Posted on 04/13/2006 7:38:05 PM PDT by NormsRevenge
Olhausen Billiards, which has built pool tables in San Diego County since 1973, is moving its Poway factory to Tennessee to save on trucking costs and to better compete against cheap imports.
The company said yesterday that it will close its 128,000-square-foot manufacturing facility on Kirkham Court in July or August, leaving about 120 workers out of jobs. About 75 other employees, most of them in supervisory and executive positions, plan to relocate with the company.
“We're on the western edge of the continent, while 65 percent of our business is east of the Mississippi,” Olhausen President Gregg Hovey said.
Hovey said high trucking fees to transport tables to far-flung regions of the country have made it increasingly difficult to fend off overseas competitors, which can craft a basic pool table for half the wholesale cost of an Olhausen.
A truck in Tennessee can be leased for about $1.50 a mile, while a carrier in San Diego can charge from $1.80 to $2.10 a mile, Hovey said. When the truck has to travel 2,000 miles from Poway to make a delivery in the Midwest, it gets expensive, he added.
Olhausen follows the path of Buck Knives, the longtime El Cajon company that moved to Idaho to take advantage of lower wages and rates for electricity, water and workers' compensation insurance.
Local leaders said manufacturing companies such as Olhausen and Buck Knives are finding it tougher to turn out their products in California's high-priced business climate, especially in recruiting unskilled and semi-skilled workers to fill jobs.
“I'm sorry Olhausen's leaving,” said Andrea Moser, vice president of economic development and marketing at the San Diego Regional Economic Development Corp.
But businesses interested in locating to the area nowadays are “knowledge-driven industries that pay wages high enough to support the cost of living,” Moser said, adding that “very, very few” companies besides Olhausen and Buck Knives have moved out of the region in recent years.
Jack Stewart, president of the California Manufacturers and Technology Association, likewise said that manufacturers in the state typically have operating costs that are up to 30 percent higher than in the rest of the country.
“The unfortunate thing is we're losing middle-class jobs” as companies defect to other areas of the country, Stewart said.
Olhausen, which had revenue last year of $45 million on sales of 31,000 tables, is known in the billiards industry for constructing eye-popping custom tables costing as much as $40,000 apiece at retail. (Basic models start at about $1,000 wholesale.)
The company's products are also available at 250 stores across the United States.
Don Olhausen, who with his brother Butch founded the company in a garage 33 years ago, said his company could easily follow such major competitors as Brunswick, American Heritage and Legacy to overseas production plants.
However, he said the quality of the company's tables – and Olhausen's ability to keep turning out one-of-a-kind numbers with amenities such as stone frames and gold-leaf-embossed legs – probably would suffer.
“What we do is unique” in customizing tables, Olhausen said, adding that the company “may lose a little money” by keeping the business stateside in order to maintain its high standards.
Production at the Olhausen plant one recent afternoon was bustling.
Several workers were busily hand-painting table frames to a rich brown finish. A computer-programmed milling machine simultaneously carved designs on several long sections of table frames.
Stacked near a loading dock were dozens of half-built tables ready to be transported to St. Louis and other destinations in the Midwest.
Hovey said Olhausen is on the verge of selling the plant to a company that will use the space as a distribution facility. He declined to reveal the name of the buyer.
Olhausen will maintain a small presence in Poway at two other nearby buildings. Hovey said it hasn't been decided how the space will be used.
Olhausen is spending $18 million to build a 250,000-square-foot headquarters in Portland, Tenn., about 30 miles northeast of Nashville.
“It will double our space and give us the ability to produce ancillary products such as game tables, bars and recreation-room furniture,” Hovey said.
Hovey said he started looking at moving Olhausen east more than two years ago after evaluating the company's operating costs.
Besides escalating trucking fees, Hovey said it has become difficult to find workers to staff the factory line.
The company pays wages starting at $7 an hour, with average pay of $13 to $14 an hour for nonsupervisory workers. But that often doesn't leave an employee supporting a family with much more than the apartment rent.
“We can't do it (in Poway) by paying the types of salaries necessary to keep employees,” said Hovey, adding that a new home on a 1-acre lot in Portland can be bought for $125,000.
The company got its start in 1972, when the Olhausens put $1,000 down for a small pool-table company on 28th Street near Balboa Park.
Butch Olhausen had quit his $12,000-a-year job the previous year with Der Wienerschnitzel, where he helped supervise six San Diego fast-food franchises. Don had moved from Las Cruces, N.M., where he had been a college student and employee of their father's pool-table servicing company.
In their first year, from a shop totaling 200 square feet, the Olhausens grossed $60,000. They didn't turn a profit until their second or third year.
They decided to go from retail to wholesale when a Colorado dealer drove up one day and asked them for every table he could get on his truck.
Hovey said a manufacturing startup like the one the Olhausen brothers created years ago would be impossible in the region's modern business climate.
For one thing, the isolated, cul-de-sac location of San Diego would make the distribution of large products impractical, he said.
“You'll never see anyone do what we do in Southern California anymore,” Hovey said.
Business: Billiard tables
President: Gregg Hovey
Headquarters: 12460 Kirkham Court, Poway
2005 revenue: $45 million
Employees: 195
Good for them...JFK
My thoughts exactly.
Another clod of dirt on the coffin of CA economy.
Yeah, California always gets hyped as the future of America. More like the pasture.
Moser is whistling past the graveyard. The dummest person may realize that there are two problems with that assesment. A totally "service" economy is specially vulnerable to economic downturns, and ultimately unworkable; and other real businesses know without question that simply acting as the tax collector for the state by "absorbing" hidden taxes is a pact with the devil.
D'OH!
Shrug?
Trying to shrug.
Will close doors soon.
Then, they will have shrugged.
"knowledge-driven industries"
Ok, I may be naive, but just what are knowledge-driven industries? Does that mean you don't have to have much knowledge when running smaller companies?
I was born in San Diego. I went to school in Poway in 1948.I want to thank the carpetbagger senators from the east for destroying my state.
Knowledge-driven
We have a major part of the bio tech and tela communications along with the sophisticated defense
weapons, etc., etc. here in San Diego
Who cares about pool tables.
Actually, you should probably thank the folks who ELECTED those sick scumbags.
Har! Yeah, those 120 pool table employees can just go get jobs with a defense contractor.
This is an older article in PDF but I would be interested in knowing if most of it has come to pass.
http://www.cbrt.org/other_documents/ccp_press_release_final.pdf
Lot of other jobs here.
Construction is also big. There are several dozen high rise condos in just downtown alone. 25 to 42 stories high
that have gone up and several more in progress. Not counting more high rise hotels. Many high rise condos going up in my neighborhood.
Plenty of work for all. There are developments all over
the County.
San Diego is the second largest city in Calif.
I live near the downtown area.
If people want to live in large homes with two cars that is their problem.
I have always had to support myself. I live in a 1 bdrm apt. and never owned a car. and I am still alive.
I love city living.
Also for those looking for work out of the tech area, there is ship building. The ship yards have contracts
with the Navy and other for years and years.
There is a large list of work if people want it or apply themselves.
I think that's what the guy was talking about when referring to the middle-class jobs leaving.
Pretty soon there will be nothing gardeners and scientists in SD.
A few leave and new ones come in only some folks don't
like putting up threads with good news.
San Diego also has the largest concentration of military in the world and a lot of industry that goes with it.
We also have tens of thousands in civil service doing everything from medical to legal to clerical.
I think the issue is that business environment in CA continues to worsen. Higher taxes, intrusive regulations and legislation, etc. Why stay in CA when there are better places to locate?
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