DEMCO, Inc.

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DEMCO, Inc.

4810 Forest Run Road
Madison, Wisconsin 53704
U.S.A.
Telephone: (608) 241-1201
Toll Free: (800) 962-4463
Fax: (608) 241-1799
Web site: http://www.demco.com

Private Company
Incorporated: 1905
Employees: 130
Sales: $50 million (2002 est.)
NAIC: 322130 Paperboard Mills; 323118 Blankbook, Loose-leaf Binder and Device Manufacturing; 334310 Audio and Video Equipment Manufacturing

DEMCO, Inc. is a Madison, Wisconsin-based supplier of school and library products. The company offers supplies in a large number of different categories, including audiovisual (AV) equipment, AV packaging and supplies, boards and easels, computer supplies, facilities management, library supplies, office supplies, security, and signage. In addition to supplies, DEMCO sells many different kinds of children's, computer, library, office, and school furniture. The company also markets learning materials related to arts and crafts, library skills, and reading enrichment, among other areas. Finally, DEMCO's Periodicals Subscription Service makes subscription management easier for librarians by enabling them to search hundreds of titles in approximately 50 different subject classes ranging from archaeology, boating, and chemistry to economics, genealogy, and writing. This service also allows librarians to evaluate periodicals by grade level or recommending source.

A Quiet Start: 1905–67

DEMCO's roots stretch back to 1905, when the company was a division of the Democrat Printing Co. At that time, its primary role was printing forms for the University of Wisconsin-Madison Library. However, Norman D. "Smiley"

Bassett, who purchased DEMCO in 1931, has been credited as DEMCO's founding father.

Born in Minneapolis on Nicolet Island, Bassett graduated from the University of Wisconsin in 1914 after attending the Jefferson School in Charlottesville, Virginia, and New Jersey's Lawrenceville Preparatory School. He served in the U.S. Navy and Air Corps during World War I and then pursued a successful business career.

After buying the DEMCO division from Democrat Printing, Bassett established it as an independent enterprise, and the former parent company reorganized as Webcrafters, Inc. As DEMCO's president and chairman, Bassett led the company for many years. The April 29, 1980 issue of the Wisconsin State Journal explained that Bassett "built the firm from a small mail-order company in the early 1930s to one of the country's three leading national suppliers of materials to school, public, academic, private, and professional libraries."

Despite its ascension to a position of leadership within the library market, DEMCO historically kept a relatively low profile. The company's first four decades were marked by quiet, steady growth. However, a number of important developments occurred during the 1950s and 1960s. The first of these milestones came in 1950, when DEMCO moved to a facility located at 2120 Fordem Avenue in Madison, from which it would operate until the late 1980s.

In 1965, DEMCO obtained what eventually would grow into a 176,000-square-foot warehouse and production facility in DeForest, Wisconsin. In 1967, the company strengthened its international reach through an affiliation with Toronto, Ontario-based McLean Stationers. By forming Demco-Mclean Co., Ltd., DEMCO was able to offer library and school supply products throughout Canada.

Growth and Expansion: 1968–89

One of the most important developments in DEMCO's history occurred in 1968, when John E. Wall was named president. He would provide valuable leadership to the company for many years. Born in Chicago on April 17, 1926, Wall served in the U.S. Navy Air Corps during World War II and earned an undergraduate philosophy degree from Xavier University in 1950. His professional management career began that same year at Inland Steel Co. in Indiana Harbor, Indiana. Wall's career path then took him to a number of manufacturing firms in the Chicago area, including Cook Electric.

After joining DEMCO, Wall invigorated the company in a number of ways. Despite a burgeoning education market during the 1960s, DEMCO's growth had been sluggish because of a culture that downplayed risk taking. According to the May 1993 issue of In Business, Wall "wandered around, asked people questions, and gave them the go-ahead to try new ideas. He had employee luncheons and set up quarterly 'state-of-the-company' meetings with managers and year-end meetings with all employees. Another step Wall took early on was to set up a board of outside directors."

As the 1960s drew to a close, DEMCO was growing in sophistication. The company changed its name from Demco Library Supplies, Inc. to Demco Educational Corp. It offered approximately 3,000 different products—including some carrying the DEMCO brand name—to customers from several warehouse/office locations. These included sites in DeForest, Wisconsin; Fresno, California; and Hamden, Connecticut. In May 1969, DEMCO hired John Willert, a manager of marketing and business planning who President John Wall said would "serve as the company's 'nervous system' and provide for future company growth by identifying market and business opportunities and developing long-range strategy," according to the May 19, 1969 issue of the Capital Times.

