A Factory That's Like Family Moves South with Its Workers
Quoizel's CEO inspires the kind of loyalty that bolsters the bottom line
Third in a series on moving your business to the country
It was late 1995, and Albert Velez, a quality-control worker in a decorative
lighting factory, had lost a lot of sleep. His company, Quoizel Inc., was
moving from the New York City suburbs to rural Goose Creek, S.C., to slash
costs. This was no ordinary heartless plant relocation -- the 48-year-old
Velez wasn't in danger of getting the ax. On the contrary, the family that
owned the plant was moving, too, and encouraging every worker down to the
floor sweepers to come along.
Yet Velez couldn't see himself moving. Born in Puerto Rico, he had lived
30 years in New York, near his sisters, nieces, and nephews. "I'm going
to rip away from my family, when I have nobody down there and don't know
what life is going to be like?" he agonized.
Ira Phillips, 71, Quoizel CEO and owner, had already taken extraordinary
steps to make the move easy on his workers -- many of them unskilled and
wedded to New York's Hispanic communities. Yet he sensed how wrenching
the decision was to leave the bustling, multicultural city for the Carolina
countryside. He called them together for a heart-to-heart talk. They'd
live better down there, for less, he said, in safer, quieter neighborhoods
with nicer houses. Velez caved. "I've known Mr. Phillips for years. He'll
tell you the truth right off." He had reason to have faith in the entrepreneur.
About eight years earlier, when Velez was in deep water financially, Phillips
sat down and showed him how to budget. Then he loaned him money. "I would
do anything for Mr. Phillips. Let's put it that way," says Velez.
Phillips didn't stop there though. Velez joined an all-expenses-paid
company trip south to survey the scene. Further reassured by the promise
of a free trip home if he changed his mind, Velez took the plunge along
with about 150 of the 215 factory employees. Once there, the veterans taught
their 150 new colleagues in South Carolina how to do their assembly, handpainting,
shipping, receiving, and stockroom jobs.
Phillips' generosity paid off in spades. Factories typically take a
drubbing in production and sales the first year of a major relocation.
Not Quoizel. The company emerged from 1996 with a 20% rise in revenues.
By 1998, Quoizel's revenues were up to $75 million, vs. $50 million in
1995, its last year in the Northeast.
Quoizel's story sounds anachronistic at a time when unskilled, urban
workers are the throwaways of the labor force in industrial countries --
readily replaced by technology or cheaper labor elsewhere. For three decades
now, manufacturers have fled Northern cities to the rural South and Midwest
or overseas. Agriculture Dept. statistics show U.S. metropolitan areas
lost over 2 million manufacturing jobs between 1969 and 1996, a 12.4% drop,
while rural areas gained 800,000, a 22% increase. Today, there are three
times as many manufacturing jobs in the rural U.S. as agricultural jobs.
The phenomenon conjures up sad images of decimated inner cities and
unskilled men Velez' age who never find work at a decent wage again --
with reason. Yet Quoizel's take on relocation challenges the assumptions
of many businesses that make such moves. "It cost us a million dollars
to move everyone, and it was worth every penny," says Phillips. Had Quoizel
been forced to staff its plant from scratch in South Carolina, "we would
have gone out of business." Why? Most factories, figuring minimum-wage
workers are interchangeable, move only managers and supervisors. They don't
understand how workers learn, asserts Phillips: "Supervisors don't train
line people. Line people train line people."
By melding such down-to-earth management tactics and an unfashionably
paternal philosophy, Quoizel has kept a loyal workforce performing at its
best for decades. Phillips says that's one factor behind 35 straight years
of revenue growth, never lower than 5% and as high as 30%, and no annual
losses. In the process Phillips, a high school dropout, has caught the
attention of Harvard University and Dartmouth College, where MBA students
study his company's methods.
|CEO Ira Phillips Dancing at Quoizel's Christmas Party|
Quoizel's move to the country was no whim. Years of steady growth had
been pushing it out of its New York area base for some time. Quoizel was
a small family-owned lamp manufacturer with flat growth in 1964, when Phillips
approached it. He proposed joint ownership if he increased sales of its
midpriced lighting fixtures. He became a partner within the year, and in
1985, bought out the other owners. In the past five years, the company
has branched out to mirrors, wall decor, Tiffany-style lamps, and hand-painted
By the early 90s, Quoizel was bursting out of its two Hauppauge, Long
Island, facilities and a New Jersey warehouse. But adjoining land in Hauppauge
was prohibitive at $250,000 an acre, with only five acres available. Surprisingly,
neither New York state officials, nor the local utilities, which typically
pitch in to court and retain business customers, made any special effort
to keep him. Southern officials, meanwhile, treated Phillips like visiting
royalty: In Georgia, he dined with the governor and had a prime seat at
the Masters Tournament.
