The Longaberger Company

views updated Jun 27 2018

The Longaberger Company

1500 East Main Street
Newark, Ohio 43055
U.S.A.
Telephone: (740) 322-5000
Fax: (740) 322-5240
Web site: http://www.longaberger.com

Private Company
Incorporated: 1973 as JW’s Handwoven Baskets
Employees: 8,000
Sales: $1 billion (2000)
NAIC: 321999 All Other Miscellaneous Wood Product Manufacturing; 327112 Vitreous China, Fine Earthenware, and Other Pottery Product Manufacturing

The Longaberger Company is the leading producer of handmade baskets in the United States. Once the sole product, these baskets made up about half the company’s sales in 2000. A network of 70,000 independent sales associates, nearly all of them women, peddles the company’s wares at in-home shows à la Mary Kay or Tupperware. The company’s staff is also predominantly female; company founder Dave Longaberger named his daughter Tami chief executive in 1998. Using mottoes such as “handmade to be handed down,“ the company has leveraged a strong sense of nostalgia and an appreciation for quality into a flourishing family legacy. The anachronistic company pays for hardly any advertising for its baskets made by hand by 2,500 non-unionized artisans. In the late 1990s, Forbes began listing Longaberger as one of the country’s 500 largest private firms; it has been regarded as perhaps Appalachian Ohio’s greatest corporate citizen.

Origins

Born in the Ohio town of Dresden, about an hour northeast of Columbus, founder David W. Longaberger coped with a severe speech impediment and epilepsy, both of which hindered his academic career. He failed first grade once and fifth grade twice, and finally finished high school at the age of 20 at the insistence of his mother. Upon graduation, Longaberger briefly tried door-to-door sales and factory work, then settled into an eight-year stint driving sales and delivery routes for local bakeries.

Longaberger went into business for himself in 1963, when he and his wife bought an ice cream shop in Dresden, a town of less than 2,000 people. Within five years, they were able to purchase a local grocery store. The two businesses—known as “Popeye’s,” in reference to Longaberger’s nickname—were so profitable that he began investigating other ventures in the early 1970s.

Longaberger took particular interest in the resurgent popularity of baskets as decorating elements. Longaberger’s family had a basket-weaving heritage dating back to 1896, when his paternal grandfather, John, moved to Dresden and started work at the Dresden Basket Factory. Until the mid-twentieth century, sturdy, utilitarian baskets such as those made at the small town plant were used to transport ceramics within pottery plants in the clay-rich region and by others for everyday chores like egg and vegetable gathering or shopping. Dave’s father, JW (for John Wendell), began hand weaving at the basket factory in the late 1910s, and was able to purchase the plant for $1,900 during the Great Depression. He renamed it the Ohio Ware Basket Company, and involved all of his twelve children in some aspect of the business. In the postwar era, Ohio Ware suffered insurmountable competition from modern containers made of cardboard and plastic. In 1955 JW Longaberger closed up shop and went to work at a local paper mill.

The patriarch kept up his craft in the intervening decades, however, selling some baskets for $1.50 and giving others as gifts. So in 1972, when his son asked him to make a few for retail sale, JW agreed. Dave Longaberger soon found that customers would pay $10 and more for the high-quality hardwood baskets. He launched his third business in 1973, calling it JW’s Handwoven Baskets for the man who died that spring at the age of 71. Dave hired two weavers to create each basket from thin strips of maple veneer. Promotional materials took pains to assert that “staples and glue are never used.” The baskets were fitted with leather hinges, copper rivets, and sometimes maple lids, lightly stained, then initialed and dated by the weaver in a process that remained essentially unchanged throughout the company’s history.

