Part I of II

The Origin Story of Ray Loewen & The Loewen Group

The recent movie “The Burial” is an Oliver Stone-style retelling of the tale of the demise of Ray Loewen and the “death care provider,” The Loewen Group. The movie tells the core of the story of the courtroom drama and how a US jury awarded a small-time funeral operator, who was out an estimated US$8m, with a whopping judgment of US$500 million.

Ray Loewen is vilified in the movie—it makes for a better storyline. But who is Ray Loewen? Here are some extracts from my interview with Ray Loewen on September 16, 2005. The full transcript was published in Richard J. Goossen, The Christian Entrepreneur: Insights from the Marketplace.

RG: Was your educational experience (to whatever extent) helpful? If so, in which way?

RL: My formal education did not help very much I started helping my father in his ambulance and funeral home business [in Steinbach, MB] at a very young age. As a result of this involvement with my father, I missed a lot of high school. Chasing down the highway at age 13 in an ambulance was a lot more exciting than high school. These types of experiences also helped me grow up quickly. One of my most memorable childhood experiences was driving an accident victim back to my father's funeral home in a serious prairie winter white-out situation at age 15. I have often wondered why my father had that much confidence in me to allow me to drive the ambulance in those conditions. I didn't even have my driver's license at that time.

RG: What is the story behind The Loewen Group?

RL: With respect to the early years, my brother and I bought my father's funeral home for $56,000 in 1963. I was 23 years old at that time. I worked very hard to build up that business and put it into a solid economic position. I then sold my interest to my brother and purchased a beautiful funeral home in Fort Frances, ON from Rusty R.V. Green in 1967. That really gave me confidence in my ability and gave me a great financial start on my own. I also built two apartment buildings in Fort Frances. This gave me a good beginning in development and construction. In 1969 I purchased a larger funeral home business in New Westminster, BC and moved my family to BC. I bought a number of additional funeral homes in the following years and continued real estate development on a limited basis.

Between 1979 and 1981 I became one of the biggest builders and developers in the Greater Vancouver area. My development activities came to an abrupt end with interest rates rising from 18% to 26% as a result of the commitments of the industrial world to bring inflation down to 1 to 2% annually. I then began to focus on building a large funeral home company called "The Loewen Group, Inc."

I had slowly been accumulating a number of funeral homes during my political years and my Loewen Development Corp. years. After the excitement of my property development years I was really not very interested in funeral homes. BC was in a real estate recession for quite a few years after the 1981 real estate bust, however, and I was open to new opportunities. Very unexpectedly, people started to phone me and wanted to sell me their funeral homes. Because of limited other opportunities, I reluctantly began to pay attention to these requests.

In 1984 my funeral home company had $4 million in revenue. At that time the Royal Bank of Canada started to restrict credit and therefore we went to a Class B bank called the Canadian Commercial Bank. This change allowed us to continue our company's growth I kept buying funeral homes until one day the Canadian Commercial Bank went into receivership and our company's $10 million loan was called. Because the banking community was still in an inflation fighting mode and continued to restrict credit we had no way to pay off the receivers.

Therefore, out of necessity we put together a $10 million subordinated debenture, coupled with a $30 million acquisition line of credit from Royal Trust, to both pay off the receiver and also continue our acquisition strategy. A year later we went public officially on the Toronto Stock Exchange with a small public offering of approximately $4 million.

RG: Where did the idea for consolidation in the industry arise?

RL: It is said that for any industry or profession to mature and become fully accepted by society it must be economically rationalized. I realized that the time for funeral home consolidation had arrived. We had a winning formula. I understood the social, non-monetary needs of third generation funeral home owners who wanted to retire with dignity in their own communities and at the same time needed to do their succession planning. I also understood that few sons and daughters wanted to be saddled with the same responsibilities of their fathers and grandfathers in the funeral home business.

RG: What was the reputation of The Loewen Group?

RL: The Loewen Group quickly gained a reputation for integrity, for taking care of the reputation needs of the selling family, and improving the services that the funeral home provided. This included a serious upgrading of facilities across Canada. One day a reporter came to see me and wanted to do a story. She tried to suggest that the public was better served if funeral homes remained individually and locally owned-often referred to as "mom and pop" businesses. I enjoyed telling her that The Loewen Group was still a mom and pop operation and introduced her to my wife, Anne, who was in the office next to mine and was responsible for upgrading and updating dozens of funeral homes from Port Alberni to Charlottetown, PEI.

The Loewen Group's reputation grew rapidly in the industry and soon funeral directors in the US were asking us to come and help them with their succession needs. After considerable deliberation and due diligence we began to entertain the possibility of expanding to the US. One day I received a call from Dan Whitehurst of Fresno, CA. Dan had just retired as the youngest mayor of a major US city. His father who was the owner of a large, very highly respected business in Fresno and surrounding communities was getting on in years and was going into the hospital for a bypass operation. The family felt that it would be best to do their succession planning before he had his operation. I began to feel that the door to the US was wide open for us.

RG: What was the pre-Mississippi peak of The Loewen Group?

RL: We continued to grow exponentially. By the time we "hit the wall" in Mississippi our revenue was well in excess of US$1 billion. Our earnings had compounded for 8 years at 30% on a fully-diluted basis-and our stock had gone up 20 fold. The Loewen Group had truly become a darling North American growth story. By 1998 we had approximately $3 billion in revenue and 16,000 employees. We also had a market capitalization of $2 billion and were listed on both the New York Stock Exchange and the NASDAQ Exchange in the US, as well as the Toronto and Montreal Stock Exchanges in Canada.