On a clear day, 76-year-old Arthur Irving can stand on the hill beside his big white mansion, at one of the highest points in Saint John, and survey an urban industrial landscape that should, in reality, be called "Irvingville."
To his left, he has a clear view of the silver metallic silos of the Irving oil refinery, the crown jewel of the family, run by himself and his oldest son Kenneth.
To his right, Arthur can make out the dense plumes billowing from the Irving pulp mill at the Reversing Falls in western Saint John, which is under the command of his older brother J.K., 79, and J.K.'s son Jim.
By stretching a bit, he can take in a complex of low-slung buildings along the west side of Saint John harbour - construction, steel and engineering firms that are the responsibility of his younger brother Jack, 75, and his son John.
And directly below him are two stocky yellow-beige office buildings - separated by an Irving gas pump - that contain the principal family businesses, Irving Oil Ltd., which Arthur runs under the family operating agreement, and J.D. Irving Ltd., the forestry company managed by J.K.
If his gaze continued down Union Street, he could spot the non-descript offices of the local newspaper, the Telegraph-Journal, where his great-nephew Jamie Irving is publisher.
From Arthur's cupola-topped house - built for his late father K.C. - he might just be able to trace the curving coastline of the Bay of Fundy as it reaches toward the state of Maine, where the family owns gas stations, energy terminals and 490,000 hectares of timberland, making it the third-largest private landowner in the United States.
Everywhere Arthur looks from his estate, he can see the hand of the great empire-builder K.C., who died in 1992 and believed that assets, once bought, should never be sold. He can see the growth generated by himself and his brothers, and his sons and nephews, the fourth generation now poised to take over a more splintered version of this 125-year-old empire.
Saint John is Canada's last great company town, but the city and its southern New Brunswick region are suddenly in play, caught up in a dynastic division of the Irving assets. All that Arthur surveys is being divvied up in one of the most ambitious estate planning processes in Canadian history.
It has been triggered by the decision, as reported recently in the Report on Business, of the three septuagenarian brothers, J.K., Arthur and Jack, to break up their family conglomerate, giving each of the family branches direct control over the individual businesses they manage under K.C.'s trust provisions.
Around Canada's East Coast and the U.S. Northeast, consultants and business assessors are being asked: How do you put a price on a Junior A hockey team in Moncton, potato fields in Prince Edward Island, parcels of empty land in gritty Saint John, or an emerging energy hub whose spokes extend from the refinery?
What is clear is that, for this intensely private family, all wealth estimates have been too low. Canadian Business magazine recently put the Irving brothers' fortune at $5.3-billion but the refinery itself is worth more than that - as much as $6-billion, based on the going rate for such assets. Add in forestry properties - depressed but still substantial - construction, food processing, trucking, media, real estate and retail properties in Canada and the United States, and the Irvings are surely worth more than $10-billion, even accounting for debt.
There are other sizable enterprises in Saint John, ranging from the Oland family's Moosehead Breweries Ltd. to Aliant Inc., the East Coast telephone company. Local people say the Irvings are no longer so obsessive about vertical integration, which means they don't need to own every single link in their supply chains.
Yet they are part of every conversation about business in this community of 120,000 people. It is estimated they have their hands, directly and indirectly, in as much as a third of the local economy.
For example, Moosehead, which ships a lot of beer south of the border, has developed a just-in-time supply chain that moves product seamlessly from the loading docks of its Saint John brewery to thirsty U.S. drinkers. The medium is the New Brunswick Southern Railway, which runs the supply system, including a massive warehouse. The railway is owned, of course, by J.D. Irving Ltd. - and there is no danger of any product leakage by the teetotalling Irvings.
What is also clear is that while Irving businesses may dominate this province and the Maritimes, they don't play a major role in any single national or international market. They cast big shadows in central Saint John but they are global pipsqueaks - in their chosen sectors, they may hold only 1- to 3-per-cent market shares, at best. They are companies with little reach, and they need to grow.
That fact is recognized most acutely by the two heirs with conflicting ambitions - Jim Irving Jr., in his mid-50s, who runs the forestry side and related businesses, and Kenneth, 46, Arthur's heir apparent on the energy side. They want to control their own destinies, rather than remain tangled in an octopus of interrelated interests decreed by K.C.'s opaque trust agreements.
Yet according to one person who knows the Irvings well, it is as much access to capital as towering egos that is at stake here. These businesses are capital-hungry, and they're getting in each other's way.
