Small Business

The Top of the Barrel


The rural acres of Green County, Pa., are about as far as you can get from Pittsburgh's metropolitan sprawl without leaving the state entirely. But Bill Wilson, president of Wilson Forest Products near Jefferson, enjoys plenty of contact with the wider world. His family business and its subsidiary, Keystone Cooperage, make oak wine-barrel stock -- the staves and barrelheads -- as well as finished barrels. And while the completed barrels generally stay in the U.S., the wood stock is exported worldwide, keeping Wilson in touch with customers from South America to Australia, Europe, and Asia.

"We're in constant contact with these people," Wilson says, revealing one of the key elements of his success. "They're here, visiting our place. We're there, visiting their places -- several times a year, not just every two or three years. It's a full-time job."

That full-time job includes producing enough stock to make roughly 100,000 barrels a year, while dealing with the ups and downs of the wine and spirits retail realm. Winemakers, for example, can't know exactly how many barrels they'll need until they see how many have been emptied by the previous year's sales. Yet Wilson has to plan a few years ahead, so he can be sure he'll have enough aged oak available when need arises. It's a guessing game, one Wilson has been playing for decades -- and which he and his sons have no intention of giving up.

SACRED TRUST. Wilson's father started the forest-products outfit in 1931, and barrel-stock exports began in 1951. Wilson, who bought the company from his dad about 30 years back, says he's seen times when he could have made more money by shifting into selling furniture stock domestically, rather than sticking to the international barrel business. "But we never involve ourselves in that," Wilson says. "We keep our focus straight ahead on our business, and service the customers who need to be serviced."

As he explains it, consistent customer service is the key to success. In the wine world, everybody talks to everybody else, and if your quality isn't good, or you're not available when customers need you, you're sunk. Knowing this, Wilson has made his clients the center of his business and insists that his employees do the same. "You don't bite the hand that feeds you," he notes, adding: "We work for the customers. They don't work for us."

This month, after being honored with a U.S. Small Business Administration special exporter award for "exporting and advocacy efforts on behalf of small business exporters," Wilson spoke with BusinessWeek Online's Lisa Miller about his company, the vagaries of exporting, and why trust is the most valuable commodity of all. Edited excerpts of their conversation follow:

Q: Is the way you run the business different from the way your father did?

A: Oh, light years. He always went through middlemen. He would sell to other merchants, who would have the direct contacts with the customers. My philosophy is, we sell direct, as close to the end user as necessary or as possible -- either directly to someone in the wine industry or in the hard-liquor industry.

We don't necessarily use a lot of agents. We've got an agent selling premade wine barrels for us. All of our other products we sell ourselves.... Let's say you were a merchant in Portugal, and you wanted to buy our product and then mark it up and send it on. We don't do that. We circumvent those people, because [otherwise], we have no customer base.

They [the middlemen] are looking for bottom-dollar pricing. They're not looking at quality or anything else. And that's how we've stayed in business over the years. Our prices may not be the cheapest, but our quality is very good and to very high standards, and that's what's kept us in the position that we're in today.

Q: What about the economy being so slow; how has that impacted you?

A: Well, our business has slowed some in the last two years, because of the economy -- more in the U.S., because [a couple years ago] we began producing a finished barrel earmarked for the [U.S. market] ... Well, the economy has come to bear on that, and it's holding us back on that little section of the company, somewhat.

Q: Is there anyone in the family you expect will take over the company from you?

A: Yes, I've got two sons here. They run the place. I just happen to be alive for this award. I get involved with some of the long-term stuff and visiting customers, and that sort of thing.

Q: Are your sons working to increase production capacity?

A: Capacities won't really increase much here. We're pretty well in the saturation point, with what we can physically control, as a family business. Now, we can go outside and start hiring people and increase the business, but we've done that in the past, and we never find the right person to do the details, when they need to be done, as we do. When it needs to be done at 7 in the evening, we stay and see that it gets done. But, if you hire somebody, they'll say, 'I've got other pre-commitments, and I'm going to do them.' It's a different ball game.

What we want to see grow is the pre-made barrel. We want to make maybe 10,000 or 12,000 finished barrels a year. After that, we're not really interested in going any further. We've got other wood projects that we'll go into. I used to be in the veneer business -- I used to do a lot of that inside this cooperage business, but then, seven or eight years ago, I got rid of all the veneer stuff. The boys, they wanted to key in on the cooperage business. Now, they've got this stuff down pat -- better than me. Maybe I'll start a little business over here of my own, someday.

Q: You entrepreneurs, you never stop!

A: [Well], you give a few people jobs.... I've got one guy, he started with me in 1966. Then, I've got another employee who has been here 28 years. We've got a lot of employees who've got 10, 15, 20 years with us.

Q: You also used to help other small businesses start exporting, correct?

A: Oh, in the past, years ago, I used to help with some people who wanted to get into it. ... [Big companies], they've got full office staffs looking after all that stuff, with another building full of attorneys. [But] when you're out there, floating your own boat, you've got to go see the customer, and you've got to draft your own contract and payment terms. And then you've got to go back to your banker and explain what you've done and why you did it. A lot of people in these small businesses, they don't understand that. The only thing they see sometimes is that they can sell it to Columbus, Ohio, for a dollar, and they can sell it to somebody in France for $2. But, there's a lot [that gets] eaten up inside that other dollar. The other dollar sometimes is not as big a deal as they think.

Q: So people try it and then find there is far more to it than they expected?

A: Well, yes. You send it over to Columbus, Ohio, and the bankers look at it, and they say, OK, it's worth a dollar and we're going to advance you 80 cents on that, ... and [if] the company in Columbus, Ohio doesn't pay, [you] go over and file suit against him, and maybe he's got a warehouse full of stuff, or maybe he's got something else that can be attached.

Well, [in international trade], this stuff goes out of the country. Basically, you'd better be dealing with honest people, or kiss it goodbye.... You've got to know your customer. You've got to know who you're dealing with. You've got to know whether you feel comfortable with him and you trust him. And it's vice versa -- they've got to know you, they've got to trust you.

Q: It sounds like in your industry, everybody knows everybody?

A: When you break it all down, truthfully, this is a very small industry inside the wood industry. It's so specialized ... [and] to do what we do in the export market, there are very few people who get into it.... When I took over, I played the domino theory. I got [our product] in with one company, and then one more -- it was a small community of people who said, 'Look, we're getting good results.' I guess I'm betting the same thing will happen with the barrels [in the U.S.]. We'll be getting barrels into California, Oregon, Washington, all over the eastern U.S., in Texas, different parts of this country. Every place is getting good results out of us, so we think the domino theory will carry us forward.

Editor's Note: The U.S. Small Business Administration handed out several awards during its National Entrepreneurship Conference & Expo, held in Washington D.C. Sept. 17-19. Among these were three special advocacy awards given to small businesses that, in the SBA's words, showcase "the vital importance" of America's entrepreneurs. BusinessWeek Online spoke with each of these small-biz champions, and has published the interviews as a series.

Other interviews with SBA award-winners in this series:

"The Top of the Barrel"

"Tailored for the Rugged Invidualist"


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