Thursday, June 20, 2024

Shurtape binds Hickory’s Shuford family

Photo of Jim, left, and Stephen Shuford by Mike Belleme

By David Perlmutt

Like many business owners facing the worst recession in decades, brothers Jim and Stephen Shuford became crisis managers as consumer confidence, net worths and jobs began to rapidly vanish. It was early 2009, and their Hickory-based company, Shurtape Technologies, had recorded a 20% decline in sales the previous year, a rout that wasn’t unusual for U.S. manufacturers rocked by the economic downturn. Yet amid the despair of the Great Recession, the brothers found opportunity when their  largest customer — an Ohio-based tape distributor that did $75 million of annual business with Shurtape — was suddenly placed on the auction block by its German owner.

The Shufords decided they had to make a bid or risk losing a vital chunk of their business. One big challenge loomed: They had to line up bank debt to finance the deal. In a normal economy, bankers would rush to work with the Shufords, fifth-generation members of a blue-blooded North Carolina manufacturing family. But these weren’t ordinary times. About 15 banks turned the brothers down before they signed agreements with four lenders.

“I went home and told my wife and kids, ‘This deal is either going to be the best thing that ever happened to us, or the worst,’” says Jim Shuford, chief executive officer of Shurtape’s parent company, STM Industries. “To double down in ’09, when everybody’s running for the hills, we knew it was a really big swing at the plate.”

The gamble paid off: Revenue has more than doubled since Shurtape’s 2009 acquisition of Ohio-based Manco Inc. and is on pace to reach about $650 million this year. The company ranks second in consumer-tape sales, trailing 3M Corp, the St. Paul, Minn.-based industrial-products giant. With roots dating to the 19th century, Shurtape remains an important economic force in the Hickory/Lenoir/Morganton metro area, which has lost 20% of its manufacturing jobs since 2007.

Over the years, Shurtape’s array of sticky products has patched a plane mauled by a bear, repaired broken fingernails, boats and cars, and rescued brides from embarrassment by shoring up wedding gowns suddenly splitting at the seams. Its tapes have saved thousands of DIY projects and kept tattered wallets and briefcases from finding trash cans. High-school students compete for scholarships by fashioning stunning prom dresses and tuxes from designer Duck Tape, offered in 30 colors and 70 patterns.

There are hundreds of intended uses, too. The company makes more than 650 different types and colors of tape that serve the packaging, painting, HVAC, construction and other industries under names including Shurtape, FrogTape, T-Rex and ShurFlex. Traditional uses include sealing heating and cooling ducts and blocking moisture from crawl spaces and windows. There are tapes that glow in the dark, seal boxes, fix cracks and pry lint from clothes — cloth tapes, paper tapes, aluminum-foil tapes, plastic and vinyl tapes, and double-sided tapes.

“If you need a tape to stick two objects together, we make it — or we can figure it out,” says Jim, 51. He runs Shurtape with CEO Stephen, 48. Their sister, Dorothy Shuford Lanier of Bedford, N.Y., is a part-owner not involved in the day-to-day operation. In 2016, the 1,500-employee company sold 733 million square yards of tape — enough tape, cut into 2-inch strips, to stretch to the moon and back 16 times.

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Shurtape’s headquarters is a sleek, 60,000-square-foot former car dealership in Hickory that sold and serviced Cadillacs, Porsches and other luxury cars. At the 600,000-square-foot former Manco plant in Avon, Ohio — a Cleveland suburb that hosts an annual Duck Tape festival in June — subsidiary ShurTech Brands manages the company’s consumer-tapes business. At both sites, company leaders work with marketers who create demand for the products. Chemists and a brigade of engineers conceive and test new products in the company’s laboratories.

Behind the high-tech equipment is a rich history that still propels the company. As Shurtape aggressively penetrated the tape market over the last 20 years, the Shuford brothers adopted the culture they inherited from their father, Pope Shuford, and his three siblings, whose family helped transform the Hickory area into an important textile and furniture manufacturing hub.