Home Sales Start in 1978

Despite his optimism and enterprise, a combination of sluggish retail sales and high startup costs found Longaberger deep in debt by the late 1970s. Instead of abandoning his product, he re-examined his sales method. He related the problem in a 1994 interview with Columbus CEO magazine: “I couldn’t tell our story in the shops. I had baskets in a couple of shops, and I would go back on Friday and Saturday nights to see how they were doing. I’d watch the expressions on customers’ faces as they picked up the baskets and think (about the sales clerk), ’Go on, tell them about Mom and Dad, tell them about the 12 kids, talk about the utilitarian purpose of the baskets, tell them about Dresden.’ Well, the clerks didn’t know all that, and they didn’t really care.” In 1978 a friend, Charlene Cuckovich, suggested direct sales. Selling the baskets at Tupperware-style home parties would give salespeople the opportunity to describe the craftsmanship and tradition represented by each basket, she reasoned. Home sales also focused the folksy pitch on the people who were most likely to become customers. Cuckovich became one of Longaberger’s first sales consultants.

The new marketing scheme vastly improved sales—within a year, Longaberger had 30 associates and 40 employees. In 1980 the entrepreneur agreed to purchase a veneer factory in nearby Hartville to accommodate his growing materials requirements. He even sold his thriving restaurant in order to raise the necessary capital. But before the purchasing agreement on the veneer factory was complete, the building, which was not insured for its replacement value, was destroyed by fire. Although Longaberger could have walked away from the deal, he instead sold his flourishing grocery store for $300,000, honored his commitment to purchase the property, and rebuilt.

Longaberger’s under-capitalized business continued to founder in the mid-1980s. Longaberger later said wryly that “banks almost put me out of business. The IRS [which negotiated a tax payment plan with the struggling entrepreneur] helped look for a way to keep me in.” His perseverance finally began to pay off in increasing sales in the late 1980s, with the company selling 1.4 million baskets in 1987 alone. In spite of economic recession, the company began to record growth rates of almost 40 percent annually. In 1989 Longaberger’s cash flow was strong enough to buy back his eatery, now known as the Longaberger Restaurant.

Exhibiting a combination of business acumen and altruism, Longaberger began revitalizing the city of Dresden in 1988. The combination of public and private amenities helped make the village both a destination for hundreds of thousands of tourists every year and a more desirable place to live and work. Community investments included the Longaberger Fitness Center, the Swimming Center, the Senior Citizens Center, and an addition to the local public high school. The company designed Dresden’s city landscaping—featuring Longaberger baskets, of course—maintained city parks, and even kept up some private property along the town’s Main Street. The World’s Largest Basket Park (certified by Guinness) featured a 23-foot-high hand-woven maple basket. A former bakery became the Longaberger Museum. Longaberger University, a nineteenth-century schoolhouse, housed corporate training and education programs. Outside the town, Longaberger Farms bred Angus cattle and advocated agricultural education. The company even transformed its weaving plant into a tourist destination, offering “a full mezzanine view of hundreds of crafts people weaving baskets with a centuries-old method,” according to a press release.

New Plant, New Products in 1990

In 1990 the company started production at a new plant and opened Popeye’s Soda Shop. The addition of fabric liners, wood accessories, and plastic basket inserts added to both the fashion appeal and functionality of the baskets. That year also saw the launch of Woven Traditions Pottery and Dinnerware, a line of earthenware that capitalized on the burgeoning popularity of the hand-crafted baskets. The ceramics featured an embossed pattern that mimicked a basket weave, and, although not hand thrown, appropriated a hand-crafted image with marketing pitches like the following: “traditional pottery-making methods used for centuries,” “our own secret [clay] recipe,” and “handmade quality.”

Upon achieving his own success, Longaberger made “stimulating a better quality of life for customers, associates, and employees” a corporate mission. He sought to manufacture quality products, adopt fair employment policies, support the community, and conserve the natural environment.

Company Perspectives:

We take great pride in our history of making high quality, handcrafted, American-made products. Admired for their craftsmanship, our products are created for the rigors of everyday use and truly made to last.

