Five Best Hometown Businesses
Business: Burger Boat Co.
Place: Manitowoc, Wis., where boats have been built since 1847
CEO: David Ross, 54
Keys to success: Local ownership and a commitment to the company's second- and third-generation boatbuilders
Production manager Rich Auth stood at the boatyard gate and watched his 166 colleagues, some tearful, leave behind the work that had sustained many of their families for generations. On that day, in November 1990, Burger Boat's absentee owner had faxed a message to the staff: the yard would close. Twenty minutes later, at the shift's end, the yard was shut down. Burger's owner had stopped
Burger's owner had stopped paying employees' health-insurance premiums and had run up $13 million in debt. Still, Auth's coworkers "went out like gentlemen," he says. "There was no foul language, no threats. That's just the way people are here." Or maybe they just knew they'd be back.
Manitowoc's boatyards were famous for building first-class schooners and for constructing submarines and other military vessels. Burger Boat, founded in 1863 and family run until 1986, had constructed boats for three wars when, in the early 1960s, the company repositioned itself as a builder of luxury aluminum motor yachts. The yachts quickly became known for quality craftsmanship.
By 1970, though, all the other shipbuilders in Manitowoc had moved or shut down, and Burger had been sold to its second out-of-towner, an ailing shipbuilding company based in Tacoma, Wash., that used Burger as a cash cow. When the yard closed, says Mayor Kevin Crawford, "everyone felt a ripple go through the community."
Luckily for Burger and Manitowoc, the ripple was felt as far away as Chicago, where David Ross, an entrepreneur who had sold his $55-million commercial-photo-labs company in 1989, heard of Burger's plight. Ross had always admired Burgers -- coveted them, even. Now there appeared to be an opportunity to buy the company itself.
As Ross gathered information about Burger, what impressed him even more than the boats were the people who made them. Shortly after the yard closed, 18 Burger employees crawled through a hole in the fence to get the tools and materials they needed to finish a boat they'd been working on. Later a customer with an unfinished boat in the yard -- The Lady Iris -- would help Rich Auth and 70 other employees set up a shell corporation to try to revive the company. There was not only boatbuilding to be done but also a retirement plan to rescue, an employee stock ownership plan to develop, and a blatant violation of state plant-closing laws to redress.
Burger's yard had been filled with men whose fathers and grandfathers had practiced the same craftsmanship before them, who had fashioned gracefully curved bows from sheets of aluminum. The instinct to preserve that tradition was overpowering. "When I met Rich, I determined that this company was zero without the people who made it famous," says Ross. For more than a year, Burger's employees had struggled unsuccessfully to save the company.
Ross, along with his partner, Jim Ruffolo, offered the wary craftspeople a second chance. "They weren't ready to put their trust in just anyone," Ross recalls. "I told them I was going to move here and that I could offer them something they didn't have -- a hands-on owner who could speak directly to clients, who could bring strong advertising, marketing, and sales skills."
"We never would have done the deal if David were staying in Chicago," says Rich Auth.
Ross flew Auth to Chicago to speak with employees of Ross's former company and to examine its financial statements. "We didn't want another silver spoon coming into the yard," says Auth. Ross, he discovered, was genuinely respected by his old employees. By 1992, Burger's former workers decided to throw their lot in with Ross. Most, like Burger designer Don Fogltanz, had landed good jobs elsewhere. But, says Fogltanz, "I wanted to finish off my working years at the company where I had spent my life. I wanted to build boats."
In January 1993, after more than a year of negotiations, a dramatic appearance before a U.S. Bankruptcy Court judge, and more than $250,000 in legal fees, Ross and Ruffolo were permitted to buy Burger. They promised to keep the company in Manitowoc for at least 20 years. "We never would have done the deal if David were staying in Chicago," says Auth. But Ross never had any intention of staying there. What he saw at Burger -- a company bonded to its community, and workers impassioned by their craft -- had drawn him in.
Today Burger has a three-year backlog of orders, steady revenue growth, and four years of profits on the books. Half of the company's 200 employees are people who returned to Burger when the gates reopened in 1993; Ross keeps them and the company focused around their skills and passions. "In May we launched hull number 491, and it's an 85-foot flush-deck motor-yacht cruiser," says Ross. "In 1901 we launched our first motor yacht, and do you know what it was? It was an 80-foot flush-deck motor-yacht cruiser."
The launch of hull number 491 -- like most of Burger's launches -- was a public event. Twelve hundred admirers crowded the yard to watch the maiden voyage. "It's just a beautiful ceremony," says Auth. "This company was started when Lincoln was president, and today we're building boats on the same shoreline. I know a lot of people here who take great pride in that."
Five Best Hometown Businesses
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DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.