The Century Club – 2014

Increased globalization, along with a rapidly evolving business climate, challenges family-owned firms and institutions like never before.
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ON THE GO

After a while, it got to be like a game: If Nick Becharas got to work at 8 in the morning, his dad, Dean Becharas Sr., had already put in an hour’s worth of work. If Nick arrived at 7 a.m., Dean Sr. was there at 6 a.m. “My dad was a 24/7 workaholic,” says Nick, president of Becharas Brothers Coffee Co. in Detroit. “I could never beat him here.”

The father-and-son game has changed a bit, and while Dean Sr., 78, is chairman, he’s turned the day-to-day operations over to the next generation. In doing so, he made way for Nick and his siblings — Dean Jr., Demi, and Stephanie — to run the company that Greek immigrants George and Nicholas Becharas (bet-CHAIR-ess) started in 1914 in Detroit.

“He said, ‘You know, your great uncle was always looking over my shoulder,’ ” recalls Nick, of a conversation he once had with his father. “ ‘You and your brother and sisters have to learn on your own and make your own mistakes.’ ”

As it stands, family-owned businesses often fizzle out in their second generation — 70 percent either don’t make it or are sold. Around 10 percent remain viable enterprises into the third generation, while 3 percent make it to the fourth generation, according to the Family Business Review, a publication devoted to covering family-operated enterprises.

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Another challenge is tenure. Among public companies, many CEOs last, on average, only six years, while leaders of family-run operations can stay for 50 years or longer. Such personal longevity can have an impact on embracing technology, market shifts, business models, and consumer preferences, says the Harvard Business Review.

Not only has Becharas Brothers made it to the century mark, but Dean Sr.’s laissez faire attitude may hint at why the company remains all in the family: There’s no pressure for the next generation to join in.

 

For example, Dean Jr. worked in New York for six years before returning to run the operations side of the family business. And Nick and his wife, Michele, are encouraging their oldest son, Nick Jr., a freshman pursuing a marketing degree at Michigan State University in East Lansing, to try other things — although it looks like Nick Jr. has inherited his grandfather’s passion. “When he came home from Michigan State (for the winter holidays), he said, ‘OK, I’ll see you at work tomorrow,’ ” Nick says.

The Becharases introduced their children to the business at an early age. Nick has a picture on his desk of himself at age 4 packing coffee. On a working Saturday in January, Dean Jr. had his 3-year-old daughter with him. Nick attributes his company’s longevity to its size. “We’re big enough to compete with the industry leaders, but small enough to build up partnerships and relationships with our customer base,” he says.

Becharas Brothers distributes its coffee in 12 states and roasts more than 2 million pounds of beans each year. It’s had the Big Boy contract for 55 years, and supplies coffee to longtime eateries such as Lelli’s of Auburn Hills, Mario’s Italian Restaurant in Detroit, numerous Greektown eateries, and offices and vending companies such as Continental Canteen.

The bulk of its business is in contract packaging, or private label. “When other people entrust their name to us, we take the same kind of care with it as with our own name,” Nick says.

With 20 employees, almost no turnover, and fierce loyalty — 94-year-old Nick Georges retired after 77 years, but won’t admit it and still calls customers from his home — the company is nimble enough to address
its clients’ needs quickly.

And while Becharas got out of the retail business about 20 years ago when its $4 price-per-pound coffee was double the price of such competitors as General Foods, Maxwell House, and Folger’s, today it sells eight of its coffees from an online retail store. “Now people pay $4 for a cup of coffee,” Nick says.

 

ALL IN THE FAMILY

Giussepe La Grasso used to stock a pushcart with bananas at the foot of Woodward Avenue, and then he’d walk north on the bustling thoroughfare to Highland Park, selling his produce along the way. Detroiters in 1914 must have been hungry for the tropical fruit, because Giussepe often had to load the cart two times a day.

One day, he walked past Henry Ford’s Model T factory at Woodward and Manchester. A newspaper headline, “Henry Ford to pay his help $5 a day,” made Giussepe laugh. “People say I don’t know anything,” he later recalled thinking to himself upon spying the headline; it was nothing for him to make $25 a day with his pushcart of bananas.
That cart grew to become La Grasso Bros. Inc., which today has a 40,000-square-foot temperature-controlled distribution center at East Warren and Bellevue streets in Detroit, a few blocks south of the General Motors Hamtramck Assembly Plant and about four miles from where Giussepe first began to load bananas onto his pushcart.

Today, La Grasso’s 55 refrigerated trucks travel throughout Michigan and northern Ohio, transporting fresh produce, dairy products, processed and frozen foods, and spices.

La Grasso services schools, government buildings, hospitals, and restaurants ranging from white-tablecloth establishments to delis. Giussepe might be surprised at the issues the business faces today, from the scanning technology it uses to trace the food from farm to fork to concern over the carbon footprint of its fleet.

The “Buy Local” campaign also has been a challenge, as the firm has sought out new partnerships with Michigan farmers in recent years. On a global scale, improved logistics and a steady run of cooking shows on The Food Network has created demand for once-rare or hard-to-find items, like yellow raspberries, seedless watermelons, purple sweet potatoes, and all manner of organic produce.