Basic to that culture: Respect customers and employees and make every worker feel like he is an extended member of the family. Everything — including revenue and future plans — is shared with employees.

Jim and Stephen arrived at Shurtape in the 1990s, both freshly armed with MBAs and sharing a vision for the company. “We came with big ideas and an appetite for risk,” Stephen says. “But it took a lot of resilience from everyone in the organization to power through a period of substantial change.”

They are a rarity in the business world, where the average lifespan of a family-owned business is 24 years. Though 80 to 90% of U.S. companies are family-owned, only a third survive the hand-down from first to second generations. Just 12% make it to the third generation, according to Steve Miller, co-founder of the Family Enterprise Center at UNC Chapel Hill’s Kenan-Flagler Business School, citing research by Northwestern University professor John Ward.

“The further you get away from the founder — the person who took the risks — the further away you get from the original culture that made the company great,” says Ralph Griffith, who teaches entrepreneurship at Lenoir-Rhyne University in Hickory. “Around the third generation is when companies start to have tough times understanding the core of the business.”

The Shufords have been willing to adapt and change when others weren’t, says UNC’s Miller. “These guys are ones who have done a lot of things right,” he says. “They took responsibility for their own actions and decisions and leadership.”

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The Shufords’ tolerance for reinvention dates to 1880. That year, Confederate veteran Abel Alexander Shuford — wounded at Gettysburg and held captive by federal troops for two years — opened a yarn mill in nearby Granite Falls with two partners. A.A. eventually bought out his partners and named the company Shuford Mills. Meanwhile, he started Hickory’s First National Bank in 1891, its first telephone company and its first movie theater.

For the next half-century, Shuford Mills built a powerful presence in Hickory and was a leading maker of rope and twine. Then the entrepreneurial itch struck A.A.’s descendants. In 1935, grandson Harley Shuford Sr. bought Swiss Embroidery Co. in Valdese in Burke County and renamed it Valdese Weavers. It’s now the country’s largest weaver of jacquard upholstery fabrics, covering sofas and chairs by furniture makers including Williams-Sonoma Inc.’s Pottery Barn. Last May, the family sold the company to its employees.

Twelve years after buying Valdese, Harley started showcasing its fabrics on furniture frames. In 1947, he opened Century Furniture Co. in Hickory, which remains one of the world’s largest privately owned furniture makers. Most of its upholstered furniture and case goods are made in North Carolina, where the company employs more than 800 people.

In 1955, the Shufords pivoted again when Alex Shuford, Harley’s older brother and then-president of Shuford Mills, noticed that tape was overtaking twine for wrapping packages. Many World War II soldiers used masking and duct tapes to seal ammunition boxes, repair Jeeps and fashion crude bandages. So Shuford started a tape division in a corner of a Hickory yarn mill.

“There was no book on how to make tape,” Jim says. His great-uncle Alex brought people to Hickory who knew how, and “they just sat down and figured it out.” First year sales totaled $14,000.

By the 1980s, the four companies — jacquard weaving, textiles, furniture and tape — employed 4,000 workers at 19 manufacturing facilities. In 1989, Harley, then president of Shuford Mills, merged the enterprise under a holding company to oversee growth. But the overseas exodus of textile manufacturing forced shuttering of seven of its 12 mills.

Harley died in 1994, leaving majority ownership to his four children, including Pope Shuford, Jim and Stephen’s father. Two years later, the tape division — outpacing textiles in yearly revenues — was spun out  and named Shurtape Technologies. Within months, a competitor approached Shuford Industries’ board with an offer to buy the tape business.

“Tape was the least understood of the companies,” Stephen Shuford says. “Our dad was the only one of four family members in his generation directly involved in tape and textiles. The others were more engaged in weaving and furniture.”

Pope understood tape’s potential and didn’t want to sell. Likewise, his son Jim had managed tape exports for 18 months and strongly opposed a sale. He convinced Stephen that their side of the family should buy Shurtape. “We decided if anybody was going to buy, it should be us,” Jim says.

