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For the exclusive use of D. Li, 2017.
NA0415
Halifax Port Authority and the Seaport
Farmers’ Market
Ramon G. Baltazar, Dalhousie University
Shamsud D. Chowdhury, Dalhousie University
T
he scent of the ocean breeze reached Karen Oldfield, president and chief executive officer of Halifax Port Authority (HPA), as she stepped out of her car on
a sunny April morning in 2012. Walking toward the restored brown-brick
building on the waterfront that housed her office, her gaze was drawn towards the
modern steel and glass structure to the right of the HPA. It was home to the financially
troubled Halifax Seaport Farmers’ Market (HSFM), whose disposition was the subject
of urgent discussion among HPA’s senior management in recent days. Oldfield and her
top managers were scheduled to discuss the matter further that morning and make a
decision within several days.
HSFM was operated by the City Market of Halifax Cooperative (CMHC), which
leased the property from HPA. CMHC was a cooperative of market vendors that
included some, but not all, of HSFM’s vendors. The $14.3 million state-of-the-art
market had opened in 2010 to positive media reviews. However, revenues failed to
support its operating expenses, construction costs, and debt. By April 2012, $732,000
in current obligations—including rent, property taxes, construction bills, and debt
repayment—was past due.
On the recommendation of HPA, CMHC had retained the New York–based consulting firm Project for Public Spaces, Inc. (PPS) in January 2012 to provide it with a
turnaround plan. HPA paid for the consultation on the condition that it would receive
a copy of the PPS report. The report, which Oldfield and her management team had
been reviewing in recent days, covered a wide range of issues around, and recommendations for, the market’s governance, management, and operations.
It was clear from the report that without intervention HSFM would fail soon. As
Oldfield entered the HPA building the question in her mind was what HPA could
and should do about it. Should HPA allow the market to fail and put the property
up for lease? Should HPA continue to provide financial and management support to
CMHC? Should it endeavor to find, perhaps even help establish, another organization to operate the market? Or should it commit to operating the market itself, even
though HPA did not normally operate port facilities?
Copyright © 2016 by the Case Research Journal and by Ramon G. Baltazar and Shamsud D. Chowdhury.
All rights reserved. The authors are deeply grateful for the support provided by Karen Oldfield, president
and CEO, and other senior executives at Halifax Port Authority that made this case possible, and for the
extensive comments and insightful suggestions made by three anonymous reviewers and CRJ Editor John
J. Lawrence on previous versions of the case.
Halifax Port Authority and the Seaport Farmers’ Market
1
This document is authorized for use only by Dingyu Li in Business in a Global Context taught by Dr. Ramon Baltazar, Dalhousie University from September 2017 to March 2018.
For the exclusive use of D. Li, 2017.
HALIFAX AND PORT OF HALIFAX
Halifax was located in the Province of Nova Scotia, Canada, which fronted on the
Atlantic Ocean. With a population of 450,000 in 2012, it was the eighth largest city
in Canada and the largest east of the Province of Quebec. Home to seven degreegranting universities and eight major hospitals, Halifax was the second largest scientific
center in the country behind Ottawa, the nation’s capital. Built on hills and plateaus
surrounding the Halifax Harbour, the city’s urban core provided easy access to destinations ranging from historic rock formations and isolated walking trails to sandy
beaches and numerous freshwater lakes. The city’s active oceanfront downtown area,
varied topography, rich history, and proximity to other eastern Canadian provinces
made it a popular tourist destination.
The Port of Halifax had one of the largest and deepest natural harbors in the world.
Minimal currents and tides and the absence of ice made the harbor accessible year
round. The port enabled the shortest ocean voyage into North America for ships
operating in the North Atlantic.1 Small by international standards, the port’s natural
endowments were complemented by state-of-the-art facilities that serviced the cargo
and cruise trades. It accommodated the world’s largest vessels, had over one million sq.
ft. of loading and unloading, distribution, and warehouse space, serviced every type of
cargo, provided direct-to-rail cargo services for connections to 43 percent of the North
American population, and had a full complement of the services required by the cruise
trade. The port serviced 1,500 vessels in 2012 including the world’s leading shipping
lines that connected trade to 150 countries, and was the hub for imports destined to
Midwest and Central Canada.2
Table 1 shows 5-year statistics for containerized cargo (expressed in twenty-foot
container equivalent units or TEUs) and cruise ship passengers serviced by the port.
