Keith Horsburgh had no way of knowing the question was coming. But it was like he’d been thinking of the answer for months. “If you had the chance to name the lone cow that started this whole mess, what would it be?” I ask, after sitting down with him. The owner of Grace Cattle Haulers–which is now a 12-truck fleet based in Brooks, Alta–is pensive at first. As co-chairman of the Alberta Livestock Carriers Association–whose own business dove after a single cow found to contain mad cow disease four months earlier sparked a crippling U.S. ban on Canadian beef–Horsburg wants his answer to capture the collective mood of the entire beef-hauling industry.

“How about,” he says, “Cow Zero?”

Good one. By no means does Horsburgh intend to equate the magnitude of Cow Zero with Ground Zero, but for anyone here in Southern Alberta whose racket involves cattle or beef, May 20, 2003, is a date that has become as difficult to forget as Sept. 11. And it serves as a grim lesson for anyone driving around with all their corporate eggs in one basket, whether you’re talking car parts in Southern Ontario or lumber in central B.C. If your single market dies, so might your business plans, your lines of credit; your hopes for the future.

***
Horsburgh’s beef isn’t really with the poor sick heifer, parts of which are likely laying on a table in a disease-control lab in Winnipeg. Rather he says this ban–which has recently been lifted for selected cuts of boneless beef but remains in place for all live cattle–is purely political. “It’s unimaginable one animal could cause all this,” he says. “The science has all been done long ago, and everybody agrees–There’s no mad cow. But the border remains closed to Canadian cattle shipments. You tell me.”

I can’t. So I ask another question: Describe May 20–the day the U.S. closed the border. What was it like?

“Our dispatcher called and told me the news,” Horburgh says. “I thought, ‘yeah right.’ But the auctions closed almost immediately and our business was affected the very next day. While only five per cent of our total miles are U.S., we still had nothing to do. It just collapsed overnight–and that was the local market.”

Horsburgh’s operation consisted of hauling cattle from feedlots to auction market, and from there to local packing plants. Instantly, the auction-market business was almost non-existent, and shipments to Lakeside Packers evaporated by 60 per cent. Horsburgh estimates he lost about 150 loads a week, at a value of $60,000, and to date approximately 40 per cent of his owner-operators have driven off. He was forced to park half of his 20 cattleliners in the yard.

Survey Horsburgh’s colleagues in these beef-reliant southern Alberta towns such as Brooks, Lethbridge, and Picture Butte and you’ll hear an almost identical story. The devastation started May 2 and casualty reports continue to pour in: Equipment dealers, buffalo, sheep and elk breeders, and local retailers have all been impacted. When people have less spending money, everybody suffers. To make matters worse for the beef industry, which relies on the U.S. for about 70 per cent of its revenue, almost 20 other countries followed the Americans’ lead and banned our beef.

Nearly 5,000 beef industry workers have already lost their jobs. The crisis is costing the $4 billion industry an estimated $11 million a day in exports alone. That number more than doubles when related businesses like trucking are factored in.

The industry isn’t even close to recovering. Overpopulated herds get fatter lounging on feedlots, reducing their usefulness as prime cuts, and therefore their value in the market.
As a result, some carriers who once specialized in the export market are cutting rates to compete in the domestic market, one that was already tight before May 20. “Carriers that now have a severe cash-flow problem have been forced to seek loads in the non-cattle, and in some cases, are even taking loads in non-beef sectors,” says Kim Royal, executive director of the Alberta Motor Truck Association.

“I bet,” I say to Royal, “that you’re taking calls from cattle haulers who’ve lost their market in the U.S. and are looking for work, and the next day you get a call from another member who complains the first guy just found work in his sector.”

“I do get calls like that,” says Royal. “And we have positioned ourselves not [to take sides]. But if there’s anything that can be taken from this is that we need compensation not just for the beef industry, but for the trucking industry in general. It’s all being severely affected.”

