Hammers go silent at Viceroy Homes
By: Susan Pigg | Toronto Star Business | Apr 06 2015
They are as iconic as cottage country sunsets.
For 60 years Viceroy Homes have been distinctive fixtures atop the granite cliffs of Muskoka or centrepieces of sprawling properties across Canada.
They are Canadiana at its best.
Fashioned out of British Columbia lumber, with signature soaring windows and massive beams, some 70,000 Viceroy Homes have been built since the company was founded in 1955 and shipped in ready to assemble packages as far away as Japan, Korea, Spain, France and Germany.
But for weeks now, Viceroy’s two plants — one in Port Hope, the other in Richmond, B.C. — have been effectively shut down and more than 130 employees have been trying to figure out if they will ever build the makings of another Viceroy home.
“It’s been a mystery to everyone,” says Lou Rinaldi, the MPP for Northumberland-Quinte West which includes the Port Hope plant that has 100 or so employees at peak building season. The Richmond factory, built to service what was expected to be a hot Asian market for the classic wood homes, has another 30 or 40 employees.
Employees stopped getting paid around Christmas and their extended health benefits were cut off. Some kept coming to work as late as February 13, despite the fact pay cheques still failed to arrive, electricity at the Port Hope factory was cut off for three days and phone lines stopped working.
The Star tried unsuccessfully to reach a number of company executives, as well as the current owners, a Chinese consortium with two principals, Kuen Yu (Joseph) Kwok and Ming Tang Liang, reportedly based in Vancouver.
Director of manufacturing, Reg Tucker, acknowledged in February that Viceroy was in arrears on health benefits payments, owes $32,266.46 in back wages and $17,000 in union dues.
“Please accept our apologies for this situation and every effort is being made to rectify it as soon as possible,” Tucker wrote as part of an arbitration, initiated by Unifor Local 414 on behalf of Viceroy’s unionized employees, which resulted in a ruling against the company March 9.
“We are hopeful that things could get going later in April and this thing will right itself,” said Unifor national representative Chuck New in a telephone interview. Just a week’s wages have been paid, but benefits remain cut off.
“No one has been able to tell us anything. We don’t know if the employees are going to get paid or even when, or if, they will have a job.”
Up until 2007, when Viceroy’s Canadian founder Gaylord Lindal and his son, Chris, were approached by a Russian company, looking to buy the publicly traded firm and take it private, Viceroy was a niche, but highly recognized and respected, “pre-engineered” house builder with $82 million in sales in Canada, the U.S. and 40-plus countries.
Greg Millar, a lead hand in the company’s Port Hope mill, started at the now-defunct Scarborough plant 28 years ago when Viceroy’s houses were loaded on flatbed trucks in three parts and plunked on waiting foundations, largely in Ontario cottage country.
The Lindals added dozens of smaller models to stalwarts like the 4,000 square foot Rosseau and started expanding internationally.
In 2007, Russia’s Growth Technologies Ltd., a subsidiary of Open Investments (OPIN) came calling, looking to buy Viceroy and take it private — a lumber play, competitors believe, given that Russia had lots of trees but little know-how in producing timber.
They “got a deal” says Montreal-based activist investor Mario Rizzi who helped lead an investor revolt against the deal, concerned that Class A shareholders were being offered just $5 a share — about $55 million — for a firm he valued well in excess of $63 million.
According to filings, the Lindals would keep their shares and earn about $500,000 each, plus bonuses, to keep running the company for a few years. But the Russians’ timing couldn’t have been worse.
When the deal closed in early 2008, the U.S. housing market was in full meltdown and Japan in slowdown. By the third quarter of that year, sales to Japan, which made up 26 per cent of Viceroy’s business, were down 56 per cent to $14.8 million, compared to $33.3 million in the first nine months of 2007.
While Canadian sales remained strong, Viceroy’s Russian parent company also started faltering.
On Dec. 21, 2012, Canada Wood Frame Solutions Ltd. snapped Viceroy up, supposedly aiming to bring Viceroy homes to China.
But by mid 2014, contractors who had once travelled the world, constructing the giant packages into often highly customized homes, found work was running out.
“This is an anomaly,” says a veteran builder who’s heard rumours Viceroy is about to be sold to another Chinese company. “There’s actually been an uptick in demand, especially in Ontario and the U.S. given the state of the dollar.”
Meanwhile, employees like Millar wait for word of any kind and remain hopeful the Viceroy name will live on, along with its trademark homes.
“I’ve always been so proud to work at Viceroy. They were expensive, but they were the best,” says Millar.