Dunn-Edwards Corporation

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Dunn-Edwards Corporation

4885 52nd Place
Los Angeles, California 90040
U.S.A.
Telephone: (323) 771-3330
Toll Free: (800) 733-3866
Fax: (323) 826-2650
Web site: http://www.dunned wards.com

Employee-Owned Company
Incorporated: 1925 as the Consolidated Wallpaper Corporation
Employees: 1,500
Sales: $250 million (2002)
NAIC: 325510 Paint and Coating Manufacturing

Dunn-Edwards Corporation is an employee-owned, Los Angeles-based manufacturer and distributor of paints and painting supplies (as well as wall coverings), catering mostly to painting contractors, who provide 90 percent of all sales. Dunn-Edwards supports the contractor customer in a variety of ways. It offers seminars that teach business techniques as well as offer training on how to best apply Dunn-Edwards paints. Because the product is made to certain specifications it often requires the use of certain application tools and procedures. In addition, the company provides paint contractors with customer marketing materials such as yard signs and door hangers. Dunn-Edwards also maintains a web site that provides customers with other business tools for developing job proposals, even a program to design professional-looking logos and letterhead. Geared more to the do-it-yourself customer, Dunn-Edwards stores offer many “how-to” brochures, providing useful hints about tackling a project and tips on how to determine the right kind of coating to use and the best way to apply it. Dunn-Edwards operates 75 stores in California, Arizona, Nevada, New Mexico, and Texas, with its paints formulated to withstand the climate of the Southwest. Dunn-Edwards coatings also are sold through independent dealerships. In addition to a manufacturing plant at its main Los Angeles complex, the company maintains production facilities in Tempe, Arizona, and Albuquerque, New Mexico. Dunn-Edwards is one of the few paint companies to employ a computer-automated manufacturing process, the “slurry system.” Rather than have workers add ingredients into paint mixing tanks by hand, this method relies on a dual computer network to ensure that a precise amount of raw materials are used, resulting in a highly consistent product. Dunn-Edwards paint has been used in many recognizable sites in the West and Southwest, including the famous HOLLYWOOD sign.

1925 Origins

According to an unproduced video script commissioned by the company, the Dunn of Dunn-Edwards was Frank “Buddy” Dunn, a wallpaper salesman who along with a colleague named Charles Smith founded what would become Dunn-Edwards in August 1925, when they bought a Los Angeles wallpaper business, the Garman and Woodson Company. Initially known as the Consolidated Wallpaper Corporation, the new company did not offer paint until 1927, prompting a change of name to Consolidated Wallpaper and Paint Corporation. The paints were supplied by Pittsburgh Plate Glass Company and sold under the Sunset Paint Company label. Consolidated later sold a paint under its own label, manufactured by the Premier Company. In 1930 Smith sold his interest in the business to a man named Robert Evans, the same year that Dunn contracted tuberculosis, forcing him to take a leave of absence. His wife, her father, and some employees struggled to keep the business afloat while he recovered, with the situation exacerbated by the effects of the Great Depression. The fortunes of the company reached their nadir in 1933 when sales plunged to just $57,000 and most of the workers gave up hope and quit to look for other employment. Both Dunn and the company he cofounded recovered, however, and in 1934 a second store was opened. Because an area competitor was doing business as the Consolidated Paint Company, the business changed its name to Dunn’s Inc. in 1936. It was also during this period that paint sales surpassed wallpaper sales, a reflection of a wider cultural change, and the company took steps to establish its own paint factory, which opened in 1937. At first it was just a one-man operation, with the equipment limited to two used stone mills, an agitator, and a cooking kettle.

