Longaberger bas­ket em­pire un­rav­eled after 2000 peak

Re­ces­sion, ef­forts to di­ver­sify has­tened end

USA TODAY US Edition - - MONEY - Kent Mal­lett Ne­wark Ad­vo­cate USA TO­DAY NET­WORK – Ohio

NE­WARK, Ohio – Sales con­sul­tants are no longer plac­ing or­ders for cus­tomers, bas­ket weavers are not per­form­ing their craft, and Longaberger prod­ucts are not be­ing shipped across coun­try this Christ­mas sea­son.

The bas­ket­maker, known for its seven-story replica build­ing and fa­nat­i­cal col­lec­tors, is out of busi­ness. Some are bit­ter over the end­ing, while oth­ers fo­cus on the good times.

The Longaberger bas­ket em­pire, once a $1 bil­lion com­pany with more than 8,000 em­ploy­ees and 70,000 sales as­so­ciates, slowly un­rav­eled in the nearly two decades since its founder’s death. The end came 45 years after Dave Longaberger started the com­pany with five weavers in a small Dres­den, Ohio, build­ing and 20 years since the founder re­tired and turned the com­pany over to his daugh­ter, Tami.

First came the May an­nounce­ment it was sus­pend­ing op­er­a­tions. Then, in June, its par­ent com­pany filed for Chap­ter 11 bank­ruptcy. And fi­nally, on Oct. 26, a Texas bank­ruptcy court granted the con­ver­sion to Chap­ter 7, for liq­ui­da­tion of the com­pany’s as­sets.

Patty Mar­shall, a con­sul­tant for 26 years from Martinsville, In­di­ana, said this year has been a dif­fi­cult one.

“It’s like a death in the fam­ily be­cause they’ve been a big part of my life,” Mar­shall said. “This hurts. I think it was poor man­age­ment. The last few years, more money was be­ing taken out of the com­pany than be­ing put back in.”

The rea­son for the com­pany’s demise de­pends on whom you ask, and much of it goes back to sev­eral events from 1998 to 2001. In 1998, the first full year oc­cu­py­ing the bas­ket-shaped head­quar­ters in Ne­wark, Dave Longaberger re­tired from run­ning the day-to-day op­er­a­tions of the com­pany. He died in 1999.

In 2000, Longaberger reached $1 bil­lion in sales, its peak year, and ranked as one of the 500 largest pri­vately held com­pa­nies in the U.S.. Then came the 9/11 ter­ror­ist at­tacks, an eco­nomic re­ces­sion and a changed mar­ket­place.

The founder’s legacy: The com­pany brought joy, pros­per­ity and big dreams to many around the coun­try for many years. Dave Longaberger re­ceives much of the credit. His sup­port­ers say he was im­pos­si­ble to re­place.

Sara Clancy, 37, a Longaberger col­lec­tor in Ohio, said her grand­fa­ther of­ten talked about Dave Longaberger when he drove a tour bus for the com­pany.

“It was his dream job,” Clancy said. “He loved talk­ing to peo­ple. He en­joyed it so much. He couldn’t say enough about Dave. Re­ally good things to say, how kind he was and how he re­ally cared about the em­ploy­ees. He def­i­nitely thought the world of Dave.”

The daugh­ters’ role: Many blame the com­pany’s demise on the founder’s daugh­ters: Tami Longaberger, com­pany CEO and pres­i­dent at the time of Dave Longaberger’s death, and sis­ter Rachel Longaberger Stukey, who was pres­i­dent of The Longaberger Foun­da­tion. Over­spend­ing and mis­man­age­ment are the usual al­le­ga­tions.

Rose Wolver­ton, a con­sul­tant from Ham­burg, New Jer­sey, said, “(Tami) tried. She re­ally did. I saw that poor lady age. You just know when the weight of the world is on some­body’s shoul­ders.”

Stukey, in an email re­sponse to Ad­vo­cate ques­tions, said her fa­ther’s death was dif­fi­cult for the com­pany to fully over­come, even though it sur­vived for 19 more years.

“The sud­den and un­ex­pected death of the founder, CEO and chair­man of the board, set the busi­ness and its op­er­a­tions on a chaotic tra­jec­tory,” Stukey wrote. “The iconic leader and THE driv­ing force be­hind ev­ery as­pect of the com­pany was a healthy 61-year old man one day and was a ter­mi­nally ill, stage 4 can­cer pa­tient the next.”

Dur­ing the en­su­ing 18 months of surg­eries, chemo­ther­apy and ex­per­i­men­tal treat­ment, there was no course set for

what to do if he died, Stukey said.

“There was NO prepa­ra­tion for this event,” she said. “We all thought we had decades to deal with the no­tion of him be­ing gone. There was no pre­vi­ous suc­ces­sion plan or even a tran­si­tion phase for the busi­ness.”

Sev­eral con­sul­tants have said pot­tery be­came an is­sue with their cus­tomers, for var­i­ous rea­sons.

Dixie Rol­li­son who worked in ship­ping for the Longaberger com­pany for 29 years, said, “I think we got too big too fast, es­pe­cially when we started sell­ing pot­tery, and couldn’t fill the or­ders be­cause de­mand was so high.”

