The Edmonton Journal’s front page on Friday. Below: Brian Nilsson apologizing, Lee Nilsson, the Mannix brothers, Fred and Ron. All photos grabbed from the Internet.
Postmedia News, owner of Alberta’s two largest newspapers, was so relieved when one of the brothers who own troubled XL Foods Ltd. in this province’s southeast finally emerged and apologized for the E. coli mess at the company’s meatpacking plant the Edmonton Journal devoted a massive four-line headline to the story.
Normally, this is the sort of treatment reserved for humans landing in another part of the solar system or reports of the second coming, not a pro-forma apology, late and barely better than never, from one of the low-profile owners of the massive slaughterhouse in the town of Brooks.
But then, in fairness to the Journal, just about everybody in Alberta has been scratching their heads for days about why the Nilsson Brothers, owners of XL Foods’ self-named parent company, had been doing such a pathetic job of public relations and brand management – which was recently described in this space as a textbook example of how not to handle a PR crisis.
The mystery was all the deeper because Brian and Lee Nilsson not only can obviously afford competent public relations counsel, but based on their capable performance during the Alberta Mad Cow Disease crisis of 2003 know how to deal with this kind of situation.
But maybe the media are just asking the wrong questions.
Perhaps someone should ask how Edmonton-based Nilsson Brothers Inc. has been able to punch above its weight for so long, certainly more than a decade – in 1998 spending $24 million to buy XL Foods Ltd., which in turn bought the Brooks plant in 2009 from Tyson Foods Inc. of Springdale, Ark., for $145 million US.
It seems likely the Nilssons simply couldn’t have done it without partners with very deep pockets – a fact that seems to have been missed entirely in the coverage of the situation to date. This includes another Postmedia story that went on for more than 1,500 words without getting anyone to say anything very revealing about the company or the people who own it, and a Globe and Mail story yesterday that similarly contained very little that is new.
If this conclusion is correct, it would be reasonable to speculate that the ineptitude of the Nilsson Brothers’ handling of their PR crisis had as much to do with the wishes of their silent partners, whomever they may be, as any other factor.
So a good question for some investigative journalist with a nose for news and budget for extensive corporate searches – the CBC’s Charles Rusnell, c’mon down! – might be to ask just whom those silent partners could be.
I can tell you that in 2004, according to the website of the Calgary-based Mancal Group of Companies, Nilsson Brothers Inc. did business with a company called Manvest Inc.
While the link to the page that is supposed to tell us about the nature of that business is no longer functional, simply informing us the file or directory can’t be found, a reader has dug into the Internet’s trunk of memories and provided a link to the missing Manvest Inc. page, which states that in July of that year, “Manvest announces that it has divested its equity interest in Nilsson Bros. Inc., an Edmonton-based marketer and processor of cattle, operating auction markets and beef slaughter and processing plants in western Canada, as well as feeding and other industry related businesses.” Readers will recall that this was at a time the Mad Cow crisis was continuing.
It would be interesting, of course, to know how big this equity position was and to whom it was sold.
Bloomberg Businessweek describes Manvest as the “private equity and venture capital arm of The Mancal Group specializing in management buy-ins, management buyouts, expansion capital, acquisition financing, succession planning, mezzanine and bridge financings, and pre-liquidity event value enhancement in emerging and middle market companies,” whatever the heck that’s supposed to mean.
The Mancal Companies are known to be owned by another pair of well heeled and low profile brothers, Calgary’s Fred and Ron Mannix, who according to Canadian Business Magazine and other sources are among the 10 richest Canadians.
The Mannix brothers are said to be so shy they fine their public relations counsel if their names ever appear in the media! So Alberta Diary apologizes in advance to their public relations staff if this mention results in a financial cost to them. They should tell the Brothers this is just a blog, and nobody reads those things.
However, since there seems to be no additional information found elsewhere as to the nature or value of the business referred to on the Mancal Group’s website, it is impossible to speculate on the extent or nature of this business.
