Value Added: "Keeping The Game Going"
By Thomas Heath
Hardwood Artisans, a Woodbridge-based maker of high-end furniture, has similar values. Hardwood has zero debt. It didn't overexpand. It reinvests its profits into the business and watches costs like a hawk. The company hires lots of friends and family, so there is little turnover.
Compensation is modest; a top bonus might reach $5,000. There is no health insurance. The co-founder, Greg Gloor, made $150,000 at his peak, a nice living but it won't get him entre into Great Falls or a place on Foxhall Road.
When Gloor decided to sell his half interest in the high-end furniture company, he didn't hire a Wall Street investment bank to fetch the highest dollar. He sold his share of the company for $50,000 to five long-time employees, even though the share was worth $700,000 on paper. And he paid them a bonus the previous year so they could afford the purchase.
Hardwood Artisans makes nice stuff. Their "craftsman style" furniture is simple but utilitarian, characterized by smooth lines and joints that eliminate the need for nails, screws and metal braces. The products are labor intensive, requiring precise measurements and finishings. They are expensive to make. An armoire can run to $6,000 and a bed to around $8,000. Custom-made projects for homes can cost more.
Hardwood Artisans' conservative financial approach has kept it alive while competitors such as Mastercraft and Scan, have closed.
"Nobody is out to get rich quick," said Lois Gloor, Greg's wife and a longtime employee. "We just like to do what we like doing and make it work. The last time there was a soft spot in the economy, five or six years ago, my husband and his partner didn't pay themselves. The important thing was to keep this game going."
Greg, 58, grew up in Pittsburgh in a neighborhood "where if you needed something done, you figured it out yourself."
A self-described "hippie wannabee" who dropped out of Drexel University's engineering program, Gloor started his company in a basement in Alexandria in the mid-1970s. He and partner Larry Spinks patterned their business after similar establishment in New York City.
They called it the Loftbed Store, and it was a shoestring operation. The company grossed $30,000 the first year making loftbeds, a staple in college dorms and similar to bunkbeds without the bottom bed. They sold for around $400 each. Greg paid himself $35 a week and Lois waitressed to make ends meet.
Business was good. The Loftbed Store increased revenues by 100 to 200 percent a year during their early days. It later expanded into other lines of furniture and now features hundreds of items in its catalog. It changed its name to Hardwood Artisans 10 years ago as it morphed from its college dorm image into an upscale custom furniture manufacturer. Its longest continual solid seller is a pedestal platform bed with headboard and nightstand. Price: $6,000 to $8,000, depending on size and wood.
To finance operations the company asks customers to put 50 percent down for furniture, which usually takes eight to 10 weeks for Hardwood Artisans to make. The down payment -- known as a float -- allows Hardwood Artisans to operate without going to banks for short-term loans. Insurance companies and other businesses are built on "float."
"We aren't having to borrow the money because we are getting it at zero interest from the customers," said Greg.
Gloor is an efficiency guru. He can tell you that the optimum backlog of orders for Harwood Artisans is 10 to 12 weeks, which gives him $1 million or so of orders waiting to be filled. That in turn allows him to buy more wood and parts in bulk, saving on costs. It also means he likely has four or five similar items to build instead of just one, which also saves on costs.
Statistics tell him it costs about $75 an hour to keep a furniture-maker -- known as a craftsman -- in the workshop. If he is building 10 pieces on a certain machine instead of two, he can save a couple of hundred dollars, which can be the difference between profitability and breaking even.
Gloor even knows if he advertises in The Washington Post Sunday Magazine 75 percent of the time -- not 74 or 76 percent -- he maximizes his return on investment. "We watch numbers pretty closely and we know our historical norms," said Gloor. "If we are outside one way or another, we ask ourselves why are we doing that."
The company grossed $6 million in 2007. That dropped to $5.7 million last year. Profits come to around two percent of gross revenues, and much of that is rolled back into the company for new equipment. The company gives generously to WETA, Washington's public radio station. (My wife works for WETA.)
Personnel is 60 percent of costs. Wood and parts are another 20 percent. The rest is rent, advertising, backoffice, utilities and fuel for the trucks.
Hardwood Artisans has three showrooms, including Alexandria, Rockville and Chantilly, and employs around 65. Gloor has allowed that number to dwindle due to attrition. There are 35 to 40 craftsmen, 15 sales people, five in administration and half a dozen deliverymen. The company owns three delivery trucks.
If you want to get rich, look elsewhere. Top craftsmen earn $20 an hour, with two weeks of vacation a year and a 401(k) employer match. They can boost than significantly with overtime when things get busy. Gloor dropped health care coverage as it became more expensive. But 20 people have been at Hardwood more than a dozen years.
Gloor said this market is his toughest ever. He said he is introducing lots of new products, including new lines of tables, chairs and living room pieces, to "see if we can find a sweet spot." Gloor is leaving the shop and walking the showroom floors, helping to close deals. Some jobs he is doing at cost in hopes of creating longtime, loyal customers.
"We are a small cork floating on a rough sea," said Gloor, who has reduced his pay to $60,000 a year although he remains general manager. "We aren't large enough to create trends, so we have to be alert to where the ball is heading and try to be there with regards to style, product and space."
The Gloors are building a $700,000 new home after tearing down the old one near Springfield Mall in Franconia. His children are grown and gone. He owns some other real estate and made a nice profit when he sold the land and building where the Woodbridge shop is located.
"I get up in the morning and I look forward to coming to work," he said. He drives to work in an eight-year-old Mazda Miata, which has a rip in its convertible top that he refuses to fix because of the cost.
My kind of guy.
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