Longaberger’s magnanimity was evident on the shop floor. In 1994 Vice-President of Corporate Affairs Mike Bennett told Columbus CEO that “Dave has an unwritten rule that 25 percent of the day should be dedicated to having fun,” which keeps the atmosphere “very relaxed, very professional, [and] very creative.” LTV, Longaberger Television, was one outgrowth of that corporate culture. This 70-monitor, closed-circuit network featured company news, music videos, and employee interviews. Programming has even included the wedding of two employees who met at the plant. Employees work 35 hours a week, and their ample benefits plan includes tuition reimbursement. Some weavers, who were paid piece rates, made more than $40,000 per year in the early 1990s. Employees elected their front-line supervisors. Weavers seeking a new challenge or break in the routine could apply to transfer into corporate landscaping and construction crews, one of four local Longaberger restaurants, the company museum, or recreation facilities. In 1993 the company’s Weaver Request Program began offering a select few basket weavers the opportunity to travel around the country giving demonstrations of their craft at company sales meetings and events. The employee roll included Dave’s daughters, Tami Longaberger Kaido, president of marketing and sales, and Rachel Longaberger Schmidt, president of manufacturing and human resources, as well as seven of Dave’s 11 siblings.

By the early 1990s, Longaberger’s direct sales team numbered over 25,000 associates, mostly women, in all fifty states. The associates were also some of the company’s best customers: a press release noted that some owned more than 800 baskets. According to Opportunity, a quarterly company publication, sales associates move up within the organization by bringing new consultants into the group and meeting sales targets. As they progress through the levels of branch advisor, regional advisor, and finally sales director, they cultivate their own sales organizations comprising hundreds of sales associates. Along with the increasing responsibility came progressively greater rewards, with directors earning six figure incomes. Not surprisingly, Charlene Cuckovich became one of the company’s first sales directors over the course of her career with Longaberger.

The company’s environmental programs included selective harvesting of the maple trees that go into its baskets, the use of water-based stains and recyclable plastics, and the pursuit of relationships with like-minded partners. Longaberger also makes contributions to programs like the International Center for the Preservation of Wild Animals.

Longaberger’s philanthropy won both himself and the company national recognition, including the Direct Selling Association’s Vision for Tomorrow Award in 1990, the U.S. Department of the Interior’s Take Pride in America Award in 1991, Inc. magazine’s Socially Responsible Entrepreneur of the Year Award in 1992, and the Friend of Education Award and an honor from Childhelp USA in 1994. Longaberger was also named a Central Ohio Business Hall of Fame Laureate in 1994.

Dave Longaberger’s confidence in the nostalgia market led him to take the phrase “company town“ to a whole new level in 1994, when he announced plans to build Longaberger Village, an “educational theme park” just west of Dresden on a 625-acre campus. Longaberger Village’s first phase, Main Street, promised to evoke a “typical” Midwest town of the 1920s. Plans for the complex included a reproduction of the Longaberger home, a soda shop, drug store, and barbershop, as well as gift shops, specialty shops, overnight accommodations, and Longaberger Characters who will “spin tales of the old days.”

Dave Longaberger has boiled his company’s success down to 18 folksy “Principles of Management,” including “you must always be looking on the bank for help and assurance no matter who you are,” and “the past is the present; the present is the future.” His plans for the firm’s future included venturing into furniture manufacturing and real estate, as well as perpetuating the eccentric charm, financial prosperity, and civic responsibility exemplified by the Longaberger Company for the past two decades.

A Big New Basket in the Late 1990s

Longaberger sold seven million baskets in 1996 and took in revenues of $525 million. Sales rose to $611 million in 1997. The company began using a new sophisticated, computerized sales forecasting system in 1998 to help manage this growth. At the end of 1997, the company’s 500 employees moved into their new workplace, a $30 million, seven-story building designed as a replica of a genuine Longaberger basket. Its handles weighed 75 tons; their installation represented a considerable engineering challenge. “People told me, ’Dave, you can’t build that basket,’ “ said Dave Longaberger in The Wall Street Journal. “But I said, ’They can put a man on the moon and bring him back. Don’t tell me they can’t build a basket.’ “ The unique building gave Dresden something of a tourist attraction and brought Longaberger an untold amount of publicity.

