Built on a Handshake |The Story of Showplace Cabinetry by Showplace Cabinetry

B U I LT O N A HA N D S HA K E Judith Zwolak

Dedication:

This story is one of teamwork. It is about a group of individuals, whose shared vision, trust in one another, and hard work founded a highly-successful business. Gathered through personal interviews with key players and shaped through South Dakota author Judith Zwolakâ&#x20AC;&#x2122;s inquisitive nature, Built on a Handshake reveals the heart and soul of a unique Midwestern start-up company.

The company, known today as Showplace Wood Products, was made

possible through the resources of a group of investors who shared significant personal and financial risk, along with an unshakeable confidence.

That group had a lot of reasons to be confident: A visionary leader, the

right ideas, a steadfast core team, and something else that ensured the effortâ&#x20AC;&#x2122;s success. That something else was the quality of the people who come to work each day and build the cabinets, support the dealers, and keep everything running as smoothly as it does.

On behalf of the entire founding team, we dedicate this book to the employee-

owners of Showplace Wood Products.

About the author:

Thank you to our author, Judith Zwolak. The substantial effort she invested in gathering information and shaping it into this story of Showplace Wood Products is greatly appreciated. The skill and insight she brought to the project will be apparent to all who read her words.

Judy is a South Dakota freelance writer who has written for newspapers,

alumni publications and trade magazines.

CONTENTS Introduction: A Young Company Becomes an Industry Leader . . . . . . . . . . . . . . . . . . . . . . . 1 Chapter 1: Phoenix from the Ashes: Building a Team and Financing a New Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Tony Bour: Decades in the Cabinet Industry . . . . . . . . . . . . . . . . . . . . . . . . . 4 A New Company’s Birth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Assembling the Internal Management Team . . . . . . . . . . . . . . . . . . . . . . . . . 12 Paul Sova—The Operations Chief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Emery Lee—Building the Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Scott Korsten—From Materials to Marketing . . . . . . . . . . . . . . . . . . . . . . . . 18 Lori and Pat Seykora—Keeping Customers Happy and Equipment Working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Bill Retterath—Assuring High Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Steve Richter—Keeping an Eye on Logistics . . . . . . . . . . . . . . . . . . . . . . . . . 26 Randy Pooley—Making the Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Lorraine Bour—Helping To Build a Legacy . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Sharing the Risk, Reaping the Reward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Bank Loans Help Build the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 More Investors Join In . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Showplace is Born . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Chapter 2: Alfalfa Makes Way for Showplace: Building the Showplace Wood Products Plant and Making the First Cabinets . . . . . . . . . 38 The Basement Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 A Team Built on Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 The Plant Becomes a Reality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Installing Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Assembling the Financial Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 The Initial Product Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 A Simpler Approach Serves the Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 New Cabinet Sales Rep Firm Forms to Sell Showplace . . . . . . . . . . . . . . . . 66 Ready for Take Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

CONTENTS Chapter 3: Room to Grow: The Young Company Takes Off . . . . . . . . . . . . . . . . . . . . . . . 69 A Family Atmosphere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Positioning the Showplace Brand and Reaching Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79 A Surprise Expansion: 30 Miles South . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 More Business Means More Expansions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Accolades and Giving Back to the Community . . . . . . . . . . . . . . . . . . . . . . 88 Suppliers Along for the Ride . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Showplace Expands to Meet Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Chapter 4: Showplace Transitions to Employee Ownership . . . . . . . . . . . . . . . . . . . . . . ESOP: Employee Stock Ownership Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . ESOP a Win-Win for the Company and Employees . . . . . . . . . . . . . . . . . Tony Tells the Showplace Staff the News . . . . . . . . . . . . . . . . . . . . . . . . . . . Original Investors Rewarded for Risk, Company Transitions Seamlessly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notifying the Industry and Setting up the Plan . . . . . . . . . . . . . . . . . . . . . An ESOP as Employee Motivator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Showplace a Textbook Example of a Successful ESOP . . . . . . . . . . . . . . . Industry Interest Piqued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 5: Showplace Thrives in Recession, Becomes More Efficient and Plans for the Future . . . . . . . . . . . . . . . . . . . . . Showplace’s Finest Moment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Showplace Becomes “Leaner” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What Lean Looks Like in Showplace’s Finish Department . . . . . . . . . . . . New Products Help Cushion the Fall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Serving the Customer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Training and Promotional Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Showplace Customers Speak Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Workplace Environment Rewards Employees . . . . . . . . . . . . . . . . . . . . . . Leaving a Legacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100 101 103 105 109 116 117 118 119

121 123 125 127 130 132 134 138 141 143

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Introduction: A Young Company Becomes an Industry Leader As you approach the 100-percent employee-owned Showplace Wood Products facility in Harrisburg, South Dakota, you’re greeted with a bustle of activity. Turn onto Enterprise Street in the Harrisburg Industrial Park and soon you will see an electronic sign flashing brightly, listing that month’s birthdays of all employees at the facility. Friendly professional staff members greet you as you walk into the main lobby. Beautiful red-oak shelving and cabinetry behind the reception area provide your first glimpse of the company’s products.

Two floors of offices house the company’s marketing, human resources,

customer service, information technology, engineering and other associated professional staff. A full-service cafeteria, an on-site fitness center, and a medical office staffed by a physician’s assistant are just down the hall. It’s difficult to imagine a nicer work environment.

The real heart of the facility, however, is the production floor, where hun-

dreds of employees, who are also part owners of Showplace, create more than 500 cabinets each day. Starting on the north end of the nearly 200,000-square-foot facility, workers take the raw materials that will form the frames and faces of a cabinet and cut them to size on computerized panel saws. These pieces then join the doors and drawer fronts delivered from the company’s second plant 30 miles south in Beresford, South Dakota, and move through a process of sanding, by machine and by hand. After sanding, the face frames, drawer fronts, doors, and other cabinet components—about 7,000 each day—fly high above the factory floor attached to a conveyor system on their way to receive stain or paint on one of Showplace’s five, 2,000-foot-long paint lines. Moving at 12 feet per minute, the paint line descends to the plant floor and attached components travel through a system of spray booths and sanding areas. Here, the cabinet pieces receive either stain or paint, and perhaps a glaze, and pass through a 140-degree oven to dry

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and ensure a durable finish. Assembly workers take the finished components and put together the doors, drawers and cabinet bases that will become one of the 25 kitchens Showplace will produce on a given day. After packaging, the kitchen moves to the warehouse on the south end of the plant. At the end of the day, the raw pieces of wood are now a kitchen ready to travel to its final destination—one of Showplace’s 600 dealerships across the country.

Of course, kitchen cabinetry is not all Showplace makes. The company

also produces bathroom cabinets, fireplace surrounds, entertainment centers, Murphy beds, and office cabinetry—some of which grace the Governor of South Dakota’s residence—among other products. In essence, Showplace prides itself on offering wood products and a semi-custom cabinet line that feature flexible design options at affordable prices.

Formed in 1999 by a group of friends and colleagues with more than a

century’s worth of combined experience in the kitchen cabinet industry between them, Showplace Wood Products is more than just a manufacturer of cabinetry. At the time of the company’s birth, Showplace was the means by which industry professionals, some of whom were pushed out of previous jobs in cabinetmaking by forces beyond their control, joined to build a business of their dreams. Handpicking other cabinet manufacturing experts to join them, the group aimed

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to create a company that did things their way, not the way corporate executives in a far-off city wanted them done. It was a straightforward plan: Showplace Wood Products would sell well-made cabinets at a fair price to independent cabinet dealerships. Excellent service to the customer would guide the company’s business dealings. Showplace would strive to honor and respect employees at all levels.

It turned out to be a revolutionary idea. From the moment Showplace

shipped its first load of cabinets in early 2000 to the occasion six years later when the business became 100-percent employee-owned, the cabinet company grew faster than any other manufacturer in the industry. Even after the economic recession that began in 2008 delivered a massive blow to the housing industry, Showplace has remained profitable, with a growing roster of new products and a steady employment base. The company takes great pride in the fact that Showplace laid off no workers during this downturn.

The story of Showplace Wood Products is one of hard work, friendship, expe-

rience, knowledge, and exceptionally-good timing. But most of all it’s the story of people—the industry executives who experienced a professional rebirth when they joined together to start their own company, their colleagues and friends who helped fund the endeavor, and the workers who joined the fledgling company to help produce cabinets and provide the best possible service to Showplace customers.

Other companies can mimic Showplace’s products and copy its pricing,

but they can’t reproduce its people. The initial group of nine friends that joined together to form Showplace Wood Products held each other in such high regard that it took little more than a handshake to signify their deep commitment to the venture. More than a million-and-a-half cabinets later, this tight-knit group still manages the enterprise with the same enthusiasm and principles as the day Showplace first opened its doors. Far surpassing their wildest dreams, the company they built on a handshake has evolved from a small Midwestern cabinet firm to a marketplace leader that sells its products throughout the country. But perhaps the greatest measure of the company’s success is its commitment to its customers and its employees—the core philosophies born of the experiences the founders had elsewhere in the industry. It’s this commitment, and the people that stay true to it, that have created the Showplace Wood Products success story.

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Chapter 1: Phoenix from the Ashes: Building a Team and Financing a New Company While the group of cabinet manufacturing professionals who assembled to form Showplace in 1999 represented decades of experience in the industry, the one man with the most years under his belt was also the person who could best bring together the disparate elements needed to start a new company—Tony Bour.

Tony Bour: Decades in the Cabinet Industry Those who know Tony Bour often wonder how he does it.

His friend and business associate Tom Everist marvels at Bour’s ability to

manage hundreds of employees without seeming to break a sweat. “He’s got a knack for managing people,” Everist said. “He’s one of the best managers I’ve ever seen, because it doesn’t look like he’s working at all. He does it effortlessly.”

His wife Lorraine admits she can’t fathom where her 74-year-old husband

finds the energy. “Here’s an example of what he did last weekend: He was at the governor’s hunt and we hunted all day walking the fields and went to a banquet that got over at 9 p.m.,” she said. “Then we drove from Pierre to our little log cabin in Yankton, South Dakota, and got in at 1:30 in the morning. On Sunday, he went to 7 o’clock mass and then he played 18 holes of golf. Then we drove home to Sioux Falls and he’s back to work the next morning. That is so typical of him.”

His investors in Showplace are amazed by Bour and his management

team’s ability to grow a start-up company into a major industry player with little disagreement. Showplace board member and initial investor Rob Everist, who is also vice president of a construction materials company, wonders how the group worked together so well. “They really work together seamlessly, from finance to

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marketing to sales to production” he said. “Better than any other organization I’ve seen, including ours. Maybe they have knock-down, drag-out fights like we have but I don’t see it at all.”

His employee and fellow Showplace management team member Lori

Seykora is in awe of Bour’s capacity for creative thinking. “He comes up with great ideas,” she said. “I could sit and think all day and never come up with his ideas.”

For his part, Bour is quick to credit his team for the success of Showplace,

but it’s difficult to imagine the company’s existence without this seasoned cabinet executive and energetic entrepreneur at its helm.

“I really didn’t grow up wanting to own my own business,” said Tony

Bour. “In fact, I couldn’t even spell ‘entrepreneur.’” As a child in the 1940s in St. Paul, Minnesota, Bour did grow up surrounded by family members who loved to make things with their own hands. His grandfather was a cabinet maker at a time when the craft was fairly simple. “Back then making cabinets was really making boxes,” he said. “There weren’t a lot of options and the doors were plywood doors. They were well-made but not sophisticated and all the finishing was done by hand.”

Bour’s father, a pilot in the Minnesota National Guard who had flown

bombing missions in Burma during World War II, was a part-time airplane mechanic and an industrial arts teacher at a boys’ correctional facility. “Dad taught these young men skills so that once they got out of the correction facility they could go on and be useful members of society,” Bour said. “He loved to work with his hands and he was a gifted mechanic.”

Inheriting that ability to work with his hands, Bour excelled at industrial

arts in high school. “I couldn’t get enough of it,” he said. “I enjoyed drafting. I enjoyed welding. I enjoyed the woodworking side of it.”

His first part-time job after school also taught Bour that he enjoyed earn-

ing a paycheck. Like many teenage boys in the 1950s, he secured a job manually setting pins in a bowling alley. Wages were ten cents a game, plus tips, and on a good night Bour brought home $5. The experience not only provided some spending money, but whetted the young man’s appetite for real paying work. The opportunity to get more hands-on experience as well as a paycheck came in

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Bour’s senior year in high school, where he took advantage of an industrial-arts program that allowed students to earn credit by working at a job in the afternoon in addition to taking morning classes. Through the program, Bour entered the world of manufacturing as an entry-level worker at Champion Aircraft Corp. at the start of his senior year in high school in 1954.

The Aeronca Model 7 Champion, more commonly known as the Champ, manufactured by Champion Aircraft Corp. beginning in 1945.

Champion Aircraft was the hobby business of a former Navy pilot who

had purchased the manufacturing rights to a utility airplane, such as one used for crop dusting, flight training or as pleasure crafts. “It was a single-engine plane with high wings on top and it was covered in fabric, not aluminum skin,” Bour said. “It was really a well-built plane.”

The company was in its infancy and Bour got to witness the building of

a plant from the ground up. While his initial tasks at the plant were far from glamorous—he spent a lot of time cleaning toilets and sweeping floors—Bour also had the opportunity to use the welding skills he had learned in his high school classes. The young trainee was often pulled away from other jobs to help unload and organize the truckloads of airplane parts that continuously drove up to the facility. Here was Bour’s first exposure to the inventory side of a business.

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“It was just a great experience,” he said.

After Bour graduated from high school in 1955, he moved with the

company to its new headquarters in Osceola, Wisconsin, about 70 miles east of St. Paul. The trainee who started sweeping floors moved up through the ranks through his ten years at the company and eventually became the plant manager. “It was fun,” Bour said of his decade at Champion Aircraft, which employed about 100 people at the time. “The only thing that wasn’t fun was that the owner of the business was wealthy and it was more of a hobby business.”

An accountant friend in the area, who had become a trusted mentor of

Bour’s, recommended that the young manager earn his college degree at night while working during the day at Champion. Bour took his advice and traveled to the Minneapolis campus of the University of Minnesota after work, making the 140-mile round trip a few nights each week. The future cabinet executive took two or three classes a night over the course of four years and found that he hated economics but loved accounting. “I did not want to become a bean counter,” he said, “but I was so curious about business and how business worked and how accounting fit into the business.”

During this time, Bour had married and was just starting his family—

which would eventually total eight children. His busy schedule resulted in Bour never receiving his college degree, but his on-the-job experience and professional contacts proved priceless. One of these contacts, Sam Hertogs, was an attorney practicing in Hastings, Minnesota. Bour had called on him to help address an attempt to unionize the Champion plant and the two had become good friends. Hertogs envisioned grander opportunities for his young pal and told Bour to contact him if he ever wanted to move on from his current position.

“Of course I was flattered that Sam would say that to me, and, besides

being an attorney, he was a really good businessman,” Bour said. “I really took to heart what he said and I drew a line in the sand with Champion.”

Bour thought the hobby business could be managed for greater sales and profits

and when the company didn’t meet his self-proscribed benchmarks, he decided to separate from the company to which he had given ten years of his life. “It was a big move for me,” he said. “I had six children at the time and another one was on the way.”

Showplace Wood Products Hertogs introduced Bour to his friend Bob Swanson, with whom he

was part owner of a cabinet manufacturing company called Riviera Products. The company had two plants, one in Red Wing, Minnesota, and the other in Colorado Springs, Colorado. The owners needed a plant manager to help turn around the Colorado Springs plant, which, as Bour recalled, “was a disaster.”

Bour entered the cabinet industry with full knowledge that he was taking on

a challenging situation. Hertogs and Swanson “were very open about it,” he said. “They showed me the books and they showed me what a disaster it was. Looking back it was probably like jumping from the frying pan into the fire but I had confidence in my abilities and I had confidence in what Sam and Bob were telling me.”

His confidence paid off and Bour turned the plant around with the help

of a strong production manager. About a year after he started, Hertogs and Swanson sold Riviera to Evans Products, a large corporation looking to expand into the cabinet industry. Once Evans took over, Riviera acquired another plant and built two more plants, all under the direction of Bour. “It was a tremendous experience,” he said. “We started two plants from scratch, one in Ohio and the other in New York. I had to staff the plants and serve a large customer base.”

Unfortunately, after ten years with the company, Bour became caught up

in management changes at the upper levels of the Evans Company and was fired for the first time in his life in 1976. Opportunity soon came knocking in the form of the United Cabinets Division of Beatrice Foods. The company was looking to start a new cabinet division and hoped Bour could serve as their general manager. Under the United Cabinets umbrella, Bour built and managed the Decora Manufacturing plant in Zumbrota, Minnesota.

“Decora was fun and successful,” he said. “I was allowed to develop my

own markets and my own customer base and sales representatives. We hit the industry at a pretty good time and sales mushroomed in a three-year period.”

Yet another opportunity emerged when Bour’s old friends Sam Hertogs

and Bob Swanson approached him in 1979 with the chance to start another new cabinet company. The two had regretted selling Riviera Products a decade earlier and knew their former plant manager had a proven record in running cabinet companies. Hertogs and Swanson had also heard news about the attractive

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business opportunities in Sioux Falls, South Dakota, and were looking to open a new cabinet manufacturing plant there. Would Bour be interested in joining on as a partner, running the plant and growing the business?

The answer was an enthusiastic yes and Bour became manager and even-

tually president of StarMark cabinetry in 1978.

One could argue that this decision ultimately led to the formation and

subsequent success of Showplace, the company Bour would start 20 years later. For Bour’s experiences at StarMark—the good as well as the bad—formed the philosophies and approaches that proved so successful at Showplace. Also, the managers and hourly employees at StarMark, many of whom Bour had hired himself, created the wealth of experienced professionals that ultimately joined Showplace. And, finally, Showplace would never exist if StarMark’s parent corporation hadn’t done the unthinkable: fire Tony Bour.

A New Company’s Birth To look back on it now, getting fired from high-level jobs in a company they had built and nourished for nearly two decades was one of the best things that could have happened to three of the nine internal managers and shareholders of Showplace Wood Products. At the time, however, the dominant feelings were ones of anger and sadness for Tony Bour, Paul Sova and Emery Lee.

When Bour, with Bob Swanson and other investors, founded StarMark

Cabinetry in 1978, the nation was at the height of Star Wars mania. The spaceage name and the company’s products caught on quickly and the cabinet manufacturer experienced tremendous growth over the next decade with Bour at the helm, first as vice president and general manager and then as president and CEO. During these years, StarMark experienced a period of growth and increased industry name recognition. Paul Sova joined the company as a customer service manager at its inception and advanced to become a plant manager and then director of manufacturing in 1989. Emery Lee started with the company in 1992 as controller. One by one, all three of these top-level managers lost their jobs

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at StarMark, at the hands of the management team at Masco Corporation, the conglomerate that bought the company in 1989. The original StarMark owners had sold their company to the corporation so they could realize the gains on their initial investments.

In April 1997, Bour was the first of the three who lost his position.

“I really had no warning. It just came out of the blue and all of the sudden

I was terminated,” Bour said. “It was very disappointing because StarMark was my baby. It was like losing a child.”

His experiences during the seven years Bour spent running StarMark

under Masco eventually influenced the guiding principles of Showplace Wood Products. Chief among the business approaches that Bour wished to avoid was selling his company’s cabinets to large home centers. He also saw the benefit in a flat management structure, where every employee’s opinion counts and decision making didn’t require navigating an organizational hierarchy.

“When you are part of a large corporation, the management doesn’t often

consider the individual, they just make certain decisions,” Bour said. “We were selling our products to the second-tier group of home centers, probably about a dozen different companies. Masco had built their company business model around this mission, partly selling to big builders and partly selling to the large big boxes and home centers.”

Selling to this price-competitive market proved a difficult environment to

turn a profit, he said, adding “but we were making money and the last year that I was with them, we had a strong bottom line.”

For the last three years of his tenure at StarMark, however, Masco had

required that Bour take on another failing division in its holdings and turn it around. He accepted the difficult task reluctantly, but with a determination to help out the corporation. “I tried to be a good soldier, and in doing that, I think it came back to haunt me,” he said. Although he and his StarMark team immersed themselves in returning the added division to profitability, this challenging period came with the personal cost of his marriage. Then, despite Tony Bour’s best efforts, in April 1997 Masco fired him as CEO and president of StarMark Cabinetry.

Although his wife Lorraine described a period immediately after the

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decision when Bour got up every morning to park on a street near the StarMark facility and gaze at the plant he helped build, the loss of his position at the company didn’t keep him down for long. He had a two-year non-compete clause after his termination at StarMark, which gave Bour the opportunity to pursue other passions, including earning his commercial real estate license and becoming a real estate broker, and spending time at a shooting club he owned in a small town west of Sioux Falls. Nearly all of Bour’s acquaintances speak with awe about his enthusiasm and seemingly boundless energy, and the busy executive spent the two years following his departure from StarMark in a characteristic quest for new entrepreneurial and business experiences. In late 1998, however, disquieting news from his former company gave Bour pause.

Emery Lee, StarMark’s controller and CFO, and Paul Sova, the company’s

director of manufacturing, had stayed on with the company after Bour left and worked under a new president whose leadership term saw massive losses for the company. Perhaps sensing the impending reaction from the parent company, the president left in the fall of 1998 and, when corporate managers looked for someone to blame, their gaze fell on Lee and Sova. The pink slips arrived for the two StarMark executives a few months after the president’s departure.

Bour was nearing the end of his non-compete clause, and, upon learning of

his former colleagues’ termination, he began thinking about uniting with his old friends to form a new venture in the industry that had served him well throughout his career. In the spring of 1999, when the time came that Bour could legally pursue a new company start-up, he approached Sova and Lee with the idea.

“As I recall, they didn’t bat an eye,” Bour said. “They said yes.”

And the three knew just the people they wanted to join them in this new

venture. All together, the nine managers who would form the heart of this new company had more than 150 years of experience in the cabinet industry. In fact, they would later reflect on how difficult it would be to bring together ever again such an experienced group of wood cabinet professionals, all available and willing to join a start-up venture.

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Assembling the Internal Management Team While Bour used his contacts as a 20-year veteran of the Sioux Falls business community and his decades-long experience in the cabinet industry to secure outside investors, he also pursued a group of five past and present StarMark employees to join him, Lee, and Sova in building the new company. They had no trouble deciding which individuals they would ask to join them; each had distinguished him or herself in their area of expertise at StarMark. To run the purchasing departTony Bour

ment and develop the Showplace product catalog, the

team looked to Scott Korsten, the former director of materials management at StarMark, who had left the company in 1997 to attend college at the University of South Dakota. They approached Lori Seykora to head up customer service and asked her husband Pat to be the facilities manager. Sales manager Randy Pooley would join the venture once the company had products to sell. Production managers Bill Retterath, who would head up the finishing department, and Steve Richter, picked to oversee assembly and shipping, rounded out the group.

The offer for these individuals to join the new company came with the

Left to right: Paul Sova, Jay Lee, Lori Seykora, Steve Richter, Tony Bour, Pay Seykora, Emery Lee, Scott Korsten, Bill Retterath, meet in Paulâ&#x20AC;&#x2122;s kitchen during the early planning stages.

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requirement to help raise initial capital by becoming shareholders. Of the $600,000 initial stock offering, the eight internal managers bought half of the holdings, with the remaining half purchased by outside investors. Bour met personally with the managers and their spouses to explain the financial structure as well as the risks and rewards their investment offered.

“These operating managers were all to have part ownership in the company.

From my standpoint, that was very important,” Bour said. “These were people that I knew I could work with because I had worked with them before. But I knew that to make this successful, they needed to have skin in the game.”

That “skin in the game” represented a significant investment for many of the

individuals, and Bour took that into account when he divided $300,000 worth of shares in unequal amounts among the nine managers of the company.

“They all had particular talents and niches that they could focus on,” Bour

said. Coupling their experience and skill with the added incentive to earn money from their personal financial stake in Showplace created a skilled group motivated to make their new company succeed. Bour also understood that the commitment went beyond the individuals who would actually work at the company—the decision would have a profound impact on their spouses and families as well. From the first planning stages of Showplace, Bour included spouses in many of the initial meetings where he outlined the company’s financial structure and the progress of plant construction.

Showplace certainly began to feel like one big family, with Tony Bour as the

patriarch. The seven seasoned wood cabinet professionals who joined him in 1999 in his bid to build his seventh cabinet plant remain the core managers of Showplace Wood Products today. Their individual stories—and the support of their spouses, who literally and figuratively had to buy in to the new venture—illustrate the experience and drive that formed the backbone of the fast-growing young company. The managers, all native Midwesterners, had specific roles to fill and the experience to do their jobs well.

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Paul Sova—The Operations Chief After graduating from South Dakota State University in 1975 with a degree in political science and history, Paul Sova immediately married his high school sweetheart and began looking for work. Raised in Sioux Falls, Sova had summer jobs in the residential construction industry throughout high school and college, so he returned to the industry and even imagined starting his own contracting business as a homebuilder. “I liked that work and I was running a crew Paul Sova

for a couple of different builders in town and gaining

a little management experience,” Sova said. “Then at the end of the seventies, the housing market suffered in the economic downturn and I got cold feet about going out on my own. I just didn’t have enough good personal business experience to launch my own business. I knew how to build houses but I didn’t know much else about it.”

Neither did Sova relish the thought of working outside in the harsh South

Dakota weather, so he resolved to find a warm, comfortable position in management, in any type of industry. An employment agency sent him on interviews, including one with Tony Bour, the general manager of a new manufacturer in town, StarMark Cabinetry.

“Tony was setting up the factory and starting to hire managers to work in his

new company,” Sova said. “The timing worked out right. I was looking for a new career and cabinetmaking fit my work life because I knew a lot about home construction.”

Bour hired Sova to work in customer service, but the brand new factory

still had equipment to set up and Sova spent the early months working on the manufacturing floor, installing machinery and even building the first cabinets produced at the company. Eventually, Sova arrived at his original destination, a job in the StarMark offices as the customer service manager, where he helped

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customers with their cabinet orders and prepared these orders for construction and shipping. A skilled draftsperson, Sova honed his skills at kitchen design and oversaw the training program for the company’s dealers.

The sudden resignation of the company’s plant manager just a few years later

found Sova with a surprise promotion to fill his place. “That was a role I didn’t see coming,” he said. “I had experience in manufacturing and I knew how things were built and I understood kitchen orders because of my experience on the front end. I was pretty wet behind the ears to move into a manufacturing management job. But I weathered the storm and made that transition.”

While most plant managers come from an engineering background, Sova

credits his liberal arts education as a significant part of his success in the industry.

“Having a liberal arts degree has a lot of advantages: being able to think

critically and being able to communicate and write legibly,” he said. “If you have only the technical background, you’re missing the other half of what it takes to be a complete leader and manager.”

Sova remained in the plant manager’s position until 1989, when he received

another promotion and became the director of manufacturing. Ten years later, Masco managers fired Sova from StarMark after he had spent 20 years helping to build the company from the ground up.

Jil Sova, a clinical laboratory specialist at Sanford Hospital in Sioux Falls,

recalled the day her husband told her that he lost his job. “It was in the morning when he came to my work at the hospital and called me out in the hallway and told me he had been fired.”

In shock, the couple’s thoughts raced to the impact on their children Dan,

a high school sophomore, and Laura, a middle schooler. Moving to another city for a comparable job would disrupt their family life and force Jil to find a new position. The uncertainty of their circumstances weighed on them.

“But Paul is a resilient guy and he was determined to keep everything intact

and keep our family here in Sioux Falls and let our kids finish high school,” Jil said.

It was that determination and desire that lead Sova to sign on enthusiasti-

cally to Bour’s proposal to start a new company with his former StarMark colleagues. “We were all conveniently unemployed, ready for work, and fortunately,

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had many years of business experience in different key areas,” Paul said.

Jil breathed easier when she heard of the plans. She could remain at her job

and her kids could stay at their schools and with their friends. “It was a feeling of relief, of excitement, and exhilaration.”