Today, Tom La Grasso Jr., Giussepe’s grandson, heads the company; he works with nine other family members. Tom La Grasso III, Tom Jr.’s son and vice president of operations, credits hard work and dedication for the business’ longevity.

“Any business can survive one generation,” he says. “That is just one person with a dream and a vision. A family business that can survive through multiple generations is very unique.”

 

Just like the Becharas coffee clan, the young La Grassos grew up around the family business. Each generation has had — and still has — a chance to be a part of the firm from a very young age. The practice of making any day a “bring your kids to work day” allows the next generation to seamlessly merge into the business, Tom III says. “Working hand-in-hand with our family makes for a very special workplace that we would not trade
for anything,” he says.

Another familiar refrain at the company is to pay attention to the customer and build relationships.

“As with any business, our company has to stay on top of changing customer needs as well as stay ahead of the competition,” Tom III says. “Forming long-lasting relationships with our growers as well as shippers allows us to maintain a steady stream of product.”

160 YEARS OF HELPING CLIENTS

As Detroit goes, so goes the law firm Butzel Long.

When the Detroit River bustled with imports and exports in the 1850s, Butzel Long attorneys were proficient in trade and maritime law. As the city’s economic base turned to lumber and then foundries, and when the automobile made Detroit an industrial giant, so did the legal expertise of the firm’s attorneys.

“We have evolved as Detroit has evolved,” says Dick Rassell, a media lawyer and chairman of the firm, which celebrates its 160th anniversary this year.

 

Butzel Long attorneys won litigation that forced Henry Ford to pay stock dividends, but lost to the auto industrialist when he sued the Chicago Tribune, one of their clients, for libel and was awarded a paltry six cents by the jury. The firm’s lawyers were instrumental in the formation of General Motors starting in 1908. More recently, they took a lead role all the way to the Supreme Court in representing the University of Michigan’s race-based admissions policy. Additionally, they helped restructure labor contracts for the city they call home.

Butzel Long’s longevity, Rassell says, is due to “not being stuck in what was, but looking forward to what will be.”

Butzel Long’s history is so intertwined with that of the city that it may not be surprising to learn that 2009 — the depth of the Great Recession — was its worst year ever. But the economy wasn’t entirely to blame.

Between 2009 and 2013, the firm lost about 100 lawyers due to dissension in the ranks, according to an article in the online ABA Journal. The unrest stemmed from worries that the company lacked direction and that its New York office wasn’t as narrowly focused as it was supposed to be, Rassell says. The New York office’s roster had grown to almost 30 attorneys, but has since been trimmed to 10 lawyers, he says.

In January 2013, Butzel Long turned over its defined-benefit pension plan to the federal government because the market crash created a $39-million shortfall in its portfolio. The firm now has an entirely employee-funded 401(k)-based pension plan.

Today the company has nearly 140 attorneys serving “thousands” of clients and backed by a 200-member support staff, Rassell says. In addition to Detroit and New York, Butzel Long operates offices in Bloomfield Hills, Lansing, Ann Arbor, and Washington, D.C. It also has alliance offices in China and Mexico.

 

In late 2012, Butzel Long acquired a Washington law firm — following a joint venture relationship — which brought in 13 attorneys who have expertise in auto industry safety (think driverless cars), aerospace, defense, and health care.

The acquisition falls right in line with the firm’s comeback from 2009: It refocused the company on issues related to the local economy and its international work, and follows Rassell’s advice to startup law firms that want to celebrate their own 160th anniversary.

“Continue to evolve every day,” he says. “Pay attention to your clients’ needs, not your own.”

DETROIT, WE’RE STAYING

Before college and professional sports saturated American culture and became the economic juggernauts they are today, there was the Detroit Athletic Club.

The DAC, which was established in 1887, was the center in Detroit for intramural and interclub sports competitions, from baseball to swimming. The club’s first facility, located just north of the Whitney mansion at Woodward Avenue and Canfield, offered a clubhouse and several sports fields. Even baseball legend Ty Cobb played for the DAC team one year, when he was on the Detroit Tigers’ disabled list.

Not ones to hold a grudge for being upstaged, DAC members helped form the Lions and the Red Wings. In addition, eight of the 10 owners of the Tigers over the past 111 years have been DAC members, according to The Enduring Legacy of the Detroit Athletic Club, the second of two DAC histories co-written by Ken Voyles, the organization’s communications director.

 

Although college and pro teams have become a huge sector of the American economy, the DAC still places great emphasis on intramural sports including bowling, basketball, squash, handball, racquetball, and swimming. Voyles is confident that even if there were no intramurals offered at the club, many DAC members would still be participating in sports for wellness and personal development.

With a diminished focus on sports after the first decade of the 20th century, the DAC redefined itself and placed greater emphasis on culture and “automobiling” — that is, driving and the growing auto lifestyle.

More importantly, the DAC, through a confluence of global events, became the center of business and politics in Michigan. With the construction of its Albert Kahn-designed clubhouse at Madison Avenue and Randolph Street in 1915, the club soon found itself hosting Presidents Woodrow Wilson and Teddy Roosevelt, as well as other notables including Charles Lindbergh and Marshall Foch, a French hero during World War I.