A friend of Dunn, Arthur C. Edwards, who would one day contribute the second half of the Dunn-Edwards name, joined the company in 1938. Born in San Francisco in 1904, Edwards came from a family familiar with the paint business. Both his father and his mother’s brothers were contract painters. Edwards dropped out of school and went to work himself as a house painter at the age of 13. In his early 20s he left the contract business to work as a salesman for National Lead Co., which later became Dutch Boy Paints and was well known to major paint contractors. He became the firm’s leading salesman and transferred to southern California. He was 35 when he bought Robert Evans’s interest in Dunn’s Inc., which at this stage consisted of just two stores and a small factory. His impact was quickly felt, as a new emphasis was placed on producing quality paints at a fair price and offering superior customer service, an approach that over the course of the next few years won over many contract painters. Having worked as a painter, Edwards knew his customer and personally tested the company’s paints. Only when he was satisfied would a product be ready to market. In addition to selling a high-quality paint, he also believed in operating high-quality stores, offering excellent customer service by top-notch personnel. With the basic formula for success in place, annual sales topped $200,000 by the end of 1940. With America’s entry into World War II and the resulting shortage of raw materials, the company faced a new challenge, but because Dunn’s was contracted to produce government specification paint it was able to procure enough ingredients to meet the needs of its regular customers as well. Before the war was over, in 1944, the company changed its name once again, now becoming the Dunn-Edwards Corporation.

In the final year of the war, Dunn-Edwards generated more than $700,000 in revenues, but because of a postwar housing boom this level was quickly exceeded. A Glendale store was opened, and in 1947 the company topped the $1 million mark in sales. In the 1950s Dunn-Edwards adjusted to the introduction of water-based vinyl paints into the market by selling such products made for them by third-party manufacturers, before eventually manufacturing water vinyls itself. Also during this decade, the paint industry witnessed the introduction of rollers. After assigning someone to work for the Purdy Brush Company to learn both the roller and brush business, Dunn-Edwards was able to expand beyond paint and wallpaper to offer professional brushes and rollers and, later, spray equipment. During the first half of the 1950s the company also moved into the Arizona market. In 1955 annual revenues approached the $5 million level.

Changes at Mid-Century

Frank Dunn died suddenly in 1956 and several top employees were afforded a chance to purchase his stock from his widow. Only Edwards was interested, and on January 8, 1957, he became the sole owner of the business, although he continued to carry the Dunn name. In the second half of the 1950s, Dunn-Edwards opened several more stores: San Jose in 1956, Van Nuys in 1957, and San Diego in 1959. During this time, Edwards’s oldest son, Ken, a trained chemist, joined the company.

In the 1960s Dunn-Edwards became a family-owned company when 30 shares were distributed to each of the sons of Arthur Edwards. In addition to Ken Edwards, the second eldest child, Ed Edwards, who had been working as a junior high teacher, went to work for Dunn-Edwards in 1962. He was followed in 1968 by the youngest son, Jim Edwards, who joined the firm upon graduation from high school. By the middle of the 1960s the company was closing in on the $12 million mark in total revenues. During this period Dunn-Edwards moved into the northern California market with the opening of a store in Daly City in 1969. All told, the company enjoyed significant expansion during the 1960s, opening ten other stores, including Long Beach in 1961; Anaheim in 1962; Tucson, Arizona, in 1963; Phoenix, West Covina, Hollywood, and San Jose in 1965; another Tucson outlet in 1967; Colton in 1968; and May wood in 1969.

Company Perspectives:

The cornerstone of our business philosophy is a commitment to research, formulation technology, and unmatched service and support for each of our customer divisions.

As the 1970s began annual sales reached the $20 million level and growth in the balance sheet was further fueled by several more store openings: Tempe in 1974, Pasadena in 1975, Ventura in 1977, and Mission Hills in 1979. By the end of the decade revenues had soared past $60 million. Steady expansion continued into the 1980s, both from internal start-ups as well as by acquisition. New Dunn-Edwards store openings included: Laguna Hills in 1980; Bakersfield in 1981; Bell Road in 1983; Escondido, Cathedral City, and Huntington Beach in 1985; Modesto, Las Vegas, and El Cajon in 1986; Culver City and Salinas in 1987; Cotati in 1988; and Herperia in 1989. Dunn-Edwards moved into the markets of New Mexico and Texas in 1985 when it acquired the Wellborn Paint Manufacturing Company, based in Albuquerque, New Mexico, adding a dozen stores bearing the Wellborn name. As a result, Dunn-Edwards became a major regional paint company. In a matter of just ten years the company witnessed a tripling of its annual sales and employment topped 1,000. To support this constant growth over the years, the company’s main plant in Los Angeles expanded in stages, so that by the mid-1980s it covered some 100,000 square feet. Because all the surrounding land was occupied, the company focused on being efficient in order to increase productivity and began to computerize its manufacturing operations. Also during this decade, in 1988, 50 years after buying out Robert Evans, Art Edwards died at the age of 85 following a stroke and a long battle with cancer. Control of Dunn-Edwards was now entrusted to his three sons, Ken, Ed, and Jim. In addition to coping with a change at the top, the company faced regulatory challenges when California instituted tough volatile organic compounds (VOC) standards, forcing Dunn-Edwards and other paint companies doing business in the state to reformulate their products. In the ensuing years, Dunn-Edwards took the lead among small and regional paint manufacturers to fight against overly stringent VOC-reduction legislation at both the federal and state level. Nevertheless, Dunn-Edwards maintained a record for being an environmentally responsible manufacturer, often adhering to standards that exceeded federal, state, or local regulations. It became the first major paint company to voluntarily discontinue the use of the latex paint additive ethylene glycol, which was deemed a hazardous and toxic substance in some state and federal regulations. Dunn-Edwards replaced the ingredient with the more costly propylene glycol, a nontoxic substance that had FDA approval for use in foods, beverages, medicines, and cosmetics. Dunn-Edwards also became involved in the environmentally friendly recycled paint business. In 2000 it formed a joint venture with Amazon Environmental Inc. to sell recycled latex paint in the southwestern United States.