When the 1970s arrived, DEMCO had truly secured its position as an industry leader. Processing as many as 800 orders each day, the company offered thousands of different items, including book cards, pockets, and jacket covers; devices for storage and filing; magazine binders; and close to 2,000 multimedia selections (slides, overheads, tapes, records, and filmstrips). DEMCO also offered a microfilm cataloging service to aid librarians with book circulation. The company, which employed approximately 75 to 80 workers, produced about half of its total product offerings at the facility in DeForest, Wisconsin.

The 1970s also were a time of considerable change at DEMCO. In 1972, Norman Bassett retired as chairman, and the company became a wholly owned subsidiary of Menasha, Wisconsin-based George Banta Co., Inc., one of the nation's leading printers of educational materials. DEMCO's sales for fiscal year 1971 totaled $5.8 million, while the larger Banta had recorded sales of nearly $40 million in the first three quarters of calendar year 1971.

In August 1972, DEMCO announced that construction was underway on a 37,000-square-foot addition to its 50,000-square-foot DeForest facility. The new space was intended to provide more warehouse and shipping capacity. Completed in 1973 at a cost of $250,000, the finished structure included new shipping and receiving docks, as well as space for storing finished products and assembling furniture. It also was in 1972 that DEMCO's sales reached record levels, driven by a product offering that had grown to include some 25,000 items. With 160 employees, DEMCO had extended its market reach to include all 50 states and 20 foreign countries.

DEMCO furthered its expansion in 1973 by acquiring Paramus, New Jersey-based American Library and Educational Services Co. (Alesco). With annual sales of $6 million and 150 employees, Alesco was a distributor of periodicals, hard cover books, and other instructional materials that mainly served elementary and secondary schools, according to the October 1, 1973 issue of the Milwaukee Journal. Alesco was founded in 1961 as the Missionary Society of St. Paul.

An important development occurred in 1978, when an Alabama firm offered to buy DEMCO from Banta. Along with William Erickson, vice-president of operations; Greg Larson, vice-president of marketing; and Lawrence Sobyak, vice-president of finance, President John Wall made a successful counteroffer and purchased DEMCO. However, significant challenges remained. These included a loan that carried an interest rate of 25 percent, as well as a debt-to-equity ratio of 11 to 1. DEMCO's Alesco subsidiary also was struggling financially. In the May 1993 issue of In Business, Wall said: "There were 24 people at the closing downtown, including all the vice-presidents from Banta, and they were saying, sotto voce, down at the end of the table, 'They'll never make it. They'll go bankrupt in six months.' " Although the buyout put a strain on DEMCO's resources until the mid-to late 1980s, Wall and his executive team were successful in keeping the company afloat and guiding it to more prosperous times.

In 1980, DEMCO lost its founding father when Norman D. Bassett died in April at the age of 89. Bassett left a charitable gift totaling $4.5 million, which was dispersed to a number of different organizations. At the time, this was the largest charitable contribution in Madison's history.

As the 1980s progressed, DEMCO continued to find success. In 1987, the company's warehouse in DeForest under-went another expansion, increasing in size to 133,000 square feet. The facility stocked approximately 25,000 different items worth more than $4 million. The following year, sales reached levels of more than $30 million—fueled by annual growth of approximately 15 to 18 percent—and the company's employee base numbered almost 250. By this time, about 35 percent of DEMCO's sales were attributable to schools. Another 20 percent of sales came from the library market, while colleges and universities represented 18 percent. The remainder of DEMCO's revenues came from businesses and other specialized markets. While the company still manufactured some of its own branded products, it mainly purchased items from other manufacturers and repackaged them under the DEMCO name.

Company Perspectives:

For nearly a century, DEMCO has been serving the needs of America's libraries and schools. With a broad product offering of over 20,000 items including thousands of unique or hard-to-find supplies, furniture, and equipment, DEMCO offers more of what librarians need every day.

It also was in 1988 that DEMCO was preparing to relocate its headquarters from the location on Fordem Avenue to a new, two-story, 42,000-square-foot facility at Forest Run and Hayes Roads. DEMCO was committed to staying in Madison and to remaining independent. As John Wall explained in the July 13, 1988 issue of the Capital Times: "I hope to do what we are doing a little better each year. That's my philosophy. Selling the business and taking the money would not be good for the company's viability. Nor is going public. I like the ability to focus on the long term rather than quarterly updates for the shareholders." Continuing, Wall praised DEMCO's workforce, stating: "I can't stress enough about the quality of our workers. What they say about the Wisconsin work ethic is true. We try to keep everyone happy. We have profit-sharing and supervisors meet monthly with their staffs. Also, my door is always open."