Becoming a shareholder in the company meant devoting their entire sav-

ings to the venture. “Luckily we had a bit of a nest egg, but everything in it did go.” Jil said. “That was a little alarming. I’m the kind of person that did not grow up with a lot as a child and I like to have a little bit of a nest egg. But I had every bit of confidence that it would come back sooner or later and it has. That’s the happy ending.”

While Sova knew everything about building cabinets, another former

StarMark colleague was just the man to construct the financial plan that would help guide the new business.

Emery Lee—Building the Bottom Line A job at a bomb plant in the early 1970s taught Showplace CFO Emery Lee everything he needed to know about institutional politics and wasteful spending. A Rapid City, South Dakota, native freshly graduated from Black Hills State with a business degree, Lee went to work at a government-owned, contractoroperated plant in Burlington, Iowa, that made conventional and atomic weapons. Naïve and outspoken, the young auditor examined operational budgets and Emery Lee

thought he would be rewarded for reporting absurd

expenditures such as the plant’s purchase of a hammer for hundreds of dollars.

“The government seemed to have money to throw around, and as a young

man I couldn’t figure out why they threw it away.” Lee said. “It was an interesting experience: diving into these areas and getting reprimanded for writing them up for how wasteful this was. I got introduced to politics there. But I don’t hesitate

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to say if I think something is wrong to this day.”

As the war in Vietnam wound down so did bomb production. Lee left

that position to join a family-owned jacket and sportswear company in Grinnell, Iowa, as an accountant. An outsider in a family business, Lee found he had no future for advancement there and moved on to begin work at Weigh-Tronix, an electronic scale manufacturer in Fairmont, Minnesota. As controller, Lee directed the company’s transition to public ownership, gaining experience with the regulations of the Securities and Exchange Commission. Sold to a British company on a mergers and acquisitions binge soon after, Weigh-Tronix no longer seemed the place for Lee.

“I chafed under British rule,” he said.

In 1989, Lee moved to Sioux Falls and became part of the team hired to

turn around the Litton microwave division of Litton Industries. At one time the overwhelming leader in the microwave oven business, Litton’s well-made, but expensive appliances saw their market share gobbled up by competition from foreign manufacturers. Part of the problem, as Lee saw it, was the separation of headquarters in Memphis and the production facility in Sioux Falls, resulting in muddled communications and expectations. He soon realized he had arrived too late to save Litton’s sinking operations and applied for a job as a controller at StarMark. Tony Bour interviewed and hired him in 1992 on “what was probably the luckiest day of my life,” Lee said.

Although it appeared that his luck in the cabinet industry had ended

when he was fired from StarMark in 1998, Bour called Lee in the spring of the following year to discuss partnering on a new business. Lee’s initial job involved devising the new company’s financial structure and leveraging investments to obtain bank loans and industrial bonds, and to take advantage of low-interest state loans for businesses that create jobs in South Dakota.

Lee recalls no hesitancy from the inside investors when asked to buy their

portion of the initial shares. “We were all firmly convinced that this thing was going to go,” he said. “We had the drive, we had the knowledge, and I didn’t have any qualms over whether this was going to fly.”

Lee, Sova, and Bour had their futures laid out for them when they agreed

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to start a new cabinet company. Now it was time to recruit some of their former colleagues for crucial positions managing the production and operations areas of the business. Their first contact was another former colleague who had years of experience in the industry under his belt and had actually proposed the idea of starting a new cabinet business to Bour the previous year.

Scott Korsten—From Materials to Marketing When he was a high school student in the 1970s in Zumbrota, Minnesota, Scott Korsten looked for any opportunity to make money. He mowed lawns, shoveled snow, and baled hay, but a job sweeping floors at a print shop was the one that eventually led him to become part owner of a multi-million-dollar company. Korsten’s boss at the print shop saw that his young worker had an inquisitive nature and impressive work ethic and began giving him opportunities in other Scott Korsten

parts of the business.

“I was doing everything except running the press and I loved it,” he said.

Korsten’s duties included managing the printing of catalogs, letterheads, and envelopes for a cabinet company in town called Decora Manufacturing. He worked closely on these projects with the company’s general manager, Tony Bour; and, when Bour left to form StarMark hundreds of miles away in Sioux Falls, he kept the company’s print business with the Zumbrota company where Korsten worked.

The economic recession of the early 1980s, however, cut into the print shop’s

business and left Korsten without a job. He enrolled in a vocational certification program and was prepared to start his coursework when Bour called him out the blue.

“I got a call from Tony because he had just heard I wasn’t working for the

printing company,” Korsten said. “He just wanted to know what I was up to. I don’t recall the specific conversation, but he probably became aware that I was not too happy.”

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Bour asked Korsten to come out to Sioux Falls and talk about a possible

position at StarMark. Without telling his parents, the 20-year-old drove across the state on a cold morning in February of 1981, interviewed for a job as purchasing manager with Bour in the morning, helped install a kitchen at the house of Bour’s friends Pat and Lori Seykora over the weekend and started work on Monday. After working for a week, he drove back to Zumbrota the next Saturday to pack up his belongings and move to Sioux Falls. He still marvels at his entry into the cabinet business.

“I had a position for which I was infinitely unqualified,” Korsten said.

“Tony hired potential. He didn’t hire me because I was qualified for the job. He hired me because he knew from working with me that I was the kind of person that he would like to have with his business.”

Korsten advanced through numerous positions at StarMark and eventu-

ally held the job of director of materials management when he left to get his college degree in business and public relations in 1997. The following summer he met up with Paul Lawrence at a golf tournament in Zumbrota. Lawrence was an original investor in StarMark and knew Korsten from the young man’s time working there. Korsten answered Lawrence’s question about his future plans by saying that he and his wife Marilyn, who had also worked at StarMark for five years as a special projects manager, were contemplating starting their own cabinet company when Korsten finished his degree. Both husband and wife had numerous family members in the cabinet industry and they often dreamt of tapping into this expertise to start their own business. Lawrence, intrigued by the idea of investing in another start-up cabinet company, asked Korsten to call him if his plans became a reality.

With this discussion fresh in his mind, Korsten bumped into Tony Bour

a month later at Korsten’s part-time job at a furniture store in Sioux Falls, and followed him out to the parking lot to propose forming a new cabinet company together. “After talking with Tony for a few minutes by his car he said, ‘That’s the craziest thing I’ve heard in a while,’” Korsten said. “We didn’t talk again about starting a cabinet business until early 1999 when Paul and Emery became available and our yet un-named Showplace project was on the table. I always guessed

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his response was partially due to the still fresh disappointment of his departure from StarMark; I never knew for sure but it was a pleasant surprise when I got the call that started the ball rolling for me.”

When he agreed to join Showplace in 1999, Korsten had one stipulation:

he would start off in the dual role of director of marketing and materials management—which included handling the purchasing needs of the company—but move on to head Showplace’s marketing and public relations efforts as soon as the company was successful enough to hire on more purchasing staff. Within three years Korsten was able to shed his purchasing role, adding responsibility for the Information Technology area to spearhead the selection and implementation of a more robust computer system. After another three years of growth at Showplace, Korsten handed the Information Technology responsibilities off as well and settled in to his current position as director of marketing.

The decision to join Showplace represented a turning point for Korsten and

his wife Marilyn. Scott was offered and had accepted a prestigious summer internship with the International Advertising Federation in New York City in 1999, and Marilyn and he had been excited about the new prospects this opportunity offered. After some soul-searching and sleepless nights, they decided to sign on with Showplace even though it meant reconsidering and declining the internship. When Scott called the advertising federation to decline this one-of-kind internship, “you could have heard a pin drop on the other end of the line,” he said. The federation staff was astonished that he would give up such a choice opportunity.

Marilyn said the decision to stay in Sioux Falls, where she was working as a business

analyst and where they had friends and connections, ultimately seemed like the right choice. The commitment to become a shareholder in the company also appealed to the couple.

“It was a fairly big buy-in although quite honestly we were prepared to do

even more than the bank would allow,” she said. The couple took out a second mortgage on their house to fund the investment and bought large life insurance policies for each of them to protect their family members from incurring their debts in case anything happened to them. In addition to their new mortgage, Scott conserved money by trading down from a beloved Mercedes to a Honda.

Both Korstens share an entrepreneurial spirit and a commitment to

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supporting each other’s career goals. “We’ve always wanted to live our lives and our careers to the fullest,” Marilyn said. “Wherever the best opportunity is for one of us, the other one is always supportive.”

That commitment from spouses and families of the first Showplace man-

agers was crucial for the company’s success, as the only married couple to be part of the initial management team can attest.

Lori and Pat Seykora— Keeping Customers Happy and Equipment Working More than a decade after the fact, Lori Seykora still remembers what she cooked for dinner on the night in 1999 when she and her husband, Pat, sat down with their family friend and past bowling team member, Tony Bour. As the former president and founder of StarMark Cabinetry, where they both currently worked, Bour had a business proposition for the couple. Lori Seykora

“I made a roast with potatoes and carrots and

we had wine,” Lori said. “I bought some homemade

bread from the bakery. It was real comfort food.”

Bour dined at the Seykora’s house with the couple’s teenage sons, Jason and

Jeremy, who were whisked off to their rooms immediately after the meal ended. Bour presented the opportunity to join the new cabinet venture as shareholders and as part of the paid managerial staff. Since Bour had previously mentioned that the Seykoras would be asked to invest in the company, Lori said they had come prepared with the amount they wanted to commit. Bour, however, asked them for a more substantial investment.

“We had in mind what we thought we could put in but he was asking for more,

which was fine,” Lori said. The financial commitment paid off when the company’s business took off in the ensuing years. “I’m glad he had us do more now,” she added.

Showplace Wood Products At the time, however, gathering the cash to buy

their shares required some fleet financial footwork.

“Tony left our house after supper that night and

we dove into our finances and said we can take from here and here and here,” Lori said. “We sold a boat. We cashed all of our life insurance policies in and we took the cash value.”

Pat and Lori had both left solid, good-paying

jobs at StarMark when they joined the Showplace venture. The only married couple among the inter-

Pat Seykora

nal nine shareholder/managers to both invest in and work at the company, the Seykoras knew they risked their family’s financial future when signing on to the project. With Jason heading off to college and Jeremy in high school, huge expenses loomed in their future. Their boys, however, saw their parents’ excitement and urged them to go through with the deal, even after learning they would have to sell a few of the family’s possessions.

When Bour left the Seykora house after that fateful dinner, the teens

immediately descended on their parents.

“As soon as Tony left they were right there saying, ‘Let’s do this,’” Lori said.

“They were all for it.”

In fact, Lori’s eyes tear up at the memories of her oldest son’s enthusiasm

and support for their parents’ new company in the early days. On the day she quit StarMark, Lori came home to a single red rose on the kitchen counter. Attached was a note that read, “There is nothing but red roses and blue skies ahead.”

The prescient young man was right, of course, although the success came

after a lot of long hours and hard work. Twelve years after he wrote that note, Jason is a remodeling contractor in Sioux Falls and playfully tells his parents that they’re at fault for the evenings he spends away from his young family while he finishes jobs. Their youngest son, Jeremy, joined Showplace during the start-up phase and continues to work there.

Lori, who grew up in Faribault, Minnesota, has an education degree from St.

Cloud State University in her home state. She was a middle-school teacher in Sioux

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Falls when she and her husband met the man who would change their lives. Pat and Lori were newcomers to Sioux Falls and had joined a couple’s bowling league to meet people. The league required couples to compete as a foursome and Lori scanned the room looking for possible teammates among the strangers. In her 20s at the time, Lori spied a couple that looked to be in their 40s across the room. She nudged her husband and whispered under her breath, “I bet you we get stuck with that old couple over there.”

She was right, and Tony Bour and his wife became not only bowling team

partners, but good friends.

Pat Seykora remembers the comment with wry laugh. “We got stuck with

the old couple, but Tony’s still going 90 miles an hour faster than I am and he’s in his 70s now.”

The Seykoras had never planned to work for Tony, thinking that it would

jeopardize their friendship. In fact, Pat had turned down offers to work at StarMark twice before accepting a job as a maintenance manager in 1984.

Trained in electronics at a technical college in Willmar, Minnesota, Pat

came to Sioux Falls in the late 1970s as a newlywed and was ready to work at a position at a two-way radio manufacturer, which was secured for him through his college. Within a month he was laid off, and before he could reach Lori to tell her he was without a job, he found a position as an electrician. A housing market bust in 1981 found him again without a job until he found a position servicing word-processing equipment.

All the while Paul Sova at StarMark courted Pat to come work at the plant,

where the machines were becoming more computerized and Pat’s experience in electronics would help keep the factory humming. In 1984, on the third request, Pat signed on to the team at StarMark, and joined his bowling partner in the woodworking business. At Showplace, Pat began as the maintenance manager and now currently runs the “after finish” departments at the Harrisburg plant.

Lori, who had been teaching middle school science, soon joined her hus-

band at StarMark in the customer service department in 1985. Now a certified kitchen designer with years of experience and professional recertification under her belt, Lori was a blank slate when she started in the cabinetry business.

Showplace Wood Products “Tony handed me a drawing pad and a scale and said ‘Here you go,’” she

recalled. “I had no idea what a cabinet was or how to read scale.”

Now Showplace’s director of customer service, Lori knows cabinets inside

and out and uses the experience from her background and past positions in education when she holds training sessions on the company’s products for Showplace dealers.

As she has from the early days of the company, Lori works with the production

department to form a team that ensures customers receive products of the highest quality. A former StarMark colleague is one of her closest allies in this effort.

Bill Retterath—Assuring High Quality It was a far cry from traveling the countryside as an agriculture insurance adjuster to assembling cabinet doors, but that’s just what Bill Retterath did in 1984, when the insurance company he worked for in the Sioux Falls area said they couldn’t pay him over the slow winter months. The 23-year-old, who spent most of his formative years just outside of Sioux Falls, was hired on the spot when he walked into StarMark. He worked for a full week before, as fate would have it, serving as one of 40 employees laid Bill Retterath

off at the company at the end of his fifth day.

Not long after, Retterath was the first to be hired back to start a new

cabinet line in a production expansion at the StarMark plant, where he worked under his future colleague Steve Richter until Retterath received a promotion to become a night-shift supervisor in 1987. A move to Northwood, Iowa, for a stint as production manager at Masco subsidiary Fieldstone Cabinetry followed in the mid-1990s. Retterath returned to the Sioux Falls StarMark plant in 1995 to work in quality and production management until 1999.

The departure of Bour and then Lee and Sova from StarMark, and the change in

management direction at the plant, gave Retterath the feeling that he didn’t fit in there.

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“I had no sense of belonging at StarMark any longer. The reasons to come

to work were no longer there,” he said. “All the new people had developed their own relationships and the writing was on the wall that my time there was going to be short-lived.”

When Sova contacted Retterath to mention the possibility of bringing him

on to the new cabinet company, his immediate reaction was to sigh with relief. “What a blessing,” he said. “It was just a neat feeling that you belonged to something greater,” he added. He felt honored that Bour and the other founders chose him and a handful of fellow StarMark employees to join them as managers.

“That’s the neat part, that they recognized that it was to their advantage to

include us,” he said.

Bill and his wife Mary Beth, at the time a banking professional at Citibank,

took all the money they had in their savings to buy their shares in Showplace, putting off planned home improvements and vacations with their then 11- and 5-year-old daughters. The Retteraths looked at the risk pragmatically; their nest egg “was meant to be used for something like this—an investment of some sort,” Bill said.

Mary Beth appreciated the regular meetings Bour held with the future

Showplace managers and their spouses, even before her husband left his job at StarMark. “Tony really did a good job of making certain that we were all informed and could ask questions and that really helped as the project moved along.”

That reassurance came in handy when Bill committed to joining on as a

Showplace shareholder and he and Mary Beth drove down to Harrisburg to see the building site. “We went down there and it was just land, not even a building yet!” Mary Beth said. “Those were exciting times, but they were scary too.”

The financial sacrifices were small compared to the family activities Bill

missed out on during the long hours and extended work weeks of Showplace’s initial years, Mary Beth said.

“For the first year and a half, he worked every single Saturday,” she said.

“Our girls were involved in all sorts of activities and that was left on my shoulders and I was working full-time too. Bill would try to come when he could.”

It wasn’t until years later that the Retteraths learned of the extra risk

taken on by Tony Bour and his wife and some of the outside investors, who had

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invested substantially in the company and who would have had to pay back a large share of the bank loans if the business failed.

“Whatever we lost we could have recouped,” Bill said. “There was a great

deal of risk for some of these gentlemen.”

No matter the risk or the hard work, Bill said he still feels the pride in the

company he helped build whenever he’s at the Showplace plant, where he now serves as plant manager in the finish department.

“This was the best of times,” he recalled. “It’s why whenever I lock up the plant at

night or walk in each morning, I pinch myself and remember that dreams can come true.”

There was a time, however, when he had committed to Showplace but had

yet to leave StarMark, when Retterath kept a nervous eye on the construction of the Harrisburg plant and speculated about his role at the company. He liked to touch base and contemplate the company’s future with another StarMark manager and future Showplace shareholder, Steve Richter, who preferred a wait-andsee approach. After months of chewing over possible scenarios, Richter forbade Retterath to talk to him anymore about the topic.

“I’m a person very comfortable with structure and boundaries and I was

interested in learning more about the facility as it was going together,” Retterath said. “Steve had enough of that. He and I are different on that score.”

Steve Richter—Keeping an Eye on Logistics It was a good thing that the doctors put a walking cast on Steve Richter after he broke his foot during a volleyball game in 1983. Managing crutches would have only slowed him down as he looked for work having recently lost his job as a welder when the company he worked for closed down. Richter was still looking for another position when his brother-in-law Paul Sova, then plant manager at StarMark Cabinetry, offered him a position as the coordinator for the “after paint” Steve Richter

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activities of assembly and shipping at the plant.

“I said that I wouldn’t get my cast off for another month, but he said I could

come in and start to learn,” Richter said. “I hobbled around while I learned.”

The Sioux Falls native shed his cast and moved up through the ranks to

become a supervisor, a night-shift manager, and then a day-shift plant manager. After the forced departures of Bour, Lee, and Sova at StarMark in the late 1990s, Richter said his job at the company had become an unpleasant chore. New corporate managers with no cabinet-building experience were now directing the plant and moving the company away from its original ideals. Richter felt the company no longer focused on building a strong relationship with dealers and customers. He spoke with his long-time colleagues Lori and Pat Seykora and Bill Retterath about the foursome’s chances of breaking off and starting their own cabinet company.

“The four of us were secure in our jobs and were well-respected,” Richter

said. “But it had become a pain to get up and go to work.”

As it turned out, the four professionals were soon to be tapped to help start

up Showplace.

“I was all ready for this from the word go,” Richter said. “It was a once-in-

a-lifetime opportunity.”

To buy his shares, Richter withdrew the amount from his profit-sharing

account at StarMark, absorbing the penalty for early withdrawal of plan funds. “It was about a two-minute conversation with my wife and she said ‘go for it,’” he said.

Of the switch from a secure position at StarMark to a start-up company

that had yet to build a production facility, Richter said, “It was not a hard choice to make.” His wife Denise was in full agreement. “She knew it was going to happen sooner or later,” he said. “When you come home grumpy and growly all the time, she was ready for me to do something different.”

For her part, Denise Richter claimed she’s not a natural risk taker, but saw little

risk in investing in and signing on to the new company, especially with Bour at its helm. “Steve had worked with Tony for a long time and we had gotten to know him and if he was ready to start something else, then we would be there ready to join in,” she said.

Neither did she lose sleep over the possibility that the company wouldn’t make

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it. “There’s always a little concern with a new company,” she said, “but I don’t think we ever worried too much. I think we never felt it was the wrong thing to do. We were confident in it.”

When Richter started at Showplace, he managed the door assembly, trim

line, and shipping operations. His position moved 30 miles south of the main Harrisburg facility when he became plant manager of the Showplace door assembly plant in Beresford, South Dakota. Richter and his Beresford staff send two shipments of doors to the Harrisburg plant every day in a well-oiled operation that relies not only a state-of-the-art computerized ordering system, but on the trust that exists between him and his fellow managers at the main facility.

“They get their product and they’re happy and life goes on,” he said.

Randy Pooley—Making the Sales The production and business staff assembled, the team called on their former StarMark colleague Randy Pooley to join on as director of sales. Pooley had decades of experience in the construction industry, having worked in Rapid City, South Dakota, for a fabricated-housing manufacturer that made its own cabinets. The southeast South Dakota native took that experience across the state when he joined StarMark in Sioux Falls in 1986 as a showroom manager and Randy Pooley

then as director of showroom operations. In that

capacity, Pooley built and oversaw the management of StarMark showrooms throughout the country. When the company’s business faltered in the late 1990s, and Bour, Sova, and Lee were let go, Pooley said he saw no future with the cabinet company under its conglomerate owners.

“The attitude was that if you weren’t with corporate in Michigan, you

weren’t one of them,” he said. “If you wanted to go anywhere in the company and improve your career you had to be one of them and, obviously, we weren’t.”

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In the summer of 1999, Pooley heard about Bour’s new cabinet company

and asked to become part of the team. Pooley joined in the planning meetings, but was too late to buy some of the initial shares in the company. The sales professional remedied this situation by buying some of another investor’s shares. “Even though I wasn’t in the initial investor group, when I came on board I made it known to Tony that I was after more than just a job,” Pooley said. “I wanted to be involved in the ownership and have a say in those decisions that went along with being an owner.”

Bour invited Pooley to approach the Showplace Board of Directors with

his proposal. Board member Rob Everist agreed with Pooley’s request to join the ownership team and sold him a substantial portion of his personal shares. This act meant a lot to Pooley. “I had jobs all of my life. I wanted more,” he said. “I could see this giving me something that I really enjoyed doing and getting me settled for those retirement years.”

On May 1, 2000, Pooley officially joined his former colleagues on staff at

Showplace and “did anything I could to get sales going,” he said. Pooley began expanding the number of independent sales representatives who worked with Showplace, with the eventual aim to cover all regions of the country. “It wasn’t too long before we moved from a regional company to a national company,” he said.

Lorraine Bour—Helping To Build a Legacy Although not a member of the group of original nine managers, without Lorraine Bour’s blessing and support, Showplace would likely have never gotten off the ground. Lorraine knew her husband had wanted to start another cabinet business, even as he was busy selling commercial real estate in the late 1990s.

“He would ask me, ‘What if I started a cabinet business?’ ” Lorraine said.

“And I said, ‘Tony, you’re in your early 60s and I’m in my 50s and most people think of retiring, not starting a new business.’”

Lorraine and Tony had worked hard all their professional lives and

were now in a comfortable financial situation. Lorraine envisioned time spent

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traveling and visiting grandchildren, not watching her husband work long hours at a start-up company.

When StarMark terminated Lee and Sova, however, Tony’s interest in

starting a new company became more focused and intense as he realized that he and his former colleagues could parlay their years of experience into a successful new company. Lorraine knew she couldn’t keep her husband from following his desire.

“He kept on talking about it and he had so much enthusiasm and so much

knowledge that he couldn’t let this opportunity go by the wayside,” Lorraine said. As she recalled, Tony told her he would start small with 25 employees and that he would work only part-time. “That’s how he convinced me.”

Like the other internal investors and their spouses, Lorraine not only

bought shares in Showplace, but also signed a personal guarantee with Tony and the other primary outside investors that would require them to pay back the loans from the bank if the company failed. Her faith in Tony’s experience and enthusiasm, and that of his management team, carried her through the nervewracking experience of committing her life savings to the venture, especially as the couple neared retirement age.

“If you just think about that building,” Lorraine said of the Showplace

plant, “it wasn’t as big as it is now, but it was plenty big and we signed our lives away to build it.”

It didn’t take her long to realize that the new company would employ more

than a few dozen people and that her husband would be putting in long hours, at least in the company’s first years. On a drive back from Minneapolis around Christmas in 1999, Lorraine and Tony were discussing names for the new business venture, when Tony suggested “Showplace.” At that point, Lorraine knew her husband had plans beyond a small, modest cabinet company.

“I said it’s really going to be bigger than you told me, isn’t it?” she said.

“And he said, ‘Well, it probably will be.’”

Lorraine is professionally involved in Showplace as a licensed insurance

agent who administers Showplace’s employee insurance programs, but the biggest payoff for her is the success of the company and the jobs it provides to the

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community. She still wishes one employee would retire, however.

“Everybody and their uncle knows that I wish Tony would retire,”

she said. “But you know what? He never will retire and it makes him happy and he would probably go stark raving mad if he did.”

Sharing the Risk, Reaping the Reward The internal managers in place, all Bour and his team needed to start building the plant and making cabinets was money—lots of money—and a site for their new facility. Bour called on his connections in the Sioux Falls business community and the kitchen cabinet manufacturing world to drum up interested investors. In turn, Showplace would then leverage the amount raised through shareholder stock purchases to garner loans and lines of credit from their financial institution in Sioux Falls, U.S. Bank.

Already in on the plan was Bob Swanson, affectionately known as Swanny,

and a longtime friend and associate of Bour’s. Swanson met Bour and hired him in 1965 to become the plant manager for Riviera Products at the company’s Colorado Springs plant. The two worked together again when they founded StarMark in 1978, which formed with Swanson as the president and Bour as the plant manager. Like Bour, Swanson had signed a non-compete agreement with Masco, although his covered ten years from when he sold the company to the conglomerate in 1989. In that time, Swanson had moved on to other business interests, including developing condominiums in Florida.

After he sold StarMark, it had saddened Swanson to see the company he

founded and helped build begin to falter following Tony Bour’s termination. The early years after the sale of the company had gone well for Swanson and Bour while they continued to work at the company, with Swanson on a consulting basis, in a “work-out” clause. Designed to protect the buyer of a new business from problems relating to a previous owner’s abrupt departure, the clause required the two executives to make a certain profit for the company over the next three years. The couple piloted the business and reached the goal, earning

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the two an additional 50 percent of their initial buyout in company shares.

“The last year of our work-out, we made $5 to $6 million and then the year

after they let Tony go, the company broke even,” Swanson said. “The year after that, they lost money. They got rid of Tony and that’s what they got. I hated to see it. We were proud of StarMark.”

Bour and Swanson thought they could again experience that feeling of pride

in a new company, especially one that could leave a lasting legacy of financial success while rewarding and remaining loyal to the people who worked there. As veterans of the cabinet industry, not only did they have the knowledge, experience and reputation to build a successful company, they also had the financial resources to invest substantially in the venture and sign personal guarantees required for bank loans. They, in turn, tapped other friends and associates who could afford to take on the risk of guaranteeing their investment in the company.

Bour and Swanson, along with Dave Lawrence, Swanson’s business part-

ner in another entity and the son of an original StarMark investor, were in the position to invest and serve as guarantors on bank loans. Swanson and Lawrence provided a significant portion of the capital to fund the venture and agreed to serve on the five-person Board of Directors.

The strength of these and other outside investors played a crucial role

in getting the necessary loans from the bank and the state of South Dakota.

Bank Loans Help Build the Business Before Marie Frederickson, vice president of U.S. Bank in Sioux Falls, helped structure the financing package that ultimately resulted in $9 million in loans and mortgages to Showplace, she had worked with Tony Bour on a much smaller project. After he left StarMark, Bour had approached Frederickson to set up a checking account and small line of credit for a fun enterprise—manufacturing a high quality, lightweight version of a popular bean bag toss game to sell to recreational vehicle enthusiasts.

“Tony is someone who is a true entrepreneur inside and out,” Frederickson

said, as she described her first project with Bour. “He and his wife Lorraine

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love to travel the country in their RV and he said that campers would love this product. The frame was plastic and the bags were sewn in nice, heavy cloth, all manufactured in South Dakota.”

The next project she undertook with Bour was considerably larger in

scope: building a cabinet manufacturing facility from the ground up.

As with any business entity, but particularly a start-up, Frederickson said

her bank considered the risks posed by loaning the huge sums needed to start a production facility.

