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Unbreakable in a cracked economy - Vancouver’s Peninsula Glass grows strong with 'slow-growth strategy'

Post Time:Mar 16,2009Classify:Company NewsView:393

They might have seemed like the opportunities of a lifetime: the chance for Vancouver window and glassmaker Tom Kemp to rapidly expand his business by becoming the primary supplier for major manufacturers.

All it would take was bank loan.

But Kemp was uneasy with putting all his eggs in one basket, and he was even more wary of debt. Both times, he walked away.

Those companies, Freightliner and Country Coach, are now being sucked under by the economic riptide while Kemp's company is still going strong. In fact, Battle Ground's Peninsula Glass Co. recently added a new division, acquiring Sanders Reproduction Glass in late 2008 even as the economy continued to go south.

Kemp purchased Peninsula Glass in 1998 and expanded the window and glass manufacturing company at a steady pace, seeing a 15 percent to 20 percent sales growth per year. The work force has grown from 12 to 22 this year.

"We chose the slow-growth strategy," Kemp, 59, said. "Most companies have a difficult time having their earnings finance their growth rate." Kemp said that a 15 percent to 20 percent growth rate — more comfortably 15 percent — can be achieved while still retaining sole ownership.

His business strategy is to find niche business opportunities in the glass industry and to make sure they are diversified as much as possible. Peninsula Glass now has three divisions: One Day Glass, Motion Windows and Sanders Reproduction Glass.

"We maintain a mix of retail and wholesale customers," he said. "We serve several different industries with a varied product offering, and we are sensitive not to become too dependent on any one customer."

His daughter Kristine, manager of One Day Glass, said the Internet is also important in diversifying where their product is sold.

"We sell one day in New York, the next day in Portland," she said.

Kemp's son Joe, who heads up Sanders, added that the company probably sells more product in New York than locally.

"New York City, no cars. So much easier to just have it show up," he said.

Planning ahead

Kemp believes it is important to have a solid business plan, stay focused and remain debt-free.

"People who don't find their focus and do well at that, they are going to have problems," he said. "Try hard to find things others can't — or won't — do well, and do that."

Having the flexibility to weather economic storms is also important, although that is easier done when you don't have debt hanging over your head.

"If you wait too long in an economic recession to take evasive action, you will be in trouble," Kemp said.

For his part, Kemp carries no debt. Not personal, not business.

"We own our home and cars and business outright," he said. "No loans. We pay all our (business) bills every Wednesday evening."

Kemp's son Jeff, sales manager of Motion Windows, said the company has been debt-free for about five years.

And how did Kemp achieve debt-free living?

"The secret's pretty easy. For 30 years, we've lived on less than what we made," he said. "It was a slow and steady reduction of debt. No 'A-ha!' moment."

Kemp has used automation to improve his business, increasing productivity and decreasing waste. His waterjet machine can cut a perfect circle of glass three to four times faster than doing it manually.

Cost control is ever-present.

"We've always believed that. Productivity and improvement are fundamental to what we do."

He has also worked to retain his staff, as craftsmanship is important in glass manufacturing. Kemp said his employees feel a level of ownership in the business.

"Everybody here is eligible for bonuses based on the performance of the company," he said. "There is no supervision." If an employee needs someone to do something, they simply go directly to that person and ask.

Looking ahead

The year 2008 saw a 15 percent increase in sales and an 18 percent rise in profit for Peninsula Glass. Kemp said he expects 2009 to be flat or even go down a bit.

"I think the economic outlook for the economy is decidedly unstable. Our efforts will continue to be low-cost improvements," he said. "We are not going to incur debt in this environment."

And on that point, Kemp says he's far from alone.

"The truth is that there are a large number of conservatively managed businesses that will continue to perform quite well," he said. "I do not want to imply that we are the only business that will successfully navigate through this recessionary period.

"There are others doing this as well. Lots of companies that are unsung heroes of the economy, the rudder of the ship."

Source: Columbian.comAuthor: shangyi

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