Irvings' succession plans raise questions

Questions are being raised over the succession planning inside the Irving family's group of companies after the death of Jack Irving on Wednesday.
Jack Irving, left, shown here with brother J.K. Irving. Jack Irving died on Wednesday in Saint John. He was 78. ((CBC))

Questions are being raised over the succession planning inside the Irving family's group of companies after the death of Jack Irving in Saint John on Wednesday.

Irving, who ran the family conglomerate's construction, engineering and steel fabrication companies, died after a brief illness on Wednesday morning. He was 78.

Also complicating the questions over who will lead the powerful Irving family's New Brunswick businesses was the announcement this week that Kenneth Irving, Jack's nephew, was taking an indefinite leave of absence as the chief executive officer of Fort Reliance, the parent company of Irving Oil.

The Irving family's vast empire of companies is intricately woven into almost every facet of New Brunswick life and stretches from newspapers and a forestry company to an international energy company.

Deborah Armstrong, a human resources specialist in Saint John, said the family's patriarch, K.C. Irving, divided his empire between his three sons: forestry to J.K., oil and gas to Arthur and property, construction and radio stations to Jack.

"K.C. was brilliant in how he set it up for the next generation," Armstrong said.

But Armstrong said as the family grows, it gets more complicated as to who will control the companies into the future.

Kenneth Irving has taken an indefinite leave of absence from his position as chief executive officer of Fort Reliance. His father, Arthur, is back at the company but it is not clear what the long-term plan for the company is. ((CBC))

She said later generations may not be as interested in operations,  or they may feel they can't measure up against the legacy.

But Armstrong said outside professional managers may be equally reluctant to take over because their decisions can always be overturned by the family.

Jack Irving's death overshadowed news earlier in the week that Kenneth Irving was taking the indefinite leave of absence.

Arthur Irving, Kenneth's father, has returned to the company but it is unclear what succession planning has been done in case Kenneth does not return to the international energy company.

The Irvings have been ranked as Canada's second-wealthiest family by Canadian Business magazine.

Observers split on future of Irving companies

Former New Brunswick premier Frank McKenna said he isn't worried about the future of the Irving group of companies.

Jack Irving receives an award from former New Brunswick premier Frank McKenna. McKenna said he is confident the Irvings have an effective succession plan in place.

"They run extremely high-quality operations, they have professional managers, they have strong family members who continue to be part of the leadership and I have no reason not to be completely confident in the direction of these enterprises," McKenna said.

The future of the diverse group of companies is less clear to some New Brunswick business executives, such as Francis McGuire, the chief executive officer of Major Drilling Group International.

McGuire said  the companies were extremely integrated 40 years ago, but have become more independent over the decades.

"It is symbolic of the evolution of the company. [Jack Irving's] passing probably hits me as being that we are definitely looking at a different stage," McGuire said.

"We are so used to, as New Brunswickers, having the Irvings and the McCains as being part of the decision-making power being here. Maybe we are going to see some changes there. Maybe New Brunswickers are going to see a different kind of corporate evolution."

Other business observers say many New Brunswickers are hoping that a successful corporate succession plan is in place because the companies employ thousands of workers.

Donald Savoie, a University of Moncton professor, said large family-run companies have been pillars of the New Brunswick economy.

"The New Brunswick business community essentially is made up of small- and medium-sized businesses and then the large family businesses — one is the Irvings and one is McCains," Savoie said.

"All of New Brunswick is hoping the transition to the next generation will be smooth."