Pope and his sons matched the competitor’s offer (they decline to disclose the amount), proposing to relinquish their equity in the weaving and furniture businesses.  The board agreed, and Pope and his sons moved Shurtape and the five surviving textile mills under a new holding company, STM Industries. Tape revenue then totaled about $130 million a year, while textiles added $70 million.

Like other family members, the brothers had to abide by a company rule of working elsewhere for five years. An MBA degree counted for two. After graduating from UNC Chapel Hill in 1988, Jim joined Ohio-based Manco, which owned the Duck brand of tapes that Shurtape manufactured. A year later, he left for UNC’s Kenan-Flagler Business School and finished his MBA in 1992. He joined the tape division two years later after running his own packaging business in Charlotte.

Stephen graduated from Princeton University with a political science degree in 1991, then worked for an investment bank in Nashville. He arrived at Shurtape in 1997, just out of Kenan-Flagler. At the time, their father, Pope, was consolidating Shurtape’s yarn business as production shifted overseas. “He had a relationship with the people he employed,” Jim Shuford says. “These were all good people. They’d grown up in Hickory, so letting those employees go was very tough.”

The Shufords closed two mills and sold two more to senior management. They sold the fifth to an Austrian company. “I think we did a decent job of exiting a business that wasn’t going to be part of our long-term investment plans while minimizing the community impact of that difficult process,” Stephen says. “We never closed a textile mill that had a viable economic future.”

The 1996 equity swap left Shurtape with manageable debt, allowing the company to pursue growth. After Pope retired in 2000, the brothers borrowed more money to modernize Shurtape, installing new software and building and buying new facilities. “We were young and aggressive and had this take-on-the-world attitude,” Stephen says. “To rip out the company’s information systems as your first act gives you a sense of the risk appetite we had.”

They built a 100,000-square-foot factory in Hudson to manufacture packaging tapes and a second plant in Hickory to make masking, foil and Gaffer’s tapes. They also went on a building and buying spree overseas, opening slitting and packaging factories in China, Mexico, Peru and the United Arab Emirates during the late 1990s. In 2004, they opened a distribution center in Catawba and bought Permacel Ltd.’s arts and entertainment division that primarily made Gaffer’s tape used in movie, TV and stage productions to secure cables and lights.

Four years later, the recession had arrived, and the brothers braced the company for “a fall of unforeseen proportions,” Stephen says. By January 2009, they began laying off 20% of the workforce. Retained workers took temporary pay cuts, and the company’s 401(k) match was suspended.

Then came the challenge posed by the sale of Manco, Shurtape’s biggest customer and the company where Jim had worked. Germany-based Henkel Corp.’s Ohio operation employed 350 people at the 200-acre site near Cleveland. Shurtape manufactured its Duck and DIY tapes. “We were doing about $250 million in business a year, so losing a $75 million customer could have been a huge problem,” Jim says. Early in 2008, an Arizona company made a bid, but the deal fell through. When Henkel put Manco up for sale again, the Shufords pounced.

Jim approached 20 banks to borrow money for the deal. Most were in damage control and rejected his request. After much cajoling, Bank of America, Royal Bank of Canada, Fifth Third Bank and Prudential Insurance Co. helped finance the deal for an undisclosed price. “It’s the most transformational deal we ever made,” he says.

Since then, Shurtape has continued to expand. In 2010, the company bought the FrogTape brand from a small Minnesota-based company. Popular with painters, FrogTape uses an absorbent polymer to keep paint from seeping beneath edges. This year it invested in specialty tape companies in Connecticut and Maryland.

Both brothers live in Charlotte. While Stephen makes the hourlong drive to Hickory to oversee Shurtape’s daily operations, Jim steers STM Industries from a Queen City office. Along with their sister, Dorothy, they have a combined nine children, none of them old enough yet to work in the business.

“Positioning ourselves to pivot so that we capture new opportunities is the toughest part of the job,” Jim Shuford says. “Learning fast from our failures — and those of others — is always critical because no plan is ever perfect.”

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