“Obviously, you don’t have a track record for profitability or business cash

flow; that’s all projected,” she explained. “So you look at the owners. How well do we know them? What’s their character? What is their personal financial worth? How much can they bring to the table in cash or land equity? What’s their management style? Does the management know how to set up a cabinet manufacturing company?”

In terms of management experience and cabinet know-how, the combined

years in the industry of the management team, as well as Bour’s national reputation in the cabinet industry, readily convinced Frederickson and her bank of the company’s viability.

“But at the end of the day, whenever you do any bank financing, you have to

look at your repayment risk,” she said. “Especially with a start-up company, what is the repayment source if something happens? You always look to the guarantors.”

Bour and his wife were among those who signed a personal guarantee

to repay the bank if the company failed. Outside investors Bob Swanson, Dave Lawrence, and Tom Everist also signed guarantees.

“We ended up funding about 85 percent of the total cost of that building,

which is the maximum amount of loan to value,” Frederickson said. “But there was a lot of strength in those guarantors. L.G. Everist was very willing to provide a guarantee, and that is a strong company. And Tony, Robert, and David had a vested interest in making this successful, so there was no question that they would provide the guarantees to set the structure up. The combination of that and the experience of Tony and his crew allowed us, for lending purposes, to mitigate any risk from the new start-up company.”

Showplace Wood Products Frederickson said the Showplace financial structure was a testament to the

group that agreed to be part of the new company, as investors and as managers.

“It took a team of folks that believed that there was a need to have a South

Dakota grown company that was going to stay locally-owned and that they knew could get business throughout the nation,” she said. “They were principled right from the start and they’ve created a real legacy.”

More Investors Join In Helping to put the bank officers at ease were Tony Bour’s outside investors, which included his old friend and boss, Bob Swanson; as well as Dave Lawrence, the son of Paul Lawrence, an original StarMark investor; and Tom and Barb Everist, whom Bour knew through the Sioux Falls business community.

Dave Lawrence considered himself fortunate that Bour offered him a

chance to invest in the company. Lawrence is president and CEO of Sunstream, Inc., a hospitality management company in southwest Florida, and had partnered on numerous business projects with Bob Swanson and the other Minnesota businessmen (including his father) who formed StarMark in the late 1970s. He considered Bour’s request to invest in Showplace and the New Century Land deal a significant honor.

“I have to thank Tony and his crew and I’m so appreciative that those origi-

nal guys from Minnesota gave me the opportunity to be a part of this industry,” he said.

Lawrence had known many of the Showplace management team from

previous interactions. He had often traveled from Hastings, Minnesota, to the StarMark facility in Sioux Falls as a business partner of Bob Swanson. Their enthusiasm and experience sold him on the new company. “A lot of the core group I knew very well from their many years at StarMark and they were a super hardworking group of people my age,” he said. “And Tony had a great track record because he had been in the business for many years.”

Another shareholder, Tom Everist, had served with Bour on numerous

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boards and organizations and the two had become good friends. In 1999, Everist was president and chief executive officer of L.G. Everist, a Sioux Falls company that mines and produces aggregate, concrete and asphalt for the construction industry. Although he left the company to form The Everist Group in 2002, at the time of the Showplace start-up, he ran the family company with his two cousins, Rick and Rob Everist. When Bour asked him to invest $150,000 to get a 25 percent share in Showplace, Everist said he took the idea home to his wife, Barb, an attorney and former majority leader in the South Dakota state senate.

“I told her ‘Tony offered us 25 percent of a brand new cabinet company

and I think it’s a neat idea and I think it has a lot of potential,’” Everist said. “She thought it was a lot of money.”

While working on the negotiations with Showplace to build at the L.G.

Everist-owned Harrisburg Industrial Park, Everist mentioned that Bour had offered him a quarter share in the company to Jay Van Den Top, at the time vice president and CFO of Everist’s company. Van Den Top had worked with Bour and Everist on securing the land for the plant and had been impressed with the Showplace team and Bour’s plan for the company.

“The more I learned about what they were going to do and the team Tony

was putting together, it looked to me like this is something I’d like to be involved in,” Van Den Top said. “And I thought that there were others that worked at [L.G.] Everist who would like to be involved, too. So we brought the five people at Everist together.”

Their idea was to split the $150,000 worth of shares between the top man-

agers at L.G. Everist.

Tom Everist brought the business plan developed by Showplace CFO

Emery Lee to his four top managers and gave his arguments for investing in Showplace. “I told them I know Tony personally. I like Tony. He’s got a team together that’s hungry. I’ve never been in the cabinet business before so I don’t know if the projections are good or bad but it sure looks worth it to me,” he said.

The group of managers took Tom at his word, but had plenty of questions

about the business plan and cabinet industry. “I said ‘These are really wonderful questions. I have no idea what the answers are,’” Everist said. “We should really

Showplace Wood Products

get Tony in here.”

Soft-spoken and gracious, Tony Bour is also doggedly persuasive when

the need arises. Convincing Rick Everist, current president and CEO of L.G. Everist, Inc., and his brother Rob, L.G. Everist vice president, to invest in his new cabinet company required Bour to make a strong case. Rick and Rob were two of four managers of their company asked to buy five percent, or $30,000 each, of the initial shares in Showplace. To sell the idea of a new cabinet manufacturing company, Bour met Rick and Rob, as well as Van Den Top and John Henkhaus, then a senior financial manager at the company.

Although Bour and Tom Everist were good friends and business associates,

and Van Den Top was already familiar with and enthusiastic about the venture, the other three managers at the meeting knew Bour only in passing or not at all.

A young professional in his 30s at the time, John Henkhaus was a senior

financial officer at L.G. Everist when Bour and Everist made the offer to invest in the new cabinet company. Henkhaus had known of Bour from the Sioux Falls business community and his work in commercial real estate, but had never formally met him. Bour’s experience and that of his team sold Henkhaus on the venture.

“It was a $30,000 initial investment and, at the time, it wasn’t just sitting

around in my drawer,” Henkhaus said. “But it seemed if you were going to invest in anything, this was worth the risk. We liked that the management team was already in place and just waiting for Tony to start it up again with these seasoned veterans of the cabinet industry.”

Two of the other managers, Tom’s cousins, Rick and Rob Everist, were not

immediately enamored of the idea.

“Rick and I were pretty skeptical,” recalled Rob, who eventually became

a member of the Showplace Board of Directors. “We thought, let’s put $30,000 into this and see where it goes. What’s the worst that could happen?”

His brother required more convincing, however, and after Bour met with the

five L.G. Everist managers, Rick got him alone and peppered him with questions.

Rick admitted that his discussion with Bour, whom he now counts as a good

friend, started out on a confrontational note. On investing in the company, “I refused to do it,” Rick said. “I said I don’t know a thing about the cabinet business, I don’t

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want to be in the cabinet business and I’ve got better things to do with my money.”

Bour didn’t back down, provided reassurances for any misgivings during

their hour-long discussion, and Rick eventually agreed to buy in.

“Over the normal course of business you realize the people you like are

the ones that can make their case. Tony can make his case,” he said. “I have to say that I was damn reluctant, but I wrote the check. And, of course, I’m pretty humbled by the results that Tony has put out.”

Rob concurred with his brother’s assessment. “We were kind of along for

the ride. Initially our expectations were pretty low,” he said. “But after the first year they immediately started making money. The proof was in the results and they got results pretty quickly. I was amazed then and I’m still amazed by Tony’s internal team and how they get results. They did it right from the start.”

In hindsight, Tom Everist had to laugh at some of his initial concerns about

Showplace. He recalled looking at the drawings for the plant in the summer of 1999 and asking whether the architect could raise the ceilings so the building could be rented out as a warehouse if the cabinet venture failed. The Showplace team argued that the additional headroom would cause their heating costs to increase in addition to creating other operational headaches. They convinced Everist that, if the worst happened and the business failed, another manufacturing plant could move right in. “It’s kind of a funny story, considering Showplace is such a big success,” Everist admitted.

Showplace is Born The team and initial financing assembled, the group began the work necessary to build a manufacturing plant in a small, sleepy town just south of Sioux Falls. What began as a dream between a few friends and colleagues was about to become reality.

Showplace Wood Products

Chapter 2: Alfalfa Makes Way for Showplace: Building the Showplace Wood Products Plant and Making the First Cabinets In 1934, legend has it that John Dillinger—or perhaps one of his infamous gang members, Baby Face Nelson—robbed the State Bank on Railroad Avenue in Harrisburg, a town just south of Sioux Falls and home to all of 200 souls at the time. As the bank robber left with his loot, the story goes, he turned to fire a bullet into the teller counter as a warning not to follow him. There’s no official documentation of the event, except for the bullet-scarred teller box carefully preserved by the current owner of the building, but the legend lives on in Harrisburg. Until the past decade, excitement had eluded this quiet and genial municipality, and perhaps residents clung to their thrilling brush with a dashing public enemy as a way to set themselves apart from other crossroads on the Midwestern prairie.

Now one of the fastest growing cities in the state, Harrisburg has more excit-

ing stories to tell. The city’s population has nearly quadrupled in the past decade, from 958 in 2000 to 4,089 in 2010, according U.S. Census figures. In this same time, the Harrisburg School District constructed four new school buildings to serve its skyrocketing population. Growing along with Harrisburg, while helping support the town’s mounting expenses through the property taxes it pays, is the largest private employer within the city limits—Showplace Wood Products.

Showplace broke ground on its new plant on nine acres in the Harrisburg

Industrial Park in 1999, but the story of the facility’s location dates back a few years earlier, when the Sioux Falls-based company L.G. Everist bought the land to develop as an industrial park for businesses who needed railroad access. In 1997, the company, which quarries materials for the construction industry, purchased 120 acres of alfalfa and corn fields nearly four miles south of South

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An aerial view of the industrial park prior to the 2007 plant expansion.

Falls and due north of the cluster of houses and small shops that constitute the Harrisburg downtown. L.G. Everist bought the land just prior to the Harrisburg population explosion. At the time, the city claimed about 800 residents.

Tom Everist, now president and chief executive officer of the Everist

Company, held these same positions at L.G. Everist at the time of the purchase of the Harrisburg Industrial Park land. By 1999, the park had one tenant and plenty of land available for another manufacturing facility. Everist met up with Tony Bour, an old friend who moved in the same Sioux Falls business circles, in the late spring of that year at a meeting in Phoenix, Arizona. Both he and Bour sat on the board of Raven Industries, a Sioux Falls company that was holding its annual meeting at a Ritz Carlton Hotel.

â&#x20AC;&#x153;We sat in the concierge lounge and had a cookie and a glass of wine and

he explained that his non-compete with StarMark had ended and that he had a cadre of aggressive young people who know how to build cabinets and that the best place to do it was Harrisburg,â&#x20AC;? Everist said. â&#x20AC;&#x153;He was looking at drawing

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employees from the little towns south of Sioux Falls.”

Bour and his team had looked for land in Sioux Falls and surrounding areas,

but Harrisburg quickly emerged as the best site for the new plant, particularly considering the cost of the land and the availability of skilled labor. “Even though I’m a Sioux Falls person and I spent many years on the Sioux Falls Development Foundation’s Board of Directors, I had seen how prices for land had really gone up,” Bour said. “I also knew how tight the labor market was in Sioux Falls because StarMark had experienced problems with hiring people. I thought that Harrisburg’s location, just south of Sioux Falls, would be great for attracting people from the rural areas who may not want to fight traffic into the bigger city.”

Not only did the Harrisburg site provide a good location and access to an

enthusiastic labor force, his relationship with Everist allowed Bour and outside investors Bob Swanson and Dave Lawrence to form a new company that would help take some of the start-up financing burden from Showplace.

As a financing mechanism to prevent the new company from taking on

too much initial debt, Bour, L.G. Everist, Inc., Swanson and Lawrence—in addition to buying shares in the Showplace venture—formed their own company to purchase the land and pay for the construction of the plant. The entity, called New Century Land, would then lease the land and building to Showplace, lowering the amount of initial capital needed by the new cabinet company to start operations. Low-interest industrial revenue bonds sponsored by the city helped fund the $3.25 million price tag on the land and building construction.

“New Century Land bought the land we sit on here and then negotiated

with the bank an industrial revenue bond issue,” Bour said. “With an industrial revenue bond, we could get attractive interest rates and the bank could get a better return because they don’t have to pay any income tax on the interest they are getting. Harrisburg sponsored the bond but they didn’t guarantee it. They didn’t have any skin in the game.”

In keeping with the initial plan, Showplace bought out New Century Land

and took over the liability of the industrial revenue bonds in 2005. Showplace paid off the bond two years later.

Setting up these bonds for the company was friend and counsel Russ

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Greenfield, a partner at Boyce, Greenfield, Pashby & Welk, a law firm in Sioux Falls. Greenfield had also worked with Bob Swanson in the late 1970s to help him incorporate StarMark and find land on which to build the cabinet plant. Greenfield, who had previously served as counsel for the Sioux Falls Development Foundation, is a booster for the greater Sioux Falls area and praises Bour and his fellow investors for starting their business in the community.

“The economic benefit to the community is huge,” Greenfield said.

“They’ve been a great corporate citizen. They’ve always been involved in United Way and have been a good addition to have in our area.”

When Showplace decided to build in Harrisburg, the city was just starting

its period of dramatic growth, and it was a bit lonely at the industrial park. Only two other businesses called the park home, although the land quickly filled up to two-thirds full in the following decade.

Everist credits various public-private efforts for the growth and success

of the industrial park, and, by extension, the city of Harrisburg. The South Dakota Governor’s Office of Economic Development helped L.G. Everist build Enterprise Street, the main road into the park, through a state program that encouraged small towns to develop these types of facilities to attract businesses. Another large project had a direct impact on the industrial park as well as the town. “Harrisburg had a water tower that was a wood-staved tank on top of their city hall,” Everist said. “If you turned the faucet on it would dribble out. Harrisburg couldn’t grow because they didn’t have a water tower and we needed water pressure so that we could get fire permits and have our building insured.”

L.G. Everist donated a parcel of their industrial park land for the city’s new

water tank, which was constructed with state funds. “Because of that water tower, Harrisburg has just exploded,” Everist said. “This is how capitalism is supposed to work. The public entities encourage private investment and that encourages people to build more houses and when you’re all done you’ve got thousands of people there who are living there and having a nice life.”

Jim Aalbers, mayor of Harrisburg at the time, worked with the city coun-

cil to bring Showplace into the community and vividly recalls the day when he served as one of the city’s representatives to sponsor the industrial revenue

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bonds at U.S. Bank. “I do remember that day,” Aalbers said. “Our financial officer and I spent hours at the bank signing papers.”

Aalbers had known Bour prior to his Showplace experience through

Bour’s shooting club. Aalbers’ job at a building material wholesale distributor had also brought him in contact with Bour when he was still at StarMark.

“Tony Bour came to our city council meeting one night and gave us his

ideas about the location,” Aalbers said. “We were in the infancy of having our industrial park developed and all of us at the city council thought it would be a great fit for Harrisburg.”

Showplace received a property tax break over the company’s first five years

of business as an added incentive to build in the industrial park. The city also invited the company’s managers to attend city council meetings to answer residents’ questions.

“There were some people in town that were worried that they would smell var-

nish,” he said, “and the Showplace people would reassure them that it would be a stateof-the-art cabinet company, not like somebody building cabinets out of their garage.”

Another concern was the noise of the ventilation system fan, which

Showplace resolved by building soil berms between the town and the plant. “They were great people to work with. They did basically everything we asked them to do. They are a good neighbor,” Aalbers said.

Initial shareholder and Showplace board member Dave Lawrence pays

back the compliment to the Harrisburg city leaders and the area’s residents. He credits the business climate in the Harrisburg-Sioux Falls area and South Dakota for helping make the new manufacturer a success. “It’s very nice to do business out there; the town has been very easy to deal with,” he said. “There are really good people there who work hard and enjoy their families and it’s just a pleasant place to be.”

For his part, Tom Everist is proud of the impact Showplace and the L.G.

Everist-owned industrial park have had on the once small hamlet of Harrisburg. He recalled the excitement he felt 52 years ago when, as a ten-year-old, he and some friends braved the ten-mile bike ride from his neighborhood in Sioux Falls to the then tiny Harrisburg town center. “That was a pretty big adventure for a

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ten-year-old,” he said. “Harrisburg was a three-block-by-five-block town then and now there are houses and new developments all around. It’s fun to look at how things change as you get older.”

The Basement Drawings Still smarting from his StarMark termination, Paul Sova channeled his anger into drawing the plans for the new Showplace plant during the spring of 1999. He set up a drafting table in the small basement workshop at his home, purchased some drafting tools that he didn’t already own, and drew the plans for the new cabinet manufacturing plant by hand.

“I was fully aware of the importance of the work, not only for my future

and my family’s future, but because so many of the initial financial decisions would be based on this design,” Sova said. “I found the work to be exhilarating and I worked long days on the project, often losing track of time. I cannot recall ever being more focused.”

Sova worked quickly and intensively on the plans, knowing that the con-

tractor needed these drawings to provide a construction cost estimate and that Emery Lee, the chief financial officer, would use them and an equipment list to determine the amount of bank and private loans needed. Scott Korsten also planned to show copies of the plans to suppliers and vendors to demonstrate the scope and scale of the new company.

An experienced draftsperson, Sova had nonetheless never designed a manu-

facturing plant from scratch, but still found that he enjoyed the challenge. Laying out the plant was like assembling a giant puzzle. He needed to place each department in a logical spot, while allocating the proper space for individual machines and enough room for the people who ran the machines as well as those who worked throughout the rest of the plant. The design of the proposed 70,000-square-foot facility also would have to create an efficient flow of the product from raw material to shipping. In addition, inventory storage, receiving and shipping areas, and employee break rooms and rest rooms had to be factored into the design.

Showplace Wood Products His biggest challenge, however, was the design and size of the overhead

paint line and the finish room, where workers apply stain and paint to the cabinet components.

“We decided to start with only one line and four booths, but our plans for

growth included three lines, 12 booths, a walk-through system, and an oven, all to be added later,” Sova said. “Even in those early weeks we knew we were to become a national player.”

Years had passed since Sova had designed a finish system at StarMark and

he realized that he needed some help in ironing out the details. Arguably one of the most important features of a completed cabinet, a flawless finish involves cabinet components traveling through a coordinated system of booths where operators spray on layers of finish while a carefully-timed conveyor system moves the doors, drawer fronts, and other cabinet parts from station to station throughout the paint room. A super-insulated oven dries the cabinet components, which then travel through assembly stations and, finally, to a warehouse area where they wait to be picked up for delivery.

Sova knew he needed assistance setting up this crucial aspect of their plant,

but he also understood that he would have to tread lightly when looking for an outside professional who could lend a hand. At this early stage, the Showplace principals were quietly pulling together the plans for the new venture, waiting until they had the financial and structural details in place before they announced their new company to the public. An old friend with a wealth of experience in applying finish to cabinets and furniture, and the willingness to keep mum on the project, immediately came to mind.

Charlie Johnston was a sales representative based out of Illinois with

AkzoNobel, a leading international paint and coating company. He had worked with Sova as a supplier of paint and finish at the StarMark plant. The two had become good friends and had spent time with each other’s families over the past two decades. Sova called Johnston and asked him to stop by his home then next time he was paying a sales call to StarMark in Sioux Falls.

“I knew I could trust him,” Sova said of his close friend. The two met over

drinks at Sova’s house and commiserated over his termination at StarMark.

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“Then I told him I wanted to show him something important and that it must remain confidential,” he said. “We went downstairs at my house and I laid bare all my plans for the factory.”

Perhaps fueled by the cocktails, the two became teary-eyed when Johnston

looked at the plans and realized that Sova and his former StarMark colleagues meant business. He joked about the secretive nature of the venture.

“Paul told me that they were going to start a company and I said, ‘What do

you want me to do?’ He told me to keep my mouth shut and I did.” Johnston said.

“I knew they were going to be successful,” he added. “To be quite frank, if

it wasn’t against my company’s policies I would have been one of the investors.”

Johnston, who had also worked with Tony Bour decades earlier at Bour’s

previous cabinet companies, helped Sova puzzle out the paint line particulars. “With finishing, the timing of what happens in production is very important,” he said. “So I set up the distance between the spray booths and the location of the oven so the production line was efficient and economical.”

Sova and Johnston also designed the paint line to accommodate future

expansions. The extensive overhead conveyor lines and spray booths are difficult to move once installed, so the design of the paint room must accommodate higher levels of production without much disruption. Also, ensuring the best application and adequate drying of finishes requires careful control of humidity and air circulation, which meant this part of the plant could not be exposed to outside elements during an expansion. Sova counts his friend’s input as priceless when coming up with the paint room’s production line.

“It’s a little bit of a guessing game,” Johnston conceded. “How many feet a

minute can a line run? How many people need to be working on the line? How many extra feet around them do they need? If somebody is sanding something— not so much. But if somebody is handling a spray gun—that’s a different story. You don’t want to make the line too fast so you make a lot of junk at the end.”

Johnston also helped out the Showplace team by allowing them to use his

facility in Illinois in the fall of 1999 to produce their first door samples in order for factory representatives to show the company’s products to dealers. The story behind the trip to the Akzo facility shows the Showplace managers’ willingness

Showplace Wood Products

to take on extra duties to get their company off the ground. Scott Korsten, who was lining up suppliers and deciding on door styles with the other members of the Showplace team, ordered several hundred doors from Woodcraft Industries, a maker of hardwood cabinet components headquartered in St. Cloud, Minnesota, and run by Lewie Walker, a friend to all of the former StarMark managers. Sova and Emery Lee bought a used Ford cargo van and fitted it with a set of custom plywood storage racks Sova had designed in his garage. The racks held the doors in individual slots to protect them from damage during the trip.

“After figuring out the logistics and loading the van, Emery and I took off for

Illinois,” Sova said. “We made it to Jackson, Minnesota, and pulled over to eat, but, when we came back to saddle up again, the van’s security system locked us out and the van would not start. We rode in the cab of the tow truck with the driver all the way back to Sioux Falls.” A couple of days later and now with the security system disabled, the two took off for the Akzo lab once more and finally met with Johnston and a technician to spend a few days finishing the door samples at night when the lab was closed. Their project translated into a sizable production run, and the doors soon overwhelmed the tiny lab, which was primarily used for quality control checks. The group stained, sealed and top coated each door, one side at a time, and carried them by hand to a small oven to cure. Lee, who was more used to deciphering spreadsheets and loan documents, became the chief seal sander while Johnston and Sova decided on design standards and mixed up color formulas.

“It was cramped and cumbersome, but we pulled it off,” Sova said. The fin-

ish not yet cured, the doors were nonetheless loaded into their individual slots in the van, and he and Lee took off for Sioux Falls. “We headed home, pooped out, but satisfied we had done essential work. The trip back was uneventful and in short order we had samples in the hands of our reps.”

The cargo van was later pressed into service as a Showplace Kitchens delivery vehicle.

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Not long after, orders began trickling in and Sova and Lee knew their

trip—the long hours, cramped quarters, and hour-long tow truck ride notwithstanding—had produced the desired results.

Johnston’s dedication to his friends’ fledgling company also revealed itself

when he became a plant fixture in the early months of 2000. Production was just starting on Showplace’s first cabinets and Johnston spent every day there during the first month helping to set up the paint line and iron out problems. “I unloaded trucks and helped set up pumps” Johnston said. “You have to do things like that when you’re small and trying to get big.”

Being part of building a company at the ground level was exhilarating

and it was especially rewarding to see old friends who were dealt an unfair professional blow revive their careers with a vengeance. “On the whole, they are wonderful people to work with and they’re still my friends, although to say we never had a sharp word with each other would be untrue,” he said with a chuckle.

It’s an understandably tense situation when a few people are working long

hours to build a manufacturing plant and customer base over the course of just a few months. Johnston said the Showplace crew handled those busy early days with aplomb.

“We were all very experienced and we trusted each other,” he said. “And

everybody did a little bit of everything. If a problem arose because somebody did not quite read what was going on, they would fix it rather than whine about it. To this day, that’s how they work.”

A Team Built on Trust In the late spring of 1999, the four members of the internal management team that still worked at StarMark had each individually talked to Bour or Sova about joining the Showplace business. None of them, with the exception of the husband and wife team of Pat and Lori Seykora, yet knew which of their colleagues had also been asked to come along on the new venture. They each had their suspicions, but were hesitant to broach the subject in case they were wrong in their assumption.

Showplace Wood Products The group members finally spilled the beans at a Shriner’s dance attended

by the Seykoras, Bill Retterath and Steve Richter. “This was before the new company was a topic of open discussion,” Retterath said. “I think everyone had talked to someone but none of us knew if the others knew anything. Finally, someone broke the ice and it helped so much. We had all gone so long without saying anything to anyone else.”

Keeping the secret between themselves, and a few other trusted coworkers,

the group of nine managers and their spouses were eager to start learning more about how the business would function. In the summer of 1999, Tony Bour held regular meetings in the recreation room in the basement of his house where he explained the financial structure of the start-up to the prospective Showplace managers and their spouses. As the summer wore on, the team continued to meet there to talk over developments and make decisions on their product line.

“It was very important that spouses be in the loop,” Bour said. “I wanted

the managers and their spouses to know all of the things we were planning and where additional investment would come from. Not only were we going to provide a good job for these people but then we would also talk about the prospect of their investment growing and giving them a nice return on their investment.”

Bour said that although he, Sova, Lee and Korsten had all left StarMark,

the other four managers still worked there at the time and he didn’t want to put their jobs in jeopardy until it was time for them to leave the company. He also wanted the families of the current StarMark employees to be fully informed about the decision to join the new company, since they were all leaving secure jobs. “We thought the spouses would like to know exactly what their families were looking at in making a job change because StarMark was a viable company with good compensation and benefits and all of them had been at the company quite a few years,” Bour said.

Another aspect of the company that he wanted all of the other managers

and their families to understand was Showplace’s plan to become a national player in the cabinet industry within a few years. “Although it needed to walk before it would run, Showplace would not start out as a tiny little company. We were starting out at a pretty good size and putting together the financial wherewithal to do

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that,” Bour said. “It was very important that the spouses understood that.”

Lorraine Bour remembered the dedication of the individuals that assem-

bled in her basement. “Everybody wanted so hard to make it work. I guess part of it was that they wanted to show up StarMark,” she said. “I would serve refreshments in glasses that had ‘StarMark’ written on them and I would use electrician’s tape to cover up the name.”

Other than those initial meetings, however, the team completed their

individual tasks largely independent of each other.

“We were all fully competent in our roles,” Sova said. “We had assembled

a team of industry veterans that probably couldn’t be duplicated anywhere in the country.”

Working out of their homes, Emery Lee assembled the financing and fine-

tuned the company’s administrative matters. Paul Sova designed the plant and ordered equipment. Scott Korsten used his extensive industry contacts to make deals with suppliers and vendors. Overseeing the company’s progress, Tony Bour also courted outside investors and met with Harrisburg government officials on issues related to the plant’s construction.

The absence of shared office space resulted in some unique arrangements.

Showplace’s sole fax machine resided in a place of honor in the garage of Emery Lee’s house, just outside of Sioux Falls. As luck would have it, Scott Korsten was a close neighbor and Lee entrusted him with a garage opener so Korsten could send and receive faxes at all hours.

Meanwhile, at Korsten’s house, his position as the head of purchasing

and materials management lead to a semi-hostile takeover of his house by the ephemera of the cabinet industry. He and his wife Marilyn had to make their way each day through piles of samples of plywood components, hinges, adhesives, laminate and whatever else arrived in the mail or with a salesperson. Marilyn, although supportive and excited about the opportunity Showplace represented, grew weary of months spent wading through cabinet materials on her way into the house from the garage. “A lot of these things were large items, too,” she said. “There were door samples and drawer samples and at one point I realized that I was ready to get my home back.”

Showplace Wood Products Scott’s office space had also taken up a portion of the Korsten home. The

dining room table on the first floor housed a computer and served as the location where Korsten made purchasing deals and decisions. A Macintosh computer in the basement held his designs for the plant’s logo, letterheads and envelopes as well as the beginnings of the Showplace catalog and other marketing materials. His dual role at Showplace gave Korsten both a mental and physical workout during those first few months.