If Detroit, as identified by President Franklin D. Roosevelt, was the “Arsenal of Democracy,” the DAC served as its epicenter. When Adolf Hitler was ascending to power in Germany in the early 1930s, several DAC members with large industrial holdings began meeting secretly at the club with military officials. The gatherings resulted in the planning and construction of factories for tanks, Jeeps, airplanes, munitions, and weapons.

At the end of World War II, focus again returned to culture and sports. The DAC became the prime meeting location chosen among many who were seeking to launch or enhance a business deal, hire a successful CEO, or host a promising political candidate.

Today it’s so much more: It’s an elegant place to host meetings and social events; drop by for a drink in the Tap Bar or have a meal in the Grill Room; or rub elbows with business, media, sports, and government leaders.

 

“A lot of what’s happening in downtown Detroit is being discussed at the club,” says executive manager Ted Gillary. “DAC members are pretty passionate about Detroit.”

The DAC board and membership confirmed that passion in the late ’70s and early ’80s, when some members started pushing for a move to the suburbs, as many other downtown businesses were doing. “Basically the board and the membership said, ‘We’re staying,’ ” Voyles says.

The DAC then went on a shopping spree and bought up nearby property, which led to the vacating of Randolph Street, enabling the club to build its 600-car garage (in two phases).

The DAC has had to weather some other storms beside the mass exodus from downtown and the advent of college and pro sports. Membership fell considerably during the Great Depression and Prohibition. “From people that I talked to who were members at the time, it certainly was a tough time,” Gillary says. “(But) the DAC had such a solid base and purpose in the community.”

More recently, during the Great Recession, the club cut its costs while focusing on maintaining the clubhouse and its membership. “We wanted to have a stabilizing effect on members’ lives,” Gillary says. “Outside there was chaos, but inside was calm — it was orderly, beautiful.”

 

Gillary’s been executive manager for 20 years, and has advice for others with the desire to start a club. “One thing’s for sure, you have to have a real purpose for starting and it has to be linked to the city,” he says.

Not a club to stand still, members have invested more than $40 million to restore and enhance the facility in recent years, including dining areas, ballrooms, locker rooms, sporting areas, and guest rooms. In spring 2015, the DAC is set to unveil a rooftop pavilion that will provide dining service and meeting areas, with Comerica Park and Ford Field — as well as the downtown skyline — as the backdrop.

INNOVATION TO MAKE LIVES EASIER

Chances are good there’s a Whirlpool Corp. product inside your home. That’s because the Benton Harbor-based company is the parent brand not only for Whirlpool, but also for Maytag, KitchenAid, Jenn-Air, Amana, and Gladiator (garage organizers). Farther from home, Whirlpool manufactures the Brastemp and Consul brands in Brazil, and Bauknecht in Germany.

Since its founding in 1911 when the Upton brothers, Lou and Fred, and their uncle Emory Upton made electric washing machines, the company has systematically added new technology and brands. This is the same Upton family that has had success in politics. Michigan Republican Congressman Fred Upton is a grandson of the founders and fashion: Sports Illustrated swimsuit model Kate Upton is a great-grand-daughter of Whirlpool’s founders.

The corporation currently has 68,000 employees in 65 manufacturing and technology centers. Sales in 2012 totaled $18 billion.

 

“Whirlpool has been successful for more than a century by remaining focused on consumer needs and providing innovative products that exceed expectations and make lives easier,” says Kris Vernier, a corporate spokesman.

The company has had its share of operational innovations, as well. It was the first to offer paid vacation for factory workers, enforcing the fringe benefit by announcing it in a letter to the employees’ wives. It was also the first manufacturer to offer a 24-hour, toll-free hotline for consumers, the Cool Line. And it facilitated the development of the Environmental Protection Agency’s Green Lights program, a precursor to the Energy Star program that gives its stamp of approval to appliances that conserve gas or electricity.

Whirlpool owes some of its success to another longtime American brand, Sears Roebuck & Co.

The Uptons sold their first order of washers to Sears in 1916. In 1921, Sears loaned the Uptons $87,500 to expand so they could build more washers. When the economy took a downturn and washer sales plummeted 65 percent, Sears had to cancel the order and Whirlpool couldn’t repay the loan. No problem; Sears allowed the Uptons to repay the balance in company stock.

The relationship became even stronger in 1925, when the Uptons became sole suppliers of electric and gasoline-powered washing machines to Sears. Demand was so great that the Uptons merged with another firm to meet their production needs.

In 1936, Sears introduced the Uptons’ products to an international marketplace when it started selling in England and Sweden. Sears introduced the Uptons’ first automatic washer 11 years later.

It was not until 1948, 32 years after the start of the Uptons’ relationship with Sears, that the company branched out and began selling their Whirlpool brand through other retailers. Even though many companies now sell the Whirpool brand, their relationship with Sears continues to this day: Sears uses Whirlpool to produce stoves for its signature brand, Kenmore. db

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