Dave Longaberger, who had contracted cancer in July 1997, died on March 17, 1999. The company he had led, and its related stores, restaurants, and real estate firm, had transformed east-central Ohio. Most of Dresden’s 1,581 residents worked at one Longaberger enterprise or another. Before his death, Longaberger dictated a memoir that would became a number-one bestseller, thanks in part to the promotional efforts of the company’s 70,000 independent sales consultants. In July 1998, Tami Longaberger, a daughter of the founder, was named president and CEO of the company, while her younger sister Rachel remained president of the Longaberger Foundation.

Ninety-nine percent of Longaberger’s clients were white women, mostly from Ohio and neighboring states. In the late 1990s, realizing the potential of a vast new market, the company began a drive to hire sales associates among other ethnic groups, reported local American Cities journal Business First. Its designers began incorporating such elements as African Kente cloth into products. Even the mannequins at the new Longaberger Homestead attraction were updated. The push for diversity was important as Longaberger sought to establish new territory: in California, where the company had 1,200 sales associates, minorities comprised half the population. One expert felt that home sales would help Longaberger win minority customers, as it had Avon. The company’s U.S. heritage was also expected to appeal to immigrants.

Longaberger was also trying to bring more men into its sales force. It hoped its new $10 million golf course would help. However, the pool of male basket fanatics was relatively small. To appeal to the male buyer, Longaberger introduced functional baskets for shaving supplies and golf balls, etc.

Sales reached $850 million in 1999. The slowing economy prompted Longaberger to cut 400 jobs, five percent of its workforce, in April 2001. Lay offs for another 500 weavers and 300 support staff were announced in July.

Key Dates:

1896:: John Longaberger begins working at the Dresden Basket Factory.
1955:: J.W. Longaberger closes his own basket shop.
1973:: Dave Longaberger start JW’s Handwoven Baskets.
1978:: Longaberger begins direct sales.
1990:: Longaberger launches pottery plant.

The 40,000 baskets Longaberger’s Ohio weavers made every day accounted for half the company’s $1 billion in revenues for 2000. In May 2001, Longaberger was one of six firms given awards by the Rochester (New York) Institute of Technology and USA Today for manufacturing improvements. Three of the company’s weavers developed a system to reduce downtime by developing techniques to ensure a more efficient flow of materials to workstations.

Principal Competitors

Euromarket Designs Inc.; Pier 1 Imports, Inc.; Pottery Barn.

The Longaberger Company

views updated May 29 2018

The Longaberger Company

95 North Chestnut Street
Dresden, Ohio 43821-0073
U.S.A.
(614) 754-6300
Fax: (614) 754-2004

Private Company
Incorporated: 1973 as JW’s Handwoven Baskets
Employees: 5,000
Sales: $300 million (est.)
SICs: 2499 Wood Products Nee; 3269 Pottery Products Nec

In less than twenty-five years, the Longaberger Company has grown from a basket-making sideline into a midwestern family empire. The company was founded in 1973 with two basket weavers, and by the early 1990s, hundreds of employees hand-wove millions of baskets for sale by tens of thousands of sales representatives each year. At that time, Longaberger enterprises included a basket plant, a purebred Angus breeding farm, four restaurants, eight retail shops, and a pottery-making operation. Founder Dave Longaberger was also planning for Longaberger Village, an entertainment/resort complex, to become another in a growing line of extraordinary successes. Using mottoes such as “Handmade to be handed down,” the company has leveraged a strong sense of nostalgia and an appreciation for quality into a flourishing family legacy.

Longaberger went into business for himself in 1963, when he and his wife bought an ice cream shop in Dresden, a town of less than 2,000 people. Within five years, they were able to purchase a local grocery store. The two businesses—known as “Pop-eye’s,” in reference to Longaberger’s nickname—were so profitable that he began investigating other ventures in the early 1970s.

