Growth Dictates Move of Tom's of Maine Warehouse

Typography
Tom's of Maine's new building may not be exactly what the company wanted, but apparently it's what it needed. While it's not the ultimate environmentally friendly campus the company had set its sights on, its extra space has been a factor in recent growth, said Tom Chappell, founder and chief executive officer.

SANFORD, Maine — Tom's of Maine's new building may not be exactly what the company wanted, but apparently it's what it needed.


While it's not the ultimate environmentally friendly campus the company had set its sights on, its extra space has been a factor in recent growth, said Tom Chappell, founder and chief executive officer.


The company moved its factory and warehouse operations into the 150,000-square-foot building in July 2004. The old 15,000-square-foot Kennebunk factory had been crammed to capacity with people and equipment, and that limited growth, said Chappell.


The move has enabled Tom's to increase production by 25 percent, Chappell said. The company was making 4 million units of product a quarter -- mouthwash, deodorant, toothpaste and other such products -- at the old facility. It's up to 5 million a quarter now, said Chappell, and will hit 22 million annual units in the next fiscal year.


Increasing production, combined with a refocus on core products (the company dropped from 250 products to 120, centered in oral and body care) and the launch of new items that address more consumer needs, has allowed the company to grow sales by 25 percent since January, said Chappell. With new space, new focus and plans to launch a TV ad campaign to penetrate lukewarm markets, this 35-year-old company is making a push for growth.


But the building itself, the physical space, wasn't Chappell's first choice.


The company had a brand-new, extremely "green" campus planned on the Mousam River in Kennebunk. Everything was architecturally planned to be as environmentally sensitive as possible, from the materials used to the siting of the building to best take advantage of energy patterns. The town was open to the plans and the approvals were won, said Chappell. It was a way of advancing the company's sustainable values, which have often put Tom's in the spotlight as a laudable example.


But the bank loan for a green building would have cost the company more, said Chappell. The bank examiners, who look at potential projects up for loans, take a short-term view of investments, and have a hard time accepting environmentally friendly materials when cinder blocks would do, he explained. "We have a very long way to go in making green a part of our economy," he said.


Instead, Tom's bought a factory building in Sanford for $2 million, putting about $3 million into improvements to date, with another $800,000 in capital investments ongoing.


"I had to go through a process of letting go of an ideal that was out of our reach because we didn't have a cash flow of an extra 8 million bucks," said Chappell.


But, said Chappell, pieces of the company's values have begun to infuse the new property. The open cafeteria serves as a place for "fellowship" gatherings every other week or so, when production stops for a few hours while employees meet and socialize. The building has a fitness center, complete with a director who sets up workout routines for individuals.


Perhaps most telling is the new herb garden in the front of the building, a patch that makes the site different from other business park offerings. The company is built on the principle of using natural rather than synthetic ingredients, and the garden symbolizes that ideal. Employees, not a hired grounds company, maintain the garden.


Tom's new factory may seem like a compromise, but a concept of "integration" is more to Chappell's liking. To explain, the holder of a degree from Harvard Divinity School described two worldviews.


The first is the basic "ends-to-a-means" concept that, in the business world, sees people as resources to achieve a bottom line. "We strip out the spirit, because it's all a calculation," he observed.


The other view is the concept of integration, said Chappell. It sees relationship building -- among employees, managers, executives, townspeople and consumers -- as the primary value, but one that can co-exist with a healthy bottom line.


Chappell notes that Tom's spent $75,000 in the fight to keep a casino out of Sanford, and wound up moving much of its $50 million business and $8 million payroll to the town.


Just last month, the company was awarded with the first Corporate Ethics Award from the Taking Action for Animals group, recognizing that "companies can be financially successful while behaving in a socially responsible and environmentally sensitive manner," according to a press release from the organization.


And the company is profitable and continues to grow, said Chappell. While he didn't discuss specific figures, he said profit is plowed back into the company to generate more growth. He noted that growing profits since the move into the new building have allowed the company to spend $4 million on television advertising in the next fiscal year, compared to $500,000 on marketing in the last year.


Chappell said the push will be in the mid-Atlantic region, especially in New York, Philadelphia and Washington, D.C., where Tom's has about 2 percent market share. In comparison, the company's share of the Maine market is about 9 percent.


Nationwide, the company's products are in about 2.5 percent of households, Chappell said. To reach the company's goal of 13 percent, Chappell and Chief Operating Officer Tom O'Brien travel the country to sell Tom's products to supermarket chains that want to offer a more complete line of natural personal care products.


A recent report from retail analyst firm MarketResearch.com ranked Tom's at No. 4 in the natural personal care market in 2004, with 1.5 percent of the $5 billion market. By 2010 that market is expected to grow to $7.9 billion, with sales of natural oral care products alone rising from $589 million in 2004 to $1 billion.


As for Chappell, he said he'll continue to put Tom's needs first and stay on as long as it's in the company's best interests.


"You get to my age and you say, 'Goodness sakes -- sign me up for another 50 years, I like this,' " Chappell, 62, said. "But God's got a different plan."


To see more of the Portland Press Herald, or to subscribe to the newspaper, go to http://www.pressherald.com.


Source: Knight Ridder/Tribune Business News