Joe Larson's Trial By Fire

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A year ago, at 3:00 in the morning on a quiet Fourth of July weekend, Joe Larson's factory burst into flames. While Larson, his business partner and son, Jack, and most of his 50 employees watched in horror, the fire tore through the Sparta Brush Co.'s warehouse and plant. By dawn, almost nothing but a few concrete walls remained of the firm the Larson family had owned for 31 years. Rows of brush-making machines lay melted and twisted or buried in debris. Ninety percent of Sparta's inventory had turned to ashes. All of the damage had apparently been caused by a malfunctioning furnace.

Joe Larson, a former Fuller Brush salesman who bought the company in 1949, was a careful, meticulous manager who knew the value of planning ahead for new products or gyrating interest rates. But he'd never thought about what he'd have to do if full-scale disaster struck.

At first, Larson figured he'd seen his life's work go up in smoke. Insurance covered most of the loss, and no one would blame a 60-year-old owner for taking his insurance money and simply walking away from the rubble.

"But when I stopped to think," says Larson," I knew I couldn't do that to the employees, customers, and suppliers." Instead, the Larsons and their staff went out and rented a temporary building and started putting the company back together again.

Before the ashes had cooled, Larson found himself facing questions without answers. He got on the telephone and started calling around for advice. Bit by bit, with a generous measure of his own common sense and instinct for fair dealing, he put together an informal recovery plan -- the kind of plan he now insists every business should have before disaster strikes.

Larson's first move, and one he says was fundamental to bringing his company back to life, was to call in an independent insurance adjuster to handle the details of his claims. Says Larson, "No businessman, particularly one distracted by his anxiety to get back into production, is qualified to negotiate with skilled insurance company adjusters. Hire your own man -- and get him on the scene immediately."

Larson had an adjuster at work less than 24 hours after the fire. While bulldozers cleared away the wreckage, the adjuster moved through the remains of the building -- which had contained both warehouse and plant -- foot by foot, accompanied by the plant superintendent and shop workers, who could point out the exact location and use of each piece of damaged machinery. The adjuster then took over the job of negotiaring with the various insurance companies that had written policies for Sparta Brush. In addition, the in-house adjuster could provide quick answers about what steps Larson's employees should take to protect machinery from further damage.

While the adjuster handled Sparta Brush's insurance claims, the Larsons and their staff could concentrate on getting production rolling again. Customers, suppliers, and employees were given detailed reports about the company's progress. Larson's purchasing agent, for example, spent almost his entire time for two weeks after the fire on the telephone, scheduling immediate shipment of raw materials from suppliers. The director of marketing spent his time talking to manufacturers' representatives; some of the staff manned phones from their houses. In addition, major customers were informed of the fire by mail, and Larson made sure that others would hear about the company's gradual recovery through ads in trade publications and exhibits at industry shows. The message was clear: Sparta Brush was still very much in business.

"It was important to notify customers, to let them know firsthand we'd had a fire, but that we could still ship," says Larson. "Yet we didn't make rash promises about delivery. Above all, we didn't lower quality. If we couldn't supply our customary quality, we admitted it. We didn't lose a customer."

Larson took personal charge of keeping his employees informed about his plans to rebuild the company. In the small Wisconsin town where Sparta Brush was based, even a small fire is likely to bring out a crowd, so hardly a single employee missed being on the scene the morning the plant and warehouse burned down. Larson spoke to each one individually, and from that moment on there were few doubts about whether the business would resume.

"Jack and I had lunch with our people every noon for two weeks at a good restaurant where we were welcome even in our cleanup clothes," Larson recalls. "I made certain they heard everything from the horse's mouth. It was very important to keep everyone reassured: I didn't want any rumors about not rebuilding to get started.

"It made all the difference in the world to their dedication," he adds. "It was like the philosophy of Japanese businessmen, where the whole company is regarded as a large and sympathetic family. Some say what happens in Japan can't happen here. At Sparta, it did."

The Larsons also made a point of giving their supervisors almost unlimited authority to go ahead and do what had to be done. "Joe and Jack gave us the feeling," one employee says, "that we should go ahead without worrying about making mistakes. In a large company, making a mistake might make you feel like you'd be in the soup. But everyone had been here long enough that we knew exactly what to do."

Because of excellent employee relations, Larson could also depend on his own shop workers to help with painting and cleaning. Machines were repaired by his own machinists on the spot, instead of being shipped off for rebuilding.

Within a week, Larson's crews had jury-rigged a small production facility in the company's temporary headquarters. Wire-winding machines, essential for making brushes, had been cleaned, restored, and mounted on newly built tables. Material had been flown in from a cooperative supplier. The company was back in business, in a limited fashion, turning out glass-washing brushes and pastry brushes to fill orders from key customers. Seeing a portion of the company's routine resume so quickly was a boost for morale, Larson says.

Putting the rest of the company back on schedule took longer, but Larson discovered an unexpected benefit of his years of good relations with suppliers and even competitors. The New Jersey company that built Sparta's pastry brush machines immediately sent a replacement that had originally been destined for an overseas buyer. The German firm that had built another special machine for the company promised speedy delivery on two more. "They knew our reputation," says Larson. "Jack had visited their factory, and they'd been to ours. They even flew over a technician to assist in evaluating our loss for insurance purposes." And friendly competitors agreed to act as subcontractors for some custom work that Larson no longer had the equipment to produce.

Within two weeks of the fire, most of the company's urgent problems had been solved, and Larson could turn his attention to the long-range question of how to get Sparta Brush back into full-scale production.The smartest move, says Larson, is not to allow oneself to be stampeded into an open-ended construction contract. "Make sure you get firm bids," he says, "regardless of the urgency of the situation. Even though a contractor may have you over a barrel, don't be prompted to do business on a time-and-materials basis, or you may be in for some unpleasant surprises.

"And once you do have a firm bid," Larson adds, "demand action. Don't live on promises."

In rebuilding his plant, Larson found he could take advantage of low-cost industrial revenue bonds issued by the town of Sparta, which significantly cut his reconstruction costs. Larson's new plant was finished within five months of the fire, just before Thanksgiving. New and reconditioned machines were back in place, ready to turn out Sparta's full line of specialized brushes for dairy, food service, and gourmet-houseware buyers. In Larson's new office, his family pictures had been reframed and hung on the walls beside newly polished award plaques the company had earned over the years.

The recovery astonished almost everyone. By spring, the company was even ahead of Larson's prefire projections. "We'd anticipated a 30% increase in sales because of our new line and new machinery," he says with a grin. "But April showed a 45% increase."

Despite his pleasure with how fast the company recovered from a near-total disaster, Larson insists he could have done even bettrer if he'd taken the proper precautions -- and, just in case, he's already taken steps to minimize the risks of any future disaster (see box). "Now that the fire is over and we're back in shape," he says, "we don't assume the danger is over. We review what we did and how we might have done it differently."

With Sparta Brush back on its feet, Larson acknowledges that the most important thing he learned is that it pays to plan carefully for a disaster that in all likelihood will never happen. "My advice to a friend who's never had a fire is, Do a little role-playing. Like a pilot of a small plane, trained to look for emergency landing strips, have a plan. Although it may look like you're contemplating arson, simulate a fire drill. Ask yourself what could happen. Is your business insurance properly worded and up to date? Is there a building you could move to in a pinch?Do you know who is responsible for the different jobs that will have to be done?

"Above all else," says Joe Larson, "don't think it can't happen to you. It can."