AMANDA MORRISON / NNY Business
Mark Thompson, vice president of Jefferson Concrete Corp., stands inside a culvert being developed for a north country client.
Many north country business leaders face the same challenges during a fluctuating economy, regardless of the size of their operations. Some of these challenges include changes in consumer spending, increased operating costs, expanded regulations and a growth of competition in the marketplace.
One key strategy among several business leaders is diversification as a form of business development. Some modify existing products, while others also add new products to their lines. This type of strategy has allowed businesses to increase sales to existing customers while at the same time, enter new markets.
Another key strategy of north country business leaders is investment in their workforce, such as advanced training, enhanced benefits and, in some cases, the opportunity to eventually buy into the company.
We visited three north country businesses for some examples of strategies leaders have employed that have proved beneficial during tough economic times. This is their story.
Jefferson Concrete Corp., Watertown
The demand for infrastructure work in the north country started to decline when the economy took a downward turn in 2008, but diversifying its product line helped one Watertown company maintain and grow its operations.
“It’s not been an easy seven or eight years in this business,” said Mark W. Thompson, vice president of Jefferson Concrete Corp., Murrock Circle. “It’s been ugly. We’ve never worked harder since 2008.”
The key has been to diversify, and at the same time, continue to treat all customers with the same amount of attention, he said.
“We survive on a lot of small work, combined with the larger contracts,” he said. “I don’t care what the cost of the project, it’s still important.”
The company may be working on box beams for major bridge projects (such as a recent 76-foot span for a state highway in Potsdam), and at the same time, staff will help a customer walking into the Watertown office looking for a residential septic tank.
“Although we have diversified, we still serve the entire marketplace with our products,” Mr. Thompson said. “That’s what sets us aside from others in this business.”
The Watertown company produces a variety of precast concrete products, including burial vaults, catch basins, manholes, septic tanks, light-pole bases and bridge beams. One of its current projects is manufacturing precast concrete bases for electrical substations as part of a construction project for National Grid and Rochester Gas and Electric.
Jefferson Concrete Corp. not only serves the north country, but also the Utica, Syracuse and Oswego areas, and periodically serves the Albany, Ithaca and Rochester regions as well.
“That’s the result of building good, long-lasting relationships with customers,” Mr. Thompson said.
The company’s diversification strategy that has allowed it to continue to successfully operate in times of economic pressures means “we don’t have a niche in the market, and that’s been on purpose,” said Mr. Thompson.
Jefferson Concrete Company was originally started in 1967 with a batch plant and buildings on Cook Road in the town of Watertown. A 1987 fire destroyed the structures, just almost a year after the company had invested $50,000 to upgrade its facilities.
But the fire served as a catalyst for the company to move to a larger location and further expand production of precast concrete products.
Mr. Thompson co-owns the company with the adult children of the late Watertown attorney Richard F. Schwerzmann; Peter A. Schwerzmann and Julie Gilbane, and a daughter-in-law, Ghita Schwerzmann, widow of a second son, Gary, who passed away in 2007.
Although the initial start was in the burial vault business, the company soon expanded in others areas, such as agriculture, said Mr. Thompson. During its earlier years, when there were “probably more cows than people” in the north country, there was a bigger demand for precast concrete products such as bunk feeders for cattle, he said.
The expansion of Fort Drum saw the company shift its focus more to infrastructure products for highways and bridges, such as beams, catch basins, parking lot drainage boxes and light pole bases. There was also demand for infrastructure growth with the expansion of the military post and subsequent utility work for new on-post housing.
“We definitely grew through the Fort Drum years,” Mr. Thompson said. “The expansion of the 10th Mountain Division gave us the opportunity to produce many more products.”
After the Fort Drum expansion, other opportunities presented themselves. In 1998, the company produced and delivered concrete floors, walls and ceilings for the outdoor “exercise yards” used by inmates at the Upstate Correction Facility in Malone, a 750-cell maximum security prison.
But while the economic downturn of 2008 slowed operations for the company, the business has been experiencing a gradual upswing, Mr. Thompson said.
“This past year, it’s been getting a lot better, especially the bridge work,” he said.
The demand is also increasing for precast concrete products such as septic tanks and manholes as the construction industry starts to recover, he said.
Mr. Thompson credits the more than 40 employees at the company who have contributed to the success of the business and its survival through challenging economic times.
“We have surrounded ourselves with talented people,” he said. “A business is only as good as its people.”
