Herb Doman; the last lumber baron
Hyfler/Rosner
July 28, 2007 Saturday
He sold sawdust door-to-door to become the last lumber baron;
After building Doman Industries Ltd. with luck, sweat and savvy, the
self-made multimillionaire was unable to save his company from a
perfect storm of financial and stock-trading troubles
BYLINE: JUSTINE HUNTER
SECTION: OBITUARIES; HERB DOMAN, 75: INDUSTRIALIST; Pg. S10
DATELINE: VANCOUVER
In the days when British Columbia's economy rose and fell in step with
the forest industry, lumber baron Herb Doman stood out in a field of
larger-than-life personalities. He built an empire from the back of a
used pick-up truck, and later his friendship with a premier led to the
longest and most expensive case in the history of the British Columbia
Securities Commission.
Throughout, he earned a remarkable affection from employees of Doman
Industries Ltd. and the grudging respect of the industry's trade
unions. He was identified by the website The Global Indian as the
first Sikh billionaire.
His father, Attar Doman Singh, had left the village of Paldi in Punjab
and arrived in Canada in 1905. He settled with his family in the tiny
community of Duncan on Vancouver Island, believing there was money to
be made in the forests that surrounded them. As it turned out, he died
when young Herb was just 12. The boy dropped out of school and,
sneaking up back lanes in a pick-up truck that he was too young to
legally drive, sold sawdust and firewood door-to-door to support his
family.
By 1953, he and his brothers, Ted and Gordon, had opened Doman Lumber.
Two years later, they expanded it into Doman Industries, then a family-
owned trucking- and building-supplies retailer.
The retail business needed lumber. Herb Doman then got into the
sawmill business, building his first mill in nearby Chemainus. Value-
added plants followed, then pulp mills and timber-harvesting
operations. The company would eventually employ 6,000 workers, with
sales of $1-billion at its peak.
Mr. Doman became a millionaire by the age of 33. While it was a
storybook success, it was his relations with his workers that set him
apart. "Herb was different. He liked his employees," recalled former
labour leader, Jack Munro. As head of the International Woodworkers of
America union in Canada from 1973 to 1991, Mr. Munro would sit across
the table from Mr. Doman during industry-wide contract talks that
often took place in a highly antagonistic atmosphere.
"In negotiations once, he pulled out with the [lumber] association. He
said, 'I have no problem with my employees' demands. I'm not going on
strike,' " Mr. Munro recalled. "The rest of the industry was upset
with him, but he appreciated and respected his workers."
Morris Mandziuk worked for Mr. Doman for more than a decade in the
finance department.
"He's probably, next to the MacMillan family, one of the biggest
builders of the industry, and I don't think he was ever recognized for
it," Mr. Mandziuk said. "He could be domineering at times - the
company was his life - but I remember when he found out the wife of
one of our employees was very sick. He called him and offered the
company jet ... he said, 'Whatever you need.' He really felt a lot
about his people."
While not on the scale of the former lumber giant MacMillan Bloedel
(now owned by Weyerhaeuser), the Doman empire came to represent one of
the big players in B.C. On timber-rich Vancouver Island, Mr. Doman
built sawmills in Ladysmith, Chemainus and Cowichan Bay. In
partnership, the company bought ITT Industries in 1980, acquiring pulp
mills in Squamish and Port Alice as well as more sawmills and timber
tenures as part of the deal.
A stroke in 1995 set him back, but he was soon back at work. However,
his appetite for expansion went too far in 1997 when the company
bought Pacific Forest Products' timber tenures, and three mills geared
for the Japanese market. It was a $144-million investment, and it
occurred just as the Asian currency crisis rippled across the Pacific.
Bob Plecas, who was deputy minister of forests during Mr. Doman's
reign, said Mr. Doman was not naive about business, but he was an
optimist. "He believed his number-one resource was not logs but his
workers, and he kept them working ... He had a big heart, but he was a
hard-headed businessman."
For example, when the Japanese market soured on B.C. hemlock, Mr.