The de­ci­sion to have pot­tery made in China was not pop­u­lar, Rol­li­son said. “I lost some cus­tomers be­cause of that, be­cause Longaberger had al­ways been ‘Made in the USA,’ ” Mar­shall said.

In 2009, Longaberger an­nounced it would be­gin sell­ing a new pot­tery line made in the U.S., as a re­sponse to re­quests from con­sul­tants and cus­tomers, but would also con­tinue to sell its pot­tery line made in Asia.

Wolver­ton said, “When they tried to have the pot­tery made in the U.S., the pot­tery didn’t meet ex­pec­ta­tions in qual­ity con­trol. I know peo­ple were up­set with it (made in China), but it’s the way of the world.”

Eco­nomic fac­tors: Many of those who do not blame com­pany man­age­ment for the com­pany’s col­lapse ar­gue that the mar­ket­place changed, and the pop­u­lar­ity of bas­kets de­clined.

The 9/11 ter­ror­ist at­tacks hurt the econ­omy, and then the Great Re­ces­sion changed spend­ing habits.

“The econ­omy played a big part of it,” Mar­shall said. “When the econ­omy tanked for a pe­riod of time, peo­ple would rather spend money on food, shoes and clothes, things they re­ally needed, than bas­kets.”

Clancy said she owns about 100 bas­kets, which is un­usual for some­one in their 30s. But her love of bas­kets can be at­trib­uted to her grand­fa­ther driv­ing Dave Longaberger around on a tour bus.

“It’s big to me be­cause it has sen­ti­men­tal value,” Clancy said. “Not a lot of friends my age have bas­kets and don’t go out and buy bas­kets. Younger peo­ple are not as into bas­kets.”

But Wolver­ton said she cre­ated a mar­ket for farm bas­kets. The com­pany just di­ver­si­fied too much, she said. “That’s why I’m so frus­trated,” Wolver­ton said. “I know there’s a mar­ket there. I think it’s mar­ket­ing. We were mar­ket­ing the wrong stuff. They didn’t want to buy hand cream, jew­elry, pic­tures. My goal was to mar­ket bas­kets, be­cause when I joined the busi­ness, it was a bas­ket com­pany. I could sell them now if I could find some­body to make them.”

Dave Longaberger’s goal was to di­ver­sify the com­pany to the point it was mak­ing ev­ery­thing for the home – and then build the homes, as well.

The par­ent com­pany: Tami Longaberger sold the com­pany in March 2013 to CVSL, which later be­came JRJR Net­works, run by John Ro­chon Sr. and his son. Longaberger was the first of sev­eral di­rect-sell­ing com­pa­nies JRJR ac­quired in an ef­fort to boost all the com­pa­nies by pool­ing and shar­ing re­sources.

But em­ploy­ees and con­sul­tants de­scribe the last few years as the most chaotic in the com­pany’s his­tory.

Matthew Clark, who started as a temp and be­came a se­nior ac­coun­tant in less than three years, was laid off the day Longaberger left the Bas­ket Build­ing in Ne­wark on July 15, 2016. When he started, a year after the sale of the com­pany, there were about 300 to 400 still work­ing in the iconic build­ing. But there was a big lay­off in sum­mer 2014 and an­other one in spring 2015, he said.

“They had lost so many peo­ple, the ac­count­ing depart­ment was ba­si­cally not func­tion­ing,” Clark said. “They had no­body to write a check to con­sul­tants. They had is­sues. A lot of long-time peo­ple wanted to stick around, but you could tell they just didn’t want to work for the Ro­chons.”

Clark said he thinks Tami Longaberger re­gret­ted sell­ing the com­pany and could do lit­tle to stop the col­lapse. “It was just chaos.”

There was too much in­ven­tory, no com­mu­ni­ca­tion be­tween de­part­ments, and a Texas com­pany try­ing to merge the fi­nan­cial state­ments from mul­ti­ple di­rect-sell­ing com­pa­nies into one pub­lic pre­sen­ta­tion be­cause com­pany stock was sold on the New York Stock Ex­change.

“It was spring 2015 when the wheels re­ally started to come off,” Clark said.

But if Wolver­ton is right and the mar­ket for bas­kets still ex­ists, is there any chance of a Longaberger Com­pany res­ur­rec­tion?

“Dad raised me to live on op­ti­mism,” Stukey said. “Noth­ing is for­ever. I hope and pray that some­body with a heart for the busi­ness and the for­ti­tude to re­build can res­ur­rect the com­pany and op­er­ate it based on its orig­i­nal prin­ci­ples – the prin­ci­ples that made it suc­cess­ful for many decades and ben­e­fited many peo­ple.”

SARA C. TO­BIAS/USA TO­DAY NET­WORK

The Longaberger Com­pany’s for­mer home of­fice in Ne­wark, Ohio, is a land­mark.

USA TO­DAY NET­WORK

Dave Longaberger with daugh­ters Tami and Rachel and three of the com­pany’s beloved bas­kets.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.