Nu-West
Encyclopedia
Nu-West Group Ltd. was a Canadian growth-oriented house building company that grew into an internationally diversified conglomerate. In 1957 Nu-West Homes was a small, privately owned, house-building company operating in Calgary
, Alberta. In 1969, Nu-West Homes Ltd. became a publicly traded company and was listed on the Toronto Stock Exchange
. By 1981 Nu-West Group Ltd. had become the largest house-building company in Canada, with diversified asset holdings of $1.9 billion, and over 3,700 employees. The company was heavily leveraged with debt used to purchase vast holding of real estate throughout Canada and the United States. This debt, combined with the recession of the early 1980s that saw land values tumble, resulted in Nu-West losing it place of dominance in the industry.
, Nu-West’s president from 1957 until his death in 1985, worked long hard hours to build up the near bankrupt house building company into a multi-billion dollar business. Scurfield’s route to housing development was circuitous. After receiving his Bachelor of Science
degree at the University of Manitoba
, he was a school teacher in that province for two years, working the summers on construction jobs. In 1951 Scurfield abandoned his teaching career and drove to Edmonton
, lured then, as others are now, by stories of opportunity and wealth in Alberta
.
Soon after his arrival, Scurfield got a job working for Cheseley McConnell, a small homebuilder
who became one of Edmonton’s biggest during the six years Scurfield worked for him. In 1957, two of McConnell’s partners, Clifford Lee and Gordon Clark, were saddled with Nu-West Homes Ltd., a 12-year-old near bankrupt
homebuilding company located in Calgary. It was rapidly sinking because nobody would buy its poorly constructed house
s. Lee and Clark were looking for a manager to replace the one they had just fired.
McConnell knew that Scurfield was eager to become a partner in McConnell’s business. It was instead decided that each would buy 25 percent of Nu-West’s then $60,000 assets and Scurfield would move to Calgary to revive the company. To come up with his $15,000 stake, Scurfield, in a classic rags to riches
saga, sold his Edmonton home for $21,000, recovered the $9,000 home equity
, and used $1,500 as a down payment
on another house in Calgary. The remaining $7,500 provided half the money toward buying into Nu-West and the rest came from a bank loan
. In 1981, Scurfield and his family owned 26 percent of Nu-West, then worth about $50 million. McConnell was the second largest shareholder with 21 percent.
Scurfield took Peter Vass, a Dutch
immigrant
who was 10 years older and who had worked as a construction crew leader for McConnell, to Calgary with him as his only employee. The two men then set about repairing the shoddy workmanship of Nu-West Homes and, hence, to polish up Nu-West’s reputation
During the day, Scurfield and Vass would install towel bars and paint rooms that had been left unfinished. At night, Scurfield would do the estimating and bookkeeping
and Vass would do draft designs for the 65 new houses they planned to build the first year. To further clean up Nu-West’s tarnished reputation, Scurfield offered owners of Nu-West homes a five-year warranty
, which was the first of its type in Canada. In 1972, the warranty was expanded to a ten-year coverage.
The hard work paid off. Canada Mortgage and Housing Corporation
, which had cracked down on Nu-West by chopping off $3,000 from any loan guarantee, removed the restriction. Nu-West’s other major source of funds, Investors Syndicate Ltd., which had stopped providing mortgage
money because of customer complaints, also restored Nu-West to its lending list.
and then in the United States
’ Sun Belt
. Nu-West had grown from the home-builder of the 1960's to the more diversified real estate company of the 1970's , and by 1980 Nu-West had become a diversified company with major interests in oil and gas and income properties.
Throughout the 1970's, Nu-West continued its tradition of growth and profitability. During the decade Nu-West's average annual growth in net income has been 49%. In 1979, despite record interest rates and spiralling costs, revenues and net income increased more than 50%, and assets passed the billion dollar mark and totalled $1.28 billion at year end. The financial growth was the result of Canadian land sales, U.S. real estate operations and the successful operations of Voyager Petroleums Ltd. During 1979 the wholly owned Voyager Petroleums increased production and reserves of oil and gas through an aggressive exploration program, and they also increased their acreage holdings substantially.
Highlights of Nu-West's 1979 real estate activities were the growth of the Phoenix operation and the expansion of commercial and industrial operations. Nu-West Development Corporation of Arizona recovered much of its former market position to become one of the largest residential builders in Phoenix. This company also became involved in the profitable condominium conversion market in several “Sunbelt” cities.
