16753 Mon, 08/10/2009 - 2:01pm
By Warren Shoulberg
That one of the most progressive and innovative companies in the home textiles industry should not only be based in Seattle—far, far away from the Southeast—but also be known for some of the most mundane products the industry produces—utility bedding—is rather improbable.
Yet not much about Pacific Coast Feather follows any traditional story lines and this year, as it celebrates its 125th anniversary, the company finds itself moving into new territory, all the while sticking to a corporate culture and strategy virtually unique in the industry.
Not bad for a company that did under $100,000 in annual sales its first year in America and that as recently as 25 years ago barely hit the $10 million mark.
Now on its fourth generation of Hanauer family ownership, PCF has weathered the usual growing pains that any family business endures but through a combination of strategic planning, personal tragedy and industry circumstances it finds itself the largest player in its category and, quite unusual for a family owned entity, run by non-family professional managers.
“We are collectively better than any one individual,” said Eric Moen, president and chief executive officer of the company, sitting in the modest company offices—it used to be a feather processing facility—on the south side of Seattle.
“The Hanauer family always viewed the business as a business, not a family business,” he said, referring to Jerry Hanauer, who ran the company for most of the past three decades and his son Nick who became chairman of the board following his father’s death in 2007. “Jerry said the company needed to be run professionally and that philosophy continues to this day.”
The management-by-committee structure—consisting of six mangers—evolved over time, partly by design but also by circumstances. “Joff (Hanauer, Jerry’s son who died from a car crash in the mid-1990s) would have been president and CEO, that was clear,” said Moen. “After his death, we asked ourselves ‘How do we do it?’
“We decided to see what we could do with the people we had. Jerry had already transitioned from running the company and Roy (Clothier) was running things.”
Moen said both Hanauer and Clothier supported the move to an executive committee format even if others didn’t. “Some of our outside advisors said it would never work.
“But it’s been a healthy dynamic. We have a lot of expertise on the executive committee,” he added.
Of course, the classic rap against management committees is that they debate every decision to death and never reach a conclusion. “Sure, teamwork is not as efficient,” said Fritz Krueger, senior vice president of marketing and a member of the committee, “But we feel it’s much more effective.
“The downside is that there’s no face of the company, but that fits our personality.”
Moen is clear that the benefits far outweigh any possible drawbacks. “There ain’t no paralysis here,” he said with emphasis. “We have a compulsion for closure.”
The management style manifests itself in several ways. The committee meets twice a week. “We don’t always reach agreement, but we always leave with a plan.”
Every new office hire meets with a member of the executive committee so they understand the company culture. Every day PCF sends an email to all employees telling them how many orders came in that day. Once a week an update containing summaries of what happened in each department is sent to those employees. And once a year there is an annual business meeting for employees reviewing the year and talking about operations. There are little touches too like a bulletin board in the main office containing pictures of every staffer in the facility, a real-life Facebook if you will. “We try to be very transparent, which is not typical of family businesses,” Moen said.
All of those details are fine, but it’s the overall financial health of the company that makes it all possible and Moen says PCF is profitable and without any debt, a combination not many companies in the industry possess. Last year it did $300 million in sales, 85 percent of which still comes from utility bedding products like pillows and comforters. It has 1,200 employees, eight major manufacturing plants and is the largest resource in its product classification as well as one of the ten largest home textiles suppliers in the country.
And while its overall volume has been essentially flat the past few years, that is not necessarily an accident. “We are engaged in the quality of our business and gaining market share” more so than just getting volume for volume’s sake, Moen said. “We want good business, not just any business.”
Nevertheless the company targets several specific areas where it feels it can turn to for growth. One is the international market, where it is already expanding into Asia, the Pacific and Europe “following our customers.”
A second is the institutional market, both domestically and overseas. Moen said PCF is the largest supplier of hospitality utility bedding in North America and that it gets “hundreds of thousands” of emails and calls from people who have slept on its products in hotels and want to purchase them for their homes.
Another vehicle for growth is the direct-to-consumer channel where PCF has been devoting much of its marketing and advertising dollars for the past few years. “We’re spending more on direct-to-consumer than we did eight or nine years ago when we were doing a lot of print advertising,” Kruger said.
Pointing to the Tempur-Pedic strategy as a model, he said, “Our direct effort drives a lot of business to our traditional retailers. Our retailers totally get that, they know it drives sales to them.”
There’s one more way the company is hoping to grow its business, Moen said. “There isn’t a major retailer out there who doesn’t know us, but there’s one big customer we don’t sell and that’s Walmart. But we’re working on it.”
PCF is also counting on its name to drive business. “Branding is a huge opportunity for growth,” said Kruger, pointing to PCF’s industry-standard point-of-sale and packaging. “But any old brand won’t do. The right brand can have a huge impact.”
Besides its own label, the company focuses its sheeting business around the Sealy brand and also holds the license for Calvin Klein utility bedding.
And while it doesn’t rule out acquisitions, Moen says don’t expect the company to go far afield from its current positioning. “We’re not a fashion resource.”
What Pacific Coast Feather is is a solid resource that knows its place and knows how to build on that to grow both its top and bottom lines.
“I’m very proud of this company and the team and what we’ve accomplished,” Moen said. “But it’s not about yesterday, it’s what are we going to do tomorrow. And we want to figure out the right way to do it.”