Housing Slump Forces Cuts at a Small-Town Company

THREE THINGS matter big in this flyspeck city just south of the Canadian border: hockey, walleye and Marvin.

Not necessarily in that order. Yes, Warroad, nicknamed “Hockeytown, U.S.A.,” has sent six of its sons to the N.H.L. And the walleye plucked from Lake of the Woods are served for breakfast, lunch and dinner down at the Lakeview Restaurant.

But Marvin — as in, Marvin Windows and Doors — is the commercial engine in these parts and has been since George G. Marvin arrived in 1904. So when times get tough at Marvin, as they are now, the 1,700 or so residents of Warroad hold their collective breath.

But in this season of economic unease, when neither Washington nor Wall Street seems to have the answers, the descendants of George Marvin are going against the grain. Unlike so many other companies, Marvin Windows has neither laid off workers nor reduced health insurance benefits. And, its executives vow, it won’t.

Marvin Windows might seem like a footnote in the nation’s economic ledger. It employs roughly 4,300 people, about 2,000 of them here, and has annual sales somewhere from $500 million to $1 billion. But what this company is doing — and, more to the point, what it is not doing — is worth knowing.

Marvin Windows and Doors is a throwback to another era. For starters, it is a private company. No public stockholders are complaining that the latest numbers fell short, that the share price is down.

What’s more, Marvin takes an old-fashioned, even paternal view of its role here in Warroad, where the Marvin family has run things for just about as long as anyone can remember. The company has cut employees’ pay and reduced perks like tuition reimbursement and 401(k) matching. Employees haven’t received profit-sharing checks in two years, nor have the 16 members of the Marvin family who work for the company.

But, unlike its top competitors, Marvin has refused to fire people.

Many here wonder if Marvin can hold out, particularly if, as many fear, the economy sinks into another recession. Company executives say they aren’t panicking yet.

“Housing isn’t in a recession. It’s in a depression,” says Susan Marvin, the company’s president and a granddaughter of George Marvin. “While it’s challenging for our people right now, and not everybody understands all the reasons why, the alternatives are devastating. These people would have to pick up and leave.”

Some have, for places like the booming oil fields of North Dakota. Others are working two jobs to make ends meet.

THE change is palpable in Warroad. This is a place where Marvin employees get the first Monday of November off for “Deer Monday,” so they can go hunting. And where on the Fourth of July the company hands out two nickels to children in town, as George Marvin did during the Depression.

When the housing market collapsed and, with it, the market for windows and doors, competitors shuttered plants and cut work forces. But as a fourth generation of Marvins prepares to take over, the most obvious — some would argue most effective — option was off the table.

While Marvin’s story might seem quaint, even naïve, Ms. Marvin says the no-layoff policy is as much a business wager as an act of benevolence. She says she is confident that it will ultimately pay off. Already, she says, Marvin is gaining market share from weakened rivals.

Ms. Marvin acknowledges that her family’s private company may have more leeway than public counterparts. It has forgone profits for two years to keep everyone employed, for instance. Nonetheless, Ms. Marvin suggests that corporate America could learn a thing or two from Marvin’s approach and long-term outlook.

“You can’t cut your way to prosperity. You can’t grow if you are cutting your lifeblood — and that’s the skills and experience your work force delivers,” she says, adding later: “Today, I think, to a great a degree, I think things have gotten out of balance. We see Wall Street almost punish companies that take the long view.”

Article source: http://feeds.nytimes.com/click.phdo?i=0572524c3d016be661d8111f710af691