Windows of opportunity

WARROAD, MINN. - After losing his job as a golf course superintendent, Steve Timm got lucky.

It was December 2007 and the recession was beginning to take hold across the United States. Manufacturers in Minnesota had begun to slash jobs by the thousands.

But the 49-year-old Timm had landed a job at Marvin Windows and Doors. And despite his junior status at the 2 million-square-foot Warroad plant, he hung on to his job, even after sales began to drop by double-digit percentages over the past year.

The family-owned and -operated Marvin Windows kept everybody on the payroll.

"The easiest thing to cut costs rapidly is to lay off people, but that wasn't even considered," said Susan Marvin, president of Marvin Windows and Doors.

Now the business, which has weathered many recessions since it was founded as a lumber company in 1912, is well positioned to take advantage of a gradually improving housing market.

Sales of existing homes increased 7.2 percent in the United States in July as a potential housing recovery starts to take shape.

The company has avoided debt and continued to develop new products despite the economic downturn. A federal tax credit for energy-efficient windows may also spur more sales, as it did earlier this year at Marvin's Infinity replacement windows unit. And because Marvin didn't lay people off -- it put most employees on a 32-hour workweek instead -- the company can quickly ramp back up to full capacity.

"When the market turns, we are not going to be looking and then training," said Marvin, part of the third generation now running the company. "We are going to have a trained workforce ready to roll."

Still, she's realistic that the recession is far from over. She expects 2010 to be not much better than 2009. "Housing starts are more depressed now than they've been since the Great Depression," she said. She envisions another wave of home foreclosures before the housing market strengthens substantially.

Yet Marvin has no doubt that her company, founded by her grandfather George, will survive this recession. Marvin, 54, expressed confidence that the fourth generation of Marvins will be poised to navigate future downturns.

"We are making decisions this year and next year that will serve us well 10 years from now," she said.

More workers than residents

A Marvin company brochure refers to Warroad, at the top of Minnesota near the Canadian border, as the "home of windows, walleyes and hockey."

To urban dwellers, Warroad could appear to be an isolated small town. It is unquestionably a company town.

Warroad's population is listed as 1,722 on its road sign. Marvin employs 2,592 people here.

But Marvin casts a big shadow in the larger business world, even though it is far removed from big cities and big airports. Window & Door Magazine estimated that privately held Marvin Windows and Doors will generate $500 million to $1 billion in revenue this year.

John (Jake) Marvin, Susan's brother and CEO of the Marvin Companies parent corporation, last week was named chairman of the board of the Federal Reserve Bank of Minneapolis. Susan Marvin formerly chaired the board of the Minnesota Chamber of Commerce.

The Marvins have made major contributions to the library and other public buildings in Warroad, and Jake and Susan's parents, Bill and Margaret, established a $15 million endowment to fund college scholarships for Warroad High School graduates.

Community service is an ethos that was at the core of Bill Marvin, who died on Aug. 31 at age 92 in his home along the Warroad River.

David Olson, president of the Minnesota Chamber of Commerce, said Marvin's large commitment to the community where it does business distinguishes it from other companies. "Their focus has been on the success of Warroad as much as it has been on the success of Marvin Windows," he said.

He points to the management's strategy to reduce workers' hours and preserve benefits instead of laying people off. "While some manufacturers may question this approach from a bottom-line perspective, it has clearly built extreme loyalty to the company and the family," Olson said. "It also sets them up perfectly to respond to increased orders when the economy turns."

Keeping people in town

Susan Marvin said the philosophy of avoiding layoffs dates back to when her father joined his father in business in 1939.

If the Marvin Lumber and Cedar Co. could expand into making windows, Bill Marvin thought, then his brothers, friends and neighbors could have jobs in town and they wouldn't have to leave tiny Warroad to make a living.

"If you lay people off, then they are going to be forced to leave," Susan Marvin said.

After the ills in the U.S. economy were apparent to nearly everybody late last year, Marvin carried on with profit-sharing. For the 2008 year, Marvin shared $6.4 million in profits with 3,381 employees who worked at Marvin companies in Warroad, Eagan, Grafton, N.D., and Baker City, Ore.

This year, it's unclear whether Marvin Windows and Doors will be profitable.

Back to 40 hours, for a while

"I've never seen it be quite as slow as it was this year," said Chris Larson, 39, while working in the Signature Products section of the Marvin plant. He's worked for Marvin for 15 years, and his wife, Amanda, is employed in Marvin's corporate office here.

But workers recently got good news when the Warroad plant returned to a full 40-hour work schedule last week, which is expected to last about three to four weeks. The 32-hour workweek had been in place since mid-January.

There has been a boost in orders for Marvin's "ultimate casement" products, which are windows that can be cranked open. The company also typically sees an uptick in orders during fall months as people attempt to complete projects before winter sets in. Replacement windows have played a bigger role in Marvin's business during the recession, as homeowners fix up instead of move.

"The window industry over the past several years has become so specialized between the different glass options, color options and hardware options," said Daryl Doehr, Marvin's regional sales manager for Minnesota and eastern North Dakota.

Because all of Marvin's windows are made to order, he said, Marvin's staff works "shoulder to shoulder" with dealers, builders, architects and remodelers about how to place orders that will meet their needs.

Doehr said some other companies cut back on their sales staffs, which provided opportunities for Marvin's to gain new sales.

Marvin even flies some customers up to Warroad so they can get an on-site view of how the windows are made and the options available. On Wednesday, a Marvin pilot crew flew a group of New York-based architects from the Twin Cities to Warroad in one of the company's Beechcraft planes that seats 18 people.

On the ground, the architects got the chance to lay out their building needs to Marvin staff inside the company's 30,000-square-foot training and visitor center, which features cherry wood and a huge stone fireplace designed to represent the company's living room.

Susan Marvin said she knows executives who focus on short-term profits. But at Marvin, she said she takes the long view. "One of the company's greatest strengths has been the fact that it serves all of its stakeholders, not just the shareholders," she said.

Management, which cut salaried workers' pay by 5 percent this year, has held the line on discretionary expenses. But Susan Marvin said she has drawn on one of her father's business credos to guide her on what's most important in the business.

She also saw it in action in the last weeks of her father's life as he greeted Marvin customers at the visitor center from his wheelchair.

Susan Marvin said, "If you take care of your customers and you take care of your employees, your shareholders will be just fine."

Liz Fedor • 612-673-7709