Phillips narrowed his choices to Savannah, Ga., and Charleston, S.C.,
then sat back to enjoy the bidding war. Goose Creek, 20 miles from Charleston,
won. Quoizel purchased 63 acres on a former plantation for $900,000, about
$15,000 an acre. There, it built a $10 million, 300,000-square-foot facility.
The company also got 15-year state and local tax abatements and free training
for workers hired who had been on welfare or displaced from other jobs.
The area had been designated a foreign trade zone by the Commerce Dept.,
which enabled Quoizel to import parts from overseas duty-free. Utility
rates were a third of those in Long Island -- where electric charges are
among the nation's highest. It cost $50 to get a shipping container from
port to warehouse, vs. $350 in the New York area. A big plus for the staff:
Charleston Naval Shipyard, which closed in 1995 and fed workers to the
factory, had attracted an ethnically diverse community.
Phillips never contemplated leaving anyone behind: "I consider them
family. I would do the same for them as I would do for my own family."
He paid them lump sums for moving costs and cut deals with movers. He even
threw in new washers and dryers -- which few owned.
To help workers decide, the company flew them down in groups and put
them up in the local Hilton. Phillips' late wife, Nila, and his sister-in-law,
Rene Clark, accompanied them on tours of the schools and churches. They
checked out local restaurants. Realtors took them to apartment and townhouse
complexes. For Velez, housing closed the deal. He got a three-bedroom,
two-bath townhouse with stained-glass doors across from a swimming pool
for $485 a month. His tiny, dark one-bedroom in Long Island cost him $800.
They relocated in three batches in July, September, and November, 1996.
Unhappy spouses persuaded two workers to return -- the only ones to do
so. Hauppauge workers who didn't relocate got severance packages to work
until the last day, which virtually all of them took. The company also
left 35 employees, mostly sales staff, in Long Island. Altogether, the
move cost $1.5 million, says Phillips -- two-thirds of that employee moving
The workers left their union, Local 3 of the International Brotherhood
of Electrical Workers behind (the IBEW hasn't organized at the new site),
but hourly wages haven't changed much. The company still starts workers
at $6. "We can only pay a certain dollar figure to keep competitive, so
we have all kinds of programs," says Phillips. They include profit sharing
in the form of annual 10% bonuses, a 401(k) plan that matches employee
contributions dollar for dollar, and a choice of three health plans. Workers
can get low-interest loans from Quoizel for downpayments on houses and
special mortgage deals through participating banks. There are also college
scholarships, Thanksgiving turkeys, and monthly barbecues where supervisors
cook the hotdogs.
|A Quoizel Barbecue
Phillips remains the original open-door manager. The switchboard puts
calls straight through. Every morning he rides through the factory in a
golf cart, stopping to chat with workers. He encourages them to come to
him with problems, and sometimes pulls money out of his wallet.
Why? "Money is a wonderful thing, but how much can you spend? Phillips
observes, adding softly. "I lost my wife two weeks ago. There wasn't enough
money in the world to save her." When Nila died on May 1, workers turned
off the factory music for a day and lowered the flag to half-mast. Says
her husband: "There weren't 10 employees who weren't at the memorial service."
Now that it has the space to grow in its country digs, Quoizel's challenge
will be keeping that family flavor. It plans to add 200,000 square feet
and expand its workforce by 15% to 20% a year for the next three years.
Even now, says Phillips, "I know some people's faces, but I don't remember
their names." But he has taught his children -- Toni, 47, and Todd, 46,
both vice-presidents, and Gene, 30, product manager -- to walk around and
talk to workers. "My kids have been in the factory since they've been 11
years old, and they're trained by osmosis."
|The Quoizel Christmas Party
The heirs aren't the only ones who are expected to transmit the family
values. New managers are required to spend two to four weeks working labor
jobs in every part of the factory. Says Tim Hensch, plant manager: "It
breaks down the walls between people. You get to know that no one is better
than anyone else here."
Leaving the city has turned out fine for Velez, who was promoted to
receiving supervisor. He has bought a four-bedroom brick house with an
in-ground pool and drives a new Chevy pickup. He even found a wife: Xiomara
Escabosa, whom he met when she was visiting her daughter, one of the New
York emigres. Xiomara now works as an assembler at Quoizel. Says Velez:
"I went up North last year to my niece's first communion, and it seemed
so grey. I'm very glad I made the right choice." Clearly, New York lost
more than just another factory when Phillips moved his business to greener
By Meg Lundstrom in New York
TABLE: What a Few Quoizel Workers Say about the Company