Dunn-Edwards chemists achieved other successes in the 1990s, developing new high-quality coatings, including Endurawall, Enduraseal, and W 704 Acri-Flat. The company started off the decade with annual sales in excess of $155 million. By the end of the 1990s revenues reached the vicinity of $300 million. Traditionally highly fragmented, the paint industry experienced a wave of consolidation as the century came to a close, prompting Dunn-Edwards to take a number of measures in order to maintain its position as a major, independent regional paint company.

2000 and Beyond

In 2000, after 75 years in business, the company for the first time hired an ad agency to help it grow the business and make Dunn-Edwards into a super regional brand. Also in that year, Dunn-Edwards joined Paint America, an alliance of regional coatings manufacturers of similar size. It had been founded a year earlier by Pennsylvania-based M.A. Bruder & Sons, makers of M.A.B. Paints, and San Carlos, California-based Kelly-Moore Paint Company The alliance helped them to transcend their size and maintain their independence while gaining a national presence and the ability to bid on national jobs. Under the agreement M.A.B. would provide paint for East Coast jobs and Kelly-Moore would supply the West Coast. Soon a mid western paint company joined the alliance, Diamond Vogel Paints, located in Orange City, Iowa. With the subsequent addition of Dunn-Edwards, which agreed to share business in the West with Kelly-Moore, the alliance consisted of 16 manufacturing facilities and 525 stores. National customers of the alliance could now obtain high-quality coatings, made to specifically suit a region’s environment, receive local support, and still enjoy the benefits of centralized ordering and bookkeeping.

In 2001 the ownership arrangement changed at Dunn-Edwards. The two younger sons of Arthur Edwards decided they wanted to sell their interest in the business. Ken Edwards, wanting to continue running the company, arranged for an employee stock ownership plan (ESOP) to raise the necessary amount of money, in excess of $100 million, needed to buy out the brothers. Almost 800 of the company’s 1,500 workers invested $12.3 million and the ESOP borrowed nearly $100 million to meet the price. According to company officials the change to employee ownership had an energizing effect, as evidenced by the spike in the number of money-saving ideas that were now suggested. With a troubled national economy and even worse business conditions in California having an adverse impact on the balance sheet, Dunn-Edwards nevertheless remained well positioned for the future. It had decades of tradition and expertise to draw on, as well as the positive spirit of a workforce that now owned the business.

Principal Subsidiaries

DE Brush and Roller Company; Wellborn Paint Manufacturing Company.

Principal Competitors

Benjamin Moore and Co.; Kelly-Moore Paint Company, Inc.; The Sherwin-Williams Company.

Key Dates:

1925:: The company is founded by Frank Dunn and Charles Smith as Consolidated Wallpaper Corporation.
1937:: The first paint manufacturing plant is opened.
1938:: Arthur C. Edwards becomes half-owner.
1957:: Edwards becomes sole owner following Dunn’s death.
1985:: Wellborn Paint Manufacturing Company is acquired.
2001:: An employee stock ownership plan is instituted.