Longaberger took particular interest in the resurgent popularity of baskets as decorating elements. Longaberger’s family had a basket weaving heritage dating back to 1896, when his paternal grandfather, John, moved to Dresden and started work at the Dresden Basket Factory. Until the mid-twentieth century, sturdy, utilitarian baskets such as those made at the small town plant were used to transport ceramics within pottery plants in the clay-rich region and by others for everyday chores like egg and vegetable gathering or shopping. Dave’s father, JW (for John Wendell), began hand weaving at the basket factory in the late 1910s, and was able to purchase the plant for $1,900 during the Great Depression. He renamed it the Ohio Ware Basket Company, and involved all of his twelve children in some aspect of the business. In the postwar era, Ohio Ware suffered insurmountable competition from modern containers made of cardboard and plastic. In 1955 JW Longaberger closed up shop and went to work at a local paper mill.

Despite his optimism and enterprise, a combination of sluggish retail sales and high startup costs found Longaberger deep in debt by the late 1970s. Instead of abandoning his product, he re-examined his sales method. He related the problem in a 1994 interview with Columbus CEO magazine: “I couldn’t tell our story in the shops. I had baskets in a couple of shops, and I would go back on Friday and Saturday nights to see how they were doing. I’d watch the expressions on customers’ faces as they picked up the baskets and think (about the sales clerk), ‘Go on, tell them about Mom and Dad, tell them about the 12 kids, talk about the utilitarian purpose of the baskets, tell them about Dresden.’ Well, the clerks didn’t know all that, and they didn’t really care.” In 1978 a friend, Charlene Cuckovich, suggested direct sales. Selling the baskets at Tupperware-style home parties would give salespeople the opportunity to describe the craftsmanship and tradition represented by each basket, she reasoned. Home sales also focused the folksy pitch on the people who were most likely to become customers. Cuckovich became one of Longaberger’s first sales consultants.

The new marketing scheme vastly improved sales—within a year, Longaberger had thirty associates and forty employees. In 1980 the entrepreneur agreed to purchase a veneer factory in nearby Hartville to accommodate his growing materials requirements. He even sold his thriving restaurant in order to raise the necessary capital. But before the purchasing agreement on the veneer factory was complete, the building, which was not insured for its replacement value, was destroyed by fire. Although Longaberger could have walked away from the deal, he instead sold his flourishing grocery store for $300,000, honored his commitment to purchase the property, and rebuilt.

Longaberger’s under-capitalized business continued to founder in the mid-1980s. Longaberger later said wryly that “Banks almost put me out of business. The IRS [which negotiated a tax payment plan with the struggling entrepreneur] helped look for a way to keep me in.” His perseverance finally began to pay off in increasing sales in the late 1980s, with the company selling 1.4 million baskets in 1987 alone. In spite of economic recession, the company began to record growth rates of almost 40 percent annually. In 1989 Longaberger’s cash flow was strong enough to buy back his eatery, now known as the Longaberger Restaurant. In 1990 the company started production at a new plant and opened Popeye’s Soda Shop. The addition of fabric liners, wood accessories, and plastic basket inserts added to both the fashion appeal and functionality of the baskets. That year also saw the launch of Woven Traditions Pottery and Dinnerware, a line of earthenware that capitalized on the burgeoning popularity of the hand-crafted baskets. The ceramics featured an embossed pattern that mimicked a basket weave, and, although not hand thrown, appropriated a hand-crafted image with marketing pitches like the following: “traditional pottery-making methods used for centuries,” “our own secret [clay] recipe,” and “handmade quality.”