In March 1989, DEMCO announced that Greg M. Larson was its new president. With Larson's appointment, Wall became the company's chairman and CEO. Larson, who had served DEMCO for five years as vice-president of marketing, earned an undergraduate business degree from the University of Wisconsin-Whitewater in 1972, followed by an MBA from the University of Wisconsin-Milwaukee in 1981.

Preparing for a Second Century: 1990–2003

In 1993, DEMCO expanded internationally by acquiring Library Furnishing Consultants, a British company that supplied shelving and other furniture items to libraries. It was around this time that the company made a decision to move its computer operations from an old Groupe Bell mainframe to a system comprised of IBM AS/400s and 40 PC terminals devoted exclusively to its customer service application. By 1996, DEMCO's computer system also included some 200 traditional PCs that employees used to access productivity software like word processing and spreadsheet applications.

While DEMCO once developed all of its software in-house, after moving to the new computer system the company purchased a number of software applications from other vendors to handle many traditional business functions, including inventory and payroll. These applications included a database program called Showcase Vista that enabled DEMCO to perform sophisticated analysis of its marketing initiatives. Following the adoption of Showcase Vista, the response rate to DEMCO's catalog mailings doubled. Plans also were made to enter more specialized niche markets, such as legal libraries, assisted by the ability to quickly analyze product offerings and adapt to customer feedback.

Despite these third-party software purchases, DEMCO continued to write its own customer service software, given the importance it placed on customer relationships. The application DEMCO developed for its new computer environment had a positive impact on the firm. Prior to its creation, customer service functions were split among different employees and systems. The new program enabled any employee to address virtually every concern a customer had, from order processing and accounts receivable to product returns. The amount of time required to fulfill orders fell significantly, from as many as four days to only one day.

In 1997, DEMCO strengthened its audio book program when it found that libraries were doubling or tripling their budgets for such media. The company partnered with Rezound Media, Inc., an audio book rental company, to offer its 13,000 library customers some 300 titles via a biannual, 24-page catalog. While the titles offered were mainly abridgements, some unabridged audio books were also included.

As the 1990s came to a close, DEMCO had evolved considerably. The company's DeForest warehouse had grown to occupy 176,000 square feet, and its main catalog spanned 900 pages. Indeed, an article in the January 10, 1999 issue of the Wisconsin State Journal revealed that DEMCO's offerings included "items such as steel book supports in dragon and giraffe designs, eight-headset student listening centers, carpets depicting the four seasons, whale-shaped lounging chairs, and curriculum supplements with posters, games, costumes and maps on subjects like ancient Egypt and colonial America." DEMCO's customers included such prestigious institutions as the Library of Congress, and its employee base numbered 344.

Sales were expected to exceed $60 million in 1998—a double-digit jump from the previous year. That year, Ed Muir was appointed as DEMCO's president. While he was new, his philosophy mirrored the culture that Chairman John Wall had done much to shape over the years. "We know who our customers are and we service them well," he remarked in the January 10, 1999 issue of the Wisconsin State Journal. "We've not tried to be who we aren't."

Key Dates:

1905:: DEMCO is established as a division of the Democrat Printing Co.
1931:: Norman D. "Smiley" Bassett purchases DEMCO.
1965:: A warehouse and production facility is established in DeForest, Wisconsin.
1968:: John E. Wall is named president.
1971:: Sales reach $5.8 million.
1972:: Norman Bassett retires as chairman, and DEMCO becomes a wholly owned subsidiary of Menasha, Wisconsin-based George Banta Co., Inc.
1978:: President John Wall leads a successful leveraged buyout of DEMCO.
1980:: Norman Bassett dies at the age of 89.
1989:: Greg M. Larson is named president, and John Wall becomes chairman and CEO.
1993:: DEMCO expands internationally by acquiring Library Furnishing Consultants, a British company that supplies shelving and other furniture items to libraries.
1998:: Ed Muir is appointed as DEMCO's president.
2001:: Bill Stroner is named president of DEMCO.
2003:: DEMCO acquires Gaylord Brothers' library supplies and furniture division, as well as the Gaylord brand name.

By the early 2000s, sales had declined slightly from levels seen in the late 1990s. However, DEMCO was still a strong company. This was especially true considering the weak economic climate that negatively impacted library and school budgets. By 2003, sales totaled approximately $50 million, and employees numbered 130. In June of that year, DEMCO acquired Gaylord Brothers' library supplies and furniture division, as well as the Gaylord brand name. The acquisition strengthened the foothold DEMCO had established on the library market during nearly 100 years of operation. Led by President Bill Stroner, who was appointed in July 2001, DEMCO appeared to be positioned for success in a second century of operations.