Although yearly numbers were influenced by the facilities, services, and pricing at the
port, they were also subject to macro-environmental events such as the global financial
crisis of 2008, and by developments at competing ports.
Table 1: 5-year Summary of Cargo Volumes and Cruise Passengers at the Port of Halifax3
Year
Cruise Passengers (# of Ships)
Containerized Cargo (TEUs)
2007
176,742 (92)
490,072
2008
228,133 (125)
387,342
2009
227,797 (118)
344,811
2010
261,216 (127)
435,461
2011
243,577 (122)
410,649
The proximate competitors of the Port of Halifax were other ports along the eastern seaboard that were equally near Chicago, a major U.S. commercial transportation
hub. These included the ports at New York/New Jersey (5,503,000 TEUs in 2011),
Norfolk, Virginia (1,918,000 TEUs), and Montreal (1,363,000 TEUs).4 Like the Port
of Halifax, these ports had appealing features, services, and facilities that benefited
from regular streams of investment.
The economic impact of the Port of Halifax was significant. Direct and spin-off
benefits of port-related activities in 2012 were estimated at more than $1.5 billion in gross output and $650 million in gross domestic product. The port created
2
Case Research Journal • Volume 36 • Issue 3 • Summer 2016
This document is authorized for use only by Dingyu Li in Business in a Global Context taught by Dr. Ramon Baltazar, Dalhousie University from September 2017 to March 2018.
For the exclusive use of D. Li, 2017.
approximately 11,000 direct and indirect full-time equivalent jobs. Port investment
from 2007 to 2011 exceeded $250 million by the private sector and an additional
$147 million by HPA.5
HALIFAX PORT AUTHORITY
HPA led the development of the Port of Halifax. HPA succeeded the Halifax Port
Corporation in 1999 as one of the first of eighteen Canada Port Authorities (CPAs)
established under the Canada Marine Act of 1998. CPA-designated ports were considered vital to domestic and international trade. On creation they were provided federal
port territories and the mandate to promote trade with the assets.6
CPAs were classified as “Government Business Enterprises.”7 They reported to the
minister of transport and were governed by boards of directors appointed by government. They were required to pursue the CPA mandate, communicate business plans
to the minister of transport every five years, and remit a portion of gross revenues to
the federal government. They were restricted from converting inherited federal land
into residential property and using the land for collateral in borrowing. Beyond those
restrictions, CPAs operated independently of the government and for all intents and
purposes were for-profit organizations, albeit with a social mandate.8
HPA’s specific mandate was to “develop, market, and manage its assets in order
to foster and promote trade and transportation.”9 The organization exercised management authority over Halifax Harbour and 258 acres of adjacent federal property
that hosted both HPA and privately owned port terminals and other facilities. HPA
normally rented its facilities to facility operators. An exception was the Cruise Pavilion that HPA itself operated, leasing as many as twenty-five kiosks to retailers during
cruise season starting in 2006. Previous to that, the Cruise Pavilion was run by a private operator.
In 2011, HPA had operating revenues of $29.6 million and net earnings of $6.5
million. Revenues came from harbor dues, vessel anchoring charges, charges for loading and unloading cargo, cruise passenger fees, and real estate leases. Cargo, cruise, and
real estate income contributed 35 percent, 12 percent, and 53 percent, respectively,
to revenues. Approximately 4 percent of gross revenues was remitted to the federal
government. Earnings were reinvested in the port. With steady growth over a decade,
HPA had 2011 assets of $179 million. Exhibit 1 shows selected financial data for
HPA.
HPA in 2012 was markedly different from the organization Oldfield had joined
more than a decade earlier. She reflected:
When I joined HPA, there were 62 employees and the organization generated approximately $15 million in gross revenue. Today, there are 70 employees [and] we have
just completed a record year for revenue, capital expenditures, cruise vessels calling on
the port, breakbulk cargo and year-over-year growth in containerized cargo in a year
in which most ports on the East Coast of North America suffered negative growth.
