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."

CEO Ira Phillips Dancing at Quoizel's Christmas Party

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.

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 furniture.

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 costs.

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 pastures.

By Meg Lundstrom in New York

TABLE: What a Few Quoizel Workers Say about the Company