Donna St. John of Calgary-based St. John’s Transportation has never hauled a cow or steak into the U.S. Instead, she and her two sons have been hauling beef in reefers from Calgary to Toronto and Montreal for over 30 years. Since mad cow, she’s parked many of her 16 trucks and watched as her 10 loads a week to the east shrunk to four, and with them, her backhauls of dairy products. “I’m fighting just to get that,” she says.

Neither St. John nor her son Warren smile much. It’s not that they’re despondent, just exhausted. St. John says there’s less capacity per hundredth weight, with more carriers swarming in to grab a slice of an already small market. She says she’s keeping afloat by contracting some of her trucks to regional carriers hauling general goods intra-provincially. But she’s praying the companies she’s on with pay in 60 days.

Meantime, the bills keep on coming: fuel, maintenance, insurance, and driver pay. “And I’m still making truck payments on four new Kenworths we bought before May,” she says. “We know the money is coming eventually, but it’s just getting to that day that’s the struggle.”

St. John admits she’s had to trim where she could. “You just have to juggle things back and forth,” she says. If a working truck needs a part, like tires, she’ll take it from one of her parked trucks. If she has the extra money at the end of the month to replace the part, she’ll put it back on. If not, then it’s just another reason for the truck to sit.

The company is also trying to keep payments in tune with sporadic cash flow. Who gets paid first? The government and the fuel companies take no prisoners, son Warren says. They want their cut on the due date, he says, and some tale about a cow that crippled business gets no sympathy. More forgiving, however, have been the local bank and truck financier, who are a little closer to the situation. “They’ve been pretty understanding. But they don’t want the equipment. What are they going to do with it? I don’t think they can stick another truck in their yard if they tried,” The younger St. John says. “But you have to constantly be in touch. Keep telling them you’re still out there, you know you owe them money, you haven’t forgotten, and soon as you get it it’s theirs.”‘

But the other hoof, so to speak, has to drop sooner or later, right? “You’re right, their patience isn’t going to last forever,” he says. “They’re not going to have you running up the road adding wear and tear if it’s inevitable they have to take the truck back.”

How long?

“I don’t know,” St. John says. “But for now, we just want to get to Saturday, and it’s like, ‘hey we made it another week.'”

I turn to Mom and ask if it ever crossed her mind to quit the beef business permanently. “What else am I going to haul? There’s nothing here except beef and oil,” she says. “Maybe I’ll be forced to. But I’m not going to give up now because of one stupid cow.”

***
In Brooks–about 180 kilometres southeast of the St. John office–a row of Horsburgh’s cattleliners rest side by side at the edge of his yard. There, because of a recent drought, clusters of grasshoppers find sanctuary. Rolling into this close-knit town, the smells of diesel and agriculture greet me at the end of the off ramp from Hwy 1. Horsburgh says farming and the oil patch is what puts food on many tables here, and since May 20, they’re doing the same for him. Like the St. Johns, he has had to diversify. After the ban, Horsburgh traded on his good reputation and clinched a few trucking jobs with local companies, hauling mainly steel pipe for the oil patch. But his cattleliners are idle. “That’s the thing with cattleliners,” he says, “they’re only good for livestock, whether it’s cattle, hogs, or sheep. And you’re not going to make it up with hogs. There’s enough people fighting over that market already.”

“It’s hard to justify trying to make payments on equipment that just sits there.”
“You and your buddies have your ears pretty close to the ground,” I mention to Horsburgh, “any hints of when this all goes away?”

“I think it’s going to be a long time before you see live cattle moving across the border,” he says. “I can’t pin a time frame, but I wouldn’t be surprised if by this time next year we’re still not moving live cattle for slaughter across the line.”

It’s a reality Horsburgh seems to have accepted. He’s keeping his options open–the future could mean everything from continuing to downsize to diversifying into another sector completely. It’s all wait and see.

The fate of the industry depends purely on the length of the ban, Kim Royal of the Alberta Motor Transport Association says. His association figures one of the following scenarios is likely, but the light at the end of either tunnel is extremely dim.

