February 2019

Staff reorganization targets leaner fruit co-op

Drive to cut costs could see co-op relocate

by TOM WALKER

KELOWNA – The province’s biggest fruit co-op is facing a dramatic shakeup, as turnover pares both the executive team and key staff

In November, BC Tree Fruits Cooperative’s board decided not to renew the management contract of CEO Stan Swales, who stepped into the role in November 2016. CFO Warren Everton also left to work for the city of West Kelowna after six years.

Within the past month, key grower support staff were dismissed and a member of the marketing department resigned. The individuals will not be replaced.

Co-op president Jeet Dukhia told Country Life in BC Everton “was looking for other opportunities.”

“We have advertised for the CFO position and we have had 41 good applicants. We are shortlisting and hope within a week to have a new CFO,” he said in early January.

Swales remains an employee of the co-op, assisting with operations. The board had the option to reassign him from management in the third year of his contract, which it has done.

“He likes the co-op so much that he wants to try something different where he can be more helpful,” says Dukhia. “He is assisting the operations manager and focusing on long-term plans.”

The co-op’s human resources manager, Bob Fisher-Fleming, is serving as interim CEO while Swales’ successor is chosen. The new hire will be the company’s third leader since 2012, when Alan Tyabji was hired. Tyabji was fired in 2016.

Fisher-Fleming’s mandate is “to keep things moving forward” during the critical winter marketing period, says co-op marketing manager Chris Pollock.

Dukhia did not comment on the quest for a new CEO.

Cost-cutting

Dukhia described the dismissal of five of the co-op’s grower support staff as “cost cutting.”

Its well-respected senior field services manager Hank Markgraf and long-time Okanagan field serviceman Tony DiMaria have both been let go. Creston Valley field serviceman Duane Holder was also terminated. Plant pathologist Danielle Hirkala and lab technician Lisa Hilbrecht were dismissed, too.

“The board has asked the acting CEO to restructure from the bottom end, to cut costs and bring the overhead into alignment,” says Dukhia. “These are both board and management-led decisions.”

Speaking on behalf of Fisher-Fleming, Pollock described the firings as “a board decision” and “without cause” and said the co-op offered each employee a severance package.

The cuts come at a time when the industry as a whole is expanding.

Dukhia says that growers have purchased 1,500 acres of new land for fruit production in the last three years. Moreover, land that has been fallow or seeded to hay has been brought back into orchard production. Across the province, older, less profitable apple varieties are being replanted with new cultivars that will promise growers better returns.

Pollock says the Ambrosia crop sits at 400,000 cartons, but he expects that to triple to more than 1.2 million cartons in the next seven to nine years.

But new varieties call for up-to-date grower knowledge.

Honeycrisp, the most profitable variety for growers in the current market, can suffer up to 30% losses in the orchard. Grower skill varies greatly, with apple production ranging from an average of 30 bins an acre to more than 80. The difference shows the need for field support to assist growers, service for which the BC Fruit Growers Association honoured Markgraf when it presented him with its award of merit in 2017.

“The board wanted to focus more on the core business of what we do,” says Pollock. “We provide services that other grower-shippers across the valley do not do – field services being one of them – and it was decided to cut staff.”

Pollock’s statement is not completely accurate, however.  Jealous Fruits, the largest cherry grower-shipper in the province, employs two field service horticulturalists for its one crop.

BCTF members grow apples, cherries, peaches, plums and nectarines.

Many of the new plantings in the Okanagan and Creston valleys are cherries, a profitable export crop, yet Doug Needham, the co-op’s former export cherry coordinator who resigned this summer, will not be replaced.

Dukhia doesn’t think that the firings, resignations and lack of replacements will reflect badly on the co-op, however.

“All the people I talk to are supportive,” he says. “We are the leaders in the industry and they want us to be in good shape and economically as lean as we can be to bring good prices.”

“That’s the bottom line,” emphasizes Dukhia. “The main aim is to get good returns to the growers.”

Dukhia adds that as a former president of the BCFGA, he has a good knowledge of the industry and connections with parties on both sides of the legislature.

“We are trying to get some money for our long-term plan to have an automated plant in the north,” he says.

Dukhia says the current restructuring could also involve relocating the co-op to a cheaper location on Kelowna’s outskirts. A decision is expected within six months as part of a master plan for its holdings.

“We have lots of properties downtown, which is very expensive. We should be on the outskirts of the city where land is cheap,” he says. “We are looking to the next 50 years.”