Regardless of whom XL Foods does business with, it is also a reasonable question to ask if the company now remains viable in the face of the likely costs associated with the closing and cleanup of the plant, the massive worldwide recall of products, insurance issues resulting from the E. coli contamination, potential class-action lawsuits and commitments in XL Foods’ collective agreements with its workers.
It is within the realm of possibility the cost of these liabilities now exceed the value of the plant in Brooks.
This would be extremely bad news for the workers employed by the plant, 2,000 of whom the company laid off yesterday, and for the town of Brooks. It would also be bad news for Alberta and Canadian taxpayers, who could well be called on to bail out a company that is too big to fail.
Nor would it be good news for Alberta beef ranchers, although not necessarily the disaster for them it might seem at first blush.
After all, there is capacity at the modern plant in High River, Alberta, owned by the Canadian subsidiary of Cargill Inc. of Minnetonka, Minn. In addition, U.S. meatpacking companies facing the possibility of several years of lower kill numbers in that country may be prepared to bid more for Canadian cattle.
So the Alberta Beef brand at least should be able to survive without XL Foods.
NOTE: This post has been revised to include information from an archived Manvest Inc. web page discovered by a reader.
This post also appears on Rabble.ca.
well if the brothers, who fine, sold their shares in the company who did they sell to. I would think it would be of great importance for the people who eat this meat to know that. If Canada won’t release this information perhaps the Americans will.
From what I have read the problems in the plant have to do with lack of cleaniess which was brought about by lack of attention to detail, lack of inspectors, lack of time for workers to do a decent job.
I’d suggest the government look at slowing down the lines. Work can not be done at the rate these factories expect it to be done. The companies only are interested in the bottom line but the lives of Canadians & Americans depend upon clean food factories.
It is interesting that not much information has gotten out about the actual workings of this plant. I am of the opinion Canadians need to know.
The workers who were laid off do have a problem, they are out of work & may never return to work at XL. On the other hand perhaps a smaller plant might be in order, one which pays attention to hygiene & operates in such a manner than standards can be maintained.
With the amount of cattle being processed it is simply impossible to maintain standards or for the food inspectors to be able to cover all the bases.
i certainly won’t be purchasing beef slaughtered in Alberta. I have the option of having meat slaughtered & cut locally. These small operations do 2 to 4 animals a day. meat inspectors right there.
Of course I’d still like to know how that much beef got out the door. Like didn’t they test it before it left?????
I’d rather pay more & know where my beef was coming from & who was processing it.
I guess at this point its locally caught fish, local chicken & local beef and a lot more rice & beans. I’d hate to think after living the life I did, I was killed by a piece of dead meat.
I would love to see some more investigative reporting into the whole intertwined mess between these guys, the big feedlots, Stelmach and Groeneveld’s baby ALMA (Alberta Livestock and Meat Agency) set up to subsidize the big feedlots and meat processors, the PC party and the political circling of the wagons to protect their own. Groeneveld once famously said “Producers who are unable or unwilling to transform their business by meeting the conditions may need to consider ways to exit the industry.”
“Manvest [is] the ‘private equity and venture capital arm of The Mancal Group’…”.
Ahh, vulture capitalism. Don’t ya just love it? The only ones who come out better from it are the vultures. Two thousand people either laid off or losing their jobs completely doesn’t mean a thing to them. Just the cost of doing business. And it’s other people who are left paying the bill. They’ll write it off as a capital loss.
As for the company description, it’s all part of the baffle-them-with-bovine-organic-fertilizer corp-speak. Hey, wasn’t bovine organic fertilizer the main problem to start with?
And “…[T]hey should tell the [Mannix] Brothers this is just a blog, and nobody reads those things.” – who are you calling a nobody?
I heard they deal with the Bank of Hong Kong. Could that be a clue? They started buying auction marts, then feedlots, then the slaughter plant. As you noted, all of these purchases require deep pockets. The Nilsson Bros. have also been buying up pasture land in Alberta and Saskatchewan in a big way. They are known to be cheapskates and also meticulous with their centralized bookkeeping. No way is that small office space in Edmonton their head office. I think we need to know who the silent partners are and where they are sending the beef. Only a small fraction probably ends up in Canada.