Vermont Castings getting sold again....rumors

[webbie]

Bunch of talk and rumors at the show - the company is in bad shape. Rumor has it that some gas log company (Desa, Monesson) may be buying the company!

Something is happening...and in the spirit of the Drudge Report I am breaking the news......we'll see.

 

[begreen]

Sad news, but we were starting to get that feeling here. Hope it works out ok for the core business in VT.

 

[SPED]

When I went to try and look at an isle royale, the shop was mainly VC and the salesman tried to point me to one of those, I said no thanks based on the shape the company is in. He then asked me what I had heard and was interested to know what was going on...and he didn't even try to talk me into one after that, or argue that VC was in good shape. Although he did badmouth jotul, which i fully expected....

 

[webbie]

That's sort of funny they bad mouthed Jotul......I got a tour of the Jotul booth from the Jotul Prez today and also picked up some little tidits around the show...you know, gossip!

Here is one for you. The former CEO of Vermont Castings.....who actually did once save the company from ruin (before it was sold to CFM) - well, he started a stove shop in VT in order to stay busy. Vermont Castings was, of course, his main product line. Well, I'm told that he dropped VC and now handles mostly Jotul.

Jotul is doing well considering.....I mean considering that they are probably not making a dime on their stoves because the US dollar is sinking. But that is another story all together. Maybe Jotul should buy the VC foundry so they can make the castings here, and therefore avoid the fact that our money is worth nothing.

Many dealer have been bailing from VC for a decade or more. But the old CFM made up for it by getting in the builder market and BBQ's, etc. - Now that building has died, they probably took a look around and saw they had vastly fewer "real" dealers any longer.

I think the shoe will drop in the next 60 days...maybe less. Just a guess, of course. But this was a given among the rumor mill at the show, and these rumors rarely come from nowhere since it is a pretty tight circle of folks in the hearth biz.

 

[Hanko]

the dealer in Okemos Michigan who sells jotul, hearthstone, and Vc has not heard nothing about VC bing in trouble. He says he sells more VC's than the other brands. he didnt say why, maybe price.

 

[RedRanger]

This is for Craig: Even though I live close to the PE plant, I hear nothing about layoffs, or expansion, zilch!

Short of getting into the spy business, I can`t get any inkling of how they are doing. What are you hearing? Just wondering, cause I noticed that Tom Oyen`s prices on average are about a hundred bucks lower for each unit. And the factory has to ship to Washington State. Wheras, the dealer close to the factory is way higher--hmmm?

If you hear anything and don`t want to post, then pm me, I am curious if the downturn has affected my local employer. If it has , then maybe I will try again to get them to advertise on your site. For all the free blurbs they are getting, they should feel obliged to anyway.

When I was in their office a couple months ago, I couldn`t help but notice how many "suits" were employed there. Coming from a blue-collar background, that doesn`t bode well. I really hope they aren`t going to go top heavy and pay the price down the road.

 

[fraxinus]

Sad to see this (VC) once great company in trouble once again, especially after what must have been a considerable investment in American manufacturing.
The bursting of the cheap credit, speculator fueled housing bubble is certainly having a negative effect on all stove companies, but the present slump in demand may be temporary. We have almost made it through the winter of 06/07. LIHEAP funds, millions of dollars in small private donations and (relatively) low prebuy prices last summer have enabled us to scrape by this year. Next year and beyond will be a different story. Wood heat will become a necessity for many, many people. Currently, there is a bill (don't know its status) in the Senate which would give a $500 tax credit for the purchase of EPA stoves. At the same time, many states are looking into wood heat for schools and other public buildings. Of course, if the collapse of the US housing market and international credit markets manages to plunge us into a world wide recession, the price of oil will once again drop, undercutting any investment in alternative energy just as it happened after the first oil shock in the 70's.

 

[webbie]

Good points, although I doubt the new VC made any investment in American manufacturing. Remember that they took it over because it was failing and they (ontario teachers pension) had already lent them money! So in effect it was foreclosed upon with the hope that money could be made or at least the union be made whole.

What it NEEDS is an investment in American manufacturing, IMHO - meaning a company that actually wants to follow the original creed. A big part of VC was their relationship with the ma and pa shops, one of which I owned. We helped each others. They made a decision not to stand behind us, while many other manufacturers (jotul, travis, etc.) made the decision to continue to work with dealers.

