Wood that he could

Dewey Hudson traded a bird dog for his first load of antique timber. It was 1970, and he was hunting quail near Tarboro. Crossing a soybean field, he came upon a woodpile. He immediately recognized the rough-hewn planks: heart pine. Prized for its strength and beauty, the close-grained wood was the South’s most popular building material — until demand depleted the stands of old-growth loblolly, shortleaf and longleaf pines that produced it more than a century ago.

Hudson, then a high-school math teacher, had started building a cabin in his spare time. From books, he had learned that he could resaw and refinish old heart pine, then reuse it as flooring.

He found the farmer on whose land he had been hunting. “I said, ‘I like your timber.’ And he said, ‘I like your dog. Why don’t we trade?’ That dog, Jack, was a good one, too, an English setter. He’d be worth $2,000 today.”

Jack was the seed money for The Joinery Co., which has grown to 36 employees and expects to reach $10 million in sales in 2002. The Joinery and Hudson, its chairman, will have achieved that while staying in tiny Tarboro, just the sort of town often left behind by the new economy.

After Hudson, now 52, finished his cabin, friends and neighbors asked him to make floors for them. One job led to another. About six months after dealing his dog for wood, he had quit teaching to scout for heart pine and install floors full time. He built his business mainly by word of mouth. Even today, 60% of sales come from referrals.

In the beginning, he had only two competitors nationwide, but the rise of Martha Stewart and Restoration Hardware has stoked demand for old homes and recycled materials. Today, Hudson has 250 rivals. The competition has inflated the price of antique pine. In the early days, folks gave Hudson wood to get rid of it. Now, the company advertises in demolition-industry magazines and must bid against other buyers and has expanded into other specialty woods.

Facing a declining supply of heart pine — pines today don’t get old and big enough to produce dense heartwood before they’re cut down — Hudson in the mid-’90s began thinking of ways to make the old wood go farther. Plus, “I started thinking about how we could come up with some products everybody could afford.” That led to Multilayer, floor boards made by bonding an eighth-inch-thick piece of heart pine to a wooden core and a back layer. The resulting planks cost 20% to 33% less than solid heart pine. In three years, Multilayer has taken over 60% of The Joinery’s business.

Just as The Joinery was starting to sell Multilayer, Hurricane Floyd hit. The company’s mill escaped damage, but its showroom was flooded, though not by the storm. The municipal water supply came back on earlier than expected, and a faucet that had been left open over a plugged sink ran all weekend.

“We were completely unable to function for about a month,” he says. Employees couldn’t get to work. Those who could were dealing with crises of their own. “We lost in excess of a million dollars and probably a couple million in sales.”

He credits loyal customers and its reputation for The Joinery’s ability to bounce back. Combine that with Multilayer, and Hudson is convinced that he can turn his small business into a much bigger one. “We’re trying to make the leap to being a $20 million to $30 million company.”

To do that, he’s trying to delegate more. “When you’re an entrepreneur, you’re obsessive-compulsive. You want to control everything. But the best entrepreneurs are the ones who are able to relinquish control so their companies can grow.”

So Hudson is learning to do that. The teacher has become a student.

Wiping up with gifts

To grow his business, Tom Bell had to think small. He and his wife, Cissy, had started Park Imports and Designs as a part-time venture in 1984, wholesaling pricey European ceramic planters, serving bowls and center-pieces to big retailers such as Belk and Waccamaw Pottery.

They knew the business well. Bell, a Goldsboro native who dropped out of Carolina as a sophomore in 1964, had worked 17 years as a manufacturer’s representative, calling on retailers around the country. Cissy Bell, Park Imports’ chief financial officer and a Meredith College grad, had run their Goldsboro gift shop, The Heritage, almost as long. They sold it in 1983.

But by 1990, Park Imports was stuck. Between it and his full-time job as head of Tom Bell Associates, his company of manufacturer’s reps, he was traveling nearly every week. The year before, he had expanded Park Imports’ inventory with some inexpensive rugs, towels and other household textiles from a supplier in India. But he struggled to make inroads with other major retailers.

So in 1990, he sold Tom Bell Associates to his employees to focus full time on Park Imports. “My wife says I’d have never died happy if I hadn’t tried. I knew I could do it better than some of the people we were working with.”

He also switched strategies, dumping expensive items in favor of cloth napkins, tablecloths, dish towels — merchandise that sells for $10 or less. And to pump up his volume, he broke away from the chains. “When you build a business on that channel of distribution, it’s always riskier. If Wal-Mart gets a cold, you get pneumonia.”

