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Hooray!

PROCHAIN ÉVÉNEMENT
96911
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Hooray!

For years, Tom Cox’s life was full of the kind of excitement you don’t get growing corn and soybeans.

It started back in 2002, when he and other farmers and residents of Brant County, Ont., boldly announced they were going to raise $86 million and build an ethanol plant. Cox agreed to chair the board of Integrated Grain Processors Co-operative, and the ride was underway.

There would be magical moments, such as when they realized their dogged efforts to persuade people to invest $25,000 apiece were taking off, and the largest co-op start-up in Canadian history was actually going to happen. There was what Cox describes as the “surreal” day – planting corn in the morning, then hurriedly changing into a suit and driving to Toronto to make a presentation to Bay Street investment bankers. And, of course, the day about six weeks later when international banker Société Générale agreed to be ‘lead lender’ and arrange for the bulk of the financing for what by then had become an even larger $140-million project.

The list goes on and on – both highs and lows. There were times when Cox and his fellow volunteer directors would set out 150 chairs at a community hall and only have a dozen people turn up to hear their presentation on the merits of investing in IGPC Ethanol. The time they finally had to admit their original site was never going to work, and the day they found one in Aylmer that would. Plus those days the plant opened, first reached (and then surpassed) its 150-million-litre operating capacity, and the first batch of dividend cheques – $5.3 million worth – were sent out to investors.

It was quite a ride and it was only after an experienced CEO was hired prior to the plant’s opening in September 2008, that Cox was once again free to devote his full attention to his family’s grain farm and commercial grain elevator at Troy, a short drive west of Hamilton.

While IGPC has achieved the hopes and expectations of its founders, success is different than what he expected, says Cox, still the co-op’s chair.

“When you start out on something like this, you imagine that at some point, you’re going to stand on top of the mountain and say, ‘I made it,’” says the 45-year-old.

“There have been many milestones along the way, and some are much better or came earlier than I hoped. But then immediately you’re into the next thing. So there never really was that moment. It’s a different feeling than what I expected it to be.”

Cox isn’t complaining, and he marvels at how much has changed in 10 years.

A decade ago, virtually all of Brant County was in the doldrums. The rural municipality, just west of Cox’s farm and centred around the city of Brantford, was gripped in an economic malaise dating back to the closure of the Massey Ferguson plant in the late 1980s. Farming was crummy, too, with corn prices at $2.50 a bushel, barely half of what they’d been a decade earlier. An initiative by the Brant Federation of Agriculture saw about 40 people, all of them either farmers or people in ag businesses, come together with the aim of identifying some sort of valued-added enterprise; some kind of processing that could keep a few more dollars in farmers’ hands and create a few desperately needed jobs.

They knew countless groups like theirs across the country had tried, and failed, in that quest. But they beat the odds and IGPC became, by any measure, an outstanding success story. In 2011, the plant’s 50 employees ground 400,000 tonnes of mostly locally sourced corn to make 163 million litres of ethanol and 120,000 tonnes of distillers grains, which generated $125 million in sales. Just three years after it opened, the operation had paid off nearly three-quarters of the $64 million of the term financing used to construct the plant. What’s more, in the past two years, it has issued $10.6 million in cheques to the 900 members who put up $53 million during an equity drive. The company is now eyeing a co-generation project that would capture waste heat and turn it into electricity to power its turbine, and a plant expansion is also under consideration.

So what’s the secret of its success?

Cox doesn’t have a blueprint but there’s a reason why he talks about the roller-coaster ride of the early years. He can speak nostalgically of those days now, but says it’s important to understand, that with excitement comes stress and setbacks, and in between the big moments are weeks and months of grinding it out.

“One of the things I’ve said to many people is that it’s necessary to be naive,” says Cox. “If someone at the start had detailed all that something like this involves – the hours, all the ways it can fail, the consequences of failing – and I had believed him, then I would have wanted to run away.”

That makes it crucial, he says, to not only have a shared vision in your group, but also a determination to stick together and support each other.