The forestry companies are in a cyclical slump but could use the downturn to consolidate operations in time for the next upturn. Yet they must contend with the voracious capital appetite of Irving Oil, which is partnering in a new liquefied natural gas terminal but also mulling the construction of a second major refinery in Saint John that could cost up to $8-billion.
That would be a gamble, even in a world of $90 oil. Refinery margins are viciously cyclical. Right now, tight capacity on the North American east coast has boosted margins at the existing 300,000-barrel-a-day Irving refinery. But a prolonged recession could change the economics, just as the Irvings plan to seize a bigger chunk of the lucrative northeastern U.S. gasoline market.
Also, there is history here. Sources say the $1-billion refurbishment of the refinery a decade ago triggered cost overruns that required an emergency cash infusion by the then-healthy forestry side of the family. For a while, the forest products people had enormous influence on the energy business, which exacerbated family tensions.
The refinery upgrade proved eventually to be a winning formula, but now the tables are turned and it is the forest products sector that is mired in a slump, holding back the energy side from what it sees as its natural destiny. It seems the Irvings have finally concluded that oil and trees, twin pillars of the family fortune, no longer mix.
These contrasting fortunes will make it a nightmare to split the spoils. "They will have a really difficult time divvying it up equitably where everyone will be happy," one forestry analyst says.
In addition, the two operations have bred dramatically different cultures. From 1882, when ancestor James Durgavel (J.D.) Irving bought a sawmill in Bouctouche, N.B., the family has cloaked itself in secrecy. In the community, the Irvings have never been joiners. One prominent Saint John business leader confesses he has never actually met Jim Irving, perhaps the most powerful businessman in the province.
In the past, the Irvings embraced a 19th-century industrial ethic which assumes that if you simply generate jobs, you have fulfilled your entire civic and social responsibility. But in recent years, J.K. Irving has opened himself and his company up to more public activism and exposure, guided by public relations specialist Mary Keith.
He has become a driving force in anti-poverty initiatives in a city core where close to 30 per cent of people live below the poverty line. In fact, J.K. will be honoured for his anti-poverty work in early January at a public gala. His company has "adopted" an elementary school in a hardscrabble neighbourhood near the head office, where J.K. likes to visit from time to time. "Over the past 10 years, J.K. Irving has joined the human race," one Saint John businessman says.
Arthur has not followed J.K. into the sunlight. The nadir in Irving Oil's community relations came a year ago, when it was harshly criticized for striking a sweetheart long-term tax deal with the city for its new LNG terminal, reminiscent of the huge breaks K.C. used to hammer out of governments.
The deal became national news, reviving the old image of the Irvings as skinflint plutocrats who wield their economic muscle for naked advantage. A number of Irving confidants say J.K. and Jim Irving were appalled by the clumsy public relations of their energy relatives.
But the catalyst for change may be the family of Jack Irving, the most underestimated of the three brothers, who has quietly and capably managed a collection of real estate, construction and broadcast assets. Jack is even more Garbo-esque than the Irving norm, with a reticence that was only enhanced by a harrowing kidnapping 25 years ago.
Yet while Jack was accorded the most measly properties by his father, he has been a savvy custodian.
His son, John Irving, is a garrulous Harvard Business School MBA who is said to have chafed under the constraints imposed by the family operating structure. Dismissed by some cousins as book-smart but not street-smart, he kicked around the organization for a while before finding his feet in the real estate business, Commercial Properties Inc. John has put his vision to work in restoring a downtown office block as a model of heritage conservation.
His grievances, and his particular enmity toward first cousin Jim, are so strong, sources say, that he is driving the division between the camps. If Jim and Kenneth were left on their own, they would probably be able to patch up any differences, but John is "the spoiler," says one source close to the Irvings.
In the coffee shops of Saint John, the estrangement has fired up the gossip mills. One view is that an alliance of Jack and Arthur would be devastating for older brother J.K., both personally and in business. In any division of assets, Jack and Arthur have a combined two-thirds voice, including potential control over disposition of the forest products units. However, given the strong Irving culture of solidarity, it seems likely J.K. will retain his beloved forestry business, and avoid a public battle.
Even so, the tension is underlined by where the Irvings choose to live. J.K. and son Jim own estates close to each other in Rothesay, a genteel suburb anchored by the tony Rothesay Netherwood private school, in which family members are influential backers and parents.
Arthur and Jack, now apparent allies, live side by side in the old neighbourhood of Mount Pleasant Avenue; John Irving resides a block away in a sprawling split level with a commanding view of the refinery. Kenneth, the least-known important businessman in Canada, lives down an isolated trail with a private access to splendid Kennebecasis Bay. He is not a familiar face in the city and is said to despise ostentation. He and his wife Tasha and their four daughters can sometimes be spotted sampling the fish and chips special at the Irving Big Stop gas station on the highway to Moncton.