Doman didn't stop milling. Instead, he loaded the timber on freighters
bound for New York, where he figured the market was more receptive.
While he was creative in finding opportunities, he was unable to save
the company in the face of a perfect storm of economic troubles. While
the softwood lumber dispute with the U.S., combined with falling
commodity prices, forced most B.C. forest companies to curtail
operations, Mr. Doman kept banking on a turnaround. Debt mounted,
eventually hitting the $1-billion mark.
In 2001, he suffered a second stroke that left him in a coma for
weeks. His son, Rick Doman, took over, but the company paid $365,000 a
day on its debt - that is, when it wasn't missing payments. "I don't
sleep at night," Rick Doman said in 2001. "All I do is run a company,
make an interest payment, cut back ... then run it again, make an
interest payment, cut back ... that's a horrible way to run a
company."
Meanwhile, Mr. Doman, by then confined to a wheelchair, wasn't ready
to let go of a business that had consumed so much of his life.
Sam Crisp worked as a log buyer for Herb Doman, putting him in touch
with his demanding employer on a daily basis. "My end was looking
after the sawmill logging inventories. I knew he wanted to know how we
were doing at every one of them," Mr. Crisp said.
"He was a tough boss, but he had a heart as big as the building ... He
would delay Christmas shutdowns when probably the economic state said
he should stop, but he waited until the very end so his employees
could enjoy a good Christmas."
Even after the second stroke, Mr. Doman would call Mr. Crisp a couple
of times a week to try and stay on top of things.
Unfortunately, he also faced political difficulties. Mr. Doman had
forged a close friendship with the B.C. premier of the day, Bill
Bennett. While it was a relationship in which Mr. Bennett was known to
drop in for tea on Sundays, it also led in 1988 to insider-trading
charges. Mr. Doman, who had never had a speeding ticket, fought the
allegations for 11 years.
It was alleged Mr. Doman tipped the premier and his brother, Russell
Bennett, that a proposed takeover of his company by Louisiana Pacific
had collapsed. The charge hinged on the fact that on the morning of
Nov. 4, 1988, Mr. Doman had made a telephone call to Russell Bennett,
and afterward they sold 517,000 shares of Doman Industries on the
Toronto stock exchange.
Shortly after the call - which the participants maintained was just
about a horse - the company announced that the merger talks had
failed, sending share prices plunging. The Bennetts made a profit of
$2-million.
While the courts eventually acquitted the threesome, the British
Columbia Securities Commission pursued the case and, in 1996, found
them guilty of insider trading. They eventually paid a $1-million
settlement, and Mr. Doman was forced to step down from his company for
eight months.
While the legal battle likely contributed to the strokes Mr. Doman
suffered, tension over control of the company was evident. Rick Doman
admitted at the time that he and his father had "quite a difference of
opinion" over the company's financial state.
For all that, Doman Industries was near its end. In 2002, the company
missed a $26-million payment on its debt. In 2004, the now-bankrupt
company was purchased by Brascan Financial Corp., and a restructuring
effort has left only Western Forest Products standing.
"There were very few characters like Herb in the industry," said
Reynold Hert, president and CEO of Western Forest Products, who said
Mr. Doman still leaves a legacy for B.C.'s coastal communities.
Nephew Jerry Doman said Doman Industries consumed his uncle, who
worked long hours and most weekends. "He needed to slow down, but he
didn't. The company was his passion, his hobby."
Mr. Doman resisted pressure to relocate his head office to Vancouver.
He never left his hometown and, despite the fortune he made, liked to
drive a modest Chrysler K-car.
"Material things didn't mean anything to him. He wasn't extravagant,"
his nephew said.
HERB DOMAN
Harbanse Singh Doman was born in Duncan, B.C., in 1932. He died in
hospital on July 24 as a result of complications from a series of
strokes. He was 75. He is survived by his wife of 52 years, Helen, and
by his son, Rick, and by daughters Darcia, Sherry and Verinda.