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Building The Future On Lessons From The Past
By: Jen Alexander McCall, Associate Editor
Issue: 2009jul
Six companies share stories of how they weathered the Great Depression and how that perseverance is paying off today.
Bankers Advertising founder Willis Mercer works in his office with two female employees.
The nation hasn’t seen any dust bowls or massive migrations of unemployed workers this year, but the stagnant economy has drawn constant comparisons to the Great Depression of the 1930s. While the jury is still out on whether the comparisons hold water, a few companies in the promotional products industry have the luxury of hindsight and the history to prove that they know what it takes to come out of a recession relatively unscathed.
Businesses in other industries that share the same longevity have similar stories, and PPB spoke with a few of both. Representatives of these old-timers shared not only their Depression stories but also their strategies for survival, along with some advice for businesses that are suffering through their first economic setback.
Goes Lithographing (Est. 1879)
Chicago, Illinois
Sometimes it’s sheer will that keeps a company afloat; other times, it’s the necessity of the product or service offered. In the 1930s, Goes Lithographing held onto business with a seemingly mundane but rather indispensible item: the ink blotter.
“This was one of the absolute best ad specialties of the time,” says Owner Charles Goes IV, whose grandfather, Charles Goes Jr., was president at the time. Blotters stayed by phones and cash registers, and were kept on desks, ready to dry the ink on a check or memo.
“One side was green or blue, and it was quite soft. On the other side was a white sheet glued to blotter paper. We would print that sheet with messages, calendars and pinup girls.”
Goes Lithographing sold its blotter to stores that would in turn give the specialties away to customers as promotions. “A blotter had a lot of life to it, so it was the least expensive product we sold,” says Goes.
“If you really wanted to spend money, you’d laminate it to get a slick surface. Since we were ad specialty people, and a manufacturer, if the corner store bought 500 we would imprint and ship it direct under the salesman’s name. But we were also printers, so we would have the blotter with the image and there would be a blank space for ad copy, and the printer would print right over the laminate,” he explained. “This way, the barber could look as good as the big banker. With our printers, we could make an inexpensive product look nice. That’s what kept us going through the Depression.”
Production ran three days a week, and Goes sold blotters up until the 1970s.
Goes says the company also just kept “beating the drum,” telling clients that it was essential they keep advertising. “You can’t give everyone an $80 coat, but you can give them a $1 calendar.”
Goes says one of the qualities of the company that has allowed it to flourish in tough times is its ownership. “We have always been owned and managed by a family. I have my three sons and my wife working here,” he says. “We’ll have been in business 130 years this year.”
Another facet of success comes from the fact that Goes’s brood does more than just show up to work. “I would say the family has always enjoyed the business socially. The business has to be somewhat of a hobby to really weather the hard times. If you look at it as a paycheck, people become transient.”
Products change and processes change, he says, and the result is a higher degree of technical skill among employees and family members. Goes also feels having an entry-level product is key to staying on top. “We’ve figured out ways to sell products in low quantities with expensive equipment.”
To the businesses experiencing first-time difficulties as a result of the economy, Goes gives the following advice: Keep your eye on the ball.
“Tell clients you’re in the same boat they are, and tell them not to be afraid to cut their order in half. Be frugal, but don’t be afraid,” he advises. “You’ve got to be honest with your people.”
Don’t forget to cater to repeat business, either. When the times get better, they’ll be back, he says. “You’ve got to be honest—if you can’t afford it, don’t buy it. That’s family advice. That’s the absolute key to small businesses like us.”
D.G. Yuengling & Son Brewery (Est. 1829)
Pottsville, Pennsylvania
Prior to the national crisis that was the Great Depression, America’s oldest brewery had its hands full trying to outlast Prohibition. President and CEO Dick Yuengling Jr., the fifth generation to run Yuengling, recalls several breweries diversifying to survive this first round of tough times, which lasted roughly 13 years, with some hanging onto the extra business to weather the stock market crash.
