Vic De Zen has taken his company — Royal Group Technologies Ltd. of Woodbridge, Ontario — from a single production line in 1970 to the pinnacle of the extrusion world today. No company in North America extrudes as much PVC as Royal. To reach the top, De Zen had to break down some traditional corporate walls. In a September 1998 interview, De Zen, an Italian immigrant to Canada, described how his responses to early difficulties formed the basis for his unique business style.
I was working with a company [in Canada] back in 1966, 1967. They said, ``If you come in with us, we'll give you 10 percent after we pay off the bank.''
After three years they paid off the bank. They had two partners, one who owned 60 percent, one who owned 40 percent. The partner who owned 60 percent said, ``We don't need any partners.'' I said, ``Fine. You promised me.''
Then my mother got sick in Italy and I went back to Italy. I went to Milan to buy an extruder and the gentleman selling the machine from Amut [SpA] — which we now own 75 percent — said: ``I don't think it's a good idea, Vic. I think North America is a better choice for you, because in Italy, it's very tough here.''
I went to Rome and I listened and I saw it was very tough in the 1970s. I bought a machine and then I came back [to Canada]. I said to my old bosses, ``Look now, I'm going to leave because you promised me this and that.''
They said, ``No, no, no. Now we're ready to give you 10 percent.'' I said, ``No, no, no. You promised me before,'' and then I left. And I started, myself, with two partners. Later we added a third partner. And then from there, with one machine, then two and three and more and more. And then after that I had a plant manager from Royal who said, ``I want to go in business. I've got no money, but I want to stay with you.''
Then I made him a loan to start a company with two other people. When they paid back this interest-free loan, they owned maybe 25 or 30 percent of the company. Then some people from Royal and this new company wanted to do the same thing. We started going into the U.S. market and getting bigger and bigger all the time. And then from the third [partner] we went to the fourth, then fifth and then sixth, all people growing up from the company.
Four years ago we had 55-58 companies, and more than 400 partners.
For me, going public [in 1994] was a good thing. Before, I could only look after three to four people at each plant. What about the maintenance guy, the foremen, the shipper, the secretary or whatever? I could not do it. Now that we went public, we give them 2 percent of their earnings before interest, taxes and depreciation [EBITDA] and this works very good for the employees. Also, we give stock options to 30 or 40 people at each plant.
That is why I am able to grow so fast and have people all the time. They want to stay and work for that 2 percent and stock options.
With people, you do everything. Without people ...
The stock options and the 2 percent EBITDA bonus is working very well for us. We've shared the growth with the employees.
Also we are committed to customer service. The first 30 customers we still have today. I have never lost a customer yet.
To keep growing, we spend our money on R&D and new products. If [customers] have a new product we take it and do all the design, machinery, tooling and everything free of charge.
We spend more than $20 million a year in R&D. When you have a new product, you have to design and improve all the time. If you don't improve all the time you're going to have a lot of problems down the road. We come out with new products every day.
In the '70s I had a lot of trouble. I bought a machine from an Italian company and six months later the company went under. Then I bought a machine from a Canadian company, and that company went under. Then the two machines I bought from another company — after a year and half it went under, also. I said, ``Oh, God. I've got problems.''
I started buying from only one company [Amut] in Italy — for the spare parts and everything. I also started making my own downstream equipment. From there we started our own chemicals. We do most of our own ingredients. We also do all the compounding. We have about six or seven plants.
We have a company now to do all the computerized handling systems. Also we have our own construction company because every building you do, you need a special building. You need special drainage, you need special superstructure, you need a special roof to take the heat.
Also we have our own electrical company. We do everything, A to zed.
We also have our own transportation company because in North America when you promise a customer the trucks are going to be there at seven in the morning you have to be there. Using a carrier, they say, ``We'll be there a day less or a day more.'' They don't care. With this we promise and we're going to be there.
Also, when you are making a window, you have between 2 and 5 percent scrap — the little pieces. When we deliver a new trailer, we pick up the old truck trailer with all the boxes with all these pieces and we bring them back to the recycle plant. And we save some time and money.
We also have the only recycling plant [of its kind] in North America, because everybody else recycles where they take off pieces by hand. Ours is all computerized now. We recycle about 80 million pounds per year. Next year [1999] we may double that.
Here we've got 28 custom profile companies, two siding manufacturing — and we do very well there. We've got three companies in pipes, two in Toronto one in Vancouver. Also, we have a fittings company in Detroit. In vertical blinds we are in Montreal, Houston, Mexico, Florida. Now we will be in Brazil — we're just setting up.
It's very important to understand our vertical integration.
If you have a plant working over 80 percent [capacity], you are going to make money. But if you buy a machine you're going to have to make back that money. If you have to buy ingredients you have to make back that money.
When you have a new product, you are going to say to somebody, ``I need a different this, a different that.'' If they are busy, they will tell you to wait until next year. Then you cannot move. It's like you have a restaurant with no kitchen.
For our company, it's a young company — you grow. If you do not have all these tools, you can never grow. With the customers we have, if you keep adding, adding and never lose one, you have to grow. If you don't have that you better sell your business and go away. That is why we are so close to our customers. Whatever they need, we do it. It is very important to talk to your customers every day. If you don't, other people will, and leave you behind. And that is the reason we can grow.
Look at the building system, for example. We started doing basements, garages, toolsheds, houses, high-rises. We have so many different applications. With our system you are saving trees, you are saving life. If we are going to keep cutting trees in 30 years we are going to be in trouble. With this you save all this and you breathe better, saving the wildlife and everything. Really, this is the future. And we're building every day a better world to live in.
I am learning more things every day. I think I have a little bit of experience. You have to learn every day.