We were the first CPA to achieve a [Standard & Poor’s] credit rating, the first port to
achieve IS0 14000 certification and we have won several third-party awards for innovation, technology, and service.
Halifax Port Authority and the Seaport Farmers’ Market
3
This document is authorized for use only by Dingyu Li in Business in a Global Context taught by Dr. Ramon Baltazar, Dalhousie University from September 2017 to March 2018.
For the exclusive use of D. Li, 2017.
STRATEGY
Karen Oldfield became HPA’s president and CEO in January 2002. She had been
chief of staff for the premier of Nova Scotia since 1999. In that role she focused on the
government’s economic agenda in trade, energy, and information technology. Prior to
that, she had been a partner at a law firm. In 2001, Oldfield was named one of Canada’s “Top 40 under 40” by Report on Business magazine. During her tenure at HPA,
she was recognized as one of Atlantic Canada’s “Top 50 CEOs” by Atlantic Business
magazine, sat on the boards of several not-for-profit institutions, and received several
community awards for volunteer work.
Oldfield’s mandate in joining HPA had been clear:
I joined the HPA . . . following 9/11 with a mandate of change, diversify the business
model, focus on financial self-sufficiency, [and] create an entrepreneurial organization. . . .
At the time of my joining, the HPA was [virtually] without partners in the port community, the City of Halifax, or the Province. Thus, a secondary but important aspect
of my mandate was to align the stakeholders and return HPA to a collaborator [that]
could spur economic activity across the region.
One of Oldfield’s priorities was to establish HPA’s strategy. After consulting other
leaders in the region who had been successful in bringing about change, she embarked
on an extensive process that involved HPA’s board members, employees, customers,
and other stakeholders in research and discussion on “what we did, what we should
do and, as importantly, what we shouldn’t do.” The process led to HPA’s first written
strategic plan. “It wasn’t perfect,” said Oldfield, “but it was a good start.”
The strategic plan had four components. First, it identified HPA’s lines of business
as containerized cargo, breakbulk and project cargo, cruise, and real estate. Second,
it affirmed the importance of maintaining the port’s full service status. Third, it set
out strategic objectives that in 2012 still applied: growing Port of Halifax business
by diversifying HPA’s lines of business, maximizing revenues from real estate, and
integrating the supply chain. Fourth, it called for the development of collaborative
performance measurement systems. This, Oldfield explained, recognized that
. . . on our very best day, all cylinders firing, HPA is a facilitator, collaborator, partner,
and influencer. We cannot do very much alone [so] we worked with port partners—
terminal operators, carriers, and the rail service provider—to set and measure key
performance indicators (KPI’s) across the port: cargo unloading and loading times,
container ship to rail dwell times, many others. . . . Over a period of years, this methodology enabled all partners to market their services with performance data. Our ability
to come to agreement on metrics, to integrate technology systems across carriers, terminal operators, and the rail service provider, [and] monitor performance in real time
is unique [and] a service differentiator in the port system.
Over the years, the KPI approach had required investing in technology and developing capabilities that became useful in researching and undertaking deep analysis of
HPA’s potential cargo-handling markets around the world. This capability, Oldfield
noted, allowed HPA to “know exactly where in the world we are competitive [and]
where we are not” and to allocate travel dollars and staffing resources accordingly.
These four elements were the foundation of HPA’s twenty-year strategic plan. A
five-year rolling business plan was submitted to the minister of transport annually. A
one-year plan that flowed from the five-year plan identified particular priorities for
the year. In 2012, one of the priorities was to capitalize on the “Atlantic Gateway and
4
Case Research Journal • Volume 36 • Issue 3 • Summer 2016
This document is authorized for use only by Dingyu Li in Business in a Global Context taught by Dr. Ramon Baltazar, Dalhousie University from September 2017 to March 2018.
For the exclusive use of D. Li, 2017.
Trade Corridor Strategy” recently launched by the Government of Canada to integrate
the region’s air, rail, marine, and road transportation network. The Government had
allocated $200 million to support the region’s trade-related transportation system10
and HPA wanted to ensure it would be shared with the Port of Halifax for cargo
terminal expansions and improvements. HPA’s Statement of Values in 2012 included
long-term relationships, excellence, accountability, teamwork, and entrepreneurship
spirit.