“During that time, a few breweries got into the dairy business because we had the refrigeration equipment,” says Yuengling. “What you were trying to do was keep your employees.”
Stroh’s and Anheuser-Busch were two others who ventured into ice cream; Stroh’s ice cream is still distributed in parts of the U.S. today, albeit through another company. In a slightly different manner of diversification, Rocky Mountain brewer Coors actually had a strong presence in porcelain manufacturing.
After the end of Prohibition and through the Depression years, Yuengling continued to supply ice cream, and of course went from “near beer” back to full-fledged suds. While times were tough and people had few nickels to spare on luxuries such as alcohol, Yuengling’s brewery managed to stay afloat, even while others went under.
“Most breweries closed their doors,” Yuengling says. “There were about 4,000 operating at the time and maybe 700 reopened.”
The giants of the industry continue to dominate the landscape and the market—Coors, Miller and Anheuser-Busch remain household names, though in the years since the Depression dozens of specialty breweries have popped up throughout the country.
Yuengling says his brewery has been “very fortunate. We’re doing very well. I’ve seen the industry go from local breweries to regional breweries ... and they’ve closed up because more people are buying national brands. But we’re still here.”
So how does a 180-year-old brewery that is largely regional in its distribution find a place in the spotlight next to the big boys? “I think people are buying our products because we’re American first and family-owned second,” says Yuengling.
Indeed, the big three breweries are now run by foreign beverage companies—Miller by South African SABMiller, Coors by the Canadian joint venture MolsonCoors, and most recently Anheuser-Busch by Belgian company InBev.
While Yuengling enjoys a loyal following along the East Coast and in the southeastern U.S., the company is conservative about its growth. The company only built a new brewery less than 10 years ago, and purchased another one in Florida not long after “simply because we were out of beer.”
The nearly three million barrels of beer produced by Yuengling aren’t much compared to what national brands churn out, but “we’ve expanded along the lines of what we can grow to,” Dick Yuengling explains.
He offers these words of wisdom to young, up-and-coming companies eager to grow despite being sideswiped by today’s recession. “In any business, I’d be cautious of expansion. Maintain where you are,” he advises. “If you are growing, be cautious of growing beyond your means.”
He also warns against diversifying one’s business without the proper knowledge or experience, a mistake he feels led to the recent collapse of some now-infamous companies. “I think it depends on what your talents are. If you get into areas you’re not familiar with, you’re asking for financial disaster.
“I make beer,” says Yuengling. “I know how to run a brewery and I’ve stuck with that.”
Bankers Advertising Co. (Est. 1896)
Iowa City, Iowa
During the Depression, Bankers Advertising was known as Bankers Advertising & Supply Co. The company was supplying leather passbook covers and printing checks for local financial institutions when the nation’s worst financial crisis erupted in 1929. “In our own hometown we had five banks, and they all closed,” says Chairman Bill Bywater, MAS. New banks didn’t come into the area until 1934.
Interestingly, Bywater says, “one bank in a nearby country town of maybe 70 people survived, and today it is the largest bank in the state.”
Of course, when those banks—customers of Bankers Advertising—went under, finished calendar advertising orders were left without customers. “Those were packed orders, and they all went to the city dump,” Bywater shares.
The lost business was tough to make up with no banks around, but Bywater’s great-grandfather, Bankers founder Willis Mercer, was determined to pay his employees and keep business coming in. “He had some bonds and he took them to Cedar Rapids and discounted them to make the payroll.”
Additionally, Bankers dropped the “& Supply” from its name and operations and focused solely on promotional products. This move, combined with employee-focused efforts, eventually resulted in some pretty remarkable displays of loyalty.
“We have customers who were buying calendar advertising before the Depression who are still buying from us today,” he says. Chief among these are Stanley Bank of Columbia, Kansas, and Cumberland Insurance of Richmond, New Jersey.
“The loyalty means so much, then and now. When they’ve got confidence in our company, products and people, it means so much,” Bywater says. And today’s staff is showing this same confidence in the company, helping keep Bankers stable in the current recession. “Right now we’ve got some dedicated employees who are willing to make sacrifices,” he adds.
