CARRIAGE INDUSTRIES (98)
Back in the 1960s, Clarence Harris was selling mutual funds around northern Georgia, the center of America's carpet trade. When he sold his fund business in 1969, he decided to start a carpet mill. A logical move? Nope. "The whole thing [was] bizarre," he says with a chuckle. "I knew nothing about the carpet business." At least he knew how to raise money, and borrowed $222,500 from 25 friends. But even that had a touch of the unusual about it. A fair amount of the money was in cash, which Harris collected "in paper bags, sacks, and cigar boxes" he kept stored in the trunk of his car.
Despite these unconventional beginnings, Harris's company, Carriage Industries Inc., closed out its 1984 books with $75 million in sales and a 1,103% five-year growth rate. It is the premier supplier of carpets for the mobile-home and recreational-vehicle markets.
That market strategy, of course, wasn't planned either. At one point early in the game, national accounts manager Steve Dickinson visited the region around Elkhart, Ind., where most of America's mobile homes and RVs are made. Within a few days, he called Harris with an order for a scant 42 feet of carpeting. The customer needed a specialized cut, Dickinson told Harris, and had specified an exact delivery time. "We have a truck going right by your plant," Dickinson had said.
Harris promptly bought a truck, then made the delivery right on schedule. Today, the Elkhart region accounts for a large amount of Carriage Industries's business. The company, meanwhile, has 46 tractors and 57 trailers, and has set up a separate income-producing division called Carriage Transport to operate them. That first cold-call sale, moreover, set a pattern. By making specialized cuts and promising delivery to fit the demands of a production line, Harris's carpet mill has been able to win the lion's share of a growing market niche.
Until 1980, Harris says, he ran the business largely by himself. Then the energy crisis decimated sales of RVs, and the company dropped from $10.6 million in sales to $6.2 million. Harris came to two realizations: that he would have to broaden his markets, and that he couldn't do all the jobs himself anymore. "I knew I had a gold mine," he says, "but I was killing myself." So he convinced Charles Eitel, who was vice-president of marketing for a larger carpet mill, to come aboard as president. Dickinson, who was by then on the West Coast, came back east, and eventually became vice-president of marketing. Both were allowed to buy stock in Carriage Industries.
Under the management team built by this threesome, the company moved into the replacement market for multifamily housing, hotels, and motels. It also broadened and upgraded its product line, while modernizing and vertically integrating its manufacturing. Volume -- an increase from $6.2 million in 1980 sales to $75 million in 1984 -- followed.
Bringing on the other managers, Harris adds, was one of the best moves he made. By giving up equity, he gained value: "Today my 65% is worth 10 times what my 100% was worth."