The chains also drive down vendors’ margins and are always looking to switch suppliers to save a few pennies per unit. “When we decided to go after the independent retailer, that’s when we started taking off. There aren’t many people who do what we do, designing and marketing for the little guy.”As for the future, Bell is expanding the company’s lamp division, started a year ago. “Textile is still the locomotive that pulls the train, but we’re really growing our other categories.”

Working out of Goldsboro has helped keep costs down. “We can do more for less here, and it’s a great environment. If we were in Raleigh, even, our overhead would be greater. And if we were in New York or Chicago or Los Angeles, where most of this industry is located, it would be a great deal higher.”

At the same time, Goldsboro is a tough place to find textile designers. Park Imports designs most of the items it orders from its Indian suppliers. “There’s no ready pool of designers, at least those who understand our business, in this part of the country. Our head designer lives in Raleigh and commutes every day.”

Succession shouldn’t be such a problem. The Bells brought their sons into the business in 1998. Thomas Jr., 30, is vice president of sales and marketing; Miller, 27, is vice president of operations. Each owns a 5% stake in the business. (The rest is split between the parents.) Within 10 years, they should be running the business. “By then,” Bell says, “I hope I’ll be on my boat talking to them by cellphone.”

Formulas for success

Phil Hodges understands why East Carolina Bank got worried. He had quit his job as a chemist at what was then Burroughs Wellcome’s Greenville plant. He had left on good terms, and the London-based drug giant became his first customer in November 1994, when he started Metrics Inc., which tests potential drugs to determine the best ways to make and take them. The bank had helped him get a $350,000 Small Business Administration loan.

But four months later, Glaxo, which has its U.S. headquarters in Research Triangle Park, bought Burroughs Wellcome. One of its first changes was ending the relationship with Metrics, snatching away about 75% of the young company’s business. “It did make me nervous,” says Hodges, the company’s president. “The bank showed a good deal of concern. They had stuck their neck out a bit.”

Hodges was able to soothe bankers by pointing to new customers, especially in Research Triangle Park. He and co-founder John Bray, Metrics’ vice president of operations, halved their salaries the first year to help Metrics get by.

In the back of his mind, Hodges had another idea about the Glaxo-Wellcome merger. “I was thinking there might be a silver lining — an infusion of new clients” as scientists left the combined company to create businesses of their own. He was right. Instead of killing Metrics, Glaxo brought about what Hodges calls its graduation in 1997.

Even better, he was able to hire some of the scientists who left. Danny Shive joined him as vice president of pharmaceutical development. Michael Ruff came aboard as director of pharmaceutics. That, Hodges says, spurred Metrics’ transformation from an analytical lab that merely tested compounds into a company that turns other companies’ “white powder” into tablets or pills.

In all, the company added about 25 employees, up from 15 in 1997. Metrics also got $1 million that year from a stock sale, which it used for manufacturing and lab equipment.

Companies come to Metrics with a potential drug to formulate or test. “They’ve done animal testing to show that the drug is not highly toxic in animals, and they’ve got some reason to believe that it will work in humans for a particular disease,” Hodges says. Metrics takes the formula, adds other chemicals to make it soluble in humans, manufactures enough of the drug for clinical testing, determines its shelf life and provides documentation for what it does.

That forms the basis of what Hodges, 45, expects to be $8 million in revenues this year, an increase of more than 50% over 2000. Hodges says confidentiality agreements won’t allow him to identify clients or products but that Metrics’ products include drugs to treat cancer, AIDS, diabetes and hypertension.

Metrics’ appeal to drug makers stems from the nature of the industry. “Pharmaceutical development is very hill-and-valley-oriented. Take a big company. If they staff for all the hills, then when the valleys come, they’re going to have to lay people off or have people twiddling their thumbs. They staff so that when the hills come around, they go to outside contractors, like us.”

While the business has changed in its seven years, one thing hasn’t — Hodges’ commitment to Greenville. He’s a native of nearby Beargrass, in Martin County, and earned his bachelor’s in chemistry at East Carolina in 1979 and a master’s in analytical chemistry there in 1984 while working at Wellcome. He has hired about 20 ECU graduates. Hodges is Metrics’ largest shareholder, with 23%.

In October 2000, Metrics moved into a bigger building that allows it to make batches of 250,000 to 1 million pills or tablets, depending on their size. That’s not enough to make popular medications such as heartburn treatment Prilosec, which sold 870 million pills in 2000. “But something that only requires 10 to 12 batches a year, we could do that here.”