Longaberger’s magnanimity was evident on the shop floor. In 1994 Vice-President of Corporate Affairs Mike Bennett told Columbus CEO that “Dave has an unwritten rule that 25 percent of the day should be dedicated to having fun,” which keeps the atmosphere “very relaxed, very professional, [and] very creative.” LTV, Longaberger Television, is one outgrowth of that corporate culture. This 70-monitor, closed-circuit network features company news, music videos, and employee interviews. Programming has even included the wedding of two employees who met at the plant. Employees work 35 hours a week, and their ample benefits plan includes tuition reimbursement. Some weavers, who are paid piece rates, made more than $40,000 per year in the early 1990s. Employees elect their front line supervisors. Weavers seeking a new challenge or break in the routine can apply to transfer into corporate landscaping and construction crews, one of four local Longaberger restaurants, the company museum, or recreation facilities. In 1993 the company’s Weaver Request Program began offering a select few basket weavers the opportunity to travel around the country giving demonstrations of their craft at company sales meetings and events. The employee rolls include Dave’s daughters, Tami Longaberger Kaido, president of marketing and sales, and Rachel Longaberger Schmidt, president of manufacturing and human resources, as well as seven of Dave’s eleven siblings.

By the early 1990s, Longaberger’s direct sales team numbered over 25,000 associates, mostly women, in all fifty states. The associates are also some of the company’s best customers: a press release noted that some own more than 800 baskets.

According to Opportunity, a quarterly company publication, sales associates move up within the organization by bringing new consultants into the group and meeting sales targets. As they progress through the levels of branch advisor, regional advisor, and finally sales director, they cultivate their own sales organizations comprising hundreds of sales associates. Along with the increasing responsibility comes progressively greater rewards, with directors earning six figure incomes. Not surprisingly, Charlene Cuckovich became one of the company’s first sales directors over the course of her career with Longaberger.

Exhibiting a combination of business acumen and altruism, Longaberger began revitalizing Dresden in 1988. The combination of public and private amenities helped make the village both a destination for hundreds of thousands of tourists every year and a more desirable place to live and work. Community investments included the Longaberger Fitness Center, the Swimming Center, the Senior Citizens Center, and an addition to the local public high school. The company designed Dresden’s city landscaping—featuring Longaberger baskets, of course—maintained city parks, and even kept up some private property along the town’s Main Street. The World’s Largest Basket Park (certified by Guinness) featured a 23-foot-high hand-woven maple basket. A former bakery became the Longaberger Museum. Longaberger University, a nineteenth-century school, housed corporate training and education programs. Outside the town, Longaberger Farms bred Angus cattle and advocated agricultural education. The company even transformed its weaving plant into a tourist destination, offering “a full mezzanine view of hundreds of crafts people weaving baskets with a centuries-old method,” according to a Longaberger press release.

The company’s environmental programs include selective harvesting of the maple trees that go into its baskets, the use of water-based stains and recyclable plastics, and the pursuit of relationships with like-minded partners. Longaberger also makes contributions to programs like the International Center for the Preservation of Wild Animals.

Longaberger’s philanthropy has won him and the company national recognition, including the Direct Selling Association’s Vision for Tomorrow Award in 1990, the U.S. Department of the Interior’s Take Pride in America Award in 1991, Inc. magazine’s Socially Responsible Entrepreneur of the Year Award in 1992, and the Friend of Education Award and an honor from Childhelp USA in 1994. Longaberger was also named a Central Ohio Business Hall of Fame Laureate in 1994.

Dave Longaberger’s confidence in the nostalgia market led him to take the phrase “company town” to a whole new level in 1994, when he announced plans to build Longaberger Village, an “educational theme park” just west of Dresden on a 625-acre campus. Longaberger Village’s first phase, Main Street, promised to evoke a “typical” Midwest town of the 1920s. Plans for the complex included a reproduction of the Longaberger home, a soda shop, drug store, and barbershop, as well as gift shops, specialty shops, overnight accommodations, and Longaberger Characters who will “spin tales of the old days.”

Dave Longaberger has boiled his company’s success down to eighteen folksy “Principles of Management,” including “You must always be looking on the bank for help and assurance no matter who you are,” and “The past is the present; the present is the future.” His plans for the firm’s future included venturing into furniture manufacturing and real estate, as well as perpetuating the eccentric charm, financial prosperity, and civic responsibility exemplified by the Longaberger Company for the past two decades.