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Refinancing debt to restructure your business

These entrepreneurs refinanced their assets to survive a recession

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A change in mindset, finances and equipment enabled a forest products company in northwest Ontario to overcome the many challenges facing its industry.

Elizabeth Bernier and her husband, Joel St. Onge, have grown St. Onge Logging in Sioux Lookout from a small operation into a major North America supplier of lumber and woodchips.

The company originally harvested timber for Canada and export to the U.S. But when the recession hit in 2008, St. Onge Logging faced closure along with other industry players in the region. The couple had to refinance and restructure to survive.

Giving up was out of the question

“People sold off equipment cheaply or just moved away, leaving million‑dollar machines to rust,” Bernier says. “However, packing up, leaving and starting again elsewhere was out of the question for us. Refinancing our equipment was the only way to continue. So we approached BDC to consolidate our loans with leasing companies.”

The company also developed a restructuring strategy with the help of BDC to adapt to a changing market. That meant diversifying into producing wood chips for making pulp. The company also had to expand to compete effectively.

Packing up, leaving and starting again elsewhere was out of the question for us. Refinancing our equipment was the only way to continue.

“Companies no longer wanted to deal with a whole lot of small contractors to build access roads, cut the trees, process the logs and haul products to the mill,” Bernier says. “It was a case of ‘go big or go home.’ We had to reinvent the company, expand into a one-stop shop and do it all.”

Invested heavily in equipment

Adapting involved investment in a million‑dollar chipping machine, as well as trucks, vans and other equipment to harvest, process and deliver products.

Bernier says choosing the right equipment for the job is obviously vital, but it’s also important to ensure spare parts are quickly available to avoid costly down time.

“In the long run, it’s sometimes worth paying more for locally sourced equipment. We’ve had problems getting parts on time for some Asian made machinery.”

Improved business skills to manage larger company

Coming from a hands‑on background, Bernier admits she and her husband had to develop their administrative skills to run a larger company where staff had increased to more than three dozen regular employees as well as subcontractors.

They’ve hired an excellent accountant, renegotiated contracts carefully and implemented procedures to ensure equipment is more productive at all times.

In the long run, it’s sometimes worth paying more for locally sourced equipment. We’ve had problems getting parts on time for some Asian made machinery.

The couple also had to change their mindset when it came to hiring procedures. “Like other small, rural enterprises, we were working with a group of local men we knew and trusted like family,” Bernier says. “However, we needed to employ people with new and different skills.”

When choosing employees she didn’t know, Bernier learned not to judge a book by its cover.

Takes a close look at job candidates

“Sometimes a great employee hasn’t written an application in a way that current HR trends consider acceptable,” she says. “I look beyond the paper and interview people to see if they have a passion for forestry work. I’ll train them, if necessary. Giving people a chance unifies the team and keeps your business moving forward.”

Surviving the recession and growing has left St. Onge Logging well positioned to take advantage of a rebound in demand for forest products as the U.S. economy picks up and the falling dollar makes Canadian exports more competitive.

“Hanging in there has paid off for our company,” Bernier says. “It’s also helped renew confidence in this region. Sawmills are opening up again and people are returning home.”

Elizabeth Bernier’s lessons learned

  • Always be open to change and adapt to it.
  • Hold on tight and refinance if necessary to stay in the game.
  • Look beyond resumes for passionate and committed employees.
  • Find a good accountant; support from the right professionals is key to success.
  • Fight for your reputation. You can’t just live for today; you have to live for tomorrow as well.

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