Keeper Of The Flame

If ever a company seemed reliant on its founder's vision, Vermont Castings did. And never more so than after the founder was gone

When founder Duncan Syme left Vermont Castings he felt that he'd worked himself out of a job. What did his company need from him? Vision, the standard answer went. But what was "vision"? And how could it help make Vermont Castings the professional outfit it needed to become? Syme didn't have a clue -- until things got so bad he was forced to come back. -- C.H.

What does it take to make the best wood stove in the world? Ask Duncan Syme, founder of Vermont Castings Inc., and he'll show you the $900 Resolute Acclaim sitting, rejected, on the repair line.

From a distance, the stove looks perfect: bright and gleaming, engineered with state-of-the-art combustion technology, designed and built with uncompromising grace, and finished in a top-of-the-line majolica porcelain enamel finish.

But someone -- it could have been anyone in the company -- decided it couldn't be shipped.

Bend over; catch the light just right. If you look very closely you can see a scratch no bigger than a baby's fingernail.

It can't be patched. Syme will have to spend $100 to reenamel the entire stove, more than one-third of his $250 margin. But he has no choice: for 14 years, long before quality became a buzzword for the marketing mavens, he's staked his franchise around a single obsessive standard.

The product is sacred. Always was. Always will be.

But the best has never come cheap. Other stove companies could buy castings from the marketplace or manufacture offshore. Syme had to build his own computerized foundry, the most sophisticated stove-plate facility in the western hemisphere. Other companies could use ordinary enamel finish on their stoves. Syme introduced the European majolica process, adding 40% to his materials costs and requiring a lab to test each run, a $2.2-million enameling facility with an Eisenmann furnace, and an Irish engineer with enough expertise to make the process work. Vermont Castings even makes its own shipping pallets in-house, stove-specific softwood cradles to guard against jarring the product on its journey to the customer's living room.

The costs are endless. Although the company holds 290 patents and boasts the lowest emissions in its market, Syme still feels compelled to spend 4% of his $40-million annual revenues on R&D.

Conventional management structures don't work. If Syme expects every employee to be a relentless quality-control inspector, he has to be there on the floor, reinforcing the standards every day. Wandering around preaching work-force participation isn't good enough; he has to integrate the ideas from the line into his manufacturing process. Forget cutting employees to meet a seasonal drop in demand: layoffs have too drastic an effect on morale. Forget just-in-time inventory control, too. Syme has to eat inventory costs, sometimes letting finished castings gather dust for months, other times building with hot metal.

He wouldn't do it any other way -- "Why would anyone want to settle for anything less than their best?" he asks. But along with personal satisfaction, Syme can measure the benefits in numbers, in margins and market share that have led the industry through good times and bad. During the boom years of the 1970s, when national wood-stove sales climbed from 200,000 to 1 million and every job shop with a wrench started selling stoves, Vermont Castings was the star, the fastest-growing company in its industry, doubling in size every year, making the Inc. 500 list of the fastest-growing private companies. Sales reached $29 million and margins were as high as 60%. During the downturn in the '80s, even while industry sales fell to 400,000 and hundreds of stove companies folded, Vermont Castings managed to become the largest company in the industry, expanding market share to 10% and keeping revenues stable.

But the numbers by themselves don't begin to tell the full story of Vermont Castings' 14-year pursuit of excellence, or suggest how close the company came to the brink of extinction in spite of it. That is a more complicated tale, of dream and tragedy and tentative revival. It begins with a product that became an icon for an era, and with the model of new-age entrepreneurship that seemed to blossom spontaneously at its birth. It is the story of a failed corporate metamorphosis, too, of a growth company struggling to come to grips with a declining market. And it is the story of a personal education as yet unfinished, of the transformation of Duncan Syme from a self-proclaimed "backyard hippie" with a dream into a manager with a responsibility.

For the old-timers on the assembly floor, watching Syme wander through the cavernous assembly plant this chilly winter morning, it's almost as if the glory days of growth had returned. Eyes bright, hair disheveled, he peers into scrap bins, chatting with the folks on the line, still the obsessive tinkerer, keeper of the corporate flame.

But Syme, like the company he runs, has had to grow up. In the old days he'd built the equivalent of a Model T, a simple product sold for a few hundred dollars to back-to-the-land true believers. Now, he sells a combustion technology that can cost thousands of dollars by the time it's installed; his customers are more likely to live in a Georgetown town house than a cabin in the woods -- and they may decide that value for dollar comes from Taiwan.

Back then, growth had seemed like serendipity, the natural flowering of Syme's vision. Now, growth, if it comes, must be fought for. Personal vision, by itself, will not be enough. State-of-the art technology and a relentless commitment to quality, a dedicated founder and a motivated work force will not be enough, either. They are just a start -- necessary, but not sufficient.

It's not even enough to build the best stove in the world -- it probably never was.

The legend of the Defiant began prosaically enough with two young men in a bar and grill in Crested Butte, Colo., in 1970 -- the tail end of the Age of Aquarius. Twenty-five-year-old Murray Howell, co-owner of The Tailings, was a University of Pennsylvania political-science graduate getting his head together, working behind the bar. Thirty-two-year-old Duncan Syme, a Yale-trained sculptor and architect, was drifting through town.