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The Upside of a Down Economy: Two Businesses Doing it Right and Sharing Their Stories

Much has been written about the unsettled economy of 2009. But amid the gloom and doom the term “The Great Recession” was popularized by many in the media were some real success stories and accounts of companies that managed to buck the recession while positioning themselves for growth once the recovery takes hold.

Who are these companies, and, more importantly, which qualities contributed most to their success? Do successful companies, no matter size or market, share similar traits?

To find out, we looked at two very different uniform companies one a privately held family business, the other a major player that must answer to shareholders. Polar opposites in style and execution, the two share a common philosophical approach: namely, that running a successful company is less dependent on cyclical ups and downs and more dependent on strong core values, good leadership and solid relationships on both the customer and employee side.

Leadership skills can steer a company to better times and is what turns good companies into great ones. So, too, is being seen as trustworthy. Companies often thrive because of relationships built in the past and continually nurtured in the present. They also flourish because of products, and products and great leadership go hand in hand.

Yes, having deep pockets helps too, but even money cannot mask poor leadership, lousy customer service or bad employee relations forever.

So if there is a takeaway from 2009, it is that the Great Recession was not so great and powerful after all. Good leadership, a solid reputation and sound products trump a bad economic environment. That is the lesson of 2009 and a strategy that all businesses can apply.

Superior did not go unscathed by the challenges of last year. Near-record levels of unemployment and poor economic conditions across all sectors negatively impacted uniform sales for the 90-year-old company.

“No, the industry is not recession-proof, but it does typically lag behind the curve,” CEO Michael Benstock replies when asked about the long-held industry belief. “Our business is dependent on high employment, and therefore, as people are laid off jobs, there’s less demand for uniforms.”

No stranger to hard times SUG has survived and thrived despite several minor recessions and even the Great Depression the company struggled through two tough quarters in 2009 before finally bouncing back in the third.

The turnaround was accomplished in part by slashing jobs, reducing inventory and moving nonessential processes to the company’s lower-cost subsidiary, freeing up cash to use for other opportunities, including the recent acquisition of Blade Uniforms. Why make a major purchase during a recession? Benstock elaborates: “Superior is recognized as a premier name in many verticals including the restaurant/food service and retail employee ID markets. By acquiring Blade Uniforms, we are able to further penetrate these core markets and broaden the scope of our customer base. When the economy improves and current customers and prospects increase their staffing, our umbrella of brands will receive better recognition. Stronger brand recognition translates into larger market share.”

With no debt and a strong balance sheet going into the recession, Superior achieved an enviable flexibility, and it used this advantage to test unchartered waters. In 2008, SUG created a stir of sorts when it diversified into a completely different industry. Turning an in-house call center into a separate business, The Office Gurus grew out of the need a few years ago to find a lower-cost solution to a staffing shortage in SUG offices.

“Our initial approach in 2002 was to search out an outsourcing partner, but it was clear after serious evaluation and soul searching that creating and managing this ourselves was in fact one of our strongest core competencies,” explains Benstock. “Having had manufacturing operations and offices in captive near-shore and far-shore environments for over 25 years, we came to the conclusion that no outsider could do this as well as we could do this ourselves.”

Its timing was fortuitous. Other companies, too, needed ways to save money on administrative expenses. In 2007, SUG offered its product and expertise to others, thus finding an additional revenue stream. In so doing, SUG also found another opportunity to bring value and a strong return to shareholders. But it also found a way to deepen its relationship with its most significant asset: its customers.

Customer service takes a backseat in many industries, but not in the uniform marketplace. In an industry that lives or dies on the relationships it has with customers, Superior’s reputation is second to none. “Some of our customers have done business with us for over 50 years,” says Benstock. “They, like the rest, are the lifeblood of our organization and are important to our continued success.”

But exemplary service can only be achieved when a company’s employees are happy, no small feat given the circumstances in 2009. Benstock acknowledges the challenge: “The biggest hurdle is keeping the entire organization focused on getting even stronger. We have tried more than ever to be particularly sensitive to our employees and the pressures that they have at work and at home and their need to find balance in their lives during these very rough times.”

