CEO John Sheils tells us the story of how Pine Crest fabrics came to be. You can listen to him tell the story below or read here.
The Pine Crest Story
I am often asked to share the story of how I started Pine Crest. I believe it is an interesting story and contains the typical challenges as any small business faces in getting established.
I graduated from the University of Portland located in Portland, Oregon in 1971 and met my future wife, Shelby Holland, while attending the university. Shelby graduated with an elementary teaching degree and was offered a position starting in the fall of that year, so we determined it made sense to stay in Portland and see where the future would take us. Soon after, while visiting the university I found a job posting stating, “Knitting mill owner is looking for a college graduate to learn and eventual run the business”. While expecting this to be “too good to be true”, which it turned out to be, it never the less gave me the opportunity to learn the fabric business and to lead a sales effort. The company was primarily a mill producing fabrics which they produced into letterman sweaters sold to high school and college students. With the double knit explosion which began in the late 60’s; some of you may remember the big movie at that time, “Saturday Night Fever”, the mill decided to convert some of the knitting machines to produce Trevira Polyester double knit fabrics which would be sold to fabric stores.
A week into my new job I found out I was hired to replace the person running this new department; I was never fully aware of the reasons for the change, but it was a challenge to convince a team of ten to accept directions from this young college graduate, who was several years younger and having no prior knitting mill experience. I spent 6 years at the mill learning and leading the sales efforts which turned out to be invaluable lessons through mostly trial and error, as the owner was never really committed to this department. After 6 years of trying to convince him of our need to attend trade shows and visit accounts, I decided I could do it better and started Pine Crest Fabrics in the late fall of 1977.
Thinking back, I was incredibly naive and extremely lucky to make it out of our first years. After putting together a business plan consisting of unrealistic projections, I approached my parents and my wife’s parents as investors into this new endeavor. I think started with a whooping $30,000 of which I accepted a check from my mother in law with the words, “John, we have decided to invest because we believe in you”. Trembling I accepted, but deep in side I wanted to hand it back, “did I want the pressure of someone believing in me, investing their money, especially the parents of my wife”. Getting my parents investment was an even more interesting story. My dad had a personal financial manager, Howard Miller, of which my dad would run all investment through prior to investing. I will never forget the conversation with Howard, who my dad wanted to advise me on my general plan. Among the questions Howard asked me what terms I would grant customers and what terms I expected my vendors to give Pine Crest. Naturally I would bill on net 30 day terms and expect to get net 60 which would give me all of 30 days to make sure cash flowed properly. He pointed out that should a few customers pay late, or not at all, how quickly I could be a tight situation. He went on to say that “as your father’s financial advisor, this is about a poor a business investment he could make. However your father has informed me he is going to invest, so we just need to determine how to set it up.” As long as I live I will never forget that conversation. Although I was insulted and anger at Howards message and tone, in truth I am grateful he was as direct with me as he was. I was under capitalized and I did struggle in meeting our early obligations. The lesson learned was to always plan on the conservative side and to look in advance of where the “Wheels may come off”, because at some point they “will come off”.
The long and short of this story is that I did get my needed $30,000 and we were off and running. While may be not running be we did make it through year one without a major set back. That set back was saved for year two. Back in my last year with the knitting mill, the company was producing Jacquard sweater blanks. These blanks, basically consisting of a circular knitted sweater length of fabric which at the base of the blank had a waist bank ribbing automatically knit onto the length were sold to fabric stores who in turn would offer to their customers these colorfully designed sweater fabrics to be sewn into cardigans, or other sweater styles. The program was quite successful with a select market and I was convinced it could be duplicated at the newly established Pine Crest Fabrics. Again, a long story short, by year two I had a fabric inventory with a total value of about $40,000, consisting of $25,000 worth of Jacquard Sweater Blanks. That’s the good news; the bad news is I miss judged the market. Sales for our sweater blanks were dropping almost daily and if things continued on the pace, our cash would dry up quickly. Just at the right time (I really do believe that fate plays a big part in our life’s experiences0…well just at that time, I received a call from our sales person in the Midwest who told me a person whom he did business with, Larry Hayman was going to be flying to Seattle with his girlfriend for a vacation and their plans were to drive through Portland on their way to San Francisco. He had told Larry about our sweater blanks, the different designs and Larry indicated his interest to learn more about this product. We arranged to have Larry visit us in Portland during his trip down from Seattle to San Francisco. Larry really seemed more interest in finding the best restaurant in Portland for lunch, but after finishing we went back to our warehouse to discuss a possible business deal with regards to the sweater blanks. Larry’s family owned Hayman Distributing in Chicago and he ran the fabric division which would distribute fabrics to regional fabric store in the Midwest. After giving Larry more details on the attributes of why these sweater blanks would be a good item for his Midwest fabric customers, he turned to my one in house salesperson at that time and said, “Is this guy going to shut up and write an order”? I quickly got the cue, and with Larry asking me how may blanks I had, he told me he would take them all at a price which I could live with”. I could not wait fast enough for Larry to get on his way to San Francisco, not wanting to take any change that he might question his decision. I believe we agreed on net 60 day terms, and upon the 58 day I got a letter in the mail from The Hayman Company which I was almost to frighten to open. Was it going to state, “The sweater blanks we received were not as ordered and therefore we will be returning….” To my somewhat surprise and delight, in the envelop was payment in full. Another business lesson learned, don’t put your entire inventory into one product; diversify.
We made it through that year today and have continued for another 34 years in business. We have continued to be challenged as all business’s are, and we have survived and prospered. I am thankful to having worked along side an outstanding team at Pine Crest with many of our team here at Pine Crest for more than 20 year. We have been supported by loyal and successful customers. I am not sure if I will be around for the second half of the story of Pine Crest but if it is all similar to the first half, it will be quite a good story.