No one could have predicted the future of the rekindled industry as Vermont Castings began its expansion. Since 1973, continued growth in industry revenues and profits had encouraged ever-greater numbers of manufacturers and dealers. In 1979, the year of the Iranian oil crisis, demand for stoves peaked as quickly and as unexpectedly as it had appeared earlier in the decade. As demand declined, it precipitated an industry shakeout that many feel is still going on. According to U.S. Stove's Herschel, from 1973 to 1979, the number of manufacturers rose from 8 or 10 to 500 or more. "Of those, probably 300 or so are still left," he says, "but I imagine that will decline to 100. The volume in the industry just isn't large enough to support 300 manufacturers. Many are small enough so they'll hang on for a while and then drop off one by one as they realize they can't recoup their initial investment."
Vermont Castings itself hasn't been spared the impact of the industry contraction. "We've reached the point," says Dwight S. Stimson, president and chief executive officer, "where we can no longer rely on the industry's underlying growth rate alone for our own growth. We've had to make a lot of changes in management, manufacturing, and marketing." Stimson himself is one of those changes. About six months ago, Howell, who until then had been president and CEO, asked Stimson to take on those titles and responsibilities. Howell wanted more time to devote to a variety of special projects, such as creating an outside board of directors to replace one composed largely of friends and relatives.
Stimson, 53, joined Vermont Castings as its financial vice-president almost four years ago. As a divisional senior vice-president at Itel Corp. in Dallas, he had managed data service computing centers throughout the country. Stimson, a native Vermonter, says that when he considered moving back home, he reviewed his talents and decided that he could be most effective as a "gray-haired adviser to a rapidly growing, profitable, small company with growing pains." Howell agrees and says that Stimson's maturity and his background in corporate planning and administration got him the job. "We felt vulnerable being a one-product company," Stimson says. "That's why we're taking our reputation for quality and service and applying it to new, nonstove products."
According to Neil Fox, vice-president for marketing, the company began restructuring its future in 1981, when it decided to increase its reliance on dealers. "It was a difficult idea, an emotional idea," he says, because in everything we've done, the company's had complete control." Fox sees the expanded system, with 120 dealers across the country, as a particularly valuable asset. Not only will they distribute stoves, but they can also support the company in other, related areas of manufacturing. "We're trying to develop a countercyclical business," Fox says, "that uses the foundry, our assembly, our new enameling plant, our customer file, our direct-marketing system, and our new-dealer system." But Fox is quick to add that the company also intends to strengthen its dominance in cast-iron stoves by introducing new models with even greater combustion efficiency.
Dealers are an important part of Vermont Castings' plan to reach people who, unlike the mainly rural, do-it-yourselfers of the company's older, primary market, live in suburban America, are generally unfamiliar with wood stoves, and consequently appreciate guidance from a local dealer. These customers also expect a wood stove to have some of the appeal of a well-designed piece of furniture. In 1982, Vermont Castings took the idea of stoves-as-furniture a step further by introducing models of the four stoves that are enameled in porcelain: "earth green, charcoal brown, warm gray, and deep blue."
Sometime soon, the dealer network will also receive the first product made by Vermont Castings that isn't related to stoves. The company donated 24 patio benches to the town of Randolph in 1980. They were designed by Syme in cast iron and wood and manufactured in the foundry. They got high praise from townspeople. The company borrowed the benches back from the town for last year's Owners' Outing to do some impromptu market research on them and again received favorable comments. One man wanted to buy 100 benches on the spot for his shopping mall. Vermont Castings then decided to make the benches available commercially. "We've got other products in mind," Stimson says, "but we're waiting to see how this one does." In general, he says, the bench has many of the qualities the company wants in new products: a consumer-durable item that is countercyclical to the company's on-going stove business, uses the foundry, and is related to the home. "People are spending more money on their homes," he says. "It's a pretty significant market to be in, and we've got the name and resources to serve it profitably."
Stimson agrees that the market for wood- and coal-burning stoves "has shrunk significantly," but he says it is a "more realistic market than all the panic buying that went on in 1979." Even though the company's sales in 1982 were flat with the roughly $29 million recorded in 1981, he says the company was able to increase its market share. He also says the company's sales suffered from two unexpected events. The introduction of the Intrepid, Vermont Castings' latest stove, was delayed because of tooling changes and late shipments of a special type of glass from Germany. And the demand for enameled stoves was so much greater than anticipated that capacity couldn't meet it. "We've been quoting 28-week lead times," he says. "Some people will wait, but others won't."
In less than a decade, the wood-stove industry has gone through a period of expansion and contraction that previously occurred over more than a century. It has been a case of deja vu. Even Syme gets a touch of it now and then. He tells time by a gold pocket watch that was originally given to his father, John Prescott Syme, to honor his career with Johns-Manville Corp. One day, after a long session spent reminiscing about Vermont Castings' past, Syme took it out, read the inscription, and said: "It's funny, isn't it? Here I am, a guy who once said he wouldn't have anything to do with business. Well, things have come full circle, haven't they."