The first, Royal says, is a continuous ban of six more months. By then far more companies will be bankrupt. Not only that, but if they ever do start operating again, all the best drivers will have been snatched away. It’s not that cattle haulers need to be cowboys too, but livestock is a high-maintenance business that can’t be taught to just anybody. Drivers work with live animals, not pieces of freight, so they have to be able to settle and feed cows, as well as rearrange bedding. There aren’t many drivers to come off line-haul for that type of work.

The second scenario is even less comforting. “If the ban continues longer than that, we’re looking at a complete re-rationalization of the cattle industry in Canada,” he says. “We’re going to have a very large calf crop come 2004. Unless we change our eating habits, what are you going to do with all these animals?”

So, I ask Horsburgh, can we eat ourselves out of the problem?

“No way. Our [domestic] market isn’t that big, and we’re eating far less beef than we were 25 years ago,” he says. “The reality is depopulation of our cow herd. Unless we depopulate we’re going to face the same thing next year. It’s sad, because we’ve spent a lot of years building this industry what it is today–exporting a premium product–in my view the best in the world.”

Back in Toronto, I’m putting the finishing touches on Donna St. John’s and Keith’s Horsburgh’s story. I hear Horsburgh has recently got some his catteliners moving gain, so I figure I’ll give Donna a call to see how she’s doing–make sure the phones are still ringing. Warren answers. “Hey, there. How’s business?”

“The same,” he tells me. “Still pretty much week to week.”

I try to give him something to laugh at. “Guess what? We came up with a name for that one stupid cow: Cow Zero. It works … kind of.”

“That’s fitting,” he says after an abrupt chuckle.

He sounds like he’s in the middle of something, so I let him go. Bills to pay, I’m sure. And Saturday’s just a couple of days away.One day you’re happily rolling down the highway with a cattlepot full of heifers and the next, a crazy cow in Alberta gets diagnosed with mad Cow disease and the border-along with your business-shuts down. Now what?
Chris Bennett is general manager of Transport Financial Services, a Waterloo, Ont., company that specializes in accounting and management services for small fleets and owner-operators. Quickly navigating truckers through rough times is his specialty. “We always found the guy who acts immediately usually gets through these types of situations,” he says.
1. Admit your problem. Your cash flow has dried up faster than spilled antifreeze in Arizona. Now make a trip to the bank. “The small operator typically has himself tied into some type of general security agreement regardless of whether he’s incorporated or a proprietorship. He’s probably leveraged himself and his home against the assets of the business,” Bennett says.
“We had one fellow approach the bank and, because interest rates are so low, we repackaged his personal debts and first mortgage on the home, which provided some additional cash and credit. We took that cash, went to the leasing companies, and repackaged the lease-basically re-amortizing, with the argument that if the equipment was going to be parked, there’s a time factor at work in terms of depreciation, but there’s not a wear and tear factor. So, we’ve bought the guy upwards of 12 months of breathing space where he could make mortgage payments, feed his kids, and look to throw his truck on somewhere else for general freight.”
2. Put the truck to work. Go shopping for a decent rate in a related sector, says Bennett. If you have to run your trucks elsewhere, do it, and don’t wait. Getting cash flow moving downstream is what’s important here, because the cash back from the banks isn’t going to stretch forever.
3. Circle back. “If you’re running with carriers X, Y, Z to make ends meet, start evaluating your new found cash flow. Quarterly-accounting won’t cut it,” he says. “Take that information after the first month, go back to your plan and ask yourself if you hit it on the head. Because if you didn’t come up with the target numbers you were expecting, go back to the bank and lender and if necessary correct the ‘Save Yourself Program.'”
Finally, Bennett says, don’t be intimidated by your bank. It will probably be more accommodating than you expect. “Who wants the hardware back?” Bennett says. “The banks don’t want a house back. Call them up, zip down there, communicate with them, and sell your plan. They just want some comfort.”