“Sometimes the phone would ring, and, depending on who it was, I would

have to run upstairs or downstairs to answer questions,” he said.

The Plant Becomes a Reality Those who have experienced winter in southeast South Dakota can attest to its raw, frigid power. The mercury stays resolutely below freezing for months on end. The flat prairie terrain offers no break from constant, punishing winds. In short, winter is no time to build a 70,000-square-foot manufacturing plant in the Upper Midwest.

To move Sova’s plant design

from drawing to reality, the Showplace management team worked feverishly in the spring of 1999 to get Sova’s plans to the architect and a building contractor before winter weather set in.

“Things were starting to

accelerate on all fronts and we knew if we were to launch Showplace, and take on substantial debt, we did not want to miss the summer and fall seasons to build the factory,” Sova said. “Our preference was to have

Early architectural renderings

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the building enclosed before winter hit.”

Another reason to move forward rapidly: the StarMark severance pay-

ments for Lee and Sova were to run out at the end of July and Korsten had left his job in April to begin work on the Showplace project. They all needed to start drawing a paycheck.

Gil Haugan Construction, Inc., a large local firm that built the StarMark

facility 20 years earlier, joined onto the project when Bour and Sova asked the company to rough out an estimate for the new plant using blueprints from the architect. The construction company knew the Showplace managers and investors from their past projects and things progressed quickly.

“They asked us to give them an estimate on putting up a building that size

and we estimated some numbers for a square footage price,” said Wes Engbers, vice president of Gil Haugan Construction. “They said it sounded fair enough, and pretty soon we were out there staking out a building and starting to build.”

The Showplace management team and outside investors, including Bob

Swanson, felt no need to negotiate with a contractor they had worked with for years at StarMark. And the construction company’s president, Gil Haugan, Jr., knew he could trust the experience and character of his clients.

“Tony and Swanny and all those guys are so sharp,” Haugan said. “They

knew what the price should be. There was no beating around the bush.”

With both the contractor and Showplace eager to get started on the

job, Gil Haugan Construction began ordering materials and, at Showplace’s

The job shack appears on the Harrisburg plant site.

Showplace Wood Products

The first footings are placed at the Harrisburg plant site. The existing Concrete Materials facility is visible in the background of this northeastward view.

encouragement, brought a job shack out to the Harrisburg site to stake out the lot in late spring of 1999. Although the lack of finished structural and mechanical plans meant the construction company could not yet obtain a full permit, the construction firm applied for a building permit that would at least allow them to pour the footings. Gil Haugan poured these first footings for the building in June. This development was a turning point for Sova, who was witnessing the plans drawn in his small basement workshop emerging into what would eventually become a busy cabinet factory.

“We didn’t have a corporation yet. I wasn’t drawing a paycheck yet,” he

said. “This was all still pie in the sky, yet we had concrete in the ground. I remember driving out alone at night to look at all this and it was at that moment, seeing concrete in the ground for the first time, that I knew we would not turn back and life would never be the same for us.”

After pouring the footings, construction moved quickly. Sova and the

Showplace management team had always planned to expand the plant, eventually tripling its size. While their plans to grow big were never in doubt, they also wanted to avoid taking on too much debt. They raised enough capital through investors and bank loans to allow them to construct a building that would meet their needs for the first few years of production.

“Start-ups are risky,” Sova said. “We knew we were going to be in the red

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Walls are going up as more concrete is poured in August, 1999.

for a year and we would be bleeding red ink for a long time.â&#x20AC;? The team had developed a five-year plan for growth that included eventual expansions when they had accrued enough business to take on another sizable capital expenditure.

To make construction easier and more economical during the future

expansions, the team decided to upgrade from the metal building they had worked in at StarMark to a precast concrete structure. The additional stability of

Construction is well underway in this September, 1999 photograph.

Showplace Wood Products

the concrete made the extra expense worthwhile and the wall material made it easier to remove the end walls and reuse them during the planned expansions. By the fall of 1999, the contractor had built the factory shell and started pouring the floor. Sova had purchased all of the machinery and timed the shipments to coincide with the building completion schedule and the arrival of the members of the team that were still working at StarMark. Pat Seykora arrived a few weeks before Thanksgiving, with Bill Retterath and Steve Richter following soon after, and their assistance in assembling the machinery and organizing the facility was crucial.

Sova remembered working in the frigid shell of a factory alongside con-

struction workers from Gil Haugan as well as electricians and plumbers.

“They were not accustomed to seeing the owners of a new business strap on

tool belts over their insulated coveralls and work at the pace we set,” Sova said. “We got to know them real well and found that we could rely on each other to complete the work. By the end of the construction phase, I knew we had earned their respect.”

Engbers and Haugan said the Showplace team’s willingness to pitch in

during construction didn’t surprise them at all. “That’s exactly the way these people are,” Haugan said. “If you need equipment moved, they’re not too good to do it, just because they sit in an office. They roll up their sleeves and give you a hand. They’re not afraid to get their hands dirty.”

Precast concrete wall panels are placed.

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Pat Seykora, Steve Richter and Paul Sova take a break inside the mostlyempty shell of the new Harrisburg plant, December, 1999.

That respect and cooperation appeared at all levels of the relationship

between Gil Haugan Construction and the Showplace team. Not only did Showplace managers and construction crew members work together on the factory floor, the contractor helped Bour and the other managers meet with shareholders and vendors by allowing Showplace to use its conference room for the company’s initial organizational meetings.

Wes Engbers said they thought nothing of going beyond the bounds of

their contract with Showplace to help out their friends. “We treat people fair and that’s what they do. Both of our businesses are run the same way,” Engbers said. “Those are the kinds of people you like to do business with.”

Haugan agreed: “They’re very good people. I think it reflects on the kind

of cabinet they build; they build a quality cabinet.”

The friendly relationship between the two companies, as well as the

fast-track nature of the project, had one unintended consequence. Gil Haugan Construction and Showplace had jumped from conceptual drawings to staking out the site, pouring footings, and assembling walls so quickly that neither company had thought to draw up a contract for the nearly $2.9 million project. It wasn’t until the job was complete that Gil Haugan’s accountant noticed that Showplace had never signed a contract with the building contractor.

“Talk about doing a job on a handshake,” said Engbers.

Showplace Wood Products

Installing Equipment The new Showplace managers were having the time of their lives. They shivered through a brisk early winter in a largely unheated environment; they worked 12-hour days; they ate lunch in a “break room” that consisted of a card table with folding chairs held together by duct tape. But those first few months spent installing equipment and readying the production floor of their new plant were some of the most rewarding times in the careers of the Showplace crew.

The plant equipment that Sova ordered began to arrive as the building

neared completion. Almost all of the assembly and equipment setup could be done indoors except for the construction of the dust collection system, which Sova scheduled to arrive first so that they could assemble it in November before brutal cold descended on the region.

Maintenance and equipment guru Pat Seykora was the first to come over

from StarMark. “Because of my maintenance background, they pulled me out first,” Seykora said. “Paul had bought a van and my first job was to fill it with tools.”

Another one of his initial jobs was helping Sova assemble the massive metal

dust collector—a 15-foot-tall, 30-foot-long sheet-metal box that stands on legs lifting it ten feet off the ground. The excitement that Sova and Seykora felt at the arrival of the truck carrying this essential piece of equipment dissipated after they unloaded its contents and found themselves in possession of piles of steel and a skimpy instruction manual. “It came in a bazillion pieces and the instructions were somewhat Greek to me,” Seykora said. “It took several weeks to get it together, but we figured it out.”

The dust collector begins to take shape.

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Colleagues Steve Richter and Bill Retterath quit StarMark to join

Showplace not long after Seykora and were also on hand to help assemble the giant metal structure. Sova remembered a particularly frightening step in the procedure which involved assembling the dust collector’s top panels.

“The final steps required us to work high above the ground bolting

together sheet metal panels in a pretty stiff November wind,” Sova said. “I am sure that had we been under observation from an OSHA inspector, we would still be paying off the fines.”

Seykora noted the dust collector’s many pieces and meager instructions

challenged but never defeated the team, “We got it finished and it’s still running today, so we did something right.”

The outside structure finished, metal fabricators arrived to create the sys-

tem’s ductwork inside the building. The rest of the heavy equipment also began to arrive, including sanders, the panel saw, the dovetail machine, paint booths, air compressors, and floor conveyors. “Uncrating our brand new, shiny equipment was a bit like being a kid on Christmas morning,” Sova said.

In addition to assembling the big equipment, each department needed

work stations, parts bins, hand tools, lights and carts that needed setting up before construction could begin.

Sova recalled, “We worked long days and long weeks marking the aisles,

positioning machines, building bins and tables, hanging the paint line—the list seemed endless. It was an enormous task.”

Bill Retterath said one of the biggest challenges was actually being able

to see what you were working on. The contractor had hung temporary lighting from the building’s rafters, but it barely illuminated the massive building.

“We were used to working in a factory that was functioning and now we

were in a building where the lighting is scarce,” Retterath said. “If you needed better light to see your work, you would set up and work closer to the temporary lights that Gil Haugan had in place.”

The team had to make do without other conveniences they had been accus-

tomed to having at StarMark. Retterath said Showplace managers had weekly production meetings with Gil Haugan representatives in what they considered

Showplace Wood Products

A complex system of ductwork was installed before equipment was placed.

their break room, actually a tiny table and assemblage of wobbly chairs in their north paint room. “We didn’t have a water cooler, just a cooler,” he said.

No phone lines also meant they had to use their cell phones to talk to suppli-

ers, but not in the relative warmth of the plant interior. “This was in the stone age of cell phone technology,” Retterath said. “You had to step outside to receive a signal.”

Improvisation was key when the team had to figure out how to get their

sales reps more samples to generate cabinet orders as they had yet to install the overhead paint line or drying racks. Retterath recalls lining up dozens of fivegallon paint cans containing wood stain and using them as drying areas for the stained, sealed and top coated doors. Searching for a specific sample among the cans was akin to finding a needle in a haystack.

The Showplace management team and a handful of employees took on

whatever task needed to get the plant ready for full production. Speaking figuratively, Retterath said, “You had to wear more hats than you ever had to wear before. It was neat in a way: something had to get done and you had to figure out a way to do it.”

Determining how to install the overhead paint conveyor system—which

carries the assembled doors, drawer fronts and other components through the finishing process—called for the team’s sharpest problem solving skills. The paint

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system hung from the building’s rafters along with the air compressor that supplied the pressure to fuel the spray guns used to administer wood stain and paint.

“Those were two big hurdles to overcome,” said Pat Seykora. As with the

dust collector, he found the instruction manuals for these vital pieces of equipment lacking in helpfulness.

“The manufacturer provides some instructions for putting their part of

it together, but then you have to install it in your building,” Seykora said. “You have to come up with ways to hang it and run it through your building and that became a chore.”

Handy and resourceful, Seykora and Sova figured out how to hang

the conveyor system from the Showplace plant’s rafters and rented lift equipment to reach the 26-foot-high ceilings. The painstaking job of assembling the 2,000-foot-long system and attaching it to the building progressed at a pace set by Seykora and Sova, who had mapped out how many feet of the conveyor line they would need to complete each day to meet their deadline to start production. The team breathed a lot easier once this section was complete.

To accomplish the seemingly endless list of tasks necessary to set up the

plant, the group broke down main responsibilities to play to their individual

This view of the drying oven hints at the complexity of the overhead conveyor system.

Showplace Wood Products

strengths. Retterath specialized in building storage racks for raw materials and cut-to-size cabinet parts. Richter was an experienced welder, so he cut and assembled all of the work tables from tube steel. Even the office staff pitched in when they weren’t answering phones and setting up relationships with dealers.

“I remember painting storage bins gray,” said Lori Seykora, customer ser-

vice director. “I seemed like millions of bins.”

Richter said the team set goals for their work areas and didn’t go home

until they met them. A typical work day was usually 10 to 12 hours long. The one break in the day was their lunch hour, when Richter brought out a deck of cards and a cribbage board and he, Retterath and Pat Seykora would continue a tradition they had started years earlier.

“Pat, Bill and I would play cribbage every lunch hour, more for relaxation

than anything else,” Richter said. “We used to play cribbage with a couple of other coworkers at StarMark and we carried that over to Showplace.”

The close-knit group of friends and colleagues enjoyed their brief lunch-

time respite from the work but also relished the accomplishment of building their own cabinet manufacturing plant. Their eyes were on the ultimate prize of setting up a facility that would produce the best product for their customers. This single-minded purpose drove their actions and attitudes.

“I never thought about it terms of failure or success,” Seykora said. “It was

just a matter of getting it up and running and start building cabinets. Once the orders started coming in, you never saw daylight.”

Sova said this episode, in which he, Pat Seykora, Bill Retterath, and Steve

Richter assembled the myriad components that made up the Showplace plant, solidified the group’s already strong connection.

“The four of us had been together for many years at StarMark and became

very close, so to reunite under these circumstances, as managers as well as business partners, was especially satisfying,” Sova said. “To join old friends in a business start-up was a huge leap of faith and a significant risk. It created a bond, built on trust, that energized us in the beginning and remains intact today.”

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Assembling the Financial Structure While they weren’t bolting sheet metal in 40-mile-per-hour winds or drilling and sawing seemingly endless amounts of plywood for storage racks, the other members of the Showplace management team were continuing the work they had begun since they undertook the project in the spring.

Emery Lee worked out of his home assembling the Showplace financial

plan, which the team used to garner private investors, bank loans, and other sources of credit.

“It was really a team effort, but I was primarily responsible for the five-

year plan, where I laid out a full income statement, balance sheet, cash flows, and cash needs,” Lee said. “The plan showed us making money in the second or third year and showed where we would have to borrow to get there.”

Lee estimated the company’s income would grow to $20 million in five

years. In actuality, Showplace reached twice that amount in its first half decade. He doesn’t think the team was being overly conservative in their estimates, however.

“We were trying to put together a business plan that people would believe

in,” he said. “I wanted to be conservative enough that we could get there, but I didn’t really think that we would exceed it by much.”

In addition to bringing on private investors and loans from U.S. Bank

in Sioux Falls, Lee and Bour also pursued funding through a state government program that promotes job growth in the state by loaning funds to businesses based on the number of jobs created. The program, called the South Dakota REDI (Revolving Economic Development and Initiative) Fund, provided $5,000 to $7,000 in low interest loans for each employee Showplace planned to hire over a designated period at the Harrisburg plant, and, eventually, at the Beresford plant. The company applied for their first REDI Fund loan for $500,000 in 2000 and has since received, and retired, four more of these loans.

“Showplace Wood Products’ continued growth since 2001 serves as testa-

ment to the success of the REDI Fund Program,” said J. Pat Costello, commissioner

Showplace Wood Products

of the Governor’s Office of Economic Development, which administers the program. “The company has successfully utilized the low-interest loan program to continue to grow and catapult its business to the top of the industry. In addition to being an excellent borrower, Showplace has been an outstanding corporate citizen and a true ambassador for the State of South Dakota.”

Working closely with Showplace on each of the five REDI-fund loans was Kim

Easland, finance director at the economic development office. She said Showplace serves as a model for how the REDI loans can help build a company and provide jobs in a community. One factor used in evaluating whether a South Dakota business qualifies for the loans, which are offered at three-percent interest, is the employees’ work environment. “Showplace provides great employee support,” Easland said. “It’s not just the exercise room and the cafeteria, but also the positive environment they offer their employees, plus the benefit package that they offer.”

Researching and completing the application materials for government

and bank loans, meeting with bank officials and government representatives, and serving as a one-man accounting office kept Lee busy over much of 1999. In addition, his house served as the workplace for Lori Seykora, Pam Hasche and Jill Anderson, who had set up their customer service office in his formal living room. Lee’s son, Jay Lee, also left a position at StarMark to join the Showplace effort as an information technology specialist. In his bedroom at Emery’s house, the younger Lee developed the company’s first computer systems using an inexpensive business software program. Showplace used the system for its first few years before changing to a Microsoft Windows platform.

Like Jay’s choice of software, the company managers’ other decisions

underscored their desire to run lean and mean in those early days, spending their energies and resources on building the new company, not serving themselves or their wallets. In fact, Tony Bour didn’t draw a salary for the first year of Showplace’s existence and only took a nominal paycheck in the second year to qualify as a paid employee in order to receive health insurance coverage.

“It wasn’t a difficult decision to make,” Bour said. “I figured once the com-

pany was successful then I would be successful too. I had a lot of faith in our team and I had a lot of faith in our business model.”

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The Initial Product Line With an aim toward producing timeless, classic cabinetry that would always be in style, the Showplace team had enough experience in the industry to decide on their new product line without much debate.

“Our initial team made decisions of what would be in or out of our

catalog for the most part in a single meeting held in Tony’s basement,” Korsten said. “Paul put together a survey on various decisions we wanted to make, then we individually responded with our thoughts. There wasn’t a lot of hashing over what the product line would be. There was very close agreement on every decision point.” The team members also pledged their commitment to the company’s ideals. “We also had our ‘group hugs,’ where we decided things like we would only have one product architecture and we would never go after the big-box stores,” he added.

Seykora saw her position as one of the Showplace founders as an exciting

chance to start off on the right foot with regards to serving their customers. “We were pumped,” she said. “We knew to start fresh and we could bring the things that worked and leave the things behind that didn’t. It was important to me to make sure that we got back on track with taking care of our employees and taking care of our dealers. That had to be our focus.”

While the whole group agreed that customer service would be the company’s

hallmark, it was an off-hand comment from an industry outsider that brought the concept home for Korsten. A newspaper photographer had visited the Harrisburg plant to take a photo of the work on the new plant and asked Bour and Korsten why customers should buy from them rather than other cabinetmakers. When Bour responded that Showplace’s strength will be their relationship with their dealers, Korsten hurried back to his home office and developed a dealer commitment statement. The document briefly outlined the managers’ combined experience and Showplace’s promise to make the dealer successful through personal attention and by producing high quality cabinetry that ships on time.

Showplace Wood Products When Korsten pulled a copy of that initial statement out of his files more

than a decade after he first crafted it, he chuckled at the group photo—12 years in a busy company have added gray hairs to some in the group—but also marveled at the staying power of that initial communication to their customers. “All of these commitments still hold true today,” he said.

A Simpler Approach Serves the Customer The public face of a kitchen cabinet manufacturer, its most crucial piece of information available to customers, is its catalog. The catalog gives kitchen cabinet dealers the information they need about the company’s products, such as a door styles, color options, and cabinet sizes. Lori Seykora and Scott Korsten worked in tandem to develop the catalog, with Seykora camped out at Emery’s house, just across the street from Korsten. The two hit an unfortunate snag when a new cabinet-design software program they had purchased didn’t live up to their expectations. Under the gun to get the new Showplace catalog to dealers, the team struggled through the software’s limitations and eventually produced a product catalog. The software hurdle did produce some tense moments, however. Representatives from a large cabinet sales group from Ohio had traveled to South Dakota in early December 1999 to meet with the Showplace managers to learn firsthand about the new company and its products. To prepare for the meeting in the Gil Haugan conference room, Seykora and Korsten scrambled to print their catalog pages, a task made harder by the

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recalcitrant cabinet design software. It wasn’t until just before the meeting that the two wrestled a workable catalog from their printer, which they ran to a Kinko’s copy shop and brought to Gil Haugan’s Sioux Falls office.

“Scott met me in the parking lot, hopped in my car, and we started collat-

ing books,” Seykora said. “It was freezing cold, we had the heat on and hurried to put the pages into binders. We didn’t have time to proof anything. We just went on a wing and a prayer.”

Their quick work paid off. After the meeting, which included other

Showplace managers, the sales representative group asked to see the plant and the Showplace team brought them to the Harrisburg site.

“There were no windows, it was freezing,” Seykora said. “We were stand-

ing on the upper level in our coats freezing with these people we had just met, trying to tell them to sign on with us; we are going to be successful. We heard back from them in two days. They fell in love with the whole vision.”

The Showplace vision of serving their customers with a classic, straightfor-

ward product line backed up by excellent service translated into early decisions that were unheard-of in the industry, particularly related to the product catalog. At the time, most cabinet companies produced two publications for dealers to use, a price catalog and a product catalog. To make the process of designing a Showplace kitchen easier for its clients, Korsten said the team decided to combine the two.

“Simplicity was key,” Korsten said. “Learning a cabinet line is hard.

Learning the exceptions is hard. We didn’t want to walk in with this big catalog that was difficult to figure out.”

Another decision that simplified the catalog was to assign a name to a

door style that remained the same no matter the wood species or the overlay, a term that describes how much of the cabinet frame the door covers.

“In those days, a door style would have a name and it would be specific to

a wood species or an overlay. It would have one name in oak and one name in cherry,” Korsten said. “We took all of that out and said if the door looks the same, no matter how big it is or what species it is, it’s going to have the same name.”

The team also chose to offer all door styles in all wood species, a simple

choice that pleased their dealers and added to the simplicity of the catalog. After

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more than a decade in business, the Showplace catalog may have become a little larger, Seykora and Korsten concede, but they strive to keep it easy to navigate.

“We still hear from our dealers how simple our book is,” Seykora said.

“Some dealers have five or six different companies’ catalogs to choose from and they will reach for the Showplace catalog because it’s not hard to understand. I wouldn’t have thought it would make a big difference, but it does. It’s huge.”

New Cabinet Sales Rep Firm Forms to Sell Showplace Taking the Showplace products to market were a handful of independent sales representatives, including Northwood Sales, a firm founded in late 1999 with the express purpose of selling Showplace cabinetry. One of the owners of the company had not only years of experience as a sales representative but also a close connection to Showplace. Tony Bour, or “T” to his siblings and some of his colleagues, is the eldest son and namesake of the Showplace president and CEO.

“I was working for an independent rep agency in the Twin Cities at one of

the companies that was representing StarMark,” Bour said. “When Dad had the idea to create Showplace, he contacted me and asked what role I would like to play. I wanted to continue as an independent sales rep, which proceeded to me founding Northwood Sales.”

Bour asked a friend and former employee of StarMark to join him as co-

owner of the new company. Larry De Jong, a certified kitchen designer who had left a job managing a StarMark retail store years earlier to start his own design firm in Sioux Falls, took a few weeks to think about his friend’s offer. “I had never been in the sales rep business before,” De Jong said. “I had always been in the design and retail sales end. It took a leap of faith, but T had put some pretty good projections together and it looked like a good deal.”

Just like the cabinet company they represented, Bour and De Jong hit the

ground running, visiting dealers in the Midwest and Mountain states and promoting Showplace products. Both sales professionals say the flexibility and affordability of the cabinet line, along with the proven reputation of the company’s management

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Left to right, T. Bour, Tony Bour and Larry De Jong discuss the future in the yet-unfinished Showplace reception area.

team, were the top reasons dealers took on the new cabinet company.

“Showplace, from day one, wrapped their arms around offering one price

point while also making the cabinet line flexible for designers,” Bour said. “That was a huge attraction when we took it to market.”

At the time of Showplace’s founding, many of the so-called semi-custom

cabinet lines were owned by companies that also had more expensive custom lines. Instead of making the affordable semi-custom lines more flexible in terms of size and customization, these firms encouraged designers to use their custom offerings when they needed specialized cabinets, Bour said.

The dealers loved the new company’s affordable cabinets, which they

could customize to meet the needs of their customers, Bour said, adding that Showplace embraced the idea on all levels—from marketing to production. “In our previous life, we were constantly messing with the sizes and keeping standardization on things,” Bour added. “It’s more of a headache for manufacturing than to go ahead and just build what the customer is asking for.”

In addition to the value and customization options of the cabinet line, De

Jong claims one of Showplace’s biggest strengths is its willingness to listen to dealers. “As a rep, it’s all about building relationships,” he said. “And Showplace really listens to what we bring back from the dealers, whether it’s ideas about the

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product or paperwork or administration.”

Twelve years after forming, Northwood Sales has expanded to employ

three sub-representatives and sells other product lines in addition to Showplace. Headquartered in Sioux Falls, the rep firm still focuses on Showplace’s core strengths when promoting the company’s products to dealers. Although the company has come a long way since its initial offerings of a handful of door styles, four wood species and a half dozen stains, the commitment to value, flexibility and customer service remain rock solid.

“T” Bour said he credits Showplace for doing all they can to serve their

customers. When the company introduces new products and services—such as cabinet refacing—its approach is well thought out and responsive to the dealers’ needs. “When Showplace does something, they go all in,” he said. “They don’t say, ‘Figure out what you need and we’ll supply it.’ They study it and provide all their tools and make it user-friendly for the dealers. That’s very important.”

Ready for Take Off In the course of a few months, the Showplace team had laid the building blocks of the new cabinet manufacturing plant. The managers assembled, financing secured, a building erected, machinery installed, a sales team recruited and a catalog published—all Showplace Wood Products needed to do now was start making cabinets.

The new Harrisburg plant is complete in this photo from September, 2000.

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Chapter 3: Room to Grow: The Young Company Takes Off The wind was at the backs of the Showplace managers when they launched their new cabinet company in 1999.

“We often used the cliché ‘the stars were aligned’ to describe our good

fortune in the early years of our company because the timing of so many critical components necessary for start-up seemed to be perfect,” said Paul Sova. “We know now our team’s combined reputations, both locally and nationally, were essential in attracting excellent employees, investors, suppliers, and customers even before we built our first cabinet. On top of that, we began our business just as the American economy was about to launch the greatest housing boom in our nation’s history.”

At the start of 2000, the housing market was still a few years off from its

historic meteoric rise, but mortgage rates remained among the lowest in recent history. Consumer and business spending, however, had dwindled as average Americans lured into the stock market during the Internet bubble of the 1990s witnessed their savings disappear. To the rescue came federal tax cuts and slashed interest rates in 2001. Major drivers of home construction, mortgage interest rates were the lowest seen since the 1960s and spurred the housing market into high gear. Showplace had erected its plant and assembled its workforce just in time to take advantage of the unprecedented housing construction explosion.

Tony Bour, an industry veteran who had seen the best and worst times

in the housing market, compared the Showplace start-up years to those of StarMark, 20 years earlier. “Looking back I might not have ever started StarMark if I had known how tough the economy was going to be in 1979,” Bour said.

The rate of inflation, already high throughout the 1970s, sprang to record

heights in 1979 (11.3 percent) and 1980 (13.5 percent). Mortgage rates were well on their way to over 16 percent in 1982.

Showplace Wood Products “We had a headwind, and it was right at our face,” said Bour of his early

StarMark days. “It was a hurricane headwind because of what was happening with interest rates. If you pump up interest rates, you put the brakes on home building.”

Despite these obstacles, Bour led StarMark from a small start-up to a multi-

million-dollar company in a decade and a half. When industry suppliers and sales representatives who had witnessed Bour’s previous success heard about the Showplace venture, they wondered what he and his team could do when equipped with a strong economy and expanding housing market. “We hardly had broken ground in July 1999 and we had become the talk of the industry,” Bour said.

Here was a company with little capital and a manufacturing facility still in

the planning stages, and yet suppliers were sending their company jets to pick up the Showplace managers and bring them to their plants in order to get their business. “Most companies wanted to do business with us and offered us their best terms,” said Sova. “It was because of our reputation. I’m sure of it.”

Not only suppliers, but other industry players pursued Bour and the team

for information on the venture. Cabinet sales representatives tracked down the Showplace managers to learn about the new company. Some friends and colleagues approached Bour to invest in the company, and were politely turned down to avoid diluting the current owners’ share in Showplace.

“I still talk to people who say they’ll never forgive me for that,” Bour said.

Bour’s friends did get another chance to benefit financially from the new

venture when the company required an influx of cash in the first few months of operation. Showplace had grown at a pace that had far exceeded the group’s initial expectations and the company found it needed some additional operating capital to pay for more inventory and other operational costs. “We had discussed with our investors that their initial round of investment might not be the last and that we might have a cash call,” Bour said. “Then we had two friends who had passed on the equity investment in the beginning, but they said they would like to loan us some money once we were up and running if we needed cash.”