“One of the reasons we’ve been successful is that we worked really well together,” says Cox. “The directors have been 100% supportive and there’s been no finger-pointing even when things weren’t going terribly well. You can spend enormous amounts of time dealing with those sorts of issues, but we never did. We never had to.”

And there were plenty of trying times. Having to pull the plug on the Brantford site was heartbreaking, although the city’s fortunes have since rebounded and the new site an hour’s drive west of Aylmer has worked out extremely well.

But it’s not just external events that tested the group’s resolve. At the start, everyone in the group of 40 kicked in $5,000 for an initial feasibility study on an ethanol plant. The consultant’s report was favourable and said the next step was to either form a corporation or co-operative. The latter had distinct advantages when it came to raising equity, but the very idea of a co-op didn’t sit well with some, including Cox.

“Many people have a bad view of co-operatives – they think they can’t be profit-motivated or well-run,” says Cox. “I was probably a bit negative towards co-operatives but my view has changed. A well-managed, well-run business tends to succeed and poorly managed ones tend to fail. It really doesn’t matter whether it’s a co-op, a corporate model, or a mom-and-pop operation.”

But before you can run a business, you have to come up with the money to create it. The initial equity drive only raised $5 million in six months. Two more separate drives were undertaken, with the entire exhausting process lasting three and one-half years. The volunteer directors not only held 50 community meetings of their own, but also made presentations at dozens of other meetings of farm and community organizations. Even more time was spent in countless one-on-one conversations with potential investors – only one in 10 of which would actually put in money.

“You learn to be philosophical about it,” says Cox. “I can remember some of the early meetings when we would set out 150 chairs and have 15 people show up. So we learned to set up 20 chairs and if more people showed up, we’d get more out.”

Another contentious issue was whether farmer members who delivered corn to the plant would get a premium over the market price. As in the co-op versus corporation question, there were strong feelings on both sides – and a need to respect those who didn’t see things your way. (In the end, the question was settled by the realization there weren’t enough potential corn farmer members able to invest the tens of millions that were required.)

As the project moved along, the group became more disciplined. Initially, there was a lot of enthusiasm for doing co-generation right from the start and producing additional products, such as a road de-icer made from ethanol. They weren’t bad ideas but the group needed to be focused, says Cox.

“In the early stages, there’s a tendency to have four or five different focuses, and also a tendency to try to plan five steps down the road,” he says.

“As we went along, we realized we had to pull all of that back. You often hear about projects that are multi-faceted or will leverage four or five different platforms. But most of the projects where they talk that way never happen. They just become way too complex to handle.”

The group was also able to change and mature. When you’ve put your heart and soul into a project for many years, says Cox, it’s hard to let go of the reins. He made the pitch to the Bay Street bankers simply because there was no one else to do it, he notes. Today, it would be rare for him even to be in the room when the co-op’s CEO and financial staff meet with lenders.

“Some co-ops have been somewhat notorious for building something and then not allowing the management team to actually manage,” he says. “Early on we got some good advice from our consultants and corporate lawyers on the proper role of a director and the need to follow the chain of command. I would never – and I never have – show up at the plant unannounced or presume to tell an employee what to do.

“You want to attract and retain good people. A solid, professional manager is not going to put up with having nine bosses looking over their shoulder every day.”

Mind you, says Cox, being able to hand over responsibility was also a relief. There were “three or four times” when the project was in serious danger but things “bounced the way we needed them to bounce,” he says.

“When you go through those, you quickly become humble about how smart you are.”

As the public face of IGPC, Cox says he’s received a disproportionate share of the credit. He’s dined with two prime ministers, been invited to speak across Canada and in the U.S., and had experiences he never imagined having, such as the trip to Bay Street.

But the best part was getting to work behind the scenes and learn from his fellow board members and the professionals they hired, he says.

And that leads to his last piece of advice: Enjoy the ride.

“It was very stressful and there were a lot of ups and downs, but we were all pretty passionate and excited about it,” says Cox. “It was fun.”

IGPC’s website is igpc.ca