When White died of a brain tumor in 1999, his wife knew he had wanted their daughter, then 9 years old, to get a chance to run his company someday. The thought of running the company until then terrified the widow. Before marrying him, she had been a legal secretary. She had helped out around the office some but devoted most of her time to motherhood and playing golf. Selling the company would have been the easy thing to do. Running a steel-service center can be a cutthroat business. “I thought to myself, ‘Why do I want these headaches?’ ” But there was something else on her mind: the need to test herself. And running Benco Steel would do that the way nothing else in her life ever had.

She took over as president early in 2000, and Benco had its best year ever, posting more than $11 million in sales. Her efforts to move the company out of the small man’s long shadow — and her ability to survive the crucible of her first two years in charge — earned Benco Steel Business North Carolina’s Small Business of the Year award. Judging the competition, sponsored by Winston-Salem-based BB&T, were Rick Carlisle, former state commerce secretary and managing partner of Raleigh-based Dogwood Equity; Pat Renfro, president of Warsaw-based Accu-Form Polymers, which was last year’s winner; and David Kinney, BNC’s editor-in-chief and publisher.

A petite, green-eyed blonde with a shy smile and a soft voice, she is 51 but looks a decade younger. On a warm September morning, she dons a hard hat and picks her way past stacks of steel bars, beams, sheets and rods on the concrete-slab floor of the Benco warehouse, which is almost as big as a football field. Brawny men in overalls muscle steel around the floor, then on and off trucks. Wearing a knit suit, her nails perfectly manicured, she checks inventory.

This year’s economic slump has hit steel distributors hard, and Benco’s sales will probably slip back to about $10 million, where they were the last few years of White’s life. But since taking over, she has added a big-company management structure, computerized processing equipment, replaced older trucks and given salespeople laptop computers for quicker transmission of orders. By early 2002, she aims to have Benco welding structural beams for homes. Recession or not, she plans to double sales in five years.

If that happens, some of the credit will go to another of the changes she has made. Jay Tate became Benco’s first executive vice president in February and, in October, her new husband. A Hickory native and retired Army officer, Tate was working as a management analyst for the Defense Department in Washington when he ran into her at his uncle’s funeral in May 2000. She hired him to study Benco, then made him her second-in-command.

Tate comes off as a management wonk. He loves to talk about organizational charts, strategic plans and mission statements. Leaning forward, he gestures energetically to punctuate his points or scurries to another room to retrieve a chart to bolster one. But get him talking about Judy, and the confident chatter stops. He gets a little tongue-tied. “Through our discussing the business, something just magical happened. It was just . . . I don’t know. It was just the most wonderful transformation. She’s my boss. I marvel at her business acumen. I really do — aside from the fact that I love her dearly.”

Joel White’s drive was what kept Benco going in its early years. He had grown up one of seven children in a poor Hickory family. His father, a cab driver, died when he was 15. He started earning money at odd jobs as a teen-ager. White had a knack for selling, which got him a job as a salesman for a company that supplied radio and television parts. “I don’t think he ever had a vision,” Judy says. “He was just a workaholic.”

In 1960, David Kraus, who owned a scrap-metal yard, expanded into steel supply. The new company — called Benco after his son, Benjamin — was just a sideline, run out of a shed not much bigger than a camper. In 1964, White took a sales job with the fledgling company, becoming its third employee. Three years later, he and two investors purchased Benco for about $35,000. The next year, at age 32, he bought out his partners. For the next three decades, White managed the company almost single-handedly. He bought and sold the steel and often supervised its movement around the yard. No decision was too small for him to make.

Benco bought steel in sheets, bars, tubes, pipes and other forms from big manufacturers, including Charlotte-based Nucor. Some of it was sold as is, the company making money from its markup. Benco could make more by processing the metal — cutting, bending or otherwise shaping it to fit customers’ specific needs. It has always been a tough business. Make a mistake on the margin — buy too high, sell too low or misprice what people will pay for value added — and competitors pounce. But Joel White knew his stuff. In 1968, sales totaled $400,000. By 1979, they had reached $3.6 million. That year, he bought 11 acres in an industrial section for about $250,000 and spent $200,000 to build a new headquarters and warehouse.

Judy was still in high school when he was starting to build his steel business. During her senior year, she married a soldier who became an insurance adjuster. The marriage lasted 11 years. There were no children. She worked as a secretary in a Hickory law office. White was a client of the firm and rented space next to it for document storage. She handled some of Benco’s paperwork. Sometimes they chatted. White had been separated from his wife for about two years when he started asking her out in the early ’80s. There was a lunch, dinner, movies. They married in 1982.

To outsiders, she might have looked like a trophy wife. But they were a good match, friends say — the hard-edged businessman softened by his quiet, attentive mate. “He was different at home,” she says. “He was a man full of compassion, but he didn’t want people to know it.”

