Peoria, Ariz.—In 2006, OakCraft Inc., based here, was building between 800 and 900 cabinets a day. The company was running two shifts daily with “more employees than we could count,” recalled Danny Spitler, president and CEO. The high volume was taking a toll on product quality, but the demand was so high, business so brisk, and sales prices so low (roughly $170 per cabinet) that the manufacturer couldn’t stop the production line.
To make its products, OakCraft utilizes about 1 million board feet of lumber annually. Primary species include Maple, Alder, Cherry, Hickory, Oak, and European Beech.
“We weren’t happy about who we were or what we were doing at that point,” said Spitler, who founded OakCraft in 1983 with business partner LeRoy Zachek, now senior vice president of the company. “We were at a point where we really needed to catch our breath and reexamine our core values and our long-time focus on quality and consistency.”
The recession that hit just a couple of years later was completely out of Spitler’s control, of course, but it played well into OakCraft’s desire to revamp its go-to-market strategy. “We saw the recession as a chance to set new goals for ourselves, increase the average per-box selling price, and just do an overall better job at meeting customer needs,” said Spitler.
OakCraft specializes in framed cabinetry that’s used in mid- to high-end kitchens and bathrooms.
A couple of years later OakCraft found itself in one of the epicenters of the housing collapse as the Arizona new home market dropped by over 80 percent. “While we never expected the market collapse to be so deep or last so long, it did give us both the incentive and the opportunity to totally reevaluate all aspects of our company, and set a new direction and new goals for meeting our customers’ needs,” said Spitler.
As it happens, the 183-person OakCraft team – which includes COO Windy Mortensen (Zachek’s daughter) and seven other top managers – would have plenty of time to assess the firm’s situation and revamp its business approach. “The recession has dragged on a lot longer than we would have liked,” Spitler explained, “but it really did give us the chance to reinvent ourselves as a company and as a provider of top-quality products.”
Working from an 112,000-square-foot location that’s situated on 8.3 acres, and that runs on a single 6 a.m. – 2 p.m. shift daily, OakCraft specializes in framed cabinetry that’s used in mid-to-high-end kitchens and bathrooms. The company also manufactures entertainment centers and a lower volume of high-end, frameless products. “We’re in the early stages of developing our frameless product line,” Spitler said. “At this point it still represents a very small percentage of our market.
OakCraft has stepped up its manufacturing processes over the last few years. The company has effectively honed its plant layout, equipment, production, and quality control to accommodate its new business focus.
“LeRoy and I learned the hard way that there are few climates in the U.S. that are similar to Arizona; most places are a little more forgiving,” Spitler explained. “We operate in such a low humidity environment that it’s really critical that our suppliers be dead-on when it comes to their drying skills and getting us product that meets tight tolerances for drying.”
That attention to detail saves the OakCraft team a lot of grief when it comes to working with its homebuilder customers who purchase about 60 percent of the firm’s products. Roughly half of that product volume is installed by OakCraft’s own construction team, which was formed in early 2012. “We eliminated the middleman and have been able to form incredible relationships with builders as a result of that move,” said COO Windy Mortensen. “We can listen and focus on the builders’ needs and then meet them in a consistent, quality manner.”
OakCraft has also been able to boost its per-box price to about $300, up from that $170 number from 2006. “We’re now appealing to luxury remodelers and custom builders that are serving their own high-end customer niches,” continued Mortensen. “As a result, we’ve come out of the recession a completely different company than what went into it six years ago.”
Other key changes that have taken place over the last few years include the addition of a showroom – something OakCraft previously lacked – in-house designers, and a full-fledged sales team.
Other key changes that have taken place over the last few years include the addition of a showroom – something OakCraft previously lacked – in-house designers, and a full-fledged sales team. OakCraft has also stepped up its manufacturing processes over the last few years. Under the guidance of Dan Granger, operations manager, the company has effectively honed its plant layout, equipment, production, and quality control to accommodate its new business focus.
“The biggest change we’ve made involved taking a complete new look at our manufacturing procedures,” said Spitler, “and figuring out how to do everything faster, better, and more efficiently.”
A member of the Kitchen Cabinet Manufacturers Association, for which Spitler is a past board member, and the Home Builders Association of Central Arizona, OakCraft is also in touch with its community. For example, Mortensen on an annual basis serves as the leader for the annual “Kids’ Day at the Fair,” a joint effort between OakCraft, the Phoenix Kiwanis Club, and the Arizona State Fair.
“The state fair opens early on one of the days and allows us to bring in over 2,000 handicapped kids to enjoy a state fair experience (animal barns, petting zoo, kiddie rides, hot dog lunch, stage show with Ronald McDonald, etc.),” said Mortensen. “All of the prep work for the day (registration, publicity, contact with the schools, etc.) is handled by the OakCraft HR staff, and the Kiwanis Club of Phoenix recruits hundreds of volunteers to help with the day.”
Even though sales volume and employee numbers are down due to economic conditions, OakCraft is currently meeting its gross profit margin, and quality control goals. “Like everyone else we’re suffering in terms of top-line revenues,” said Spitler, who expects that challenge to slowly wane as the homebuilding market picks up and as the overall economic recession subsides. “Our goal is to get back into the $20 million revenue range (from a current $14 million) by adding new high-end dealers and homebuilders to our customer pipeline,” he said. “That’s where our focus will be centered over the next couple of years.”
Attention to detail saves the OakCraft team a lot of grief when it comes to working with its homebuilder customers who purchase about 60 percent of the firm’s products.