At a board meeting, Bour explained that Showplace’s booming busi-

ness required the company to invest an additional $600,000 in inventory and associated expenses and asked each individual to commit to lend the company

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a portion of the amount. The group, and friends Don Gustafson and Paul Lawrence, pledged their share of the needed amount.

These private loans were all part of the initial financial picture, Bour said.

“We knew that we would need additional capital because as we put together our financial plan, we saw huge losses for the first year and also for the second year,” he said. “No matter how hard we worked. We couldn’t turn the faucet on fast enough because we had all of these expenses. It wasn’t a surprise—not a bit.”

Building cabinets is a labor-intensive business that requires investing in

expensive equipment, and the team knew that it would take months and even years before they could start making a profit. “For the first two or three years, we were pretty skinny on cash,” Bour said. “With all of the planning we had done, I don’t know if it kept us up at night. If the economy had turned on us then we would have had some problems.”

The Showplace management team was too busy—and confident in their busi-

ness plan—to spend time worrying about any negative possibilities. “Even though we knew most businesses in this country failed in their first year, we never considered that outcome. Our attitude was always positive and optimistic,” said Paul Sova

Millions of dollars raised, borrowed, and spent, Showplace needed the cabi-

net orders to start arriving as soon as the equipment was installed and running. A sales force of eight representatives traveled with the door samples that Sova and Lee had produced at the Akzo plant with the help of their friend. Soon after, the first official batch of catalogs followed. The dealers had yet to receive kitchen cabinets to display from the company, but the orders began coming in. “The orders started to trickle in the first of the year in 2000,” Sova said. “Our first run was 900 cabinets Steve Richter proudly displays the first Showplace cabinet, a sample base for House of Kitchens.

in March. None of us were really

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Lori Seykora and Scott Korsten celebrate the shipping of the first-ever Showplace cabinet order.

ready to start production, but we did anyway.”

Scott Korsten remembered those first cabinet runs and how the small group

of production workers moved with the cabinets through the various assembly and finishing departments. Unlike today’s system, where the parts of the cabinet travel in an efficient assembly line fashion, “It was like kids at a soccer game following the soccer ball,” he said. “Wherever the work had to be done that’s where they went.”

The 23 people on the production staff all worked in every part of the cabi-

netmaking process, said Sova. “We would cut some parts and we made the face frames and move to finishing and then finish them,” he said. “Then we would go to the assembly area and assemble them and package them and load them on the truck. Then we’d go back and start another order.”

The first run of cabinets Showplace built went to the House of Kitchens

showroom 75 miles away in Sioux City, Iowa. Kathy Theeler, House of Kitchens president, recalls her enthusiastic response to hearing about the new cabinet manufacturer. Said Theeler, “As soon as they walked in the door and said Tony Bour was opening a new factory I said, ‘Absolutely, sign us up!”

Theeler admits there is some risk involved for a kitchen dealer to become

partners with a new manufacturer. “It’s a huge investment for a company like ours,” she said. “In order to sell their products, we have to purchase their displays and pay for all of the remodeling that goes with that.” Showplace worked with her company to offer the display cabinets at a reduced cost and to give rebates over the first year

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based on sales volume, Theeler said. But the main reason her company was happy to take on the expense of handling a new cabinet line was based on her relationship with the Showplace team when they had worked at StarMark.

“These were people we had worked with and we knew their integrity and

we knew they would keep their promises to us,” she said. “They are very nice people and they take care of their customers and that’s what’s important. Let’s face it, if they are not there for us, we can’t be there for our customers.”

Showplace and House of Kitchens, which has been in business since 1971,

have grown together as tastes in kitchen design have evolved over the years, particularly in the Midwest. “As trends come and go, we’re still pretty conservative in the Midwest,” Theeler said. “However, we have moved away from the standard wood species and the standard door styles to expand our horizons a bit. Having Showplace offer all of these things, especially at their price point, has really helped grow our business.”

When it came to loading the shipment of the first Showplace cabinets for the

House of Kitchens showroom, the company’s managers and employees decided to pay tribute to one of their coworkers who helped make the company a reality with his careful financial forecasts and plan. Although he spent most of his time behind a desk balancing budgets and deciphering spreadsheets while wearing a coat and tie, CFO Emery Lee left his office to maneuver a two-wheeled dolly laden with

CFO Emery Lee helps load the first-ever Showplace cabinet order.

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boxed cabinets heading for Sioux City, Iowa, just 75 miles down the road.

“I think I still have my name on one of those two wheelers out in the plant,”

said Lee. “It’s a fun team. It’s fun to know that everyone is focused on the same goal: to produce the best product and ship it on time and ship it complete and serve the customer. We didn’t get into this to sit back and drink champagne.”

A Family Atmosphere Rather than Dom Perignon, strong black coffee would serve as a more appropriate drink for the busy crew as business took off like a shot in early 2000. The Showplace employees were an especially close-knit bunch in the early years, their camaraderie forged through a desire to be part of a new successful business with other industry professionals they knew and admired. Managers and production workers worked closely together, a practice that continues to this day at the Showplace plant.

“It’s part of our culture,” said Bour. “There are no company cars, no com-

pany boats, no executive parking spots, no executive lunch room or wash room. We’re not into that.”

In fact, after the staff moved into the office building at the Harrisburg

plant, they worked for months using white folding tables from Sam’s Club as desks. For a manufacturer of fine cabinetry, their offices and meeting rooms remained conspicuously bare of any adornment beyond their metal file cabinets and makeshift desks. It may seem like a case of the cobbler’s children having no shoes, but the austere surroundings were actually cause for celebration—business was going so well that the company employees had no time to build their own office furniture.

Tables and office cabinetry weren’t the only things lacking in the Showplace

offices. As customer service head, Lori Seykora kept track of all incoming orders and created production schedules on a huge erasable white board. “Each week I would erase what we got done and put up new orders,” Seykora said. “At the time we didn’t have a computer system to track orders and that was the only record we

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Emery Lee relaxes in his lavish office setting in this January, 2000 photo.

had of orders coming in. If someone came and got too close I would yell, ‘Don’t touch my board!’”

Soon Seykora had scared everyone away from the wall containing the

important white board, which remained the order tracking system for the company’s first three years before Showplace changed over to a computerized system.

The managers who left StarMark were happy to depart from a company

they thought had moved away from its ideals. Staffing the new business with workers involved inviting some of the people the team had worked with at StarMark, “Leaving was really good from a selfish standpoint, but it was even better knowing you could pick who you were going to work with and bring along your coworkers,” said Bill Retterath.

The group poked a little fun at their previous employer when they recruited

a new employee from the cabinet company. “Every time we took someone, we’d meet them at their StarMark going away party,” said Retterath. “That was just firing missiles across the bow.”

Leaving to join the new Showplace company was an easy decision for many

of the production and office staff that followed the managers from StarMark. Changes in management, and the departure of trusted leaders, had left the crew looking for a different work environment.

Some of the staff that joined the new company were met with anger

Showplace Wood Products and disbelief when they gave their two weeks’ notice to their employer. “My foreman just shook his head and said ‘you’re crazy’ and walked away,” said Bill Dean, who started at Showplace in January 2000 and is now a team leader on the production floor. “Coming here, for me, had a lot to do with the people who started this company. Especially

Bill Dean

Tony,” Dean said. “But you always

worry about if you’re making the right decision going to a different job. I was at StarMark for 19 years. I needed the income.” Fellow co-workers Kathy Lottman and Darin Huebner also made the move to join the Showplace venture.

Another StarMark employee recruited for the new company was Pam

Hasche, who had worked in customer service with Lori Seykora. The two women were golfing on a local course in the summer of 1999 when Seykora asked Hasche to join her at the new company. “Was I ever excited and felt so honored,” Hasche said. “Lori told me again it was a secret and I couldn’t even tell my mom. That was really hard because it was so exciting but I did keep the secret and it was well worth it!”

Hasche became one of the first workers to leave StarMark and join

Showplace. In those early months, Showplace kept Hasche and Seykora on their toes as the two alternated between taking telephone orders for cabinets and working on the production floor to help build frames. “What excitement that was,” said Hasche. “Lori would pull all the parts I needed and then I would build the face frames. We had so much fun doing that and then we would go into the office and, of course, there would be orders on the fax machine, so we needed to get the paperwork ready for the floor.”

It’s hardly surprising that the employees at all levels had a difficult time men-

tally divorcing themselves from their former employer and often misspoke and used the StarMark name or talked about their local competitor. “We had a naughty

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Lynette West, Mona Leach, Lori Wiles, and Cindy Mess in 2001.

jar, which was an empty cheese ball container and every time you said ‘StarMark’ you had to put a quarter in the container,” Hasche said. “People were still wearing StarMark shirts but they would tape a piece of paper over the name.”

New hourly workers who hadn’t previously worked in cabinet building

also joined the new venture. Lynette West began working at the new company in January 2000, after watching the construction of the plant from her house in Harrisburg. She had worked at a hat factory in a nearby town for 20 years before that company closed its doors and she was looking to use her experience in another manufacturing facility. Her first interaction with one of the company’s managers revealed there were no prima donnas on the Showplace management team. “A girlfriend of mine knew someone and got hired so I walked in and asked if I could get a job,” West said. “The receptionist went back to the plant and got Paul Sova, who was all dirty from putting up paint lines. I didn’t know who he was at the time, but he hired me.” West’s current position is customer service representative.

Paul Sova has another fan in Linda Miles, now a quality assurance team

leader, who had worked at the Beresford Raven Industries plant for 21 years and was distressed that she would soon lose her job upon hearing that the company was planning to close down the plant. Without any knowledge that Showplace had bought the facility and was planning to invite current Raven employees to apply to work at the cabinet company, Miles stopped by the Showplace plant on a whim because she had seen a sign on a nearby highway. “I interviewed with

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Paul Sova and he already knew they bought the Raven plant, but I had no idea,” Miles said. “He hired me but told me I could stay at Raven as long as I liked so I wouldn’t lose my vacation or my severance pay. I never forgot that. He could have told me you either start now or not at all, but he waited two months and guaranteed me a job. That’s why I have such respect for Paul Sova.”

Another StarMark employee that joined the crew had no qualms about

leaving his former employer, even though he had nearly grown up at the facility and had just gotten engaged and was planning a wedding. “I knew Tony and Paul and Pat and those guys from StarMark,” said Darin Huebner, a paint line team leader who came onboard in December 1999 as one of the very first production employees. “My mom worked there for 18 years and I would stop by for lunch when I was younger and I got hired on as summer help and after high school, I worked there full time.”

Huebner had faith in the former StarMark managers who were forming

their own company. “You see Tony and those guys take something and, it never failed, they could make it work,” he said. “They could fall in a mud puddle and come out smelling like a rose.”

Showplace underscored the importance of the production staff to the

company’s success by holding quarterly business meetings with all employees, a practice which continues to this day. This respect for all workers impressed Karl Odegard, who joined Showplace in September 2001 and now works in the

Showplace managers serve beverages to employees at a pot luck following a quarterly meeting.

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warehouse. “When I first started working here, one day they announced they were having a quarterly meeting, and I said ‘What’s a quarterly meeting?’” he recalled. “It’s the first place I’ve worked where they actually tell you how business is doing.”

Managers not only take the time to address the Showplace staff as a group,

but also make a commitment to speak personally with workers who wish to address problems or discuss an issue. Elliott Kokenge, who works in the materials department and joined Showplace in early 2001, got a job offer at another company a few years after joining Showplace. Managers at all levels tried to persuade him to stay. “I talked to Tony for almost two hours in his office after work,” Kokenge said. “For someone to take that amount of time to show me things, it’s huge. That was seven years ago, and if I had made the move, I would have been unemployed six years ago. Now, I’m not going anywhere.”

For some of the hourly workers who had joined Showplace from StarMark, an

added bonus was becoming closer to the company’s president, Tony Bour. Beresford plant supervisor Sherrie Hanson said the family-like atmosphere at Showplace meant people at all levels worked closely with each other. “Tony didn’t really know us at StarMark but he was so involved with the floor at Showplace,” she said. “The most precious thing about working here has been getting to know Tony.”

Positioning the Showplace Brand and Reaching Customers Experience had taught the original Showplace managers what cabinet sizes, door styles, wood species, and stain options would best please their customers. Their first products were straightforward, well-crafted offerings in just four species: red oak, maple, cherry, and hickory. A variety of stains and glazes rounded out the company’s products.

Showplace’s initial products fit the semi-custom new-construction and

remodeling markets well, said operations chief Paul Sova. “From 15 to 20 years of working together, Scott, Lori and I knew what species of wood to have,” he said. “We knew from experience what products we needed to have and what

Showplace Wood Products

The first locally-installed Showplace kitchen used the timeless Oxford door style.

sold,” he said. “We knew what doors in the industry are good sellers and that we had to have a timeless, classic design to launch this new business.”

Since this design trio had all cut their teeth at StarMark, they also knew

they had to make their products different from those of their prior employer. Scott Korsten, director of marketing, explained, “We had to offer a square-shaped raised panel door,” he said. “It’s the number-one seller and probably always will be, but we didn’t want our square raised panel door to look like StarMark’s. We chose characteristics that were different.”

The team also knew glazing, or applying a pigmented material to the door

to create an antiqued look, would also appeal to customers. “We only considered door profiles that would show the glaze.”

Another lesson their previous experience taught the Showplace managers

was to focus on red oak, rather than white oak, in their initial catalog. “You can’t go wrong with red oak,” said Seykora. “We had experience selling white oak to customers and when they got their cabinets home, they realized that all their trim is red oak, the kind usually found in homes. They now had cabinets that didn’t match their trim. So, starting a new company, we said let’s just offer red oak in addition to the maples and cherries and hickories.”

Scott Korsten said the team chose the initial product offerings at Showplace

because they were popular sellers at kitchen dealerships. Showplace differentiated itself through offering some customization options at a semi-custom price.

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“We were offering products right out of the chute that would bring us some volume, but we took some of the custom features we were used to and offered them at a semi-custom price point,” he said.

Seykora emphasized that Showplace needed to focus on making the best

cabinets, rather than the greatest variety of products, in their start-up period. “We needed to walk before we ran,” she said. “The beauty of being able to start fresh is that you could leave behind what didn’t work and bring with you the concepts that did work and improve on them. We knew that we could do more than what we were offering but we had no clue how many people would follow us and how fast it would ramp up. Even with that small selection it was crazy. It was the right decision to start off slow.”

Together with their easy-to-use-catalog, the carefully-chosen product line

and the team’s experience and reputation, Showplace gathered steam in the industry and, by the end of their first year in business, sold their cabinetry through 198 dealerships in 37 states. “Our biggest challenge initially was just taking care of the customers and all of the business that was coming in,” said Bour.

Showplace’s forward momentum occurred at a breakneck pace that sur-

prised the team. Bour had planned for the company to start as a regional player, selling to dealers in the Upper Midwest states. They focused on building their team of independent sales representatives, whose job it is to bring the Showplace literature to kitchen design dealerships, which in turn sell cabinets to homeowners and builders. Initially, the team envisioned a regional business that would slowly expand from their South Dakota base.

“It’s like throwing a pebble into a pond and watching the ripples move

further out,” Bour said. “That’s the way we envisioned setting up our dealer organization. We wanted to start selling to dealers within 50 miles, then 100, and then 200 miles.”

It turned out that a skipping stone was a better analogy for the dealer net-

work established early on. The same sales group that met with the Showplace team before the plant was finished was one reason the company’s products took off beyond the Upper Midwest. When members of the sales rep group had visited the Showplace site, they explained why they were so interested in the new

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company. “One of their major cabinet lines had gone in a different direction and they no longer had a product like Showplace’s in a particular price point,” Bour said. “They had an eight-state territory and they wanted a line like ours they could take to their dealers.”

With this group selling their products to states such as Ohio and Indiana,

hundreds of miles away from South Dakota, the company’s business took off accordingly. Dealers signed on and cabinet orders soon followed. Bour said the booming housing construction industry, coupled with the company’s growing dealer customer base, created a situation in which Showplace was on pace to surpass their five-year growth plan in their second year.

“With this tremendous tailwind we had in the first years, our focus was

not on trying to grow the business just for the sake of growing it,” he said. “But it was to grow the business to take care of our dealers. We were able to attract additional sales reps and before we knew it we had gone from being regional to being national in scope.”

A Surprise Expansion: 30 Miles South The five-year plan outlined by CFO Emery Lee in 1999 was ambitious, but realistic. Lee had laid out a full income statement with the company’s balance sheets, cash flows and cash needs, and anticipated that Showplace would reach $20 million in annual sales by its fifth year. In reality, they hit that target after two years. By its fifth birthday, Showplace had racked up annual sales of $40 million.

Lee said the management team hadn’t intended to be overly conservative

in their earnings estimations. “We were trying to put together a business plan that people would believe in,” he said. “I wanted to be conservative enough that we would reach our goal, but I didn’t think that we would exceed it by much. We really didn’t know. It was all ‘blue sky’ at that point.”

By late 2000, it became apparent that the company needed to expand to

keep up with the demand for their products, and to keep pace with the desires of their clients.

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“One of the biggest surprises for us is that we underestimated how com-

plex our product line would become,” Bour said. “We were very attractive from a semi-custom standpoint, but we had really underestimated what we needed to do in our door department.”

Instead of buying the majority of their doors as standards from a supplier,

Showplace found itself producing a higher-than-anticipated number of custom doors at the plant. In addition, the many components and machines involved in door production took up a substantial portion of their initial 70,000-square-foot plant. “We started manufacturing in March and by November we realized business was so good that we needed more room for our door department,” Bour said.

Showplace’s booming business also necessitated an expansion of the finish,

or “paint,” area. The rails, stiles and panels needed to construct cabinet doors were stored in the paint room and that space was desperately needed for another paint line and a drying oven.

As in the start-up’s investment phase, Bour’s connections in the Sioux Falls

business community came to the rescue. Bour was a board member of Raven Industries, Inc., a publicly-held company based in Sioux Falls, currently active in engineered plastic films, electronic systems, and flow controls, and became aware that the company was closing a plant in nearby Beresford, South Dakota, a town with 2,200 residents. The plant had served as a sewing facility to produce sportswear, and foreign competition had cut into Raven’s business substantially. Showplace bought the 20,000-square-foot, 30-year-old building from Raven in early November 2000. The company then started to install a dust collection system and replace sewing machines with saws and sanding equipment throughout the winter. In late February 2001, door production for Showplace cabinets

The Beresford door plant.

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Inside the Beresford door plant.

moved 30 miles south of the main Harrisburg plant.

Steve Richter, who had managed the door assembly in Harrisburg, now

extended his commute a half hour down Interstate 29 to become Beresford’s plant manager. Opening the new facility came at a personal cost to Richter, who had managed the transfer of equipment to the new facility and had worked throughout a cold, wintry Saturday to make sure the plant was ready for business on the following Monday. Driving anywhere in the South Dakota winter is a challenging affair, and Richter’s commute back to Sioux Falls 30 miles north was made extra treacherous by a late-winter ice storm. He was the last to leave the plant in the waning afternoon hours and braved the slick interstate highway to get home. About halfway there, his car hit an ice patch, which sent it rolling into the ditch.

Richter didn’t have to worry about getting frostbit as he waited in the frigid

snow for help. “It’s South Dakota,” he said, referring to his home state’s neighborly reputation. “There were four or five people that pulled over immediately and one guy gave me a ride into town and dropped me off at my house.”

With nothing but a few bumps and bruises, Richter participated in the

“Arctic Blast” charity golf tournament the following day, but his wife couldn’t help feeling that her husband’s accident foretold of danger ahead. “We used to joke that we hoped that wasn’t a bad omen,” Denise Richter recalled.

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While luck, or providence, saved Steve Richter from a worse fate on that icy

and dangerous February day, it was hard work that propelled Showplace forward in those early years, at both the Harrisburg and Beresford plants. The Beresford expansion, although never part of the company’s initial plans, allowed Showplace to further rev up production and improve storage space for cabinet components at the Harrisburg plant. It also allowed the company to introduce two new door styles once the new plant opened: mitered and applied-molding doors.

The decades’ old metal building in Beresford wasn’t as comfortable as the

brand-new Harrisburg facility, and, at first, the roof leaked in certain areas, but Richter built a team of workers from both the original plant and from five former Raven workers. The crew spends their days putting together the stiles, rails and center panels that will make up one of Showplace’s dozens of door styles. Richter said a Beresford employee is able to make an average door in about 40 seconds, with the exception of the mitered doors styles, which feature frame corners that meet at precisely cut angles. These doors require special care to align the corners as well as ten minutes spent in a press that delivers 40 pounds of pressure to the door parts while the glue in the joints dries. Richter sends two truckloads of doors to the main Harrisburg plant each day. Like Harrisburg, the Beresford community is appreciative of the Showplace presence in town. And the feeling is mutual. “They’re a good bunch of people,” Richter said.

More Business Means More Expansions The bustling young cabinet company had spent its first few years in a whirlwind, with employees working ten-hour days, often six days a week, to keep up with customer orders. Sales more than doubled between the first and second year of production and Showplace saw its first monthly profit in just its six month of business. Even with its substantial investment in machinery and buildings, the company was able to boast a yearly profit in 2001, only its second year in business.

Matching their sales growth was the expansion of the Showplace facility.

The move to the Beresford door plant had allowed for some breathing room at

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the Harrisburg facility, where managers further reorganized the layout to allow for new machinery that would double the plant’s production capacity. In April 2001, the company installed a retail cabinetry showroom on the second floor of the company’s office building, which is attached to the production facility. In May through December of the following year, Showplace took off the southern wall of its plant structure and built on 43,000 square feet in its first major expansion of the original building.

The 2002 expansion added 43,000 square feet of plant and office space.

Unlike the Beresford expansion, building on to the main plant was always

part of the plans for the growth of the business. “We always said in total confidence that we were going to expand,” Sova said. “We didn’t build too big at the onset because we didn’t want to take on that much debt.”

Choosing to build the plant with precast concrete walls rather than metal

also ensured the building would remain stable during the expansion process. Again using Gil Haugan Construction, the plant expansion required removing an end wall, building a temporary enclosure, and extending the existing walls southward.

Sova and the architects had designed the building to accommodate future

expansions without excessive disruption to the production process. In fact, the company’s customers were often unaware that Showplace was undergoing a major expansion.

In July 2005, a 68,500-square-foot addition to the Harrisburg facility allowed

for more paint lines and storage space. A 10,000-square-foot addition in Beresford

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The 2007 expansion took the Harrisburg plant to its current size.

created a larger warehouse and new offices the following year. In 2007, Showplace completed its last expansion to date, with 54,000 square feet of new warehouse and shipping space as well as a full-service cafeteria and fitness facility.

At the same time, Showplace also began opening its own retail facilities

in areas where sales wouldn’t affect current dealers. Called Showplace Kitchens, the first of these showrooms resided in the office complex at the Harrisburg plant, but moved to a new facility just west of the plant in 2005. Other retail showrooms opened in Urbandale, Iowa; Parker, Colorado; Fargo, North Dakota; Brainerd, Minnesota; and Sioux Falls.

According to Randy Pooley, director of national sales, Showplace estab-

lishes a Showplace Kitchen showroom in areas where the company’s sales representatives cannot sign on an established kitchen dealership to provide them adequate representation. “We set up a showroom with the understanding that the sales rep firm will rope off a marketing area in which they agree that they will not set up any dealers,” Pooley said. “We sell to our showrooms just like we would to a dealer. We don’t give any special consideration on pricing, but we do

The Harrisburg Showplace Kitchens showroom is directly west of the plant, in the Showplace Plaza.

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offer a first-class showroom.”

Showplace then invites nearby dealers, whose businesses are outside of

the marketing boundaries, to send any interested clients to the showroom for a closer look at the cabinet displays. In this situation, the dealer will notify the showroom manager that a client will be coming to the showroom on a certain date and the showroom staff will answer questions but will not interfere with the client-dealer relationship. Showplace Kitchens showrooms also serve as training locations for area dealers. “Our showroom managers have struck up a good rapport with a lot of our dealers in their area,” Pooley said.

The expansions of the Showplace Kitchens showrooms and the manufac-

turing plant mirror the growth of the company’s reputation in the industry and throughout the country. At the same time, Showplace had also garnered the attention of business leaders in their home state as well as cabinet industry organizations.

Accolades and Giving Back to the Community Not yet two years into building cabinets, Showplace Wood Products earned the “2002 South Dakota Business of the Year” award from the South Dakota Chamber of Commerce and Industry in October of that year.

“It was something that we had never even planned on,” said Bour. The chamber

had contacted the company earlier in the year and asked them to submit details about their company and the start-up period. After submitting the information, Showplace received the award gratefully. “It was a surprise, and, looking back, I guess it was well-deserved but at the time we were very humbled The team accepts the 2002 Business of the Year award.

by it,” Bour said. “It was just an

awesome reward and a credit to our management team and the employees that were with us that helped build the company.”

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Production and office staff employees gathered to celebrate with the company’s Board of Directors. Showplace honored the occasion by giving all staff pullover sweatshirts with words “business of the year” prominently displayed on the front.

In November of 2005, Wood & Wood Products, a national trade magazine,

profiled Showplace in its publication in honor of the company’s third annual appearance in its “Best of Wood 100” listing. The “Best of Wood” distinction honors excellent performance in the wood products industry.

Showplace marketing chief Scott Korsten was pleased by the honors

bestowed on the company from South Dakota and the industry, and believes that the core beliefs of the company—not its sales volume, employee head count, or number of plant expansions—are to credit for its success. “For the most part, the public doesn’t really know how strong Showplace is, no matter what kinds of accolades we have received over the years,” he said. “Unless you work here or know people who work here, you don’t know what it feels like, you don’t know how committed people are.”

Sales director Randy Pooley is just as proud of all the honors bestowed on

Showplace and agrees with Korsten that the management team’s commitment to its values deserved the credit. “We all felt very much that we knew we were in a relationship-driven industry and we knew what we had to do to make that work and it permeated through the whole building,” he said. “If something needs to be changed and we need to invest money into a piece of equipment or a procedure that will help us do our job better, we do it.”

Just as the business of the year award showed that South Dakota appreci-

ated Showplace, the company valued its location in and experience with the state as well. South Dakota has been good to Tony Bour, especially. Ever since his job with StarMark brought him to Sioux Falls in 1978, he has become an enthusiastic booster for his new adoptive state.

Bour and his employees at Showplace had a chance to give back to the

state where they built their successful business when it came time to construct a new residence for the South Dakota governor and his family in the state’s capital, the small city of Pierre. The original residence, although situated in a gorgeous setting on the east shore of Capitol Lake directly across from the State Capitol,

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had fallen into disrepair and was unsuitable for the many public and private events held at the facility. In 2003, economic development groups and charitable foundations banded together to raise private donations and funding to construct a suitable residence. Tony Bour and Showplace stepped up to the table and donated all of the cabinetry for the private portion of the residence, where the governor’s family resides.

Showplace and other companies that donated services and goods to the

project helped create an impressive facility of which any resident could be proud. Former South Dakota Governor Mike Rounds, who served while the residence was under construction, said the former facility had become a hazardous building in which to live with his family and hold official events. The two-story Works Progress Administration building from 1937 had become home to termites, sat on a crumbling foundation, and had a sewer system that refused to function properly. That’s not all: “Water flowed through the light fixtures on the first floor from the second floor bath,” said Rounds. “One day it was 93 degrees upstairs and 36 degrees downstairs. The light switches in the main area were at times so hot you couldn’t touch them without burning your fingers.” After a few months in the house, Rounds, a native of Pierre, moved his family back into his own residence, and the community organizations began raising money and securing donations for a new facility. The group raised nearly five times what they initially planned, ending up with $4.8 million to build and maintain the facility.

Bour had a long-time connection with the South Dakota governor’s office

and was an obvious contact for the project, said Rounds. “Tony had always been a strong supporter of economic development plans throughout the state,” he said. “He had been one of the guys you can count on to be an ambassador for the state of South Dakota. He was engaged in the efforts to share the story of South Dakota with outside businesses.”

