Rite Way Mfg based in Canada has emerged as the owner of Morris Industries and has taken control of Morris’ well-known seeding, tillage and hay product model lines.
This was always going to be a big deal, with consideration of 134 Morris employees to care for, along with manufacturing plants and existing inventory to fix and maintain current working models.
Heather Forbes, President & CEO of Rite Way has been well and truly thrust into the spotlight as she takes up the helm to decide the structure of Morris Industries moving forward.
No doubt, in high consideration is how to avoid the position Morris found itself in, that eventually led to the demise of its previous management team.
In early January 2020, the then 91-year-old Saskatchewan agricultural equipment manufacturer, Morris Industries Ltd sought creditor protection from a Saskatoon Canadian court.
The company advised the court it did not have sufficient cash flow to meet its obligations and continue operating.
Documents handed to the court at the time revealed Morris Industries’ debts include $26.6 million owed to its leading lenders, while almost $10 million was owing to other lenders, while $4.4 million was owed to secured creditors and a further $12.7 million to various unsecured suppliers.
Morris’ secured creditors included Avrio, Kubota Canada, Wells Fargo and the financing arm of fabricating equipment maker Trumpf, among others. Unsecured creditors included Western Economic Diversification Canada and various trade vendors.
The company had further obligations to repay $3.8 million in federal funding it had received over several years but was not due to be repaid prior to November 2020.
The application for protection under the Companies’ Creditors Arrangement Act (CCAA) allows corporations in Canada owing more than $5 million to restructure while avoiding bankruptcy.
The court granted an order to keep creditors at bay on January 8 2020, and appointed Alverez and Marsal Canada Inc as receivers and to monitor the proceedings moving forward.
Interestedly the court documents did detail where everything went wrong for Morris Industries.
The document referred to an ambitious and expensive growth strategy that allowed Morris to introduce a new product that was derailed in its paddock application.
This caused costly unforeseen warranty expenses, followed by a sales slump.
The documents were clear that the strategy was launched by the new management group, which took over the once-family-owned company in 2017.
When this ambitious growth strategy failed Morris Industries’ did not have enough money to pay its debts and continue its normal operations.
The expanded new ownership came about in September 2017 when incoming President and CEO Ben Voss, an entrepreneur and active Saskatchewan grain farmer and agricultural engineer replace former CEO and majority shareholder Casey Davis.
It was said at the time that Voss and Davis had made a joint decision to transition majority ownership to a group of investors led by Voss.
It was also expected that Davis would remain a minority shareholder of Morris, and retain a seat on the board of directors, but only in an advisory role to the company.
Voss was backed by private investors including Avrio Capital and Lamont Brown Group.
This change of ownership for Morris also marked a significant commitment to growth and re-investment in the company.
Investment went into far more advanced manufacturing technology, and at the same time Morris announced ambitious plans to become a market leader in the future of farming worldwide.
From all accounts Morris Industries was in a position to meet its heady expectations.
It was at the time, one of Canada’s oldest and most recognisable farm equipment manufacturers, started in 1929 by George Morris.
However, Casey Davis only came on the scene in 2007 when he organised the acquisition of Morris from Wendy Morris, daughter of founder George Morris.
It was as recent as 2015 that Ben Voss joined Morris as president with the objective to work with Casey Davis to develop a new business plan.
However, the plan was to be a mammoth undertaking for Morris as it included adding resources and capital to the company’s research and development, and that eventually necessitated reinvestment in manufacturing technology and the product line-up.
Just as to what Morris product lines will move forward from this point is now securely in the hands of Rite Way President & CEO, Heather Forbes.
Morris and Rite Way have similarities to their background. They were both started from a successful product that made their founders household names in rural regions of Canada.
Rite Way was founded by Regina Canada machine shop owner Les Hulicsko in 1972 with a line of rock pickers.
Apart from rock pickers and windrowers, the company’s product lines had grown to include land rollers, heavy harrows, rotary harrows, crimper rollers, bale carts, grapples and high-speed compact discs.
But that is not the only product line that Hulicsko owned.
Python pothole patchers was a lucrative side-line for Les Hulicsko and in 2012 he sold both businesses to the current management team. The same team that has gone on to buy Morris.
Since then the road repair name has changed to SuperiorRoads Solutions and marketing efforts have been focused on putting the company’s vehicles on pothole riddled roads around the world.
Heather Forbes is also the President and CEO of the Superior Group of Companies which owns Rite Way Mfg. Co. Ltd. and SuperiorRoads Solutions Limited Partnership, that operates as Python Mfg.
Heather Forbes talked about the transition in 2012. “We left the Python name on the pothole patchers because of its recognition but rebranded the company as SuperiorRoads to better represent what the company is about.
The shareholder group also purchased farm equipment manufacturer Rite Way Mfg. Co. Ltd., SuperiorRoads’ sister company located in Imperial Saskatoon in that same 2012 transaction.
The two companies share senior management. Research and development for both is done at the Regina Canada HQ.
Components for Rite Way equipment like rock pickers and windrowers join the road working vehicle assemblies that flow through the SuperiorRoads shop when production time allows.
So it appears a similar growth pattern has led both Morris and Rite Way to this point in time, where research and development and continued improvement to product lines, means heavier investment is required.
But it is fair to say the transition for Rite way Mfg has been a far less bumpy road, up until now.
Pairing the far more substantial Morris product range of air carts, and seed drills with the Rite Way product line in their domestic Canadian market seems a likely fit, while it is harder to see success for that pairing internationally.
And as to whether Rite Way would be bold enough to remove the Morris badge in favour of the lesser known Rite Way name in international markets would appear an unlikely marketing success.
If the Morris name is retained it will business as usual for the badge.
This will mean some bridge mending in those markets where Morris’ Quantum product line development issues for growers to the extend where the drill openers had to be replaced.
This was an expenditure that former Morris Industries chief operating officer Kevin Adair said was difficult to bear. As the drill openers replacement cost accounted up to 40% of the original unit cost.
It was this unexpected expense that drained the company resources and led to a crisis point.
The resulting warranty issues called for “a significant capital investment far beyond any foreseeable estimates,” a company spokesperson said at the time.
As to whether any previous “Morris Issues” will be obvious going forward could well be quelled by the very impressively credentialed Rite Way President & CEO, Heather Forbes.
Heather Forbes is emerging as a leading Canadian business woman with more than 25 years’ experience in manufacturing.
Ms Forbes is already off the mark looking at ways to improve Morris, and has been quoted as saying Rite Way Mfg management has identified opportunities for improvement in the Morris manufacturing line.
At this initial stage it is not known just what will become of Morris Industries former 134 factory assembly workers.
There are also assets such as the Morris Industries Corporate Office and Training Centre located in SaskatoonSK, and the two manufacturing plants located in Yorkton SK, and Minnedosa MB.
Answers to these details will be threshed out over the next few months to determine just how much money will be available for hapless creditors.