She was canny enough to help with the company’s books and legal work. She had not gone to college but had learned legal research at the law firm. White made her Benco’s debt collector, and she politely pestered the deadbeats. They traveled a lot, joining other couples on golf outings. She was and is a duffer; he was a scratch player and fanatical competitor. They bought a house in Longboat Key, Fla., where he set up an office and kept the yacht. They adopted Amber in 1994.

In 1996, he started getting headaches and dizzy spells. On the way to a convention in Colorado, he checked into a hospital, where he was diagnosed as dehydrated, given fluids and sent home. The spells continued. Back home, he had a magnetic-resonance imaging test done. Doctors concluded he had suffered a mild stroke. He got worse. He started having trouble getting words out. He dropped things. In 1998, he went to the Cleveland Clinic in Ohio, where a neurologist diagnosed the cause: a brain tumor.

Its location made an operation too dangerous. Doctors tried radiation and chemotherapy. Nothing helped. Finally, he went to Duke University Medical Center, where a surgeon removed what he could of the tumor. Then came more radiation. Other risky treatments followed — and failed. In August 1999, a frail and exhausted White, no longer able to walk or talk, died.

During those final six months, she often thought about the company, weighing feelings of dread and loyalty. What finally persuaded her to keep Benco was what she had learned in her discussions with those interested in buying it. Most were competitors who wanted its customers rather than the business itself. “I’d ask them, ‘Why do you want to buy Benco?’ What I found out is that we were a thorn in their side.” She concluded that her husband had left a business with a solid customer base and an able staff.

But rumors of an impending sale roiled the company. A month after the funeral, she told the staff she wasn’t selling — she would run the company herself. Despite her inexperience, nobody bolted.

She sent letters to reassure customers. And she visited some to introduce herself. One of them was Bob Hege, president of Meadows Mills, a sawmill maker in North Wilkesboro. He had been buying steel from Joel White for 30 years, but he was researching other suppliers in case the new president didn’t measure up. He was impressed by her determination and the support she had from her employees. He also liked the services she added. “Our business with them has increased since Judy took over,” he says.

Even as she calmed customers and workers, she felt herself coming apart. She knew her husband had been a micromanager but never realized what that meant until she sat in his chair. The phone rang all day with employees asking for decisions on everything from accounting and inventory to sales and purchases.

Enter Tate. They had chatted briefly at his uncle’s funeral about her problems. He volunteered that he might be able to help since his job at the Defense Department was management analysis. They set up a dinner meeting.

They met at 242, a trendy Hickory restaurant. They talked over cabernet — or rather she listened while Tate talked. He eventually got so carried away that he began jotting ideas for a management reorganization on the butcher-paper place mats. “I was sitting there drawing out all this stuff, and I think it was kind of the moment that there was something special happening between us. She just sits back and lets the other person talk. I think we complement each other. She kind of brings me down to earth, and I elevate her with my enthusiasm and exuberance.”

He quickly sized up the situation. “I asked her about her long-term strategic plan. There was no plan. I asked about her management structure. She had none. She basically did everything. It was like here’s a person who wants to make things happen but has everything bombarding her at one time. It was like a fire hose going straight into her office.”

She liked what she heard and asked Tate to write it up. He took his notes back to Washington and drafted a management structure and strategic plan. He flew back to Hickory in June. They toured the plant. She introduced him, dressed in sneakers and a Hawaiian shirt, as a management consultant from Washington. She asked her managers for comments on the plan, made a few refinements, then adopted it. The plan split the company into four divisions, each headed by a vice president. They would report to a new executive vice president, who answered to the president and was responsible for day-to-day operations. That would give the president more time for planning. And she knew whom she wanted as her second-in-command.

In December 2000, she asked Tate to take the job. He agreed, going on the Benco payroll in February. Over lunch one day in April, with Amber watching, he presented her with an engagement ring. After getting her daughter’s approval, she accepted. His arrival had raised eyebrows around Benco, where employees had just gotten used to the idea of working for Joel White’s widow. Suddenly, she wasn’t only getting remarried, but they would be working for her new husband — who had never worked in a steel warehouse before.

Tate says he’s not concerned about those who might think he’s a gold digger. “I had a very successful career in government. I was one step away from being the highest I could get. I had consulted throughout the government. I had consulted for NATO. I had consulted in Europe.”

His management plan was designed for the company, not for him, he adds. But he admits he was eager to take the job for the challenge it presents and for the chance to be with her. Judy, he says, has the self-assurance needed to run Benco. Her refusal to sell the company shows that. Now all she needs is more knowledge and experience. “Perhaps she was a closet CEO all along, and now she’s come out of the closet.”