Chuck and Matt Dean with their inspiration to Win The Economic War
Winning The Economic War
By Chuck Dean Jr.
(Editor’s Note: This article was written by Charles Dean Jr., chairman of Dean Hardwoods Inc., located in Leland, N.C. A regional homebuilders association invited Chuck Dean to write an article about his company’s heritage recently from which the following is excerpted.)
Dean Hardwoods’ biggest economic blessing is having century-old roots to before the federal government enacted income tax. That allowed my grandfather to save and invest more of his earnings than was possible after 1913 when the 16th Amendment to the U.S. Constitution was ratified.
His most rewarding professional investment was the purchase of a veneer and lumber mill for his four sons to operate. As the years passed, his sons and grandsons built a series of veneer and lumber mills across the country and into Central America, but untimely early death claimed three of the four sons. In 1967 a non-family employee investor and I had the opportunity to buy The Dean Company’s lumber related assets, charter Dean Hardwoods, Inc., and continue operations on the site of the agricultural box veneer plant grandfather bought in 1927. It was upgraded to a furniture veneer and lumber mill in Portsmouth, Va.
For two decades before moving to Wilmington, N.C., in 1983, we increased emphasis on boat-building lumber, initially with the staple: Philippine Mahogany. Then, with the advent of fiberglass, to offset its Clorox-bottle appearance, one of the most beautiful woods in the world became our hallmark: Teak.
Traditionally the mariner’s choice, the golden color of Teak warms and enhances interiors, and makes gorgeous decks and mouldings.
Although we continued to sell Swietenia Mahogany and other exotics to distribution wholesalers and furniture manufacturers through the economic ups and downs of the 80’s, boatbuilding enjoyed its biggest boom ever, and so did our sales. Teak sales grew in both lumber and in a very successful manufacturing program for mouldings, we started in 1985.
Seventeen-year Dean Hardwoods’ veteran Chadd Smith welcomes Pat Monroe to Dean Sales Team.
The bust came in 1990. The U.S. Congress passed a tax on luxury goods, aimed at boats and yachts, expensive automobiles, and jewelry. It was a classic case of the unintended consequences of misguided government action. Before it was repealed three years later, dozens of boat builders shut down for good, being unable to weather the economic storm. An estimated 100,000 Marine industry workers and others supplying glass, wood, metal, and every other boat building component, lost their jobs because of the tax.
While losing over 60 percent of our sales, and having to layoff 24 of our 36 people over the three years, we reinvented ourselves. Redirecting our efforts toward manufacturing hardwood flooring and mouldings from our large inventory of fine foreign and domestic hardwoods, we were blessed to have the capital structure to allow it. Flooring and mouldings grew and prospered, and today may be seen at the Met Life building in New York, Georgio Armani Stores worldwide, and other buildings and residences, mansions to modest homes.
Dean Hardwoods was not so much lucky as blessed by financial underpinnings to survive the tax that killed so many companies. Most of them failed because, instead of having the bulk of their earnings to reinvest to grow their businesses and save for the hard times, our government taxed and regulated them out of business.
Fortunately, in the case of Dean Hardwoods, Matthew “Matt” Dean, a great grandson of the founder of our heritage in fine hardwoods, is a stockholder, general manager, and became company president in 2010. It was in large measure because of his hard work and dedication, but importantly because of the financial foundation laid for us by previous generations of our family before government taxes and regulations grew out of control.
He presides over our 2006 $5 million investment building, a state-of-the-art foreign and domestic hardwood center in Leland, near Wilmington, N.C. We receive, kiln dry, manufacture, warehouse, and distribute our products from here. They include rough and dressed lumber and our custom made and trademarked “Prestige Hardwood Flooring” and “Precision Mouldings.” We manufacture the flooring and mouldings to the specifications of architects, designers, or builders. Additionally we added engineered flooring and super-green, strong, non-toxic, and fire retardant TimberSIL building products in the downturn to broaden our offerings. We sell from climatized warehousing on a factory direct basis, giving buyers a big cost advantage over typical distributor prices.
We, like a lot of businesses in the U.S., have a harder time planning what we need to do to be more successful because of the new rules and regulations we have to deal with concerning healthcare and taxes. Part of our success will depend on what happens in Washington.