It is perhaps this last point which best tells the story of SUG in 2009. In an effort to boost team spirit and ensure customers remain the primary focus, Superior’s Human Resources Department hosted several feel-good and team-building events throughout the year to instill an even greater sense of camaraderie. The company re-emphasized its ongoing “C1 – Customer First, Every Time!” campaign, gleaning information from surveys and offering round tables, training sessions and loyalty sessions to its customers and associates.

Products are another component to the story. At its core, Superior is still a uniform company and will ultimately rise or fall on demand for its products. In 2009, amid a shaky marketplace, SUG attracted new business and strengthened client ties by rolling out a number of cutting-edge technology products that customers both wanted and needed. They were the right products at the right time, and helped Superior gain the competitive edge it desired.

The Swine Flu scare provides an example. As the H1N1 epidemic increased nationwide, Superior saw a steep increase in orders for precautionary apparel, both from long-time customers as well as from healthcare providers they had not done business with before the flu outbreak.

“Our reusable gowns reduce the risk of germ transference from one person to another and from one area of a hospital to another,” says Benstock. They’re also environmentally conscious, a plus for the socially conscious SUG. “Washable gowns are a much more responsible eco-choice than dumping contaminated disposable garments into the nation’s landfills.”

Superior’s line of moisture-management garments was met with much praise and fanfare, and the company has had to expand its color selection from four to nine styles to keep up with customer requests. And this year, it’ll introduce a collection of washable, eco-friendly tailored suiting as well as eco-friendly chef coats and pants.

These are all positive signs, for certain, but customers remain cautious. According to Benstock, they are purchasing replacement garments for existing employees at a lower rate than years past. “On the bright side though, customers are starting to see some resurgence in their business and are more ready than before to consider an update to their uniform program.”

And when they do, they’ll likely turn to Superior. It has a solid reputation, good stewardship and longstanding customers, all necessary elements in keeping customers and attracting new ones. Benstock says, “What better testimony for new accounts can you have than the relationships that have stood the test of time? We have learned that, to form great relationships, everyone involved must be engaged and feel that they are winning by being in the relationship. As clich as it sounds, Never give up’ and Never stop learning’ are the two most valuable lessons in a bad economy.”

For Superior, the strategy has been to build a more solid foundation for the future, so that when business does turn around, it will be uniquely positioned to take advantage of it. “History shows us that every economic downturn is followed by an upturn,” he notes. “In general, this is a great time to invest in our business, our products and our marketing and work on strengthening our company’s identity.”

The family-owned Charles River Apparel is a true business success story, having been profitable every year since its inception in 1983. Despite the tough economy, the company recently relocated its operations to Sharon, Mass., to accommodate its growing staff and to allow for further growth.

“While factories were closing, we went out and bought a building,” says Barry Lipsett, president of Charles River Apparel. “No one was doing that in December 2008, not in Massachusetts.”

No one was hiring either, yet somehow this leading manufacturer of active wear and uniforms increased staff by more than 40 percent at the end of last year, with the addition of 20 new employees covering virtually every department, including sales, production, embroidery, IT and customer service, and has plans for additional hires in 2010. “We are very fortunate to be experiencing growth and are proud to bring jobs back to the community,” says Lipsett.

CRA’s new headquarters is more than double the size of its previous facility, offering two football fields’ worth of warehouse space. “We moved 830,000 pieces without shutting down the old factory,” Lipsett proudly notes. The company also invested in technology, updating its computer and warehouse management systems, making it quicker and easier to find stock and track orders.

Just how it accomplished this amid the economic rumblings of last year speaks to the decision-making qualities of top management. “Turnaround was key; we were able to deliver merchandise when the customer needed it,” says Lipsett. That’s because while most companies were reducing inventories, CRA kept it at pre-recession levels. “We did run short on some styles, but for the most part, we had ample inventory.” Expenses were minimal as good sourcing in both China and the Philippines kept costs down.