ORGANIZATION
Internally, Oldfield took steps to develop an organization that would effectively implement HPA’s strategy on a sustained basis. When Oldfield arrived, the organization was
structured traditionally with functional areas (marketing, operations, finance, engineering, etc.) reporting directly to the top. Finding the structure not focused enough
on the organization’s lines of business, Oldfield began to reorganize in 2004.
Exhibit 2 shows a partial organizational chart of HPA in 2012. The president
and CEO had seven direct reports including the senior vice-president responsible for
finance, engineering and infrastructure, and maintenance and property services; the
vice-president for business development and operations in cargo and cruise; the vicepresident for real estate; the director of human resources; the director of information
services and technology; and the senior manager for strategic relations, whose role was
to develop and maintain relationships with transport partners.
Oldfield noted three things about the current structure. First, compared to the old
structure, it brought greater focus to the organization’s cargo, cruise, and real estate
lines of business. Having vice-presidents manage these lines of business ensured that
line-of-business needs, rather than technical needs, would be the driver of organizational work. Second, convinced that human resources and information technology
would be critical to implementing HPA’s strategy, Oldfield chose to have the director
of human resources and the director of information services and technology report to
her directly. Third, though not reflected on the organization chart, the new structure
entailed extensive team work within and across departments to ensure that the many
interdependencies the strategy required were attended to.
The nature of the port business called for a high degree of specialization in many
technical areas. Thus, technical knowledge and skills had historically formed the basis
of HPA’s staffing, training and development, and performance management practices.
Oldfield did not dismiss that basis. Instead, she built on it by giving it strategic direction and strengthening the rigor of HPA’s HR processes. She handpicked her senior
management team not only for their technical expertise and experience but also for
their willingness and ability to work well in a team setting. Reflecting on staffing,
Oldfield said:
. . . Hiring [used to be] based on identifying employees with the requisite qualifications
and little regard for “fit.” Today, hiring is conducted on the basis of qualifications AND
qualities. . . . Competency is “table stakes” [gets the person considered]. [Fit] is very
important given that we have a small organization with a high degree of interdependence between departments. . . . We are looking for individuals who are collaborative,
outward looking, flexible, entrepreneurial and who are able to “check their egos at the
door.” We . . . hire slowly. Applicants are required to undergo various testing for skills,
values, and fit. . . . Every serious candidate across the board meet[s] with [me].
Halifax Port Authority and the Seaport Farmers’ Market
5
This document is authorized for use only by Dingyu Li in Business in a Global Context taught by Dr. Ramon Baltazar, Dalhousie University from September 2017 to March 2018.
For the exclusive use of D. Li, 2017.
Oldfield considered lifelong learning and personal and professional development
important to HPA’s long-term success and HPA’s training and development program
reflected that belief. HPA required all employees to take an internally produced curriculum on the port business, paid for courses employees needed for job certification,
and, in 2012, worked with Dalhousie University to deliver a tailored leadership program for its mid-level managers.
Performance management at HPA was a structured process. Oldfield explained:
The CEO sets the corporate goals and objectives for the year in consultation with the
senior management team and board. . . . The department heads set departmental goals
and budgets. The employee prepares a performance agreement setting out individual
goals—personal, professional development, stretch goals, and so forth. Agreements are
signed by the employee and superior. The CEO signs off on the department heads and
the board signs off on the CEO.
The senior management team met quarterly to review organization and departmentlevel progress against goals, and to take corrective measures if there were issues. The
results of the meetings were communicated to employees. Supervisors and subordinates
met to discuss individual-level performance based on the performance agreement. For
all managers, the system included 360-degree performance reviews.
HPA comprised approximately one-third unionized laborers, one-third unionized technical employees, and one-third non-unionized management employees. The
unionized employees were subject to collective agreements that restricted HPA’s ability
to provide them with pay for performance incentives. Managers received bonuses provided corporate, departmental, and individual stretch goals were all achieved.
Employee survey results in 201111 showed an overall employee satisfa …
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