I think that is what is sinking them in the end. When push comes to shove, the dealer is not going to put a lot of stock in a company that has not protected the dealer to some degree. Also, the tendency to want to be everything to everybody often fails for high end companies. That may be the case with their pre-fab builder boxes (majestic) big box BBQ's, gas logs and other items. The low end can be a cut throat business.

My rumor sources are folks that have been in the biz for 30 years including some who worked for VC. I heard the rumor from at least three people, two of them unsolicited - folks who asked me if I heard! So I do give it a fair amount of credence. Also, it is fact that they closed the plant for the entire month of march and also had an online auction for a vast amount of inventory. Then there is the parts price increase which has customers and dealers shaking their head.

My guess is that companies like PE, Jotul, etc are at least treading water. They do not have all those other businesses in the building market, etc. - remember that VC also made Harman castings, etc. so their subcontracting biz has to be hurting too.

FYI, a visit to Jotul, Travis, Woodstock, etc. will not find you any suits - not a one!

 

[savageactor7]

Huh? I've always heard they were very good stoves...but could never find any to look at when we were in the market to buy. Just say'en I don't have any dog in this fight but in general I accept that the more competition you have in any product the end result is usually a better product at a more affordable price. Too bad for VC hope they can overcome this downturn.

 

[begreen]

VC has some good stoves in the catalytics and others that are fussy and turning into high-maintenance units after a few years. Their inserts have earned the best reputation either.

I agree with Craig's assessment and hope they can refocus on just stoves and high-end foundry work. They were a great company back when we owned a VC stove. Actually, given the low state of the dollar, I'm surprised that European countries aren't subcontracting VC to make parts for them.

The story from a local perspective:
http://www.rherald.com/news/2008/0221/Front_Page/f03.html
(broken link removed to http://www.timesargus.com/apps/pbcs.dll/article?AID=/20080222/NEWS01/802220388)

 

[SPED]

That's sort of funny they bad mouthed Jotul......I got a tour of the Jotul booth from the Jotul Prez today and also picked up some little tidits around the show...you know, gossip!

Here is one for you. The former CEO of Vermont Castings.....who actually did once save the company from ruin (before it was sold to CFM) - well, he started a stove shop in VT in order to stay busy. Vermont Castings was, of course, his main product line. Well, I'm told that he dropped VC and now handles mostly Jotul.

Jotul is doing well considering.....I mean considering that they are probably not making a dime on their stoves because the US dollar is sinking. But that is another story all together. Maybe Jotul should buy the VC foundry so they can make the castings here, and therefore avoid the fact that our money is worth nothing.

Many dealer have been bailing from VC for a decade or more. But the old CFM made up for it by getting in the builder market and BBQ's, etc. - Now that building has died, they probably took a look around and saw they had vastly fewer "real" dealers any longer.

I think the shoe will drop in the next 60 days...maybe less. Just a guess, of course. But this was a given among the rumor mill at the show, and these rumors rarely come from nowhere since it is a pretty tight circle of folks in the hearth biz.

Craig, I thought it was funny too, kind of expected it, like going to a chevy dealership and talking about dodge ya know? I asked the guy

"Well what specifically don't you like about jotul?"
His reply..."They engineer stuff just to engineer it, overdesign it"
I say "So what does that even mean? Is it overcomplicated? Does it break down more?"
Him "Welll ummm I used to be a sweep and you won't be able to do a complete cleaning of the inside of it yourself"
Me "See ya"

I love when people badmouth stuff for no reason with no facts to back them up, so really he had zero downsides that he could speak of, needless to say I won't buy so much as an adapter fitting from them ;-)

 

[swestall]

Well, here we are. The opportunity to take these assets and subcontract casting for the rest of the world would seem to be the best option. But then how long will the dollar actually be down? WE will have a new President very soon and after an initial blip the situation with our economy is either going to stay the same or get worse. We are very much in debt and the prospects for a great increase in economic growth are not good.
Having predicted that we would be here I am honestly sorry for the sake of the folks in VT who rely on this product for their living.
There is a great opportunity here within the core of the VC business. Perhaps the spinoff of the VT business that originally brought the stove to us. Take that notion, engineer the product to have an up to date secondary burner and you will have a winner when the market comes up again.
There are a lot of folks that will continue to turn to wood as an alternative; but there are also a lot of them who see us as nuts. From that perspective, who wants to deal with firewood, tend a fire, empty ashes, etc. Of course we know we do and there are a lot of us. The thing that happened back in the 70's tells us it can get really good when times are tough and its tend the fire so you can pay for the groceries.
The price of oil is going to keep going up for a while; the "world order" has created a market for oil in Asia that will not quit. By moving our jobs there we have both cut our employment options and created demand for the very commodity that fuels our oil based economy. And, that world demand has reached critical mass; it is going to continue and we will continue to have to figure out a way.
What's this mean for VC? It means that properly managed the core business has hope on many fronts but that is the problem: who has the funds and resources to properly manage it>?