Nor did the company shy away from innovation, injecting new ideas into several market spaces. CRA’s New Englander Rain Jacket was a runaway hit last year; the wind and waterproof New Englander is polyurethane bonded to a woven backing and is mesh-and-nylon lined with heat-sealed seams. Features include Velcro cuffs, zippered pockets and a hood and hem with shockcord drawstring.

On the uniform side of the business, Lipsett made sure that popular items in hard-to-find sizing options were also plentiful. CRA even expanded its work wear line, introducing several new items with great success. “Even the best-made work wear does wear out and needs to be repurchased on a fairly regular basis,” he quips.

Constructed to meet the demands of law enforcement, firefighter and rescue organizations, the men’s and women’s Allegiance work polo is an item that debuted in 2009. The durable, 100 percent cotton pique resists fading, wrinkling and shrinking and boasts a three-button placket, no roll collar with permanent stays and a reinforced dual-pen pocket on the sleeve. Other additions include an 80/20 cotton/poly guard work shirt with curl resistant denim collar and elbow patches, and a hi-vis windbreaker. Windproof and waterproof, the garment has elasticized cuffs, zippered pockets and, best of all, is compliant with Class 3 ANSI 107 standards.

Lipsett gives kudos to an award-winning in-house design team that incorporates the latest materials and technology into its designs to deliver a line that is notable for its appeal, versatility and long-lasting wearability. A consummate manager, he knows how to delegate.

“I’ve given Gina a bit more free reign to update the line,” referring to lead designer Gina Gaudet, who works with sales reps and management to gather feedback on customer tastes. “She’s brought a fresh approach and fashion-forward styling to our apparel, strengthening brand awareness and our position in the market.”

The year, of course, was not without its challenges, and Charles River Apparel, like everyone else, saw a decline in sales before finally breaking even with 2008 numbers in October 2009. But with no outstanding loans and a high credit limit, a new facility courtesy a sluggish real estate market, and a vast inventory of popular items, CRA positioned itself for an uptick in corporate orders once purchasing resumed.

It capitalized on other opportunities as well. As much of corporate America downsized, so did the company’s major competitors. It was a boon for CRA, who snatched up key seasoned pros and their expertise. Employees have always been an integral part of the equation an unrelated, extended family of sorts.

“It’s important to have consistency, to have the right employee in the right job,” says Lipsett. Much of the CRA staff has been with the company for more than five years; one sales rep has been there since the beginning. Sales reps call upon the same customers and have formed relationships that often transcend business hours. “They’ve developed friendships in many cases, and it’s not unusual for customers to call and ask a sales rep to dinner,” he says. And if you happen to need the customer service department, you’ll get a live person on the telephone. “Our customers relate to buying from a family business.”

Socially conscious, the company has always given back and does so in a number of big ways. Charles River Apparel is committed to supporting the community it works in and is nationally recognized for its philanthropic work on behalf of cancer research. Its “Be Pink Proud” line of active wear clothing was designed to support breast cancer research, with a portion of sales from the line donated to the Dana-Farber Cancer Institute and several other non-profit cancer research and support organizations. Charles River also donates thousands of jackets and pants each year to support charitable organizations, schools and athletic teams nationwide. Over the past 25 years, the company has received many regional awards and recognition of efforts in support of a variety of non-profit organizations and was named last year as a finalist in the Massachusetts Family Business of the Year competition.

Lipsett credits his company’s ability to survive to an inbred conservatism. “My father always reinvested back in the business and taught me not to drain the company’s resources,” he says about the senior Lipsett, Walter, who started the business in 1983. “If you take out too much, you’re unprepared for the lean years.” It was a lesson well learned.

Above story first appeared in MADE TO MEASURE Magazine, Spring & Summer 2010 issue. All rights reserved. Photos appear by special permission.

 

 

 

 
From left: Walter Lipsett, founder,
and Barry Lipsett, president
Charles River Apparel

 

 

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