In fact, several of the company’s employees have completed a “Master Precaster” educational program through the National Precast Concrete Association, Indiana. There are six on staff who have completed the training program (a seventh recently retired), and two more will complete that certification in 2017.
Kinney Drugs, Gouverneur
Since Gouverneur native Burt Kinney opened the first Kinney Drug store in 1903, the company has experienced significant growth throughout New York and Vermont. Today, there are 100 Kinney Drug stores operating within these two states.
The company has evolved a great deal over time as it seized various opportunities to diversify into several complementary businesses, all focused on delivering pharmacy and health care services.
Subsequently, the company rebranded as KPH Healthcare Services, Inc., a national provider of pharmaceutical and health care services with complementary businesses in both the retail and commercial segments of the industry, said Judith Cowden, senior director of advertising and marketing.
KPH Healthcare Services is comprised of four divisions: Kinney Drugs, established in 1903, a chain of 100 full-service drug stores in New York and Vermont; Health Direct Institutional Pharmacy Services, set up in 1982, which serves long-term care and alternative care needs; ProAct, Inc., set up in 1999, a pharmacy benefit management company with sales offices throughout the country and a mail-order pharmacy; and Noble Health Services, set up 2013, a specialty pharmacy that dispenses medications used to treat complex and chronic diseases.
“We consolidate purchasing power across all divisions to deliver cost savings to clients and customers while maintaining quality-of-care standards and our core values,” Ms. Cowden said.
In 2008, Kinney Drugs became a 100 percent employee-owned company, also known as an Employee Stock Ownership Plan company, to support its long-term corporate independence and private ownership.
“Employee-ownership fosters a higher level of individual commitment to the organization,” said Kinney Drugs President James M. Spencer. “There is a deep sense of personal accountability, because no one wants to let the team down.”
The employee-ownership model is very evident in Kinney’s corporate culture, which is highly collaborative, empowered, and proactive, he said.
“We help each other overcome obstacles because we really are all in this together,” Mr. Spencer said. “Employee ownership also lengthens the horizon for decision-making, because everyone is working to ensure the long-term success of the organization.”
That success is accomplished by meeting the company’s goal of “creating positive health outcomes and the best shopping experiences that drive, trust, passion, and growth for Kinney Drugs,” he said.
The senior leadership team strives to communicate with KPH’s more than 3,400 employees at all levels on a regular basis to obtain feedback and share ideas, he said.
This practice has helped the organization continue to focus on customer care during challenging economic times, which includes not only competition from larger national chain pharmacies, but also changing health care regulations.
“As with all health care providers, pharmacies are regulated by local, state, and federal governments,” explained Ms. Cowden. “As such, there is a great deal of uncertainty in the entire health care system as it struggles to transition from fee-for-service to a mandated value-based model.”
This uncertainty is “compounded by the unpredictability of the U.S. presidential election, the results of which will undoubtedly have a major impact on our health care system,” she added.
“There are also more and larger competitors entering into our markets,” Ms. Cowden said. “These large national and/or international competitors enjoy both economies of scale and lower volume-driven pricing.”
All pharmacies — large and small — also face the same challenge of fluctuating market prices for prescription drugs, she added.
“Market prices for prescription drugs are directly influenced by large third-party payers — including Medicare and Medicaid — that will pay only a certain price for each medication, creating big challenges for both pharmacies and consumers,” she said. “These third party payers have drastically reduced reimbursements and tightened plan requirements.”
This creates a situation where “both pharmacies and consumers are squeezed in the middle” because of increasing pharmaceutical prices on one side coupled with declining insurers’ reimbursements on the other side, Ms. Cowden added.
But “while Kinney may not have the buying power of large national chains, but we have a personal connection with our patients and local market knowledge, meaning that we can be very nimble in meeting specialized and sometimes rapidly changing consumer and industry demands,” she said.
“Our pharmacists are truly looking out for our patients,” Ms. Cowden said. “They may call to check on patients, particularly those with serious and/or chronic conditions, to make sure that they are taking their medications as prescribed, and answer any questions.”
It’s the “personalized attention that helps our patients improve health outcomes, which is great for them, and also helps Kinney exceed the insurance companies’ standards of care,” she added.
Kinney Drugs was recently recognized by CVS Caremark, the prescription benefit management business of CVS Health, as the top pharmacy chain in the country (within the Caremark performance network) for patient medication adherence performance in 2015.
The organization is also very focused on supporting the community, Ms. Cowden said.
Each Kinney Drug store typically hosts one community event per month a month to benefit a local nonprofit or school-based organization, she said. That adds up to approximately 1,000 events per year.