 

[swestall]

PS: Craig, you continue to be "the man". Your contribution here and to this industry is exemplary and a great service to all involved.

 

[elmoleaf]

Offhand, it doesn't seem like woodstoves are a lucrative business. The product seems to last a long time, so once you buy one.....perhaps you replace it 20 years from now? So, not a lot of repeat business? What about new customers? Well, it doesn't seem that new homes get equipped with wood stoves.

Seems like a niche market....you can't make gobs of money with a huge stove company. But, with a lean operation creating a superior product with superior customer service, you can probably stay in business and make a living.

 

[begreen]

Craig, I thought it was funny too, kind of expected it, like going to a chevy dealership and talking about dodge ya know? I asked the guy

"Well what specifically don't you like about jotul?"
His reply..."They engineer stuff just to engineer it, overdesign it"
I say "So what does that even mean? Is it overcomplicated? Does it break down more?"
Him "Welll ummm I used to be a sweep and you won't be able to do a complete cleaning of the inside of it yourself"
Me "See ya"

I love when people badmouth stuff for no reason with no facts to back them up, so really he had zero downsides that he could speak of, needless to say I won't buy so much as an adapter fitting from them ;-)

What a yahoo. The Scandinavians tend to make very simple stoves that last a long time, in part due to their simplicity. The tops are removable if you really want to clean them out, but I haven't needed to do this so far. What I really like is that the air passages don't get clogged up ash and dust over time. That cuts down on maintenance and keeps them burning consistently. Not to say that Jotul and Morso are the only stoves with these attributes, but this guy doesn't a leg to stand on.

 

[kellog]

Sometime in the next 25 years the world will reach the Peak Oil point (production of oil will start to decline and of course demand will increase) and woodstoves will be in great demand in this country. VC needs to be sold to someone who will run it right and save the manufacturing capacity for when we need it. Not sure who that is but they need deep pockets, a lot of staying power and above all integrity.

 

[webbie]

Offhand, it doesn't seem like woodstoves are a lucrative business. The product seems to last a long time, so once you buy one.....perhaps you replace it 20 years from now? So, not a lot of repeat business? What about new customers? Well, it doesn't seem that new homes get equipped with wood stoves.

Seems like a niche market....you can't make gobs of money with a huge stove company. But, with a lean operation creating a superior product with superior customer service, you can probably stay in business and make a living.

You must be a finance person!

You hit the nail right on the head. In fact, you just described Jotul and some other manufacturers. You have to have a very lean operation with max. productivity per employee and bring costs down and down.....what has sunk many manufacturers in this business (Harman the most recent) is that they get all greedy when a good year happens, so they build and build and expand....sort of a Bonfire of the Vanities. They want to own the market! But then as soon as things cycle down, they are dead. This has happened many times in the industry.

It has now been 15 years or so since VC was even somewhat close to it's roots. Very few people enter business these days (at that level) with a DREAM, it is more about "milking the brand". They have milked this one for 15+ years and there is little left in the cow at this point. Sooner or later you have to actually build up the value again.

As to their stoves, most real experts that I know use the term "over-engineered" for VC stoves! Not many stoves on the market that have even 1/2 or 1/3 the parts count of an Encore and Winterwarm. More parts often = more to go wrong when it comes to wood stoves. Their castings are almost perfect and their enamel is the same.

It would be great is they were able to actually wipe the entire slate clean and start again with a management team that cared to the degree of the original crew. But in todays business environment, that type of "foresight" is usually not rewarded. It's a tough market and world out there!

 

[eernest4]

Sometime in the next 25 years the world will reach the Peak Oil point (production of oil will start to decline and of course demand will increase) and woodstoves will be in great demand in this country.

VC needs to be sold to someone who will run it right and save the manufacturing capacity for when we need it. Not sure who that is but they need deep pockets, a lot of staying power and above all integrity.

