First in a series on moving a business to the country.

In July, 1996, Robert Du Grenier was at wits' end. His landlord had tripled the rent on the 11,000-square-foot loft in Manhattan's trendy Soho district that housed his two businesses. He hated the idea of leaving New York's epicenter. But in a year of searching, the 41-year-old entrepreneur found no affordable space. With fixed costs so high, financial trouble loomed.

One weekend, as he and his wife, Katherine, drove back from their Vermont farm, they passed a stately Georgian mansion for sale. "Do you think we could move the business up here?" he mused. As Du Grenier saw it: "If I was going to have to be in an outer borough, I would just as soon be in the borough of Vermont."

"I don't know," she answered. "Let's talk about it."

Three years later, the mansion in Townshend, Vt., 15 miles north of Brattleboro and two hours from Burlington, houses his seven-person design company, his 10-person glass-painting factory, and a gift shop, which serves as a factory outlet. He has cut his overhead, including labor costs, by 25%. His profit margins on revenues of close to $1 million are up. Still, the transition, which was fraught with trade-offs, has been far from idyllic. He lost all of his staff, and the move was a big financial investment.

Du Grenier's dilemma wasn't unique: Skyrocketing real estate costs have pushed manufacturers out of expensive cities like Manhattan for decades. Some go to the suburbs -- in New York, to the outer boroughs, Long Island, or New Jersey. But that can be expensive, too. And with unemployment so low, few workers need to follow a company if the commute is tough.

That traditionally left businesses with few options: eating the cost increases, subcontracting production overseas, or closing down altogether. But the Internet, the fax machine, and overnight delivery services have opened another way -- staying in the U.S., but far from big cities. That's a solution that appeals to some entrepreneurs who don't have a gun to their head. Lower overhead in rural areas may be a strong push -- but a gentler lifestyle is a strong pull.

Still, it's tough to leave the city. Du Grenier's situation was particularly tricky. His two businesses fed on New York's high-power design clientele and skilled, but cheap, immigrant labor. Vermont, a state reputed to have more cows than people, had neither.

Robert Du Grenier Associates Inc. designs elegant bottles and packaging for high-end cosmetic lines such as Donna Karan, Bill Blass, and Faberge. It also does award trophies and promotional items for such companies as MTV and Nickelodeon. Crest Studios makes hand-painted, custom glassware and decorative objects. Du Grenier had bought the 65-year-old company, which had produced many of his designs, in 1988 when its former owner fell ill.

It made sense to move a factory out of Manhattan, but transporting the design business -- a creature of New York's manic fashion and media worlds -- was truly "frightening," Du Grenier says. "I saw people every day, whether I wanted to or not." Clients would summon him impromptu, and he'd dash uptown. Plus, he and his wife Katherine loved the city's energy, food, and culture. They weren't sure year-round rural life was for them.

With trepidation, Du Grenier broached the idea to his clients, proposing weekly trips for "face-time." They gave it their blessing, assuring him that electronic communication would work fine, he recalls. "It was the romance of moving to Vermont. They said, 'Awesome! We'll come visit you!'" Du Grenier was still uncertain. How fast would they drop him once he got beyond commuting distance?

A week later, the couple agreed to buy the house for $245,000.

Du Grenier prepared for the move without telling his workers. He expected a third of them to come, but he couldn't afford to have the rest jump ship. A Vermont artist joined the New York staff. Unbeknownst to them, she was learning the business to train their replacements up north.

After his Darwinian struggle with New York's real estate market, the welcome he got from the state's Economic Development Authority and the nearby Brattleboro Development Credit Corp. was a relief. They helped Du Grenier secure a $105,000 low-interest loan from the state and a $205,000 bank loan so he could buy the house and its five acres and renovate the barn. The Central Vermont Public Service Corp. assigned Du Grenier an engineer to guide him through the state's complicated permit process for converting a historic site to a commercial concern.

In January, 1997, the Vermont artist went back north to train new glass painters in a space local authorities offered at nominal rent. They trained till March. In February, 1997, Du Grenier broke the news back in the city. Everyone balked. His young, hip designers were wedded to New York. The glass painters were immigrant artists from China, Indonesia, and Russia. As delighted as they were not to be washing dishes, moving to Vermont was like going to Mars. "It was too far from their communities, and you can't buy rice for 30 miles around," says Du Grenier. He found most of them jobs with friends, and all were working when he left.

Fortunately, in March, when he packed his factory and studio into seven containers and trucked them up north, his new painters were up to snuff, and he didn't miss a shipment. He'd invested $425,000 in the property and moving costs alone.

His labor woes weren't over, though. Local staffers often quit for the gardening or ski seasons. He found nonartists could learn the glass-painting craft and were steadier. The big shock: Rural talent cost more -- $10 an hour, on average, vs. $7.50 in New York. And Vermont was no refuge from global competition. Chinese and Romanian rivals chipped 6% off his glass revenues over two years. Now, he focuses on custom jobs for yacht owners, golf clubs, and restaurants.

To recoup revenue, Du Grenier put in a gift and antique shop in January, 1998. Visitors tour his factory and often end by buying his seconds. Last year, the shop, Taft Hill Collection, accounted for 10% of his revenues, and sales have been up 30% this year.

To staff his design company, Du Grenier went to the Internet, locating six workers by using Vermont-based and national job banks. One impressive resume was from the chief of graphics at the American Museum of Natural History in Manhattan, Joel Pollack, who now runs Du Grenier's graphics operations. When Du Grenier looked at his address, it was only four miles away from his new location. In this area, Du Grenier was able to economize on salaries. He now pays his designers $20,000 to $35,000 a year, about $10,000 less than he paid in New York. Pollack, who moved to Vermont for family reasons, says he took a 25% pay cut when he joined the company.

Du Grenier's fear of losing clients proved groundless: The first two years after his move, his design-business revenues -- which account for just over half of his total -- were up 20% from his last two years in New York, and his first-quarter 1999 revenues were up 40% from the same period of 1998.

That's partly because Du Grenier goes to great lengths to keep in touch. Most Tuesdays nights, he and his wife drive four hours to New York, where he makes the rounds of his design clients, returning Wednesday night. Distance has its virtues. "People at places like MTV say, 'Robert's coming in -- what can we pull together for him?' and we'll talk about five or six projects instead of one," he says.

The New York trips are also vital for stimulation, the entrepreneur finds: "You're in a swirl of new images and new visuals there, which you need to stay on the cutting edge." Ironically, he and Katherine go to more shows, exhibits, and new restaurants than they did as Manhattanites.

With business services less accessible, Du Grenier has had to be more efficient. In his city loft, he often worked up until the last FedEx dropoff at 9:30. In Vermont, the last UPS pickup is at 5:30 p.m., so he knocks off earlier. With his extra time, Du Grenier tends his apple orchard, blueberry patch, sugar maples, and trout pond. He also produces glass beehives and sculptures he entwines in apple trees. (Some are displayed at the Fulcrum Gallery at 408 Broome St. in Manhattan.)

For all the sacrifices, Du Grenier has no regrets. "Looking back over the last two years, moving here was the best decision we ever made," he says. "You're always on edge in the city. Here, with our mansion and our gardens, it's heaven to come to work every day. It's helped the business, and it's helped our state of mind." Quite an evolution for a dyed-in-the-wool city dweller.

By Meg Lundstrom in New York

Next in this three-part series: No Company Is an Island