Nu-West ended the 1970's proud of their achievements to that point, and entered the 1980 with business goals that included the plan to increase their real estate activities, with emphasis on land and commercial development, and also the expansion of their oil and gas investment so that within five years it would employ approximately one-third of their assets. In 1980, seeking to increase the potential for for greater oil and gas revenues, Nu-West aggressively doubled Voyagers' 1979 budget for oil and gas exploration and development programs.
By 1981, just 12 years after going public in 1969, Nu-West evolved from being a poorly regarded Calgary builder to one having operations in five Canadian provinces
(British Columbia
, Alberta, Saskatchewan
, Manitoba
, and Ontario
) and in ten U.S. states (Arizona
, California
, Colorado
, Florida
, Georgia
, Hawaii
, Nevada
, New Mexico
, Oklahoma
, and Texas
).
when the Canadian federal government
brought in the National Energy Program
(NEP), which didn't allow Albertans to sell oil
to the Canadian market at world prices. This policy decimated Alberta's Petroleum industry
. People left Alberta in droves and almost no one bought homes, with existing owners walking away from mortgages.
The negative effects of the NEP, combined with the North American-wide recession of the early 1980s that saw land values tumble, resulted in Nu-West, who was heavily leveraged with debt, losing its place of dominance in the industry.
Calgary
Calgary is a city in the Province of Alberta, Canada. It is located in the south of the province, in an area of foothills and prairie, approximately east of the front ranges of the Canadian Rockies...
, Alberta. In 1969, Nu-West Homes Ltd. became a publicly traded company and was listed on the Toronto Stock Exchange
Toronto Stock Exchange
Toronto Stock Exchange is the largest stock exchange in Canada, the third largest in North America and the seventh largest in the world by market capitalisation. Based in Canada's largest city, Toronto, it is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities...
. By 1981 Nu-West Group Ltd. had become the largest house-building company in Canada, with diversified asset holdings of $1.9 billion, and over 3,700 employees. The company was heavily leveraged with debt used to purchase vast holding of real estate throughout Canada and the United States. This debt, combined with the recession of the early 1980s that saw land values tumble, resulted in Nu-West losing it place of dominance in the industry.
Beginnings
Ralph ScurfieldRalph Thomas Scurfield
Ralph Thomas Scurfield, B.Sc , the son of Ralph and Ann Scurfield . He received his Bachelor of Science degree from the University of Manitoba in 1948. He was the President and Chief Executive Officer of Nu-West Group Limited , and was an original owner of the Calgary Flames...
, Nu-West’s president from 1957 until his death in 1985, worked long hard hours to build up the near bankrupt house building company into a multi-billion dollar business. Scurfield’s route to housing development was circuitous. After receiving his Bachelor of Science
Bachelor of Science
A Bachelor of Science is an undergraduate academic degree awarded for completed courses that generally last three to five years .-Australia:In Australia, the BSc is a 3 year degree, offered from 1st year on...
degree at the University of Manitoba
University of Manitoba
The University of Manitoba , in Winnipeg, Manitoba, Canada, is the largest university in the province of Manitoba. It is Manitoba's most comprehensive and only research-intensive post-secondary educational institution. It was founded in 1877, making it Western Canada’s first university. It placed...
, he was a school teacher in that province for two years, working the summers on construction jobs. In 1951 Scurfield abandoned his teaching career and drove to Edmonton
Edmonton
Edmonton is the capital of the Canadian province of Alberta and is the province's second-largest city. Edmonton is located on the North Saskatchewan River and is the centre of the Edmonton Capital Region, which is surrounded by the central region of the province.The city and its census...
, lured then, as others are now, by stories of opportunity and wealth in Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
.
Soon after his arrival, Scurfield got a job working for Cheseley McConnell, a small homebuilder
Building
In architecture, construction, engineering, real estate development and technology the word building may refer to one of the following:...
who became one of Edmonton’s biggest during the six years Scurfield worked for him. In 1957, two of McConnell’s partners, Clifford Lee and Gordon Clark, were saddled with Nu-West Homes Ltd., a 12-year-old near bankrupt
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
homebuilding company located in Calgary. It was rapidly sinking because nobody would buy its poorly constructed house
House
A house is a building or structure that has the ability to be occupied for dwelling by human beings or other creatures. The term house includes many kinds of different dwellings ranging from rudimentary huts of nomadic tribes to free standing individual structures...
s. Lee and Clark were looking for a manager to replace the one they had just fired.