According to the information that I got off the internet, we have already past the Peak Oil Production Mark, it was sometime in 2006 ,I think, & production is on the decline.
Most of the "cheap" if there is such a thing as cheap oil, at any rate, the oil that they can get to without spending a lot to get to it, has already been used up.

Now , we are running on the oil that costs a good bit more to get out of the ground, & we are paying a good bit more for it.

Next year ,we will be burning the oil that costs a whole lot more & i expect prices in excess of
$4.50 a gal for no name low test.
I hope I'm wrong but I'm too afraid i'm dead right. (or at least my wallet will be dead, at those prices).

 

[eernest4]

!

 

[downeast]

Offhand, it doesn't seem like woodstoves are a lucrative business. The product seems to last a long time, so once you buy one.....perhaps you replace it 20 years from now? So, not a lot of repeat business? What about new customers? Well, it doesn't seem that new homes get equipped with wood stoves.Seems like a niche market....you can't make gobs of money with a huge stove company. But, with a lean operation creating a superior product with superior customer service, you can probably stay in business and make a living.

You must be a finance person!You hit the nail right on the head. In fact, you just described Jotul and some other manufacturers. You have to have a very lean operation with max. productivity per employee and bring costs down and down.....what has sunk many manufacturers in this business (Harman the most recent) is that they get all greedy when a good year happens, so they build and build and expand....sort of a Bonfire of the Vanities. They want to own the market! But then as soon as things cycle down, they are dead. This has happened many times in the industry.
It has now been 15 years or so since VC was even somewhat close to it's roots. Very few people enter business these days (at that level) with a DREAM, it is more about "milking the brand". They have milked this one for 15+ years and there is little left in the cow at this point. Sooner or later you have to actually build up the value again.
As to their stoves, most real experts that I know use the term "over-engineered" for VC stoves! Not many stoves on the market that have even 1/2 or 1/3 the parts count of an Encore and Winterwarm. More parts often = more to go wrong when it comes to wood stoves. Their castings are almost perfect and their enamel is the same.
It would be great is they were able to actually wipe the entire slate clean and start again with a management team that cared to the degree of the original crew. But in todays business environment, that type of "foresight" is usually not rewarded. It's a tough market and world out there!

"Milking" is exactly what has killed too many companies riding the vanity of brand Craig. It hurts to say : "you're right".
BUT: quality control, customer and dealer attention to service, marketing and pricing DO get rewarded in a free market. VC did very well in a tiny niche market ( that they actually created) with a high end, pretty, well-made product backed up by model customer service. So much so that it became a market cult. In our industry: Apple. Consumers will pay for the feeling of being in.

Before VC ( and we're talking the real VC pre-CFM Majestic and the Adamson or teachers' union crew) remember Jaguar and Triumph bikes ? Terribly unreliable machines, I know. I had a 50's Jag at Amherst. But oh the sexual thrill when the beast ran! My old V12 Jag and Bonneville with the " Prince of Darkness" Lukas ignitions that were NO VA when hot, when wet, when cold, whenever, still became cult vehicles for the obsessed. Ford made the Jag just another car. Recall Compaq ? Lukas ignitions are now in our F16's !

Wood stoves are by far the most expensive home appliance in the market. It's business Craig: you either make a product that people want, make it work, back it up, make a profit. Simple in theory, not in execution.

For stoves look over the business model of Woodstock ? Working well for them ? You'd think that the hearth industry would be making a big, very big, marketing push for wood stove products now. The industry as a whole is fragmented, not presenting a unified message of marketing their niche products.

 

[dtabor]

I saw a thing on the news a couple weeks back that VC was laying off 75 workers for a few months due to too much inventory. I had a feeling it was the beginning of the end when I heard that.

 

[swestall]

Hey All,

Still wish a buyout of US operations was feasable. Still wish someone could carve out the core and do it right. But, being a realist, I am glad I moved on when I did; at least I won't have a problem getting parts.

The two defiants I do have are still OK. They both can go one is committed for Corie, the other is on Craig's list.

 

[Eric Johnson]

Q: Why do the British drink warm beer?
A: Because Lukas also made refrigerators.

Had a Sunbeam Alpine once.........

 

[raybonz]

Q: Why do the British drink warm beer?
A: Because Lukas also made refrigerators.

Had a Sunbeam Alpine once.........

LOL I owned an MGB once and Lucas electrics are the worst I have ever seen so I totally know what you mean!

Ray

 

[begreen]

had a Jag once and lots of fun with British electrics.