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January 25, 2012

Window maker exec on how her business weathers bad economy

I feel compelled to confess that I did not have very high expectations when I walked into the Rochester Area Builders meeting last night to cover the president of Marvin Windows talk about the economy.

However, I quickly upgraded my attitude as Susan Marvin began her engaging and interesting presentation.

Here's part of what I wrote for today's paper. Thanks to Mike Pruett of MLT for the pics.

People, community and commitment are the basic building blocks to create a foundation for a business to weather any economic storm and even grow during tough times.

DSC_0663Susan Marvin, president of the popular and successful Marvin Windows and Doors of Warroad, Minn, shared her 100-year-old, family-owned company's philosophy at the Rochester Area Builders annual meeting Tuesday night.

"We serve all of our stakeholders — our employees, our customers and the community," she told the attentive crowd of more than 200 at the Rochester International Events Center.

Marvin and her straightforward approach to business and opinions on the economy hit the national stage in the fall, when the New York Times wrote about her and the international window-making company based in a small Minnesota town of just 1,700 people.

The story generated an "incredible response" across the country and soon Marvin was appearing on CNN, Bloomberg Television and even President Obama discussing the window-making company during a speech.

"It is a story people were hungry to hear," she said.

While she describes a simple business approach, Marvin acknowledges that is not easy one.

"The last few years have been very tough. The economy went into recession and the home building industry went into a depression, one deeper than the Great Depression, with unemployment in our industry hitting 30 percent at one point," she said.

While her family's company was in a very strong position with money on hand and no debt when the worst of the home construction slump started in 2009, she and her siblings realized they had to make some changes.

"We realized immediately that we had to do everything differently," she said.
DSC_0670
The Marvin family's first decision was a key one. The company would not cut any employees.

"While a layoff would have been easier, the community would have been devastated," she told the crowd. "We kept the people, but cut everything else — wages, bonuses, travel reimbursements, 401(k)s — everything that didn't contribute to the bottom line."

Marvin Windows employs about 4,300 people, 2,000 of whom work in the small northern Minnesota town of Warroad, where her grandfather founded a lumber yard in 1904.

The town and the company are intertwined. In fact, her father originally turned the family lumberyard to making windows during World War II to help create jobs for returning GIs.

"The strength of the company is the community. It is … an incredible relationship," Marvin said.

However, cutting expenses to the bone to keep from letting workers go was not easy.

"It was a team effort, though not everyone liked it. But they were willing to do that rather than see their neighbor lose their job," she said.

Keeping the workforce intact was not just good for Warroad. The Marvins see it as good business.

"Retention of talent is key. Experience matters," she said.

Comments

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"While a layoff would have been easier, the community would have been devastated," she told the crowd. "We kept the people, but cut everything else — wages, bonuses, travel reimbursements, 401(k)s — everything that didn't contribute to the bottom line."

The key is that EVERYONE must make sacrifices. EVERYONE, including the CEO and board members must be part of the wage cutting, etc. Far, far too often companies expect the bottom tier workers to make the sacrifices while the upper management does nothing but give themselves bonuses. (see for example, Hormel in the 1980s). Kudos to Marvins for doing it right.

It also helps if your industry gets a boost from the Federal Gov. in the form of $1500+ credits for individuals using your product. Remember "Home Improvement Energy Credits"? I think everything else she says is nice and all but she benefited greatly, and maybe unfairly, from the Stimulus.

Steve- you should have been there to listen to her before passing judgement. She was very adamant that she was against government stimulus for any industry because someone along the line loses out.
Being a supplier in the hardest hit industry in the recession and being able to manage your company well enough to not lay anyone off while continuing to invest money in R&D is pretty amazing in my book.

Sorry Jeff, I was not there and I don't mean to begrudge her accomplishment in the way the company was managed thru these turbulent times. I just think that is is a disservice to the readers not to mention that her industry, namely Windows, Doors, and Insulation, received a $5,000,000,000 boost from the Stimulus. The fact that she was adamantly against the government stimulus while benefiting greatly from it is kind of ridiculous. (IMO) As far as the "hardest hit industry in the recession;" it was also one of the most greatly inflated industries before the recession and thus fell the hardest. aka "The Housing Bubble"

The housing bubble bursting drove their business down below bubble numbers I'm sure.

Actually Marvin windows did not do well with the stimulus. Think vinyl replacement as far as the stimulus money in windows. Sad part is that some of the worst manufactured and warranted windows in the country benefited. Natural selection would have befit many of those who benefitted.

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