The state’s governor’s residence is an important setting for recruiting eco-

nomic opportunities to the state, Rounds added. “When we entertain business executives that we’re trying to bring into South Dakota, if we have a location that is warm, comfortable and inviting, it makes for a better opportunity to close the deal and bring them or their businesses to our state,” he said. “That

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is a key and very critical part of the governor’s job, to try to sell South Dakota to prospective businesses that are looking for a place to grow and prosper. If we want a governor to continue to do this job he has to have the proper tools to do that. One of The Showplace kitchen in the new South Dakota Governor’s residence.

those is a residence in which he can entertain.”

When construction on the new residence started in 2004, the Showplace

team provided cabinetry and other wood furnishings for the entire residential suite in the residence. Warm cherry cabinets, topped by South Dakota granite countertops, grace the kitchen. More cherry wood resides in the governor’s personal office, a grand space that presented a design challenge for Lori Seykora, director of customer service, Cari Peters, certified kitchen designer, and Larry De Jong, a Showplace independent sales representative. The design called for base cabinets to line one office wall that assumed the shape of a semi-circle in order to present a stunning view of the grounds through its many windows. “The cabinets in this area had to be sized very specifically, because our cabinets aren’t meant to be round,” Seykora said. “We had to make sure it looked seamless when we put them in there and I think we accomplished that very well.”

Seykora added that the project was a chance for Showplace to demonstrate its abilities as a company as well as to give back to the state that provided a welcoming business climate for the young cabinet manufacturing facility. “It was a big commitment on our part to donate all the cabinetry but Showplace has a history of The office in the South Dakota Governor’s residence presented design challenges.

donating to community needs,”

Showplace Wood Products she said. “And it meant a lot to be in the governor’s mansion.” Showplace also ran ads in industry publications featuring the governor and his wife standing in the residence’s new kitchen. “This project couldn’t have been done if it wasn’t for people

South Dakota Governor Mike Rounds and Jean Rounds in 2005.

who believed in it and were willing to commit to it,” Rounds

said. “Tony and the crew at Showplace had committed to be part of the team that decided to make it first-class and come in on-budget and we couldn’t have done it without them.”

From the Showplace cabinets to the granite quarried in Milbank, South

Dakota, scores of private manufacturers in the state donated products to create the residence to serve governors and their families for decades to come. Highlighting the work of the state’s manufacturing base underscores the important roles these businesses play in the South Dakota economy. “Agriculture is always going to be one of the strongest if not the strongest industries in South Dakota,” said the former governor, “but to be able to keep young people in South Dakota, you have to have multiple options available for them.”

In addition to healthcare and high-tech industries, the state benefits when

it maintains a steady supply of manufacturing jobs as well. “You have to have a vocation where people who want to work with their hands can go and enjoy the work they’re doing,” said Rounds. “If you don’t have places like Showplace, those individuals will go someplace else and raise their families. When you bring in an organization like Showplace, they literally keep young people here in our state and produce a product which is sold throughout the United States and brings those profits back into South Dakota. That’s a win-win for the entire state.”

Showplace’s donations to this state facility don’t end there. In 2011, Bour

met with First Lady Linda Daugaard to discuss installing cabinets in a dining area in the residence’s stateroom, which is where large public events are held.

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Bour agreed to supply the cabinets free of charge in exchange for the governor’s donation of a weekend in the guest facilities at the mansion to be auctioned off to benefit one of Bour’s favorite charities, McCrossan Boys Ranch, a South Dakota non-profit that offers residential and educational services to boys and young men. Lori Seykora and Cari Peters also worked on this new project in the governor’s residence. Seykora is proud of her company’s work on the facility, especially making the public rooms of the governor’s residence beautiful and functional.

“We want to show that South Dakota has got what it takes,” Seykora said.

Suppliers Along for the Ride Bour likes to compare Showplace’s foundation to a three-legged stool, with employees and customers as two of the stool’s legs and the company’s suppliers as the third. “We try very hard to work well with our suppliers,” he said. “Most of them have been with us since day one. We respect what they do and try to keep them apprised of our volume and whether we see either growth or recession.”

Woodcraft, a wood component manufacturer headquartered in St. Cloud,

Minnesota, signed on with Showplace at the onset, continuing a relationship that spanned decades with other companies run by Bour. Retired president of Woodcraft, Lewie Walker, had first worked with Bour as a supplier to Decora Cabinets in Zumbrota, Minnesota. Walker continued to work with the cabinet executive at StarMark and had become close friends through their shared work in the Kitchen Cabinet Manufacturers Association.

Since the two had such a close relationship, Walker felt comfortable voic-

ing his true feelings to Bour when he learned about his plans to start a new manufacturing business in 1999. Walker can’t remember his exact words, but it was something along the lines of “Are you stupid?” Of course, his comment was said in jest, but Walker had reasons to doubt his friend’s cognitive abilities considering how easy it would have been for Bour to rest on his laurels, enjoy the fruits of past labors, and now have time to take pleasure in favorite hobbies.

Showplace Wood Products “My thought was that he’s very successful with his other companies; he had

made enough money,” Walker said. “He had that shooting operation up there and I thought that he could get into that full time and that would be easier than running a big business, especially starting from roots.”

Walker also knew his friend as an unlikely candidate for an easy, restful

retirement, and has Bour’s start-up venture to thank for a substantial amount of business for his company. Showplace annually purchases 68 percent of its wood components from Woodcraft.

“Tony runs a nice show, no question about it,” Walker said. “He’s got good

employees that stay with him because he’s treated them well and they treat him well.”

As a major supplier to the cabinet industry, Walker has seen manufactur-

ers come and go. “If you bring a better mousetrap to the market, you’re the one that’s going to win,” he said. Bour’s mousetrap is his approach to management and his record of assembling a team of knowledgeable experts. “He’s a people person, that’s his greatest asset,” Walker said. “He’s got a broad knowledge of manufacturing. Maybe he doesn’t have the big broad knowledge of wood but he doesn’t have to because he’s got people like me and the people who work with me who are wood specialists. His biggest claim to fame is using whomever and whatever he can to be successful.”

Bour credited Walker for convincing some of the managers at the wood

product company to take on the young cabinet company as a new customer during Showplace’s initial start-up period. “One challenge was convincing suppliers to do business with us in the late ’90s and early 2000s because they were so busy,” Bour said. “A lot of them were just trying to keep up with the business they had.”

Woodcraft was one of those busy companies that didn’t need to take on the

risk of working with a young company. “They had a lot of mature, very predictable customers,” Bour said. “They didn’t really need to work with somebody on a start-up basis, but Lewie Walker was instrumental in convincing the other people at Woodcraft that we were for real and they should not pass on the opportunity.”

Another vendor that grew along with Showplace after joining forces dur-

ing the start-up phase was Dakotaland Transportation, a new Sioux Falls firm looking to expand their operations in 2000.

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Bruce Fowlds and his

brother Jerry had just split off from a trucking business they owned with another brother whose operation provided delivery services to StarMark. The two approached Bour to offer their transportation service to the new cabinet company.

It took all of Bruce’s cour-

age to put forth his offer. “I was scared to death to talk to Tony because we were just starting out on our own at the time,” he said. “But we came to an agreement and he told us to go see Lori Seykora. At the time, he called her the company pit bull.”

Her pit-bull reputation notwithstanding, Seykora recalled being a bit scared

herself when she first met the two Fowlds brothers when they came out to visit the plant as soon as it opened. “Our first receptionist called me and said there were two gentlemen from a trucking company who want to speak with someone so I went down and here are two huge guys. It was very intimidating,” she said. “They wanted to ship our product and we built a relationship together that we still have today. They have our same philosophy. They love dealing with people and their drivers are kind and helpful.”

Fowlds said Showplace provided the business his company needed to grow from

three employees in January 2000 to 85 employees in 2012. He recalled joining in on the enthusiasm of the Showplace crew when they shipped their first cabinet orders. “When they first started, the office people were out there making cabinets and staining them and loading trucks too,” he said. “I remember the first load that actually went off their dock was only about 15 cabinets in the whole 53-foot trailer. If you look at 15 boxes in a big trailer, that’s a long way back. And they were all so happy because they were shipping their first cabinets that they were down there taking pictures and high fiving each other.”

Showplace’s dealers often cite Dakotaland’s history of on-time deliveries and

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describe the company’s drivers as helpful and polite. Fowlds said he makes sure everyone who works for him understands the importance of customer service, particularly in terms of the Showplace cabinet deliveries. “It’s crucial that drivers stay on top of things,” he said. “There could be someone waiting to close on their house and they’ll be mad it they don’t have their cabinets.”

Dakotaland’s success aligns closely with that of Showplace. “They are our

main customer and they’ve been growing for the past 12 years,” Fowlds said. “My other business has stayed the same but we’ve had the opportunity to grow with Showplace and they are a great bunch of people.”

Showplace Expands to Meet Market Needs In Showplace’s first few years, the crew focused on creating a simple, classic product line, with flawless finish and construction, that always shipped on time. This approach won over scores of customers to the new company and contributed to Showplace’s impressive growth.

“We knew from experience what the Midwestern consumer would want to

buy and that was our focus from the very beginning,” said Paul Sova, operations chief. “We knew what products we absolutely had to have to launch this thing, to have enough to make our company look saleable but at the same time not bury us in complexity. We knew full-well that as we grew, we would add products as time went on.”

Showplace’s straightforward approach meant their customers knew exactly

what to expect even if that sometimes meant turning down business. “We never made a promise we couldn’t keep,” said Bill Retterath. “We were asked to do many things many months before we were ready for it and we didn’t do it. We didn’t give them false hope and that’s where the trust was built with our customers.”

Times change, however, and Showplace found it had to change with them.

The managers realized, through discussions with dealers and watching trends in the marketplace, that kitchen cabinet design was rapidly becoming more sophisticated in the years since they started the company. The end of the housing boom and

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One of the first Showplace painted kitchens.

a dismal economy also required adding products that would appeal to customers.

The first additions to the catalog arrived in January 2003, when the com-

pany changed to all-wood construction, added rustic hickory as its first rustic wood species, and introduced the first painted finishes. Later that year, the company added rustic cherry. In the following year, Showplace upgraded drawer glides and began to offer distressed finish options. Over the next few years, the company added lyptus, quartersawn white oak and rustic alder to its catalog. Vintage finishes and assembled islands and furniture followed.

Much of the drive to offer these new products came from information pro-

vided to the company through its dealers. Showplace holds regular meetings of the Showplace Dealer Advisory Group to assess trends. An in-house product development team also meets at least monthly to consider and plan for new offerings.

The one thing that everyone can agree on is the increasing sophistication

of consumers and the wide variety of kitchen cabinet designs needed to satisfy their growing knowledge and interest. Scott Korsten and Paul Sova referred to this evolution as a change in cabinet “fashion.”

“The industry wasn’t as much about fashion in 1999 as it is today,” Korsten

said. “It got there fairly quickly. For example, we didn’t feel the need to do painted product early on.”

Showplace Wood Products Indeed, keeping the product line simple was one of the promises the group

members made to each other in those early meetings in Tony Bour’s basement. A start-up company needed to make its name with superb products and the Showplace team decided that more elaborate offerings would only hinder them in their start-up phase.

“There were a lot of ‘no’s’ in those days, but we’ve ended up adding all of

them,” said Pat Seykora. “We did hold them off for awhile.”

The products and offerings they swore off in the early days are all part of

the Showplace catalog today: inset doors, painted finishes, dark-brown stains on maple wood. The initial managers look back on the self-imposed list of banished products and muse on how much things have changed in just over a decade.

“The economy does funny things,” said Steve Richter. “Today, we’ll do

pretty much anything.”

The decision to add new products is not one the Showplace team takes lightly.

Producing a new product comes with careful consideration of the needed adaptations of the manufacturing process and the ability to market the new item successfully.

Take inset cabinetry for example. This type of cabinet features doors that

fit precisely inside the face frame, which requires a significant level of precision in the manufacturing process. “We made the decision to go with inset based on the fact that the recession was looming and we saw it coming,” Sova said. “We

Inset cabinetry (left) requires tighter manufacturing tolerances than overlay cabinetry (right).

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had to make a big adjustment. The sizing and infrastructure of the information needed to make the components is different. The tolerances are tighter. This is the guts of running a cabinet company—getting the information right so that our workers know how to make the components.”

From a marketing standpoint, the Showplace managers make sure a new

product won’t hurt their bread-and-butter offerings. “We knew when we introduced inset cabinetry that we would get a share of the market that was not going to cannibalize what we were already selling,” said Korsten. “It was a different market.”

Changing with the times meant not only adding to the company’s product

catalog, but also reassessing how Showplace would move into the future as a privately-owned company with 15 separate shareholders, all of varying ages. In 2006, Showplace took a giant step toward ensuring its future prosperity by selling the company—not to a big corporation or a private equity firm—but to its own employees.

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Chapter 4: Showplace Transitions to Employee Ownership By 2006, Showplace Wood Products had grown from a small start-up manufacturer of semi-custom cabinets to a major industry player. The company’s sales had skyrocketed each year since its inception and the original investors’ worth in the venture had grown along with it. The time had come to decide on a way for Showplace to allow the original investors, who had all taken on the significant risk of building a new company, to realize the gains on their investment. To do so, the group of more than a dozen individuals was entirely of the same mind— the liquidity of their shares could not come at the expense of Showplace’s future.

“It’s a really unique group,” said Emery Lee of the 15 original investors in

the company, including himself. “None of the original investors came into this because we wanted to get rich. We came into this because we felt we could start a little company and provide a service and good products. I’d like to come back here 20 years from now and see that the company has continued to grow with the next generation.”

The challenge presented to the Showplace board was to devise a way to

transition Showplace’s ownership, but maintain the team’s original ideals of providing excellent customer service, respecting employees at all levels and keeping decision making local.

Lee, Tony Bour, and Paul Sova, the three managers terminated after the

sale of their previous company to a large conglomerate, were particularly wary of selling their business to another company as a way to buy out Showplace’s original investors. The rest of the shareholders were in complete agreement. If Showplace had decided to pursue that option, however, they had plenty of suitors from which to choose.

“Over a three- to four-year period, from 2004 to 2006, a week did not go

by that we weren’t approached by somebody wanting to know if we would sell

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them our business,” said Tony Bour. “We had grown so rapidly and there was a lot of money to buy companies. We appeared on the radar screen because our industry was doing well. I know it sounds funny to be approached week after week, but we were. There were a lot of serious buyers.”

Bour’s response: a polite no-thank-you across the board, no matter how

much money the potential buyers offered. The calls and letters kept coming, but by October 2006 Showplace finally found a way to solve the problem of how to shift ownership of the company and also get rid of their insistent pursuers. “It was so neat to be able to say ‘We’ve transitioned the company to an ESOP, we’re 100-percent employee-owned,’” he said.

The phone calls from equity managers looking to buy the company ceased

almost immediately, the shareholders had a plan for earning the return on their investment, and Showplace Wood Products continued with its momentous forward progress, but now with hundreds of employee-owners.

ESOP: Employee Stock Ownership Plan An Employee Stock Ownership Plan, or ESOP, is a defined-contribution retirement plan for employees with tax benefits for both the employees as well as their employer. The first U.S. law to recognize these plans was the 1974 Employee Retirement Income Security Act, which was designed to protect participants and beneficiaries of pension plans in the private sector. Over the years, the federal government has tinkered with the tax provisions and benefits of an ESOP, but the underlying principles remain the same: all employees receive an ownership share in their company, which, in turn, receives a tax deduction on the contributions it makes to a trust fund that holds employee shares.

According to the National Center for Employee Ownership, slightly more

than 11,000 companies have ESOPs; 2,000 of these companies, like Showplace, are wholly-owned by the plan. These plans can work for small or large companies and are found in a variety of industries. About 25 percent of ESOPs are in the manufacturing sector.

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Showplace Wood Products A typical ESOP works like this: the company sets up a trust according to

federal guidelines and makes annual tax-deductible contributions in cash to the fund. This cash is then used to buy stock gradually from the current owners of the company. Over an average of seven to 15 years, the original shareholders are paid off and the employees build their equity in the company through shares that accrue in individual employee accounts. The employees pay no tax on the cash value of their shares until they retire and begin receiving distributions. And, since the ESOP trust is a tax-exempt entity, the company pays no federal corporate income taxes on the company’s profits.

For Showplace, establishing an ESOP was an ideal way to create liquidity

for their owners and ensure the stability of the company. Investor and board member Bob Swanson came up with the idea and the team researched the best way to set up the plan. Their search ultimately brought them to a lawyer who had a history of structuring successful ESOPs, John Kober, a managing partner in the Dallas office of the Morgan Lewis law firm.

Kober said he was struck by the integrity and experience of the Showplace

managers and shareholders when they approached him to create a plan for company succession. “The first time I met Tony and Emery and the other investors, I knew these guys were very special people. They had sold a business once before and they experienced termination. They had experienced frustration because the owner brought in new people. They brought a vast knowledge of what it was really like to go through a sale and they fully recognized the impact on them personally, on the employees, and on the community.”

Establishing an Employee Stock Ownership Plan was a good fit for

Showplace for a variety of reasons, Kober said. First, the ESOP allowed the company to keep doing what they did best with no change in operations or business philosophy. “Compared to a private equity deal or being purchased by a public company,” he said, “with an ESOP, people continue to do exactly what they did the day before the transaction and the day after. You don’t go through this whole process of eliminating jobs, changing business plans, or changing management.”

Secondly, the founders ensured Showplace’s future prospects by not selling

out to someone who could dismantle the company. “They built this company

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and they had a lot of pride. It solidified their legacy,” said Kober.

Finally, the ESOP provided liquidity for the ownership shares of the original

investors. According to Kober, “It was a way to transition management and ownership of the company to the next generation in a very friendly and easy way.”

ESOP a Win-Win for the Company and Employees Showplace transitioned to an ESOP company in October 2006 and enrolled all current employees in the plan, backdating their enrollment to January of that year. The plan is structured so that employees accrue shares in Showplace stock according to their level of compensation. Each year, the Showplace Board of Directors decides on the overall amount to contribute to the plan, based on the financial performance and condition of the company, and divides that amount among Showplace employees. To encourage retention and reward long-term employees, the shares are vested based on length of employment. Shares begin accruing on the first day of employment, but can be forfeited back to the company if the employee leaves before completing the required years of service. After two years of working at the company, an employee’s account vests at 20 percent; at the end of six years of service at Showplace, he or she is fully vested in the ESOP. In addition, Showplace applied years of service prior to the official January 1, 2006, ESOP inception date for vesting purposes to all 42 employees who joined them in the company’s start-up phase in 1999 and 2000.

All employees receive an annual statement of their ESOP allotment, where

they can see their annual distribution from the company, the amount they have accrued, and their vested portion. In general, distributions from the vested portion on an employee’s ESOP account occur upon an employee’s retirement on or after age 65 or if he or she becomes permanently disabled. Beneficiaries will receive the distribution if the employee dies. Showplace must buy back employees’ shares in the company at fair market value when they leave the company.

Unlike a 401(k) plan, which Showplace also offers to its employees, the

company makes all contributions to the ESOP and the employee contributes

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nothing from his or her paycheck. One of the benefits of an ESOP is the chance for all employees to share in a business’ success.

“Many employees don’t have the financial wherewithal, or the economic risk

tolerance to be an owner in a business,” Kober said. “If you go into a plant and tell an employee that, ‘We’re going to start a business and you have to go to the bank and borrow $10,000’ they would cringe. An ESOP is a way for individuals to become owners of the company and they pay nothing for this great benefit.”

As a specialist in structuring ESOP transactions, Kober cited other benefits

for employees. ESOP companies tend to pay above-market salaries, for instance. They also tend to provide more health care benefits and other benefits, including 401(k)s, to their employees. “From my viewpoint, the really good ESOPs reward their employees very nicely,” he said. “And deservedly so, because employees help build companies.”

As stated by the Showplace ESOP document that summarizes the plan

for employees, the company’s operations and management structure remained the same as when it was owned by the group of more than a dozen investors. “While the leadership structure and normal reporting in an employee-owned company is the same as traditionally owned companies,” the document stated, “the difference is that the people who fill all roles at Showplace Wood have an added incentive to do their jobs so that the company succeeds for the benefit of all employee-owners. We have higher expectations for ourselves because it is in our best interests for the company to be highly successful.”

When the company an employee works for becomes an ESOP, he or she

suddenly has a new benefit that will likely provide a substantial retirement income. The company gets tax benefits that allow it to improve its cash flow and invest in innovation and growth. Bour gives an example of a typical S corporation, which passes income and losses onto its shareholders for federal tax purposes, over five years of tax-free operations. Assuming the company started the first year with $500,000 of pre-tax income, grew at a ten percent annual rate, and had a 40 percent effective tax rate, the company would save more than $1.2 million in taxes over five years. “The accumulated tax savings are huge,” Bour said. “And where does it go? Back to the employees, because now the company is owned by the employees.”

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Tony Tells the Showplace Staff the News Changing a privately-held business over to an ESOP company required numerous planning meetings with lawyers, valuators, bankers and the like. By the fall of 2006, the parade of business people in suits carrying briefcases didn’t escape the attention of the office and production staff at Showplace’s Harrisburg plant. The rumors of an impending sale, not unlike the StarMark-Masco deal, started to fly.

When Tony Bour called a meeting of all Showplace employees in the

plant’s warehouse in December 2006, the rumor mill went into full production. The gossip ranged from bizarre: “Paul Sova was going blind;” “An employee was missing under mysterious circumstances;” to somewhat realistic: “Tony Bour will announce he is retiring and moving to Florida.” A nervous group of 462 employees gathered on plastic chairs and watched Bour step up to address them from a small stage.

Bour first addressed the rumors. “The company hasn’t been sold and, most

of all, it hasn’t been sold to StarMark,” he said. The group collectively let out a chuckle of relief. Another debunked rumor (“We’re not announcing a layoff ”) got a hearty cheer. Bour joked that he wasn’t retiring, much to his wife’s displeasure—a statement that received more grateful applause. The tension in the

Tony Bour announces the ESOP change to the assembled staff in December, 2006.

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crowd dissipated with Bour’s easy demeanor, but the crowd remained quiet in anticipation of the big news. It was eerily silent in the huge warehouse.

Taking out a letter that he had crafted to send to all Showplace employ-

ees, Bour made the anticipated announcement. He read, “Today I am pleased to announce that the investor-owners of our company have recently created an Employee Stock Ownership Plan, which allows for the transition and transfer of stock ownership of the company to the employees of the company.” The letter described the plan in broad terms and outlined the benefit to the employees, the original investors, and to the company. “An ESOP is designed to share the reward of stock ownership with the employees who are building and rewarding the company,” Bour said. “It is a retirement plan, not a management or operating plan.”

Giving employees the opportunity to own part of Showplace “becomes a

very efficient way to build a retirement foundation for all of our employees,” Bour continued. “And our company is able to reinvest profits back into the business and grow the business for the benefit of us the employee shareholders, our community and our customers. Our ESOP is a great way for all of us to feel we can make a positive difference in our company and we can enjoy the fruits of our efforts.”

The ten-minute initial presentation ended with a question-and-answer

period, which included an inquiry about whether Bour would consider running for political office. The crowd and Bour laughed off the suggestion, which the CEO likened to a death wish, considering his wife’s desire for him to spend more time at home. When it was time to go back to work, the entire group of more than 500 employees gave Bour a standing ovation.

“It was humbling,” Bour said of the grand show of appreciation by the

Showplace employees. “It’s fun to think about employees retiring and getting something back for their years with the company as opposed to what happened when StarMark was a part of Masco, where we made all this money but it went to executives at corporate headquarters. The beauty of the ESOP is that it all stays here.”

Long-term employees who had joined Showplace during the start-up

phase in 2000 and 2001, stood to gain the most from the plan. The company rewarded this group by grandfathering their prior years of service into the vesting schedule of their ESOP account. With this offer, 42 people suddenly had a

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A standing ovation for the ESOP change in December, 2006.

substantial sum added to their retirement nest eggs, since Showplace had backdated the plan to start on January 1, 2006.

In general, employees can’t borrow from or tap into their ESOP account

until they reach retirement age. The federal government makes this restriction to help workers increase their retirement savings and rewards companies with ESOPs with income tax breaks that allow for greater cash flow and higher profits to invest back into the company. At retirement, the employees’ ESOP payments are taxable, but the company can spread out the payments to decrease the individual’s yearly tax liability.

As chief financial officer, Emery Lee and an ESOP committee hold an

annual meeting and present information on factors relating to the ESOP to Showplace employees. Employees also receive an annual statement outlining their allotment of shares, the company’s stock value as determined by an outside valuator, and the amount of their account that is vested. As the ESOP matured and more employees saw the amount in their statements increase, the popularity of Lee’s meetings has increased accordingly.

“At the first meeting, everyone was very curious, but then the curiosity dropped

off the next few years,” Bour said. “But now that the accounts have started to build

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there is a lot of interest. The employees are anxious for us to do our annual meeting.”

Bour said the appeal of the program is naturally stronger among older

employees. “We have a fair amount of young people and they know they are going to live forever,” he joked. “They know they need the money right now, not later on. But if they tapped into it now, it wouldn’t be there when they retire. We want the money to be there for them or their beneficiaries.”

Although employees do pay income taxes on their ESOP shares when they

receive their distributions, their accounts have accrued tax-free and Showplace can spread out the payments so that employees won’t have to bear a huge tax bill as a result of receiving a lump-sum payment. Their tax rate also will likely be fairly low since they won’t be receiving a regular paycheck when they get their ESOP distributions. The tax-friendly nature of the plan is part of its appeal, Bour said. “That’s the beauty of an ESOP,” Bour said. “When you’re 18 or 20 years of age, you’re not thinking about these things. But if you talk to Mom and Dad, they’ll give you a different picture.”

For their part, employees remember the day of the ESOP announce-

ment as an emotional one. Lisa Kolbrek, production control group leader at the Harrisburg plant, recalled the nervous anticipation before the company meeting. “I knew we weren’t closing our doors, but you just didn’t know what was going to happen,” she said. “We knew something was going to change, and, as human beings, we hate change.” Her thoughts underscore one of the major benefits of an ESOP. In most cases, the operations of a business after transitioning to employee ownership remain consistent with the operations prior to the change over.

Sherrie Hanson, a supervisor at the Showplace Beresford plant, said the

mood of the assembled workers was a bit tense at first. “When Tony started speaking, the room was very quiet and it was emotional,” she said. “It wasn’t like anything the company had ever done before.” After the announcement, Bour reminded the group that Showplace would also distribute Christmas bonuses the following day. Hanson remembered the appreciative standing ovation as a well-deserved salute to the company’s leaders.

Of all the rumors that had floated around the Showplace staff, none had

come close to what Bour revealed on that winter day in late 2006. “No one had

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even dreamt of something like that,” said Linda Miles, quality assurance team leader in Harrisburg. “No one had a clue and, when they announced that, we were so relieved.” Miles said she remembered how thankful she felt on that day and ever since then for the honor Showplace bestowed on all of their employees. “That’s a big step for a company and it’s something they didn’t have to do.”

Original Investors Rewarded for Risk, Company Transitions Seamlessly Joe Carmody, an accountant with the Sioux Falls Eide Bailly office, provided auditing and tax services to Showplace since 2004. After a few years of working with Showplace, Carmody said the issue of how to change ownership became more pressing.

“It’s a very diverse group of owners with Tony and a couple of his friends

that he had been in business with in Minnesota, and then Paul and Emery and the Everists and everyone else,” Carmody said. “As their advisors, we were a bit concerned that if something happened to Tony—because he was one of the older shareholders and owned a pretty substantial amount of stock—that would put a strain on the other shareholders and the management of the company.”

When the idea for an ESOP emerged as a possible solution, Carmody saw

it as a nice fit for the company and a perfect response to Showplace’s unique ownership situation. “In fact, I was relieved,” he said. “As an advisor for a business like this, you always have to be looking at helping them make the transition of ownership to the next generation.”

