Professor Roehm believes consumers still turn to trusted brands

1.19.2010 Article, Faculty News, Retail

Local firm pulls plug
Originally Posted on Saturday, January 16, 2010 | By Richard Craver
Reposted from the Winston-Salem Journal

For 89 years, and through five family generations, Douglas Battery Manufacturing Co. took pride in its motto of "Providing power to the world."

Yesterday, however, the Winston-Salem company acknowledged that the current economic downturn has done what even the Great Depression couldn't — end its run as a world-class battery manufacturer.

The company said it will stop making industrial batteries at 500 Battery Drive by March 31, eliminating 90 of its remaining 125 jobs. The move comes as part of selling its brands and designs to EnerSys of Reading, Pa., for an undisclosed price. Job cuts are expected to begin March 15.

EnerSys, the world's largest maker and distributor of industrial batteries, said it would keep Douglas' sales team, manufacturer's representatives and distributors, which include about 15 employees. Douglas will retain about 400,000 square feet of manufacturing space.

The deal does not affect Douglas Battery & Auto Care, a retail-service center with shops in Winston-Salem and Lexington. It is owned and operated by Jim Douglas and Joe Jarvis.

Charles Douglas, the president of Douglas, called the decision "bittersweet" for a company that just 13 years ago had more than 800 employees, including 600 here.

"In spite of some success in our market, due to the prolonged recession, difficult credit environment and mounting competitive pressures, we have decided it is in our long-term best interest to sell to EnerSys," he said.

John Craig, the chairman, president and chief executive of EnerSys, said that "the extensive breadth of EnerSys' product and service offerings is further enhanced by the purchase of Douglas Battery's industrial-battery business."

As for the remaining 20 employees, Douglas said that in the best-case scenario, they will "be preparing for new ventures on the property." In the worse-case scenario, they would be "winding down the operations."

"I am very pleased that EnerSys will continue to use our brands and battery designs, and I am confident that the brand's high standards will be maintained," said Charles Douglas, who will go to work for EnerSys as the Douglas brands' vice president of sales

However, that silver lining isn't much solace, knowing that the clock is ticking on the end of an era for the company and the local community.

G. Wilson Douglas Sr. founded the company in 1921, making 10 batteries a day in a garage behind the family home. The company grew up with the automotive industry, getting into the industrial battery and charge business in 1960.

By the late 1990s, it had become the sixth-largest battery manufacturer in the United States, producing more than 4 million batteries a year and more than 200,000 cells for batteries used in material handling and other industrial applications. It was generating more than $150 million in annual revenue, some of it coming from a lucrative deal to supply the BMW plant in Spartanburg, S.C.

Along the way, the company won numerous family business of the year awards, some of which were in recognition of the responsible way Douglas employees made the hazardous lead batteries.

The Douglases had plenty of chances to follow the path of many family businesses, with younger generations cashing in when too good of an offer was made. They turned them down, according to G. Walker Douglas in a 1997 article in the Winston-Salem Journal, "because of its commitment to the business, earlier generations and Winston-Salem."

However, since the late 1990s, global competition led to lower consumer demand for its batteries — and reduced need for employees.

In January 2005, the company sold its struggling automotive-battery division to East Penn Manufacturing Co. of Lyon Station, Pa. — at that time the largest privately held battery manufacturer in the world. About 200 local jobs were eliminated in that deal.

The reputation of Douglas Battery carries a significant cache even as consumers turn increasingly to private labels and store brands, said Michelle Roehm, a marketing professor and a senior associate dean of faculty at the Schools of Business at Wake Forest University.

"With the economy limiting discretionary spending, customers need to feel very, very confident when they make a purchase," Roehm said. "Brands capture and fulfill a relationship with customers so that when times are tough, purchase decisions don't devolve simply to price."

Mayor Allen Joines, the mayor of Winston-Salem, said he is saddened to see the end of a key part of a "wonderful family business."

"They are planning to keep the equipment, so hopefully they will figure out a new way of doing business that can work in this economy," Joines said.

"Even though their doors are closing soon in manufacturing, there's no doubt in my mind that their legacy as an employer and contributor to our community will carry on."