To grow the funds of our
Plastrec, a shining example of good succession planning
An approach that left nothing to chance
Jean Roy founded Plastrec in 1992. In its early years, the production process was entirely manual. In 1998, Mr. Roy hired Louis Robitaille, giving him a mandate to automate the plant. The successful operation would increase production capacity with the same number of employees. With this achievement behind him, Mr. Roy then set to planning the transfer of his company.
“The process was gradual,” explains Mr. Robitaille, now Plastrec’s Vice-President and General Manager. “Mr. Roy gave me an increasingly active role in operations until I was fully in charge. It was only after these years of training that we began to examine the issue of stock ownership. We analyzed various options, and then we began talking to the Caisse. We were able to reach an agreement that allowed Mr. Roy to realize part of the fruits of all his effort developing Plastrec while ensuring that his company could continue to grow.”
Through the transaction completed in 2005, Mr. Robitaille and the Caisse became shareholders in Plastrec. Mr. Roy sold part of his interest in the company, becoming the majority shareholder. A board of directors was also formed, the members chosen for expertise that would complement that of management. Mr. Roy became the company’s Chair, delegating all its administrative and operational management and maintaining responsibilities for strategic management and planning.
“We have very clear roles, and the transition went very smoothly,” confirms Mr. Robitaille. “The communication between us has always been excellent. This helped the responsibility transfer process, and allows us to collaborate effectively in the company today. Even if we disagree, we can always agree on a decision that will optimize the company’s return and growth. And once we have chosen a direction, we both stick to it and move in that direction. As the third shareholder, the Caisse is helping us expand, and it brings another vision to the table. This makes for a very profitable partnership.”
Following the transfer, a growth project that opens up numerous possibilities
Since its earliest days, Plastrec has transformed containers made of #1 plastic (PET) into flakes that can be reused in the manufacture of carpets, clothing, sheet plastic, machine belts and bottles. The raw materials come mainly from selective collection programs in Québec, Ontario and the U.S. Until very recently, Plastrec exported 98% of its production to the U.S., since in order to be reused, the flakes must undergo an additional decontamination phase before they can become resin. But the Québec companies in Plastrec’s target market are not equipped to carry out this transformation.
This spurred Plastrec to acquire two cutting-edge European technologies for decontaminating PET flakes and then transforming them into resin that can be used in the food industry. “This project was already on the drafting board in 2005,” says Mr. Robitaille. “However, we took the time to plan it well and conduct the necessary research in order to find the most appropriate technologies. We are able to produce 40 million pounds (18,000 metric tonnes) of recycled PET resin per year from PET containers collected in recycling bins. With No Objection Letters in hand from Health Canada and the U.S. Food and Drug Administration, we can now sell this resin to companies in the food sector, which can use them to make new food containers. So this process allows us to close the recycling loop.”
Completion of the project was a true turning point for Plastrec, allowing it become a pioneer in Québec. Now between 70% and 80% of Plastrec’s production can be used by the food industry, all from plastics derived from selective collection programs. “We are convinced that integrating these new processes will give us access to a vast market,” concludes Mr. Robitaille. “It will allow us to enter the Canadian food market, particularly in Ontario and Québec. This makes it an investment that will support our growth and lead to more stable revenues in the long term.”
Conditions of success in a succession process
An effective succession plan depends on many factors. For example, in Plastrec’s case, key success factors included planning, training, sharing a vision, and engaging in healthy and unrelenting communication. All of this needs to be well structured, since there are several stages involved. The owner must first examine various potential scenarios, clearly determine the objectives—both for him or her and for the company—and then decide when to withdraw from the company. It may also be necessary to decide who is best suited to replace the owner, and the kind of support role that the owner can play in the post-transition period. Finally, the owner is able to carry out the plan.
In such cases the Caisse may be the ideal partner. It becomes involved several years before the owner’s departure, providing structured support and flexible, tailored financing solutions. This allows the owner to immediately cash in on part of the company’s value, and it fosters a gradual transition of management and ownership to a team that will be responsible for long-term continuity and growth.