Despite his craving for privacy, Kenneth is widely viewed as a modernizer who has ramped up the strategic thinking at Irving Oil. He is a smoother, more agile leader than was his short-tempered father.
Family members have been dismissed by some as short-sighted micro-managers who fuss more about clean service station washrooms than global expansion. But Arthur and Kenneth, along with Arthur's younger son Arthur Leigh, had the vision to pull off the retrofit that allowed the refinery to convert cheap Middle East crude into premium low-sulphur gasoline suitable for the high-density population centres of the U.S. Northeast. In Boston, it is said that six of every 10 cars now run on Irving-refined gasoline.
"They correctly read the political tea leaves that the ultra-low-sulphur gas thing was coming on," says one energy executive. "The U.S. demand in the Northeast was growing at a high rate, and this was one of the first refineries to make ultra-low-sulphur gas to meet all the specs."
The refinery should command a high valuation, experts say, because it enjoys very steep margins. The Irvings' deep-water port on the Bay of Fundy allows giant tankers to bring low-cost crude directly from the Middle East. The refinery's high-quality gasoline and diesel fuel command the same selling price as more costly imports from Europe, but with much lower input costs. It's a sweet spot for any refinery, especially one perched on the edge of North America's biggest fuel markets.
All this is buttressed by the $750-million LNG terminal whose construction is under way adjacent to the crude oil port on Saint John's eastern boundary. Irving Oil is a 25-per-cent minority partner, working with Repsol YPF, the Spanish energy giant.
The forestry assets tell another story. They are a mixed bag, ranging from company-owned timberland to mills for pulp, newsprint, tissue and diapers. The markets for these products are going in different directions. One analyst says tissue operations, run out of Moncton by J.K.'s younger son Robert, would be highly valued and could fetch as much as $100-million. But the wood products business would have trouble finding buyers in the current environment.
He believes the forest operations would not likely attract more than $1-billion if they were ever sold off. The big plus is their rigorous vertical integration - the ability to combine vast owned and managed timberland in Maine and New Brunswick with pulp, paper and wood product mills - as well as the Kent lumber stores in the Maritimes.
The Irvings also control most of New Brunswick's newspapers but these are not part of the carve-up because J.K. has in recent years assumed personal ownership of this business.
Meanwhile, the family's Acadia Broadcasting radio operations fall under the wing of Jack Irving's family. Acadia, which owns two New Brunswick radio stations and another in Nova Scotia, recently moved outside its Maritimes base by buying a small chain of radio stations in northwestern Ontario from a local family, the Fawcetts.
Often overlooked are Jack's steel and construction units, a diverse group of companies with names like Ocean Steel and Construction, York Steel, FCC, and Strescon. They are the sleepers in the dissolution of the empire, because they are excellent operations with activities through the Maritimes and New England, stretching to the suburbs of New York City. These businesses have done a lot of the construction of Irving Oil gas stations, offices and other facilities - a role that cemented Jack's close relationship with brother Arthur.
In recent years, company newsletters have boasted of supplying structural steel for a new Harvard University student residence and steel trusses for the Yawkey Center for Outpatient Care at Massachusetts General Hospital in Boston.
The construction units are among the rare examples where the family has partnered with outsiders.
In the mid-1950s, K.C. started Ocean Steel with the help of a German immigrant named Hans Klohn. That close business relationship has continued for two more generations, and the Klohns are believed to be equity owners of the Ocean Steel group of companies.
That will likely be the pattern of the future, as the Irvings of the fourth generation take over. As they break out of the old cocoon of the family trust and its interrelated businesses, they will likely shed some of the family's ungainly collection of assets.
To grow globally, they will have to forge partnerships, in the same way K.C. linked up with the Klohns 50 years ago. Arthur's family has already engineered a deal with Repsol on the LNG terminal and is looking for a partner to built the second refinery in Saint John.
In 20 years, the view from Arthur Irving's window will be much different. Arthur and his brothers will likely have passed from the scene. Jim and Kenneth Irving will be senior citizens. A fifth generation of Irvings will be putting their own stamp on the family fortune - although none has emerged so far as a potential refinery boss or forestry titan.
So what name will adorn the buildings, refineries, mills and gas pumps in the industrial panorama that unfolds before the big white house on Mount Pleasant? In many cases, it will not be Irving.