McConnell knew that Scurfield was eager to become a partner in McConnell’s business. It was instead decided that each would buy 25 percent of Nu-West’s then $60,000 assets and Scurfield would move to Calgary to revive the company. To come up with his $15,000 stake, Scurfield, in a classic rags to riches
Rags to riches
Rags to Riches refers to any situation in which a person rises from poverty to wealth, or sometimes from obscurity to fame. This is a common archetype in literature and popular culture ....
saga, sold his Edmonton home for $21,000, recovered the $9,000 home equity
Home equity
Home equity is the market value of a homeowner's unencumbered interest in their real property—that is, the difference between the home's fair market value and the outstanding balance of all liens on the property. The property's equity increases as the debtor makes payments against the...
, and used $1,500 as a down payment
Down payment
Down payment is a payment used in the context of the purchase of expensive items such as a car and a house, whereby the payment is the initial upfront portion of the total amount due and it is usually given in cash at the time of finalizing the transaction.A loan is then required to make the full...
on another house in Calgary. The remaining $7,500 provided half the money toward buying into Nu-West and the rest came from a bank loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
. In 1981, Scurfield and his family owned 26 percent of Nu-West, then worth about $50 million. McConnell was the second largest shareholder with 21 percent.
Scurfield took Peter Vass, a Dutch
Dutch people
The Dutch people are an ethnic group native to the Netherlands. They share a common culture and speak the Dutch language. Dutch people and their descendants are found in migrant communities worldwide, notably in Suriname, Chile, Brazil, Canada, Australia, South Africa, New Zealand, and the United...
immigrant
Immigration
Immigration is the act of foreigners passing or coming into a country for the purpose of permanent residence...
who was 10 years older and who had worked as a construction crew leader for McConnell, to Calgary with him as his only employee. The two men then set about repairing the shoddy workmanship of Nu-West Homes and, hence, to polish up Nu-West’s reputation
During the day, Scurfield and Vass would install towel bars and paint rooms that had been left unfinished. At night, Scurfield would do the estimating and bookkeeping
Bookkeeping
Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, receipts and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Bookkeeping should not be confused with accounting. The accounting process is usually...
and Vass would do draft designs for the 65 new houses they planned to build the first year. To further clean up Nu-West’s tarnished reputation, Scurfield offered owners of Nu-West homes a five-year warranty
Warranty
In business and legal transactions, a warranty is an assurance by one party to the other party that specific facts or conditions are true or will happen; the other party is permitted to rely on that assurance and seek some type of remedy if it is not true or followed.In real estate transactions, a...
, which was the first of its type in Canada. In 1972, the warranty was expanded to a ten-year coverage.
The hard work paid off. Canada Mortgage and Housing Corporation
Canada Mortgage and Housing Corporation
Canada Mortgage and Housing Corporation is a Crown corporation, owned by the Government of Canada, founded after World War II to provide housing for returning soldiers...
, which had cracked down on Nu-West by chopping off $3,000 from any loan guarantee, removed the restriction. Nu-West’s other major source of funds, Investors Syndicate Ltd., which had stopped providing mortgage
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
money because of customer complaints, also restored Nu-West to its lending list.
Growth
Scurfield slowly and methodically enlarged Nu-West, first through geographical expansion and later through a series of acquisitions starting in CanadaCanada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
and then in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
’ Sun Belt
Sun Belt
The Sun Belt or Spanish Belt is a region of the United States generally considered to stretch across the South and Southwest . Another rough boundary of the region is the area south of the 36th parallel, north latitude. It is the largest region which the U.S government does not recognize officially...
. Nu-West had grown from the home-builder of the 1960's to the more diversified real estate company of the 1970's , and by 1980 Nu-West had become a diversified company with major interests in oil and gas and income properties.
Throughout the 1970's, Nu-West continued its tradition of growth and profitability. During the decade Nu-West's average annual growth in net income has been 49%. In 1979, despite record interest rates and spiralling costs, revenues and net income increased more than 50%, and assets passed the billion dollar mark and totalled $1.28 billion at year end. The financial growth was the result of Canadian land sales, U.S. real estate operations and the successful operations of Voyager Petroleums Ltd. During 1979 the wholly owned Voyager Petroleums increased production and reserves of oil and gas through an aggressive exploration program, and they also increased their acreage holdings substantially.