A potential drawback to an ESOP structured like Showplace’s was the pos-

sibility that one or more of the original share holders in the company would demand the full amount of their investment gains when the company made the transition to employee ownership. None of the initial 15 investors had that mindset, according to Carmody. “I can’t say enough about how the shareholders believe that this isn’t just their deal—it’s everybody’s deal,” he said. “The folks that Tony and Emery and Paul found to be investors with them had the same

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spirit or I don’t think they would have been asked to be investors.”

Each investor receives quarterly payments pro-rated based on the per-

cent of share ownership at the time of the ESOP transition with 2022 set as the ultimate deadline of retiring the ESOP debt. The investors are happy and secure with the arrangement, said Bour.

“I would say, to a person, the original investors are all very pleased. They

like the way the ESOP’s been structured and the way it’s been managed,” he said. The investors’ devotion to the company extends beyond their monetary investment, Bour added. As a close-knit group, the investors agree that the company’s needs and other debts come before their annual check.

When the Showplace Board of Directors structured the ESOP, the group

decided that the health of the company always takes precedence, added Lee. “If we don’t get a payment, we don’t get a payment,” Lee said of the original investors. “If the company needs new equipment or if the company needs a new building, we’ll just defer. We’re fine with that. We have a plan to pay ourselves back but we’ll push it out because we understand the company has to grow and that’s first and foremost. The way we structured the ESOP is that the company comes first, we come last.”

An important feature of the Showplace ESOP is that the original group of

investors is still very much involved in the company, Lee said. Although federal regulations provide tax incentives to companies that take out a loan and become highly leveraged to buy company shares, the Showplace ESOP is self-funded and the plan gradually pays back principle and interest to the investors for the shares purchased in 2006. “We are self-financed, where many ESOPs are leveraged, so the owner wants to get out,” Lee said. “In that case, somehow the company has to come up with the total value of the business in cash. They buy the owner out, he steps away, and the company doesn’t do well. We self-financed our ESOP so we’re still heavily involved.”

Showplace’s prime creditor is U.S. Bank, which provided millions in

mortgages and loans to the company since its inception. Marie Frederickson, U.S. Bank vice president, said the sale of the company to the Employee Stock Ownership Plan was not a cause of concern for the bank. “They funded the

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ESOP as bank-friendly debt,” she said. “In other words, the shareholders borrowed money back to the company and it was not bank-financed, and the priority of repayment would always be subordinate to the bank debt.”

Her bank would have looked at the ESOP differently if Showplace had

placed repayment of the shareholders above all other debts. “The risk was that, at some point, those shareholders have to be repaid,” Frederickson said. “If they had put the shareholder repayment down as senior debt, that would have been an extremely high-leveraged balance sheet.”

She credits Bour and his shareholders for putting the company before

their personal gain. “Knowing how to structure the ESOP is a good example of not making it so the company was overextending itself to repay the ESOP debt,” Frederickson said. “Tony has always been employee-centered and that mission has never waivered from the start. Despite this slow economy, Showplace has always been able to maintain that same thought process.”

The original management team, who also put up their part of the $600,000

needed to start the company, probably never imagined when they chose to leave StarMark and form their own cabinet manufacturing firm that they would eventually own an equity share in excess of $1 million. Management team member and original investor Steve Richter said although it would have been nice to get a lump sum payment of the increased value of his initial investment—which would have happened if the company had been bought out by another firm—he knew the ESOP approach was the best for the company.

“The ESOP was a way for us to continue to take care of our employees,

especially those that had left StarMark and had taken a shot to come work with us,” Richter said. The investors’ future payouts are subordinate to other loans and the company’s needs, but that doesn’t concern Richter. As long as Showplace stays true to its ideals, and the housing and remodeling industries stay steady and eventually start to experience some growth, the company and its employees should flourish. “When we started this company, we had seen some of the things that happened when a large company acquires a smaller company,” he said. “They change the culture and everything else. We still have a good workforce out there and the ESOP is a way for us to ensure things for them. And we can

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ensure our own legacy at the same time.”

John Kober credits the shareholders’ commitment to the company for the

company’s smooth ESOP transition.“These guys really put the community and their employees in front of their financial interests because they could have sold this company for a whole lot more money but they really put the company first.” Kober said. “In this day and age it’s unusual to see someone who will exchange significant financial gain for keeping a business in the community.”

At the time, Showplace board member and shareholder Tom Everist admit-

ted that he was a bit hesitant to transition the company to employee ownership, although he readily acknowledged it was the right approach for the company. “I was a real stick in the mud about the potential problems with ESOPs,” Everist said. “You only have to look at the Chicago Tribune to see how an ESOP can go to hell. It’s all tied up in court.”

While the ESOP at the Tribune Company was by nearly all accounts a

complicated transaction that involved an already-troubled company, John Kober structured the Showplace ESOP as a straightforward and fiscally-conservative plan that rewarded employees but also allowed managers to retain their ability to run the company and extend their successful track record. The Showplace ESOP retains a pool of shares that the company can award to managers as incentives for performance.

Everist credits attorney Kober for structuring the ESOP so that it worked

best for Showplace’s needs. As a board member, Everist now said, “The ESOP is wonderful. I’m very high on the ESOP approach. Ours is an extremely-workable design. We don’t have to pay off the notes [to the original investors]; we can change the terms of the notes. But even in this downturn, we’ve had reasonable earnings and have been able to make loan payments. We do actuarial runs to make sure we can buy out the ESOP shares of the people retiring and we’re very confident that this is a very sustainable model for decades into the future.”

According to Everist, the close-knit Showplace manufacturing plants and

offices make an ideal situation for fostering the communication and teamwork necessary for a successful ESOP company. “An ESOP works when everybody is together and can see each other and know that everybody is pulling their own

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weight,” he said. “There really is an energy of common ownership.”

Original investors like himself have done nicely with their shares of the com-

pany, but Everist, who is 61 and runs his own successful company, said it is particularly gratifying to see the same investment returns go to younger individuals who took a chance on Showplace. Some of the management team recruited from StarMark, and a few of the managers from L.G. Everist had to cash in retirement accounts or take out second mortgages to come up with the initial investment amount. “It’s neat to see the young people, who have been working for wages their whole lives, be able to take a risk and benefit from it,” he said.

Lori Seykora, an original investor and director of customer service, said it’s

rewarding to look at how her family’s initial financial stake in the company has grown. “It’s fun to look at our investment and how hard we worked to put that money in and what that money has done for us in these past years. But we still have to work hard, it’s not like we can just sit back and relax. None of us do.”

For the managers at L.G. Everist, who each bought a five percent stake in

the company, the ESOP provided a way to obtain their earnings while honoring Showplace’s internal management team’s desire to perpetuate the company as a customer-centered, employee-friendly enterprise.

“We were all intimately involved with the whole ESOP process,” said John

Henkhaus, former chief financial officer at L.G. Everist and now family office head at The Everist Company. “It was a long, deliberate plan and the shareholders were involved in the planning and in many of the meetings. For investors, it turns out there are not a lot of ways in which to recognize the gain on your investment. This was a way to realize all the gain that had occurred during our ownership by, in essence, creating a sale of the whole company to the ESOP.”

Henkhaus’s investment of $30,000 in 1999 will ultimately provide him

with a significant return when the debt to the shareholders is paid off. “All of us outsiders owe a lot to these guys,” he said of the Showplace management team. “They did all of the hard lifting,” he said. “We were along for the ride and interjected if they asked, but they gave a lot of blood, sweat and tears. They’ve helped us all financially, but it’s not just that. They are good friends of ours and I really enjoy each and every one of them. It’s kind of like a little family.”

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workers for taking the company he helped form and making it such a success. In addition to providing some of the initial investment to form Showplace, Lawrence also has served on the company’s Board of Directors since its inception. From this vantage point, he has seen how the Showplace managers could shine with their own company. “I know that group has been close to each other for many years and they are really down-to-earth, hard-working people,” he said. “I owe them a lot and I’m very appreciative of Tony and his crew.”

As an investor, Lawrence is content to earn his investment gains through

the payments from the company, which occur quarterly, but he’s also grateful that the ESOP can provide a retirement benefit to Showplace employees. “The government is not going to take care of us and I don’t expect them to. We have to take care of ourselves,” he said. “The ESOP is a super way for employees to participate in the business and earn a comfortable retirement.”

Rick Everist, the L.G. Everist CEO who had been the most resistant to

buying five percent of Showplace, said the ESOP transition was the perfect solution for the company’s unique situation. “My father used to say, shareholders will want their money sooner or later. It’s just inevitable,” he said. “In the case of Showplace, the ESOP was a hugely tax-efficient thing to do with shareholders who are relatively short term. In this case, it was the perfect example of how to reward the founding shareholders who need to put together their estate.”

The annual payouts to investors from the ESOP sale have been helpful to the

original shareholders beyond improving their personal balance sheets. Rick Everist underscored this point when he related a story about touring Bour through his new house in Montana, throughout which he had installed Showplace cabinetry. “There are probably nine different rooms with different types of Showplace cabinets and there are different colors, different finishes and different woods. It could be a whole showroom for Showplace cabinets,” he said. “Tony is walking through and I’m telling him how much I appreciate him and Showplace.” Rick’s willingness to take the plunge involved more than just chipping in $30,000 in 1999 to help found the company. Like other outside investors, he also loaned money to bridge cash-flow needs and signed a personal guarantee. But this critical support had other rewards,

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too. “They gave me a heck of a discount on the cabinetry,” he added.

Rick’s brother Rob, vice president at L.G. Everist and a Showplace Board

member, said the board strove to keep faith with the original vision for Showplace. “From the board’s perspective, you look at how to sustain a company and consider the age of the stockholders. We looked at all different types of options for perpetuating the company and getting the stockholders’ money out,” he said. Selling Showplace to another company “wasn’t appealing and still isn’t appealing. We could have gone public and we could have done other things, but we kept coming back to an ESOP that would perpetuate the culture that Showplace had developed.”

The Showplace board and the company’s management team studied the

issue for more than a year and structured the plan so that the company could continue to prosper, Rob said. “There was a lot of research over a 12- to 18-month period,” he said. “Tony and Emery talked to a lot of people, went to ESOP conventions, and talked to other ESOP companies about what went right and what went wrong. We really think it came out to be a great scenario for everybody. Shareholders got their money out and employees got to buy in and the company carries on.”

Jay Van Den Top, a former Chief Financial Officer of L.G. Everist, was

always keen on the idea of investing in Showplace. He was impressed by working with Bour and his team while negotiating the New Century Land deal at the Harrisburg Industrial Park. “The ESOP is the best way to continue doing what they’re doing and have the whole team and the whole group of employees involved in it,” he said. “It’s a win-win for everybody. And, as the economy improves, it will be an even bigger win for the employees.”

Bob Swanson, a Showplace board member and original shareholder, made

the initial suggestion to pursue an ESOP as a plan to shift ownership of the company. “It’s a great way to reward those hard-working people,” Swanson said. “Those people who work in that plant ten years from now who have been there all this time will be quite wealthy when they retire.”

Unlike a 401(k) retirement plan, the ESOP accounts are entirely funded

by the company, which appeals to younger workers in particular, Swanson said.

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“The average guy living from paycheck to paycheck doesn’t want anything coming out of his check. And the ESOP makes all of the payments out of company profits. The employees understand it now and it’s starting to really do some good. Now they’re watching the waste. If a guy isn’t holding up his end he probably gets shaken down. Once you get an ESOP, workers don’t want laggards in their plant.”

Notifying the Industry and Setting up the Plan Just as important as communicating the change in ownership to their employees was the Showplace managers’ efforts to tell their customers and suppliers about the ESOP. “We also wanted to communicate this on a very positive note with our customers, so that our customers would know what was happening with our company,” Bour said.

Dealers and suppliers needed to know that Showplace planned to con-

tinue with the same management and philosophies. “In the past, customers have seen companies that have transitioned and gone out of business because it didn’t work,” he added. “Or a bigger company would buy a smaller company and take it in a different direction. We wanted to communicate to our dealers that moving to employee ownership is a really positive move.”

Showplace’s suppliers are crucial partners in their business, so the com-

pany ensured that they also understood the new ownership situation. “Again, where there has been a strategic buy in the marketplace, sometimes a company gets rid of a supplier that they’ve had for a long time and they go with a supplier that’s preferred by the ‘mother ship,’” Bour explained. Ensuring suppliers that business would continue as usual set them at ease.

Although the tax savings are substantial, establishing an Employee Stock

Ownership Plan requires incurring some additional costs during the initial phase as well as some ongoing expenses. “We had to put in place a trustee that is not a part of our company that is bonded and will provide oversight for our ESOP program,” Bour said. “Then we also hired a valuator that puts an annual value on our company.”

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Bour likens the annual valuation to getting a yearly appraisal on a house.

“The valuators compare us to other companies in the industry and other manufacturing companies and they look at our performance numbers,” he said. A current valuation is critical to the plan, since vested employees leaving the company need an up-to-date price for their shares.

The third outside party involved in the ESOP is an administrator that

prepares the annual reports for the employees based on compensation information, current share value, and length of service to the company. The companies involved in assessing value, overseeing the plan, and administering the plan follow federal regulations and maintain the integrity of the important program. “It’s not loosely managed,” Bour said.

An ESOP as Employee Motivator As Bob Swanson noted, one benefit of an Employee Stock Ownership Plan, in which company profits have a direct impact on an employee’s retirement account, is that it can serve to boost motivation and efficiency. It makes sense: if the company cuts waste, builds good products and makes its customers happy, profits increase and the workers’ share in their company increases accordingly. As part owners, they also share pride in their company’s success.

John Kober said this employee motivation may take a few years after tran-

sitioning to an ESOP.

“Once employees see that every year they are getting more stock, it really

excites people,” he said. “They’re seeing their account growing and they don’t have to take a cut in wages. They’re saying ‘All I’m having to do is my job and if I do it better and if we do better as a team, that value could be higher.’ Employees will get pretty excited but it takes three or four years for them to do so.”

More than five years into the Showplace ESOP, managers said they can see

its effects on worker pride and motivation.

“I think I see so much more pride in our hourly workers,” said Lori Seykora,

an original investor and director of customer service. “We started telling them

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this is your company, you can make a difference. You can see people walking through the office where you didn’t need to have lights on and they would shut the lights off. You would see people on the production floor perhaps just kick a shelf clip out of the way and now they’re picking it up and putting it back. Little things like that make a huge difference.”

Bour said he saw a new interest in saving money and boosting efficiencies

at every level of employee. Employees have made suggestions to boost the company’s bottom line, which varied from buying a used lawn mower and mowing their own property to suggesting new ways of shipping their product.

Lee said the ESOP created a unified team, both in production and man-

agement. “The ones that understand the ESOP certainly are productive and they drive other people to be productive,” he said. “They don’t want to see other people standing around costing them money.”

Production staff members, particularly the employees who are closer to

retirement age, see the benefits of being able to share in the company profits and claim the ESOP is just one reason they are committed to their work at Showplace. “I’ve always thought of the company as my child and I’m watching it grow up and I have a vested interest in it,” said Lisa Kolbrek, production control group leader. “We know how hard we worked to get where we are.”

Bour refers to the old adage “a rising tide lifts all boats” when he explains

how everyone at Showplace gains from working at an employee-owned company. “We’ve made projections about how significant this plan is to our employees, especially the longer they stay with us,” he said. “The beauty of it is that our profits stay right here. When an employee retires, they get something back for all their hard work.”

Showplace a Textbook Example of a Successful ESOP “If I were going to write a book about ESOPs, I would write a book about Showplace,” claimed John Kober, who has helped structure scores of Employee Stock Ownership Plans throughout the country. “They’re good people. They

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know what they’re doing. They have good employees and a lot of community pride. They just run a really good company.”

Other factors make an ESOP work well for Showplace. The employees

work in the same general location, with the Beresford plant only 30 miles away from the main facility, and the number of employees is just about right. “An ESOP can work very effectively for a company that has ten employees, but it works better for those that are mid-sized companies like Showplace. I think when you get into 1,000 employees, although ESOPs work in those companies, it’s not as meaningful to the employees,” Kober said.

The desire to leave a successful business as a legacy to its employees and the

community is something that Kober called “founder pride.” Owners with this characteristic are the ones that tend to gravitate to ESOPs and transition most successfully. Instead of a huge cash payout from a sale to a private equity firm, the owner agrees to a longer-term payment schedule that can extend past a decade. “These types of owners tend to not leave the business for awhile,” he said. “Tony is still coming to the office and transitioning duties and responsibilities at the same time he is getting paid out as a shareholder. He’ll eventually be out of it, but he’ll leave the business managed by his own people—not some other company’s people.”

Kober said he’s fairly picky about whom he chooses to take on as clients when

they approach him to help them transition a company to an ESOP. “I won’t take clients I feel I don’t connect with,” he said. “I wish all my clients were like Showplace to be honest with you. I think when you have companies that have owners and boards that put the company first, you’ve got a real winner.”

Tom Everist, Showplace board member and initial shareholder, agrees. “It

should be a Harvard Business Review case study on how to do a business,” he said.

Industry Interest Piqued In the fall of 2011, five years after the company made the change over to employee ownership, Bour gave a presentation to a group of cabinet manufacturers and associates at a meeting of the Kitchen Cabinet Manufacturers Association. His

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slide presentation gave a brief history of Showplace, outlined the challenges faced when a company must transition ownership, and explained the nuts and bolts of establishing an Employee Stock Ownership Plan.

Bour said the number of attendees, about 50 or so, attested to the inter-

est in Showplace’s ESOP experience, particularly since many of the attendees sacrificed an opportunity for a cocktail reception to stay after and ask him some additional questions. “It went over very well and there was a lot of interest,” he said. “Some of the attendees were competitors but a lot of them were suppliers to our industry which shows that an ESOP can fit a variety of different types of companies.”

Showplace’s experience establishing an ESOP, in an industry where few

exist, made Bour a unique source of information for the group at the presentation. Some in the group remained after his talk to ask Bour questions about the particulars of setting up such a plan. “They asked things like how profitable a company has to be to consider this and why did we go with being 100 percent employee owned,” he said. “They also wanted to know how expensive it was, because there are some reporting issues that are involved.”

Bour gave each inquiry a thoughtful and measured answer, but it took

him little time to respond to the question of whether, with the benefit of five years of hindsight, Showplace would it all again.

“The answer, of course, is absolutely,” Bour replied.

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Chapter 5: Showplace Thrives in Recession, Becomes More Efficient and Plans for the Future The change to employee ownership of Showplace in 2006 came at a time of sustained growth in the housing industry and the company’s sixth year of increased sales. In 2007, although the subprime mortgage disaster was showing signs of affecting housing construction, Showplace had a record year, with a 14 percent growth in sales over 2006. Showplace managers, however, kept a careful watch on industry statistics and economic reports on the possible effects of a burst in the housing bubble.

Even though Showplace was enjoying more business than ever before, the

company’s managers saw evidence of an impending crash in their industry. “We keep on top of forecasting of housing trends and listen to housing economists,” said Paul Sova. “Tony, Scott and I would hear the experts explaining that the fundamentals aren’t good and something bad is going to happen soon.”

Scott Korsten recalled the managers’ concern over the future prospects for

their industry as early as 2005, when it seemed like the housing boom would go on forever. “I can actually point to e-mails at that time when we were talking amongst ourselves about how we didn’t like what was coming,” he said.

The company’s response was to meet the challenge of a future downturn

head-on with price reductions and more product offerings. In the fall of 2006, the company offered its first sales promotion, free glazing. In March 2007, Showplace made the free-glaze offer permanent.

“Prior to that, glazing was available at a 12.5 percent premium,” Korsten said.

“People were still willing to pay for that. Making it free was an industry first.”

Sova said the move to offer a popular service free of charge was necessary to

get ahead of their competitors before the market went into a tailspin. “We didn’t want to give that up as revenue but we did so as a proactive move against the

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recession we saw coming to the industry and to Showplace. We were aggressive early on and I think far more aggressive than our competition. They just waited for disaster to happen and then they reacted. We were moving in advance of it.”

Discounts weren’t the only way that Showplace planned to weather a

downturn. They also decided to offer new products that didn’t compete with the cabinets they already sold, but which did help them take market share from competitors. “We shifted into full development mode even before people knew we were in a recession,” Korsten said.

“We saw the storm clouds gathering and we knew it was coming,” Sova

said. “We were surprised when the recession hit Showplace later than it hit most of our competitors. We were wondering when the crash would happen to us. We would hear things about our competition and then we would scratch our heads and say ‘how come we’re so busy?’”

One of the reasons is that so-called semi-custom cabinet companies, such

as Showplace, are able to offer products and services previously available only through custom cabinet shops.

“We don’t consider ourselves as being true custom,” Tony Bour said. “The

real custom companies in our industry will work with just about any kind of wood. If you bring them a certain door style, they will manufacture it, even if it’s one they don’t offer. Now, all of that comes with a price tag and looking at how the recession has affected our industry, the custom people have taken it on the chin. Companies like us have just eaten their lunch.”

Randy Pooley, director of national sales, agrees that taking market share

from custom cabinet makers has been the key to surviving the recession. Offering painted cabinets in nearly any color and high-end options such as inset cabinetry has served Showplace well. “We tried to figure out what custom people do and how we could do it on a scale where we could realize the economies that enable us to produce it and sell it at a lower price,” he said. “We’ve been successful and we’ve stayed at a mid-price point and offered more and more value for the product.”

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Showplace’s Finest Moment The Showplace management team had amassed plenty of achievements in the company’s short history but nothing makes Paul Sova as proud as the company’s response to the economic downturn at the end of the decade’s first century. The recession that began in 2007 crushed nearly all manufacturing activity in the country, but particularly devastated those involved in housing and construction. Housing starts fell from 1.36 million in 2007 to 905,000 in 2008 and then plummeted further to 554,000 in 2009, meaning fewer builders and homeowners needed cabinets for their newly-constructed homes. The renovation market also took a huge hit, as homeowners contemplating kitchen renovations put off their plans until they felt more secure about their jobs and the economy as a whole.

Although the company had continued to grow in 2007, the industry had

begun to contract and so did Showplace’s sales the following year—the first time in the company’s young existence that it didn’t experience double-digit growth. A new challenge emerged for the Showplace managers. Instead of trying to keep up with tremendous demand and building on to their manufacturing plant, the team found they needed to increase their market share with competitive prices and new products.

“We really changed our mentality,” Sova said. “We shifted gears from being

in constant growth mode and only adding products as we absolutely needed to, to changing our business model to that of being very aggressive from a new product introduction standpoint.”

At the same time, Showplace resolved to avoid laying off employees even

though sales had decreased substantially in 2008 and 2009. “We made a very deliberate decision not to lay-off employees even though in our industry and throughout the country, people were firing people at record rates,” Sova said. “Layoffs were massive in cabinetmaking. And as far as I know we were the only major manufacturer in the country that didn’t do that. We also kept our benefits in place and continued to give our employees raises and cash bonuses every year.

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They were smaller than we used to give, but we still did it.”

Some employees did leave through attrition in those years, but the com-

pany maintained a steady workforce even with declining cabinet orders. With less work on the production floor, the employees could either go home early, and receive a smaller paycheck, or find another way to serve their customers. The Showplace managers chose the latter option and took the opportunity presented by a manufacturing slowdown to initiate some training programs.

“We used up that free time, and, when people weren’t making cabinets, we

used those downtimes as much as we could to train people on lean manufacturing,” Sova recalled. “We pushed hard on quality improvements and on-time delivery improvements. Instead of pushing the layoff button, we invested in our people and served our customer from that standpoint.”

Along with slowing growth came smaller profits starting in 2008, although

the company has remained profitable even in the downturn. The managers are proud of weathering the drastic economic slump without disrupting the lives of their employees, whose hard work has made the company an industry leader. “While we’re proud of how we managed our company from 2000 to 2007, when we had explosive growth,” Sova said, “I think our performance as the economy went through the meltdown was our finest hour.”

The hourly production employees recognized the efforts of upper man-

agement to help production staff keep their jobs as well as their weekly hours. “There were weeks when our count was low, the number of cabinets we had to put out wasn’t that high,” said Karl Odegard, warehouse staff member. “They could have sent us home early every day and we wouldn’t have gotten many hours that week but they just moved on to the next week’s orders. Most companies would have said, ‘we don’t have any orders, go home.’ Showplace made sure we had our hours so we had a decent paycheck.”

Customer service team leader Kathy Lottman said the hourly staff appreci-

ated the Christmas bonuses they continued to receive at the end of the year. “Even with the poor economy, Showplace has still given us a cash Christmas bonus,” she said. “That’s something they don’t have to do but they still find it in their hearts to.”

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Showplace Becomes “Leaner” In that eventful summer of 1999, Paul Sova drew up plans in his tiny basement office for the manufacturing facility that would become Showplace Wood Products., Meanwhile, Lori Seykora and Scott Korsten decided on a simple product line crafted from four wood species and a handful of stains. These key players focused on how their new company could best create an expertly-crafted product that appealed to their customers. The limitations they placed on themselves were partly market-driven, as the “fashion” side of cabinetry had yet to dominate the industry, yet the group also strove to create their product in the most efficient manner.

Sova took his experience from nearly two decades in the industry and

designed a production line where the cabinet parts moved continuously forward. No wood components ever backtracked to a station they had already visited and the cabinets flowed through cutting, paint, assembly and packaging in a seamless manner. Even the product choices, such as a mere six door styles at the time of the company’s birth, were chosen in part to cut down on inventory storage space and production complexity. This uncomplicated approach to cabinetmaking served the company well for its first six years. Sales increased substantially each year and the company’s number of cabinet dealers swelled from 20 in 2000 to more than 800 in 2007.

More customers and more sales meant making more cabinets, of course. It

also led to more equipment, a greater number of employees and four expansions of the Showplace facility. During this time of tremendous growth, the Showplace management team often imagined the changes they could make to improve the company’s efficiency if they could only catch their breath.

When the major recession that began in 2008 put the brakes on the hous-

ing industry, the company’s managers paradoxically got what they wished for—a respite from their frenzied first few years and a chance to make some production improvements.

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improves continuously over time, including just-in-time manufacturing, lean manufacturing and kaizen, based on a system developed at Toyota car manufacturing plants in Japan. In essence, these approaches involve reducing waste, minimizing defects and mistakes in the production process, respecting the input of workers and constantly implementing incremental improvements. Before the 1980s, these concepts were relatively unknown in the United States. Now, lean manufacturing practices are commonplace in nearly all industries.

During the recession-induced slowdown at Showplace, Sova and his pro-

duction managers took advantage of their hourly workers’ free time to provide some intensive training on lean manufacturing concepts.

“It isn’t super-complicated because much of it is common sense,” Sova

said. “You reduce waste, you organize your departments so that tools are where people need them. Your equipment is maintained properly and you focus on reducing steps and wasted motion. You also reduce waste in materials and excess inventory.”

In keeping with these simple concepts, lean manufacturing also invites

workers to make suggestions about improving the process. “The old school method of running a manufacturing plant is to have a manager over a small group of people,” Sova said. “He watched his people work and told them what to do and implemented any changes. At Showplace, we have a much flatter management structure, a different, flatter organizational chart. The senior hourly people have a lot more authority.”

This sense of empowerment is key to the lean manufacturing approach.

“When you involve hourly people in strategizing how to improve things and they go out and implement their own strategies, it’s more powerful because they own it,” Sova explained. “Our hourly people at Showplace are more in control of their own departments than any of the other places I’ve worked.”

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What Lean Looks Like in Showplace’s Finish Department “Bill has the hardest job in the plant,” said Bill Retterath’s colleague and fellow initial shareholder in Showplace, Steve Richter. While Richter certainly has his hands full managing cabinet door assembly in Showplace’s Beresford plant, he admits that managing a cabinet manufacturing plant’s finish department requires finesse and attention to detail that makes managing this department a challenging task.

Retterath is up to the challenge and that’s why he is the production man-

ager over Showplace’s finish department, where employees apply paint and stain to cabinet components. “Let’s put it this way, if we’re successful in finish, everyone can be successful,” he said. “If the customer gets a finish they don’t like, they don’t care if it’s designed well. They’re mad.”

