Don Banducci Speaks on the State of Yakima Racks

The Times-Standard
http://www.times-standard.com/Stories/0,1413,127~2896~2551221,00.html

BAYSIDE -- In a palatial cabin-style, custom-built home nestled among pine trees, Don Banducci seems to be doing well.

With long and graying hair, a healthy family and a pack of hound dogs running around on hardwood floors, he is the perfect example of where capitalism, and sound business sense, can get a man.
And he got it in Humboldt County through Yakima, a company he and partners built around Humboldt County and its creative and isolated way of life. When Yakima Racks parent company Watermark cited the area's infrastructural limitations as a reason for its decision to relocate to Portland, Ore., Banducci wasn't buying it. The airport's limitations and an inability to attract talent to this area were high on the list of the company's reasons to move.

In 1979, Banducci and his business partner at the time, Steve Cole, bought a small manufacturing company out of Yakima, Wash. Over the course of the next 25 years, they fashioned a business that took Humboldt County's quirky quality of life, Arcata's artistic character and their own love of the outdoors and made it into a $25 million dollar a year business.

Yakima Racks featured a culture that was unique and relaxed in the business world. Upon entering their headquarters in Arcata, one was immediately knew this was no ordinary atmosphere. According to Banducci, their decisions weren't entirely based on the bottom line, but on making a good product and making a go of it in Arcata.

Yakima, by Humboldt County standards, was enormously successful, and they did it despite the infrastructural limitations of the area. They created good-paying jobs and brought a measure of wealth to a number of community causes they supported, all while staying true to their original vision.

"We wanted to give the product personality, give the company personality, create a culture," Banducci said. "It was live in Arcata, make a quality product, take what you do very seriously and try to take yourself less so."

Ultimately, though, in 1994, he and his partners sold the business to another company, Kransco.
"This house was in the middle of being built," Banducci said. "I thought I was going to be president for life, and entertaining people from all over the world as Mr. Yakima. Then all of a sudden, here we are garnering the company to sell. It was kind of a shock."

A shock because Kransco met an asking price that at the time seemed too good to pass up. That decision to sell, however, was followed by a measure of guilt. "I was seduced by the very thing I always believed wasn't important," he said. "So there's remorse there." Kransco has a penchant for making big money, and they turned Yakima from a decent-sized local company into a well-oiled roof rack-making machine that had doubled its profits and was ripe for purchase.

Kransco shopped Yakima around to many premier companies who made offers that approached and sometimes surpassed $70 million. Finally, Watermark came in late in the bidding process and paid what many close to the situation felt was way too much -- $91 million.

In seven years, Kransco had almost quadrupled its money by lowering costs and moving the company's manufacturing to Mexico, then selling it to Watermark. Since then, Watermark has struggled and not because of infrastructural issues, Banducci said.

Those can be a hurdle to business in Humboldt County, but they are not prohibitive, he said.
Recruitment issues for Watermark, Banducci said, stem from knowledge in the industry that the company isn't doing well, and from the way the company treats the people it means to hire.

"There's a stink on the company," he said.

There's large gaps in the leadership structure, and what remains essentially a strong brand in Yakima has been buried under the numerous other brands that have since been attached. There are dozens of examples of big businesses doing well in rural areas, like Ben & Jerry's Ice Cream in Vermont, Yakima until the late 1990s, Sun Valley Floral Farms and others. These companies made a commitment to stay in a place that was conducive to their culture and did so, Banducci said. "The major reason why Yakima as a brand was so successful was because of its culture," Banducci said. It appears now that Watermark is throwing that culture in the trash, he said.

"Yakima was this amazing confluence of people and energy and market timing, and I don't think anyone realized just how good we had it," Banducci said. "In our day it was a spiritual quest to make roof racks. We were going to make the world a better place through the manufacture and marketing and use of multi-sport bike racks, ski racks, canoe racks and kayak racks and everybody kind of believed in that. ... As soon as the guys at the top say that doesn't count for anything, you're cutting the legs out from under people and the only reason they're there is to collect a paycheck."