Also, since its inception in 2006, the Kinney Drugs Foundation has given more than $9 million to nonprofit organizations in New York and Vermont, including the Children’s Miracle Network, Make-a-Wish Foundation, the American Cancer Society, the Boys & Girls Club, the Vera House Foundation, and numerous local hospitals, nursing homes, hospices, emergency service providers, and health-related children’s charities
In July, KPH was recognized by the American Heart Association as the top fundraising company in the country for raising $30,000 for the Go Red for Women campaign’s Wear Red Day 2016.
YesterYear’s Vintage Doors, Hammond
The Vintage Door Company was started in 1990 by Howard W. Demick, and today, the company handcrafts between 2,000 and 3,000 custom-made vintage doors in its 13,000 square-foot facility, shipping to customers across the United States and Canada.
The business is operated by Mr. Demick, president and general manager, along with his wife, Rosemary, who maintains the bookkeeping records, and their two adult children, Ryan and Erica, both graduates of Clarkson University with business degrees. Ryan and Erica are responsible for sales, advertising and daily management.
Vintage Doors produces custom exterior and interior doors, along with millwork, earning a reputation for its exceptional quality and artistry. The finest furniture grade solid woods are used in every hand-crafted piece, employing “time-honored joinery techniques by expert craftsmen,” according to the company.
“Our family business has seen stable growth over years due to well thought-out advertising methods, stable product turn-around production times, a solid reputation and committed, hard-working staff, including four key family members and eight to nine craftsmen and woodworkers,” said Erica Demick, the company’s national sales and marketing manager.
“In recent years, we have undergone a strategic planning process to help jumpstart and brainstorm growth initiatives, as well as prepare for suitable transition planning into the next generation,” she said.
Their hand-crafted products are requested by homeowners, architects, historians, preservationists and contractors both at a local and nationwide level. The company offers a vast number of options for standard doors, including panel and glass configurations, in addition to customization and matching capabilities. It also carries a large collection of period hardware.
“Diversification is always an interesting topic,” said Ms. Demick. “When the business first began more than 26 years ago, the focus was purely on Victorian or ornate-style screen doors — which were marketed, sold, hand-crafted, crated and delivered by my father.”
It was her mother who eventually encouraged him to diversify into specific style lines, such as those for traditional, Victorian, rustic and contemporary-style homes, Ms. Demick said.
“Another growth mechanism was the addition of interior and exterior doors, as well as Dutch doors, which are making a comeback in the marketplace,” she said. “Everyone loves a “Mr. Ed” door.”
In recent years, the company has diversified by adding Three Season Porches to its product offerings, as well as customized pet gates and pet doors, along with pedestrian and garden gates.
“There is truly no limit to what we can produce, as we have talented craftsmen and a love by our founder and CEO for fine woodworking,” Ms. Demick said
Some projects completed by Vintage Doors include cabinetry and interior millwork for historic structures such as Boldt Castle, as well as a variety of fireplace mantels, butcher blocks, shutters and more.
“However, we have vowed not to lose focus on our core products and abilities,” she said. “Our mission remains to make the best solid wood doors in the world, and enhancing upon what we already know, to be able to help more people bring beauty, timelessness and distinction to their homes.”
One of the “major challenges to our line of work is the ability to find skilled labor. We have generally been able to train our people if they have had basic construction knowledge and abilities,” she said.
Vintage Doors offers “hands-on training to each and every one of our new employees, with the hope that their interest in being a part of a great team and producing the finest quality hand-made products will continue,” she said.
As part of its retention plan, the company offers retirement, a profit-sharing plan, paid time off, including holidays and vacation time, she said.
“This is after a probationary period to ensure the employee is a good fit for our company, and likewise, we are a good fit for them,” Ms. Demick said.
For the most part, “if an individual is employed with us for at least a year, they will probably be with us for a long-term. We have a great group of individuals who work well together currently, with little turnover,” she said.
“Additionally, we pride ourselves in hiring only when we know there is a long-term position available, as a courtesy not only to the employee and their family, but as a part of our vision for creating a sound business,” Ms. Demick said. “We do not hire for part-time or have layoffs.”
But the “most important business decision we will make, and almost certainly the toughest in terms of business planning, will be undergoing family business transition planning,” she added.
The company is also working toward key partnerships, she added. For example, this year it has partnered with “Trees for the Future,” a program that calls for the company to plant one tree for every door sold.
“This makes a statement for clients, and our business, because we care immensely about our planet,” she added.