Creating kitchens with the uniform finish, as well as superb construc-

tion, necessary to meet the Showplace customer’s high expectations requires a plant-wide commitment to produce a high-quality product. In Retterath’s department, attention to this matter means training, communicating, and empowering his employees. His efforts on quality and efficiency are illustrative of the work the Showplace management team undertook when the company’s sales slowed in 2008.

Although he started at StarMark as what he describes as a “run-of-the-mill

employee,” Retterath advanced through various supervisory positions and eventually secured a job as a quality-assurance manager at one of Masco’s cabinet subsidiarys in Mason City, Iowa. His new boss told him to write a quality manual for three cabinet manufacturing sites and gave him a stack of reading material on the subject. “He told me to write our new quality manual and told me there was a new computer on my desk. I had never used a computer,” Retterath said. “So I read and read and read and that’s how I got my quality background.”

He looks at quality programs from a different angle than that found in

traditional manufacturing. “I don’t like the role where all you do is quality,”

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Retterath said. “If you do that, you only do certain things and there is animosity. If all you’re doing is looking for defects you will find defects. I think of how we can add value besides just being there to ensure quality.”

In his view, the quality inspector should be a teacher, providing feedback and

guidance to fix problems. To accomplish this in Retterath’s department, inspectors on the Showplace paint line work everywhere on the line, rotating through the positions throughout the day. This approach means everyone knows all of the steps in the finish production process and can pinpoint where something went wrong when they’re inspecting the final product. With this background, the inspector can help a worker on the line with a problem at his or her station.

Retterath said this approach is unique in the cabinet industry. “I’ve worked

in three states in the cabinet industry and at other places you could be hired as a seal-sander and if you did a good job you could learn how to stain-wipe,” he said. “If you did well, you could learn how to inspect and then maybe you could learn how to spray. But that’s all you did.”

Not only did this system foster boredom with the employees, it also put

the plant in a difficult position if an employee or two called in sick. “When two inspectors didn’t show up, we didn’t have anyone to inspect,” he said. “With our way, if I someone doesn’t come in another employee can take his place. It’s not a matter of training or telling them what the expectation is. They’ve done it.”

Finish department Lean Team members Kerry Hayes, Lisa Kolbreck, Darin Huebner, Leah Hawe, Richard Moerke, Patti Clark, Mark Swier, and Bill Rettereth.

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With this approach, everyone has the responsibility for ensuring the

final product meets the customer’s expectations. “One of the things I’ve always wanted to avoid is having someone on my team say ‘it’s not my job,’” Retterath said. “Here, there is not one individual that doesn’t have that job at some point.”

Another benefit of empowering employees and implementing lean manu-

facturing principles is the reduction in the number of parts that needed redoing before a kitchen could ship—what the managers call “rework.” Retterath has a visceral reaction to a rework order. “The rework is what I just despise. It’s a waste,” he said. “We used to have people on the schedule just for rework. That was their role. There’s no rework person anymore and that’s been fun to watch evolve.”

At Showplace, production efficiency requires a team effort and

communication.

“‘Lean’ is like the term ‘quality,’ it can mean many things to different peo-

ple,” Retterath said. “I think of it more as having a ‘process improvement team,’ that’s the term I’m most comfortable with.”

Regular communication within the finish department as well as with other

departments ensures any problems are addressed and solved quickly. Retterath holds a daily morning meeting with his team leaders and a weekly meeting on lean manufacturing activities. Paul Sova also meets with all managers and team leaders to discuss ideas or problems and distribute production data reports. Retterath notes that a huge benefit of the weekly meeting with representatives from all over the plant comes not necessarily from what happens during the meeting, but from simply assembling the group in one place.

“I see it every time. When the meeting breaks up, the people who have

to talk to each other go talk,” he said. “Otherwise they know they have to speak to someone on the other side of the plant but they don’t want to stop what they’re doing.”

Showplace’s lean manufacturing activities translate into a product that’s

made well and best serves the company’s customers. According to Retterath, “We set goals and we know our expectations, and we have to do it better today than we did yesterday.”

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New Products Help Cushion the Fall The Showplace management team had always planned to expand its product line, and had added new finishes, wood species and door styles over the years based on dealer feedback. During the company’s first six years of production, however, booming sales meant employees had their hands full just keeping up with sales of their existing products. It wasn’t until the economy and housing construction market slowed that Showplace aggressively pursued new product development.

“Through the years, we continued to add products as our customers

demanded them,” said Paul Sova. “But we also wanted to keep a lid on things here because we were dealing with really explosive growth in those early years and we were selling everything we could make. We didn’t feel enormous pressure to jump into new products because we were expanding and growing as fast as we could. All that changed when the housing bubble burst and the industry started to retract.”

Ironically, a few of the biggest “game changers” for Showplace were the

very products the management team members swore to avoid, at least in the initial years—inset cabinetry, painted product and dark stains on maple.

Sova uses the company’s decision to offer dark colors on maple to demonstrate

the challenges, and the opportunities, associated with providing these new product offerings. “Our backs were against the wall with the great recession and with sales that were sagging,” he said. “Yet our customers were saying, ‘you guys need to figure out how to do these dark colors because the American consumer wants them.’”

The Showplace team, and Sova in particular, had resisted offering dark col-

ors on maple cabinets. His experiences with the process at his previous employer had proved difficult. Maple is a relatively hard and dense American hardwood with a fine, uniform grain. Soft spots inherent in the species, however, result in different areas of a maple cabinet component absorbing stain at a different rate, leaving a blotchy, uneven appearance that is especially noticeable with dark stains. The production staff found the solution to the problem by employing the

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help of their paint supplier, Sherwin-Williams, and altering some of the finishing processes in the plant.

Sova admits he had to “eat his words” avowing never to offer dark browns

on maple, but Showplace is all the better for the changes it has been required to make. Not only the economy, but also the fashion aspect of the industry, has changed the nature of the game for kitchen cabinet manufacturers. “Dark colors on maple are still more difficult than other finishes,” he said. “But nearly all of our finishes that we produce now are more complicated than when we began. The complexity has drastically changed.”

Scott Korsten agrees that the industry has evolved over the decade since

Showplace began production, largely due to a much more informed and interested consumer. “There has been a proliferation of really focused media that has helped to create this fashion aspect of cabinetry,” he said. “People have become so much more aware through very targeted cable channels and very targeted special-interest magazines. In the past, if you wanted a new kitchen, you walked in the door of the dealer in your community, you looked at what they had, and you made a choice. Now, the world is open to you.”

Although Showplace serves dealers nationwide, the company began sell-

ing their cabinetry on a regional level and had at first focused on traditional styles of cabinetry. With the expansion of their dealer base, and the increased consumer interest in home and kitchen design, developing new styles to keep up with trends became paramount for the company’s survival. This meant taking on two more previously forbidden products: inset cabinetry (introduced in November 2008) and painted cabinets. Since November 2010, Showplace customers can choose from more than 1,000 color options offered through the Sherwin-Williams ColorSelect program.

“Inset cabinetry has been a big home run for us,” Korsten said. “Also the most

recent things we have done that I consider game changers are the custom color program and the contemporary styling. The custom paint choices, and bringing in more contemporary styles and looks and species has opened some doors for us.”

Another success story, especially on the environmental front, was

introducing the lyptus species of wood to their customers in 2005. Lyptus is

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a naturally-occurring hybrid of two species of eucalyptus trees that is grown and harvested on sustainably-managed plantations in South America. Growers can harvest lyptus in as few as 15 years, compared to 50 to 70 years for other hardwood species. The species is as durable as maple, looks like mahogany, and Showplace remains one of the few cabinet manufacturers offering it. “Lyptus gave us a good ecologically-friendly product that our dealers loved because they could offer something fairly exclusive,” Korsten said.

But even major developments such as inset cabinets, painted cabinetry,

and new exciting exotic species are game-changers only for a limited time in this competitive marketplace, Korsten said. “We adapt to things and then our competitors can see what we’re doing and they can duplicate it,” he said. “It can be a game-changer for a short period of time and then it changes the game for everyone. Our competitors are watching us just as we’re watching them. Nobody wants to be left behind.”

The pace of new product introduction slowed after those first few years of

the recession and the bursting of the housing bubble, Korsten said. The company had to make sure its dealers processed and understood the many changes to its catalog. “We had been strongly committed to product development for several years,” he said. “We needed to cool our jets just a little bit so the dealers could absorb everything that we had put out there.”

Serving the Customer Tom Allen, Showplace director of dealer sales, paraphrased a saying used by his boss Tony Bour, when it comes to the benefits of becoming a Showplace customer. “Product and price have never really given us a competitive advantage because anyone can copy product and price,” Allen said. “Showplace’s real difference is our people and the programs we put in place to partner with our cabinet dealers.”

Allen manages the 28 independent sales representatives working nation-

wide through 17 agencies. The representatives work on a straight commission and may sell other cabinet lines, but not from companies that compete directly

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with Showplace’s products. From the beginning, Showplace has set up its dealer sales in this manner, and the benefits have been substantial. With sales representatives across the country, Showplace went from regional cabinet manufacturer to national player almost immediately after opening its doors.

Dealers stay in regular contact with Showplace and take advantage of

Internet-based webinars to learn about new products and developments, but nothing takes the place of meeting with Showplace customers face to face, Allen said. He books about 18 trips a year to visit the more than 600 Showplace dealers. “I love to get out and be in front of the customer. It’s a pure joy,” he said.

The kitchen cabinet dealers who sell Showplace cabinets often set up their

showrooms and sell good-, better-, and best-quality cabinet lines, Allen said, with Showplace in the better or best category. The company’s strength is its ability to do almost custom work on a semi-custom budget. “This economy has really changed the buying public out there,” Allen said. “Value is more important to the consumer. Right now we’re gaining a lot of market share from the high-end custom companies. Showplace’s strength is that we do modifications to a product that formerly only custom people did and we do it at an affordable price point.”

Product developments such as inset cabinetry and the Sherwin-Williams

custom color program appeal to dealers and homeowners because they can customize their cabinetry to their exact specifications. “That’s afforded us the opportunity to take the business that the custom guys used to get,” Allen said. “These homeowners are the people who want value, but they still want quality. They don’t want to spend any more than they have to but they will spend to get what they want. And that’s where Showplace fits in.”

Another aspect of the company that appeals to dealers is Showplace’s

employee ownership program. “So many of our competitors today are owned by big corporate conglomerates that are traded on Wall Street,” Allen said. “They can be more interested in making Wall Street happy than their customers happy. Being employee-owned, we’re most interested in making our customers happy.”

Allen sees some exciting developments in the company’s second decade,

particularly in the cabinet refacing market. Whereas companies who only do cabinet refacing can serve customers who want a straightforward refacing of

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their existing cabinets, Showplace can accomplish the same job as well as produce matching tall cabinets, new wall cabinets or even a mantle range hood in the same wood species.

Showplace has also taken advantage of some management decisions at

other major manufacturers to pick up additional independent sales representatives and upgrade the company’s sales force. The company’s ability to weather the economic recession and spring back when it turns around is due to leadership at the top, Allen said.

“That’s one thing about working for Tony,” he said. “He has a vision—he

sees things coming. Showplace knew the slowdown was coming, and was able to position itself going into it very well.”

Training and Promotional Support

Training programs are another way Showplace serves dealers and provides its

customers with the tools needed to make the most of the company’s products. In the early days, Showplace offered just two training programs and used whatever meeting room was available to hold the sessions. Starting in 2006, the company opened a training facility in Showplace Plaza, a retail center just west of the Harrisburg plant that also contains a Showplace Kitchens showroom. The state-of-the-art facility has amphitheater style seating and can accommodate 36 people. Currently, Showplace offers seven training programs, ranging from classes on Showplace product knowledge to classes on selling strategies and advanced cabinetry and room design. In 2011, more than 430 people received training at the facility. In addition, Showplace trainers reached 177 more people in programs delivered in the field. Dealers only pay for their transportation expenses to visit the Harrisburg facility for training. Showplace pays for the sessions and for local lodging.

Providing these training opportunities to dealers complements and

expands on the information Showplace provides in its catalog, according to Lori Seykora, who directs Showplace’s training program. “We teach them all we can about the flexibility of our product, things you can’t just get from the book,” she

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Randy Pooley addresses a rep meeting in the Showplace training facility.

said. “They get the most current, up-to-date information and it gets them revved about selling the product.”

Popular aspects of the training for dealers are meeting the people they’ve

spoken to on the phone and touring the production floor. “If you want to get dealers excited about your product you need to get them back to the factory where the product is built,” Seykora said. “They take a plant tour and sometimes see their product going down the line. They also get to see the customer service people they deal with, the credit people, the sales people—it’s like one, big group hug.”

An aspect of the tour that impresses dealers is the atmosphere on the plant

floor when they are touring the facility. “The dealers always ask us if we told the plant folks that they were coming and they needed to act happy,” Seykora said. “I tell them our plant workers are too busy to worry about that.”

Showplace also offers Internet-based training programs in the form of

monthly webinars held through a restricted online-video account. All Showplace dealers are welcome to sign in and watch the webinar, presented as a half-hour PowerPoint slide show, which remains viewable on the restricted site for dealers who couldn’t watch at the time of initial presentation. These quick webinars allow Seykora to focus on new offerings or elaborate on one of the features of a

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Showplace product. “If I hear from customer service that people are interested in the ins and outs of inset cabinets or our ColorSelect, we’ll develop a quick webinar on the topic,” Seykora said. Dealers can e-mail or call with questions after the presentation and Showplace will e-mail the question and answer to everyone who had signed in to watch the webinar.

Seykora said these services provided to dealers, and the commitment to

excellent customer service, are what makes Showplace stand out as a cabinet company. “What made Showplace shine is that in every department the dealers’ needs come first,” she said. “If we have to step out of our business plan to take care of them, we do it, because they are who has made us. It’s not a decision to do that. It’s just business. It’s not rocket science.”

When she hires people in her customer service department, Seykora looks

for job candidates that can embody that attitude. “It’s not easy to teach, you have to find people who have that mindset,” she said. “I can teach them cabinets any day, but I can’t teach them to have empathy with their customer. They have to come with that. Our customers come first and my folks in customer service know what I will do for our customers and they follow that lead.”

Showplace also makes a commitment to help their dealers advertise their

services and products, an especially important perk during the business doldrums caused by the economic recession. Scott Korsten, director of marketing,

Bill Retterath gives Showplace dealers a tour of the production floor.

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said this practice of cabinet manufacturers helping dealers advertise and promote themselves is not unusual, but that Showplace takes it a step further. In general, an amount equal to a certain portion of a dealer’s sales is placed in a co-op fund with the manufacturer for the dealer to use to help pay for purchasing ads in local media outlets. Most cabinet companies will use the co-op monies to pay for 50 percent of an advertisement’s cost. Showplace had offered the same percentage split, but during the recession has allowed co-op funds to pay for 90 percent of the price of qualified advertising. It’s a big incentive to engage in some business promotion, according to Korsten. “Basically, we’re saying we’ll pay for your advertising,” he said.

Just as Showplace made changes to its business to accommodate the reces-

sion and promote its products, so must its dealers, Korsten said. “Our core philosophy is to help the dealers promote themselves,” he said. “In any given community, the dealer is the known brand. It’s not the kitchen cabinet brand they sell, it’s the people that know and run the business. We want to help dealers to get people to walk through the door. And if we’re giving them a good product and service and we’re not priced wrong, we’re going to get our fair share of the business.”

Showplace helps with this promotion by making all of its photographs

available to dealers for use in advertising and even as graphics on the sides of their delivery trucks. The company also delivers posters, window clings, counter signs and other visual aids to dealers free of charge so that the dealers can use them to advertise sales on Showplace cabinets. While common in other retail settings, Korsten said the cabinet industry and kitchen dealers weren’t familiar with these types of sales and promotions until this recent recession. “Throughout history, the cabinet industry had never put cabinets on sale,” he said. “This recession was different. We’ve had to do things we had never done before.”

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Showplace Customers Speak Out As director of dealer sales, Tom Allen stresses the Showplace commitment to excellent customer service. When approaching a new dealer to take on the Showplace product, Allen will direct them to videos of dealer testimonials on the company’s website, but will also give them a list of current dealers to call and ask about their experience with the company.

“I don’t have my pet dozen I send them to,” he said. “I’m glad to give them

a list of all of my dealers and let them hand pick.”

Allen feels this confident in the company’s reputation with its customers

because Showplace develops relationships with its dealers. “We listen to them,” he said. “It isn’t rocket science: Produce a good product at a good price and listen to what your customers’ needs are. They will be fair with you as long as you’re fair with them.”

Showplace customers have gone on-record about their interactions and

experiences with the company through testimonials videotaped at various national events, and at the Showplace offices. Scott Korsten said the company’s customers are invited to provide their comments on Showplace in a freewheeling discussion that can range from product design to delivery. A theme emerges from the testimonials, and it’s no surprise that customer service and attention to dealer needs are topics that come up frequently.

Meghann Westover from C&C Custom Interiors in Marshall, Minnesota,

appreciates the one-on-one attention she receives from customer service employees. “Everybody’s willing to help,” she said. “They’re very friendly and they talk like they’ve known me for years. I know all of the customer service people by first name and they know me when I call because I call them so often. They are so friendly and so nice to talk to and so helpful. If for some reason they don’t know the answer to a question, they put me on hold and get the answer right then or I get a call five minutes after I hang up the phone.”

Showplace understands that the company is working as a team with

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the dealers, said Raymond Wiese, from the Wiese Company, Sherborn, Massachusetts. “I think Showplace does a really good job of not having a line between the dealers and the factory,” he said. “In a sense, we’re in a partnership and I always feel that way when I call. Whenever I have questions I always feel like those things get resolved in a mutual way so it feels more like a partnership than just a transaction.”

A major part of customer service is ensuring a cabinet order arrives on-time

and complete. Showplace, and its trucking partner Dakotaland Transportation, excel in that area, claim the dealers.

“With Showplace, their delivery time and schedule are so good that we

book our installs the day after we’re told the truck will be there,” said Mark Rohrich, Carhart Kitchen and Bath, in Pierce, Nebraska. “And that takes a lot of guts to do. It’s a little risky because a lot of times you have electricians, plumbers, and floor people and, if you end up not getting the kitchen on Wednesday, you not only disrupt the customer’s life, you disrupt scheduling subs.”

Bob Hostetler, from 4 West Cabinetry and Wall Beds in Kalispell,

Montana, credits Showplace and Dakotaland for their commitment to giving modest dealerships in remote parts of the country as high a priority as larger dealerships in metropolitan areas. “The delivery with Showplace shows their dedication to small dealers,” he said. “You can just consistently count on them and count on the delivery week and count on them to come when they say they are coming.”

Hostetler recalls an instance when a Dakotaland truck with half a trailer

full of Showplace cabinets was blown off a windy stretch of road in rural Montana a few years earlier. Dakotaland quickly sent another truck to take the cabinets the rest of the way. “I heard out of that half a truck there were three to five cabinets that had to be rebuilt,” he said. “It tells us a lot about the packaging and the conscientious drivers.”

John Priest, Tri-State Kitchens in Dubuque, Iowa, was one of the first

dealers to sign up with Showplace and has enjoyed seeing the company grow and expand. “We’ve come a long way with them and Showplace has come a long way to be where it is today,” Priest said. “Their offerings have really gone

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above and beyond what we’ve ever expected them to be—the number of new product offerings, the styles, wood species, finishes, hinges, and drawer tracks. They’re just always looking for ways to make the product better.” Priest also takes advantage of the videos Showplace provides to all dealers to run 300 television commercials each month on local television cable networks. According to Priest, these videos “are very professional and top-notch all the way.”

Showplace’s willingness to change and add to its product line based on

dealer suggestions impresses Kathryn Prater, from Standard Kitchen and Bath in Knoxville, Tennessee. When the dealers asked for custom color options on cabinetry, Showplace responded. “Coming out with the custom colors is huge,” Prater said. “I was getting ready to do a turquoise blue island and I would have had to go with a custom line.”

Laura Wallace from Southwest Kitchen and Bath in Tucson, Arizona,

cites Showplace’s flexible design options and wide variety of wood species and door styles as reasons she enjoys working with the company. But she credits Showplace’s refacing program, Renew, for keeping her company afloat in the recession. “One of the ways we’ve been able to adapt to the economy is with refacing,” she said. “Honestly, I think it has saved our business. The refacing business has almost replaced what we used to do in new construction.” The budgetconscious customer at her business can reface existing cabinets with Showplace, but also order new complementary cabinetry as well. “It makes our lives so much easier. We can just mix and match,” Wallace added.

Whether the Showplace dealers praise the company’s products, promo-

tional support, training or customer service, their comments underscore the importance of the mutually-supportive relationship between the cabinet manufacturer and the kitchen dealership. Bob Hostetler, from 4 West Cabinetry, sums it up best. “Life is kind of tough enough as it is,” said Hostetler. “If you can work with someone you enjoy working with, that makes life a lot better.”

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Workplace Environment Rewards Employees To help its employees take care of customers, Showplace provides a workplace where all staff will be happy and proud to work. When itâ&#x20AC;&#x2122;s time to break for lunch, these employees have a few choices to make. If they have paid the nominal $10 per month membership fee, they can use the time to get in a quick workout in the on-site fitness center under the guidance of a personal trainer. They can also use the center before or after work. Or, they can visit the full-service cafeteria, which is on-site as well, and choose from hot entrees and soups, a salad bar or a made-to-order sandwich or wrap. They may have brought their lunch from home, and in that case, they can sit with their fellow employees in the large sunny dining room just outside the cafeteria.

The facilities are a big change from the early days at Showplace, when the

break room contained a couple of wobbly chairs and a donated refrigerator. The cafeteria, dining area and exercise facility were all part of Showplaceâ&#x20AC;&#x2122;s fourth expansion of its Harrisburg plant, which took place in 2007. Renee Storm, director of human resources, said the facilities are a benefit to employees, especially since the plant is not close to large commercial shopping and dining areas.

The cafeteria at the Showplace Wood Products Harrisburg headquarters.

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The fitness center at the Showplace Wood Products Harrisburg headquarters.

“There aren’t a lot of places to eat around here, so most of our employees were running to the gas station and getting something to eat and running back within a 30-minute lunch break,” Storm said. “We thought it would be nice to provide as a benefit the opportunity for our folks to eat right here on site so they could have a more relaxed lunch.”

Making the Showplace workplace attractive is “just part of our culture,”

Storm said. “It’s a nice thing to do for our employees and it also helps with staffing and retention. Happy people make happy work.”

Another employee perk added in 2010 was a medical clinic at the plant

staffed by a physician’s assistant who offers basic healthcare services to both employees and their dependents. Showplace also sponsors smoking cessation programs and periodic free health fairs.

Combined with the exercise facility and healthy eating options at the caf-

eteria, these benefits underscore Showplace’s commitment to employee wellness. “We’re promoting that for two reasons: first, to maintain a happy and healthy workforce, but also to curb some of the rising costs of health insurance.”

Showplace’s efforts have not gone unrecognized. The company’s health

insurance provider, Sanford Health Plan, named Showplace the “2007 Healthy Employer of the Year.”

Employees recognize and appreciate their company’s efforts to make a

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healthy and appealing work environment. Lisa Kolbrek, production control group leader, summed it up best: “I think our benefit package here, with the free checkups, the free health fairs, the fitness center and the cafeteria—you’re just not going to find that anywhere else.”

Leaving a Legacy The nine original internal managers and shareholders in Showplace Wood Products have felt the adrenaline high and the nervous apprehension that are natural companions to the entrepreneurial spirit. Long hours, hard work and significant financial risk are the byproduct of the desire to make something—in their case, a business that provides beautiful cabinetry at an affordable price. More than a business, their goal was to create a place that honored and respected workers at all levels, where management decisions stayed local and were made with only the customer and the company’s health in mind. When this group stands back and looks at the business they created, they can hardly believe their achievements.

From the perspective of the outside investors and board members, being

part of the Showplace success story fills them with pride but also thankful admiration for the managers and employees who made the company an industry leader. The hourly production staff members take great satisfaction in their work as part-owners of a cabinet company that serves customers nationwide.

Tony Bour and the eight investor/managers with whom he started

Showplace share a bond that has remained as strong as when they first shook hands and agreed to start the venture. Their attitude toward the company they helped build encompasses more than pride. They see Showplace Wood Products as their legacy, a company built on long hours, hard work, trust and teamwork that they can eventually pass on to the next generation of managers.

The group doesn’t take lightly the task of managing a multi-million dollar

company. “None of us were gray when we started this company,” Lori Seykora joked. “We feel responsible for our employees. You can lose sleep when you have responsibility for all these employees.”

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Tony Bour addresses staff and guests during the ribbon cutting of the new expansion in March, 2008. To his left is then-governor Mike Rounds.

Bour said Showplace is well-situated for the future, with hundreds of

employee-owners at all levels focused on making the best product and creating satisfied customers. With this approach, the company, and everyone dependent on its continued success, will flourish. Like any true entrepreneur, Bour takes pride in the many lives his company has influenced. Hundreds of employees, sales representatives, suppliers and dealers, as well as all of their dependents, rely on Showplace Wood Products’ continued success either directly or indirectly. Said Bour, “If you start a business and grow a business and then step back and look at all the lives you touch, it’s huge.”

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Beneath the reception areaâ&#x20AC;&#x2122;s decorative panels, a support wall built in early 2000 contains signatures of employees, dealers, sales reps, suppliers, and others as a demonstration of their commitment to Showplace.

The 2002 expansion of the Harrisburg facilities included the additional office/administrative space shown under construction here, as well as significant expansions to the plant.

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Showplace employees take time to celebrate the milestone of the 100,000th cabinet in February, 2002.

In an act of patriotism, Showplace employees ask to gather and commemorate the exact time of the one-year anniversary of the 9/11 attacks on America.

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Lyptus, an eco-friendly wood species, is introduced in May 2005 and becomes a significant product offering. One of the first lyptus kitchens is pictured here.

This 2008 aerial view shows the Harrisburg plant at its current size.

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Showplace hosted a tour during the annual management conference of the Kitchen Cabinet Manufacturers Association September, 2004.

Showplace had a significant presence at the national Kitchen and Bath Industry Show, held in Chicago in 2010.

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U.S. representative and senate candidate John Thune met with Showplace employees in October, 2002 prior to his successful 2004 election to the U.S. Senate.

SD Governor Mike Rounds thanks Showplace for its economic impact, having injected $192 million into the local economy through March, 2008.

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Rustic Alder (introduced in 2006) graces this kitchen, updated with Showplace Renew cabinet refacing (a 2009 introduction). The refacing process (above) took the dated oak kitchen (at left) to the attractive setting shown below in minimal time.

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Custom Murphy Wall-beds were offered for the first time in 2010. Designer closets joined the lineup in 2008 to provide products for an area of the home not previously addressed.

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Several products not originally offered by Showplace grace this award-winning kitchen, including a painted finish (introduced in 2003), inset cabinets (2008), and the paint-grade wood offering (2010).

Itâ&#x20AC;&#x2122;s now a prominent national cabinetry brand, with 600 dealers across all 50 states. But in 1999, Showplace Wood Products was nothing more than an audacious vision shared by a small team of colleagues, a vision that would quickly become reality, with little more than mutual trust, hard work, and a handshake. This is the story of Tony Bour, a man with a remarkable track record for building companies from the ground up, and the seasoned team that bet it all on an uncertain future. With the backing of bold investors, the Showplace factory quickly sprouted from the South Dakota prairie, then grew, and grew more, into two plants employing more than 500 people and producing 850 cabinets every workday. Along the way, Showplace had to weather a crippling industry downturn, adapt to a changing marketplace, and make a transition to employee ownership. Today, more than 1.5 million cabinets later, Showplace is positioned well to serve a recovering economyâ&#x20AC;&#x2122;s growing demand. It is a company dedicated to its employee-owners, and to its communities. Its history is an inspiring story of achievement and perseverance, and it was all built on a handshake.

To learn more about Showplace cabinetry visit ShowplaceWood.com.

Built on a Handshake |The Story of Showplace Cabinetry

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