For younger firms who want to know the secret to such loyalty and longevity, Bywater admits his advice is well-worn. “It’s overused, but I’d say stay focused and learn what’s important,” he says. “Stay focused on what you want to accomplish and make sure everyone [in the organization] is on the same page.”
Farmers Insurance (Est. 1928)
Los Angeles, California
Farmers Insurance rests at the top of the list of recognizable names in U.S. business. The company was founded in 1928, on the eve of the nation’s most profound financial disaster. Kevin Kelso, chief marketing officer for Farmers, believes it was the insurer’s early approach to innovation in business that helped carry it through the Depression and also helped it grow to be the industry heavyweight that it is today.
“The founders of Farmers had a couple ideas in mind,” says Kelso. “First, they saw an opportunity to serve rural markets—they felt the customers there deserved a better deal.
Today it’s pretty common, but back then it took some insight.”
The other idea was to give people a chance to own their own business by acting as independent agents for Farmers. “This way,” he explains, “they could enjoy the fruits of their labor.”
Tiffany Plunkett, marketing communications specialist, says Farmers’ leaders embraced burgeoning technology as well, working with IBM early on to utilize what was then considered cutting-edge technology—direct billing and other paperwork-minimizing tasks were streamlined and overseen by Farmers, so its agents were free to focus on selling. “Agents are the backbone of the company,” says Plunkett. “They are the first point of contact.”
Even with a rural market ripe for success, Farmers might have still been at the mercy of the stock market if not for the conservative investment choice made by founder Thomas Levy. “Levy kept Farmers out of the stock market and stayed in government bonds,” Kelso says. “It kept the company strong and, to a great extent, that’s our investment strategy today. We’re not trying to be an investment company; we’re an insurance company.”
Kelso points out that companies such as AIG that once had strong insurance divisions were weakened by brazen investments. The bottom line, he says, is that companies win or lose according to the value of the service or product they offer. “Value means different things to different people, but you’ve got to provide a quality product and good service.”
Though Farmers has expanded its focus through the years to include the urban market as the nation itself has become more urban, Kelso says attention to customer needs and to equipping its agents with the necessary skills and knowledge has never wavered.
“When the economy is flying high, you may be able to bump along and do well, but when the economy falls back, people very quickly sort through what gives them value and what doesn’t.”
Kelso says the ability of Farmers to pass on its lessons learned and the importance of its history to incoming employees is something companies in any industry can learn from, and use to their own advantage.
“The struggle for us is maintaining good, consistent underwriting. But we’ve been through a dozen of these cycles and pulled through,” he says. “Your history can provide value. If you stay in touch with your history, the lesson you learn is that there will be good times and bad times.”
Companies who are hurting for business should still think twice before taking on risky clients, and if they do take them on, “charge what’s appropriate. If you don’t charge what’s appropriate to keep your company profitable, the value of your service suffers. We’ve learned not to do that.”
Brown & Bigelow (Est. 1896)
St. Paul, Minnesota
Longtime distributor Brown & Bigelow took as hard a hit as any other company during the Depression, says President William “Bill” Smith. There was no magic pill or magic product to rely on, so the company “cut their costs and increased their marketing efforts, and they survived,” he says.
To be more specific, Brown & Bigelow in the 1930s made the unpleasant but often necessary decision to tighten its belt in any way it could, without sacrificing opportunities to bring in new business. The company’s budget-slashing moves helped it stay afloat and, with the onset of World War II and a new marketing plan, Brown & Bigelow was able to take advantage of the newly minted workforce made up of war veterans.
The Great Depression wasn’t the only financial crisis to upset the economy, Smith recalls. Each decade after held its own set of problems. “There were recessions back in those days, too,” he says. “But you watch your receivables and try to maintain good banking relationships.”
Having the history to learn from means having the foresight to know when to tighten the reins again, Smith says. “The first thing we did [for the current recession] was cut out expenses like executive lunches. We have reduced personnel, instituted a pay freeze and then finally a pay cut.”