Highlights of Nu-West's 1979 real estate activities were the growth of the Phoenix operation and the expansion of commercial and industrial operations. Nu-West Development Corporation of Arizona recovered much of its former market position to become one of the largest residential builders in Phoenix. This company also became involved in the profitable condominium conversion market in several “Sunbelt” cities.
Nu-West ended the 1970's proud of their achievements to that point, and entered the 1980 with business goals that included the plan to increase their real estate activities, with emphasis on land and commercial development, and also the expansion of their oil and gas investment so that within five years it would employ approximately one-third of their assets. In 1980, seeking to increase the potential for for greater oil and gas revenues, Nu-West aggressively doubled Voyagers' 1979 budget for oil and gas exploration and development programs.
By 1981, just 12 years after going public in 1969, Nu-West evolved from being a poorly regarded Calgary builder to one having operations in five Canadian provinces
Provinces and territories of Canada
The provinces and territories of Canada combine to make up the world's second-largest country by area. There are ten provinces and three territories...
(British Columbia
British Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
, Alberta, Saskatchewan
Saskatchewan
Saskatchewan is a prairie province in Canada, which has an area of . Saskatchewan is bordered on the west by Alberta, on the north by the Northwest Territories, on the east by Manitoba, and on the south by the U.S. states of Montana and North Dakota....
, Manitoba
Manitoba
Manitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other...
, and Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
) and in ten U.S. states (Arizona
Arizona
Arizona ; is a state located in the southwestern region of the United States. It is also part of the western United States and the mountain west. The capital and largest city is Phoenix...
, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
, Colorado
Colorado
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...
, Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
, Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, Hawaii
Hawaii
Hawaii is the newest of the 50 U.S. states , and is the only U.S. state made up entirely of islands. It is the northernmost island group in Polynesia, occupying most of an archipelago in the central Pacific Ocean, southwest of the continental United States, southeast of Japan, and northeast of...
, Nevada
Nevada
Nevada is a state in the western, mountain west, and southwestern regions of the United States. With an area of and a population of about 2.7 million, it is the 7th-largest and 35th-most populous state. Over two-thirds of Nevada's people live in the Las Vegas metropolitan area, which contains its...
, New Mexico
New Mexico
New Mexico is a state located in the southwest and western regions of the United States. New Mexico is also usually considered one of the Mountain States. With a population density of 16 per square mile, New Mexico is the sixth-most sparsely inhabited U.S...
, Oklahoma
Oklahoma
Oklahoma is a state located in the South Central region of the United States of America. With an estimated 3,751,351 residents as of the 2010 census and a land area of 68,667 square miles , Oklahoma is the 28th most populous and 20th-largest state...
, and Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
).
Early 1980s
Things began to get tough in the early 1980s1980s
File:1980s decade montage.png|thumb|400px|From left, clockwise: The first Space Shuttle, Columbia, lifted off in 1981; American President Ronald Reagan and Soviet leader Mikhail Gorbachev eased tensions between the two superpowers, leading to the end of the Cold War; The Fall of the Berlin Wall in...
when the Canadian federal government
Government of Canada
The Government of Canada, formally Her Majesty's Government, is the system whereby the federation of Canada is administered by a common authority; in Canadian English, the term can mean either the collective set of institutions or specifically the Queen-in-Council...
brought in the National Energy Program
National Energy Program
The National Energy Program was an energy policy of the Government of Canada. It was created under the Liberal government of Prime Minister Pierre Trudeau by Minister of Energy Marc Lalonde in 1980, and administered by the Department of Energy, Mines and Resources.-Description:The NEP was...
(NEP), which didn't allow Albertans to sell oil
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
to the Canadian market at world prices. This policy decimated Alberta's Petroleum industry
Petroleum industry
The petroleum industry includes the global processes of exploration, extraction, refining, transporting , and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline...
. People left Alberta in droves and almost no one bought homes, with existing owners walking away from mortgages.
The negative effects of the NEP, combined with the North American-wide recession of the early 1980s that saw land values tumble, resulted in Nu-West, who was heavily leveraged with debt, losing its place of dominance in the industry.