Update #4 from Ian & Bruce McDonald

To All,

The COVID-19 pandemic crisis has materially changed the way that we live and work. 

Black & McDonald has responded admirably thus far and we are so proud and grateful for the tireless effort of all people to come together to face the unique challenges of this strange and unprecedented global crisis. 

During the past month, our people have focused the company’s response on the immediate human health priorities and required actions for sustaining our operations and the level of industry, attention and genuine care has been extraordinary. 

We remain confident in Black & McDonald’s continued ability to protect our people, maintain services and support our customers but we are very worried about the mounting social and economic consequences of the pandemic and their effect on health of the total company.

The severity and duration of the pandemic remains unknown and uncertain.  But as the outbreak continues to escalate in our communities in Canada and the United States, it is clear that the business impacts that we are now experiencing could last for months not days. 

We must now turn our collective attention and concern towards the grim reality of an extended business contraction at B&M and plan for the broad and painful financial consequences that will come with it.

The pandemic is touching every service line and regional operations in our company.  But while we are working with new field and office protocols everywhere, we can see that the overall effect of the crisis is being felt in different ways across our office network according to the criticality of the customers we serve and the extent of the local community outbreak and respective government measures.   Going forward, it is conceivable that some operations will continue to operate with little disruption. 

Nonetheless the threat of an internal outbreak in a B&M operation is an imminent risk faced by all.   One COVID-19 infection can bring a local B&M operation to an immediate standstill.  We experienced the cascading effect of single illness in our Southern Ontario Utilities region this week.   Within minutes of the confirmation of our first confirmed B&M case, our Field Services Division (FSD) was closed and the Railside office that also houses our electrical engineering group and our Toronto pipe fabrication shop was temporarily shuttered.   Each of these business units serve multiple B&M operations in Southern Ontario and each would be considered critical infrastructure services by our government.

We are already seeing that government-mandated work restrictions and customer-directed deferrals and stoppages are negatively affecting B&M operations and the demand for our services in many places.   In the past week, project closures necessitated a 10% reduction in our field force.  The expanding business lockdown in Ontario and Quebec will precipitate a steep decline in available work in the coming days and we foresee similar regulatory measures being implemented in almost every geography where we work. 

While some may be affected less than others, we know that the threat to our total company is universal and the gravity and scope of that threat are profound.  As Co-Ceo’s and representatives of the McDonald family, we have the responsibility to protect B&M for the sake of all employees and we are now taking action to preserve our collective future.

We are expecting a long and difficult fight to overcome the pandemic and we must literally gird for battle beginning with measures required to immediately solidify our financial position.   In doing so, we will ensure we have the funds to not only survive the crisis but to ramp up and restore our operations when the worst of it is behind us.

We have begun by taking steps to reduce the financial costs of corporate overhead borne by the Regions including reducing our own compensation by 50%.

We have also enacted a series of widespread cost containment measures, including an interim salary reduction for other Corporate Officers, Regional Vice Presidents, Directors, Controllers and Divisional leadership.  This decision was carefully considered.  We recognize how significantly it will impact you and your families.

We hope these measures will be sufficient but the specter of a previously unimaginable decline in B&M’s business necessitates the preparation and implementation of company-wide austerity programs not contemplated in our company in last 30 years.

Every operation and every individual in our company is now or will soon be faced with difficult decisions and significant personal sacrifices required to defend the financial viability of Black & McDonald. 

Today we have asked our leadership to step forward with us.

Working together, we will protect the total B&M family, preserve our great company, and emerge stronger than ever.

Best Regards,

Ian & Bruce