Smith adds that the unfortunate task of shrinking the staff pool hasn’t had too negative an effect on employees. “They are being supportive, and I’m not just saying that,” he says. Some employees are coming from other departments to help with the workload left by layoffs.
Smith says Brown & Bigelow’s longtime conservative approach to using credit has helped it through slumps, and even now the distributor is holding steady without having to tap into its credit. “We try to keep that down because the banks prefer that. We’re not currently using any banking money,” he says. Conserving cash and being careful about who should receive credit are two more tips Smith offers young businesses reeling from their first slump.
Though it’s wise to be conservative with funds, Smith insists companies must be proactive when it comes to digging up new clients. “You need to go after new business. You’ve got to be aggressive and that means going to work every day.”
Smith says companies who don’t show up and play an integral role in the success of their company are bound to fail. “It’s a question mainly of management. Go to work every day and run your business as if this is as good as it gets.”
Quaker Oats Company (Est. 1877)
Chicago, Illinois
It’s logical to assume that an inexpensive staple food such as oats wouldn’t suffer too greatly during an economic slump, even one as deep as the Great Depression. But the Quaker Oats Co. was determined to stay a top-of-mind brand and did so by continuing to spend money on advertising and promotions.
Cold cereals were a burgeoning market in the 1930s, and though Quaker Oats undoubtedly was king of the oatmeal market, its leaders looked to technology to help them carve out a niche in the cold breakfast category. Quaker invested in a patented steam injection process that involved superheating grains and then releasing the pressure so that the steam in the grains caused them to puff up.
Puffed wheat and puffed rice became heavyweights for Quaker. Not only did the company trademark the names, they heavily marketed the cereals, touted as healthful choices by celebrities of the day such as baseball player Babe Ruth and Hollywood stars Ida Lupino and Bing Crosby.
Quaker also attached enticing promotions to its products: prizes and collectibles such as celebrity-tagged premiums—a Babe Ruth Championship Badge—and mom-friendly kitchen items such as Depression glassware. Incidentally, Quaker Oats’ Depression-glass giveaways are said to have kept one glass company from going bankrupt by ordering its products by the boxcar-load.
Even while many household names across American business were tightening their belts, Quaker pursued potential lines of profit, including acquisitions of related food companies. One such firm was Aunt Jemima Mills.
Pancake flours were being treated as non-essential food items in the 1930s, and so Quaker embarked on a campaign to revive their popularity, particularly for its newly acquired brand. It did so by bringing the flour’s brand representative back to life through Chicago resident Anna Robinson. Robinson answered an audition call in 1933 and was presented as Aunt Jemima at the Chicago World’s Fair. She also became the new face of Aunt Jemima in a literal way—her portrait was used to update the product’s packaging—and made public appearances up until her death in the 1950s.
By doing more than just offering a healthful breakfast staple, Quaker Oats not only survived the Great Depression but in fact thrived, firmly entrenching itself in the collective memory of America.
Keep On Keepin’ On
Words of wisdom from the leaders whose companies have been through tough times
Afraid you won’t make it through this recession? Look to the leadership of companies that have weathered more than one economic storm and emerged stronger for some encouragement and advice.
Bill Smith - Brown & Bigelow“You need to go after new business. You’ve got to be aggressive and that means going to work every day.”
Kevin Kelso - Farmers Insurance“Value means different things to different people, but you’ve got to provide a quality product and good service.”
Bill Bywater - Bankers Advertising“It’s overused, but I’d say stay focused and learn what’s important. Stay focused on what you want to accomplish and make sure everyone is on the same page.”
Charles Goes IV - Goes Lithographing“Tell clients you’re in the same boat they are, and tell them not to be afraid to cut their order in half. Be frugal, but don’t be afraid. You’ve got to be honest with your people.”
Dick Yuengling, Jr. - D.G. Yuengling & Son Brewery
“In any business, I’d be cautious of expansion. If you are growing, be cautious of growing beyond your means.”
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