around, and see what other great cities - particularly around North America - are doing. Edmonton is a great place to live and work, and it has tremendous potential and opportunities ahead. We've seen some great revitalization of the downtown core over the last five years, and I think if it's done properly, we could really turn our downtown into a world-class place. I believe it's also necessary for the Oilers, if they're going to be the hockey team we all want them to be. They have to find a solution to be able to compete with the other teams in the league.
glamphier@thejournal.canwest.com
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