Annin Flagmakers' new-wave leaders

By Patricia Olsen

Before they took over as stewards of the venerable company, the sixth-generation members were mentored by two veteran non-family executives -- who initially had planned to buy out the family.

If you own an American flag, chances are it was made by Annin Flagmakers in Roseland, N.J., the oldest and largest flag company in the U.S. The company has garnered about 50% of the U.S. flag market, which varies between $150 million and $200 million annually, says Carter Beard, 47, who has been the company’s president and CEO since 2011. He and his second cousin, Sandy (Dennis) Van Lieu, 46, the senior vice president of mass-market sales, are the sixth generation to take the reins. They trace their shared lineage to their great-grandfather Louis Annin Ames, whose two daughters married a Beard and a Dennis, respectively.

A storied history

Annin flags have played an important role in countless memorable events. The company made the flag planted on the moon by astronauts Neil Armstrong and Buzz Aldrin in 1969, the one raised on Iwo Jima in 1945 and the one put up by rescue workers at Ground Zero in September 2011, to name just three. You’d think Beard might tire of being asked what it’s like to lead such a venerable company, but as Annin’s forthcoming corporate history attests, he is passionate about researching—and educating the public about—the family heritage. “Sandy and I take a lot of pride in being the sixth generation of the Annin family to work here,” he says. “We get to play an integral role in making a product that has powerful significance for many people.”

Alexander Annin started it all in 1820 when he opened a ship chandlery in Manhattan at age 23, fashioning tools and garments for sailors and sewing flags for merchant ships. His sons Edward and Benjamin, who took over in their teens, are credited with founding Annin Flagmakers in 1847. Their younger brother, John, eventually joined them and the three wasted no time in branching out. The company supplied flags for the Mexican-American war in the mid-1800s and for the Civil War in 1865. Around this time, an Annin sister married an Ames and gave birth to the aforementioned Louis Annin Ames, the third generation to lead the company.

The marriages of Ames’s daughters led to Beard’s and Van Lieu’s eventual arrival at the company two generations later, along with another cousin, Randy Beard III.

Van Lieu has vivid memories of visiting the factory as a child, especially on weekends when her father would take her and her two sisters there. The youngsters would find shopping carts filled with fabric for making flags and commandeer them for races. (Today Van Lieu’s sisters work in other fields.)

In high school Van Lieu worked at Annin as a file clerk and receptionist/switchboard operator, as well as a customer service representative. “But my father and I always believed I should get experience outside the company,” she says, so she also worked as a dental assistant and legal administrator at a law firm. After graduating from Lehigh University with a degree in sociology, she got a job as a recruiter at U.S. Testing Company, hiring staff to perform nuclear power and fossil fuel inspections, and quickly became a department head. She wasn’t happy there, however, so she spoke to her dad about a job at Annin and joined the family business in 1990 at age 24.

“We decided I should move around the company, so I started in HR and moved to production planning and then purchasing,” she explains. “Then I became vice president of logistics and in 2008 moved into sales as the account manager for Walmart.” Along the way, Van Lieu obtained a manufacturing degree and a master’s in business.

Beard shied away from working in the family business, even during summers as a college student studying economics at the University of Richmond. “I never intended to work at Annin until the fall of 1988, when George Bush visited,” he says. Beard helped the Annin team prepare its factory in Bloomfield, N.J., for the visit of the first President Bush, who was running for office at the time. “The next day, I started work in our Verona [New Jersey] location as an assistant sewing machine mechanic—and never left.” He worked in or led numerous departments, rising to vice president of manufacturing and of operations before taking over as president and CEO in 2011. “I may never have planned to work at Annin, but now I find it hard to imagine not working here,” he notes.

Neither Beard nor Van Lieu took over immediately when their fathers retired. Rather, an important chapter in the company history provided them with top executive training and armed them with the skills to meet the challenges of today.

Transitioning to the sixth generation

In the late 1990s, Randy Beard II (known as Randy Sr.), Beard’s uncle and Van Lieu’s cousin, decided to retire from his position as Annin’s president. (He has been chairman of the board since then.) In 2000, just as Beard’s and Van Lieu’s fathers, Lee Beard and Jack Dennis (who became co-presidents when Randy Sr. retired), were thinking of doing the same, they received a phone call from that proved timely. Joe LaPaglia and Lindley Scarlett, two savvy executives who were familiar with the company, wanted to buy it. Annin fit well with Scarlett’s deep patriotic feelings, and he convinced LaPaglia, a former colleague at Faber-Castell, an office and art supply company, that it was a good deal.

The Annin co-presidents declined the buyout offer, but LaPaglia’s financial expertise and Scarlett’s background in strategic planning and sales and marketing were quite appealing. The four struck a deal in which the outsiders would run the company for a number of years and mentor the sixth generation until the three young family members were ready to take over. (Randy Beard III, a cousin of Carter Beard and Sandy Van Lieu, handled Annin’s national sales accounts at the time. He passed away at age 50 in 2009.)

Annin had acquired Dettra Flag Company, its largest competitor, in 1998, and the outsiders’ extensive business experience would come in handy. Other 30-somethings might have taken umbrage at the decision to bring in outsiders, but Beard and Van Lieu were all for it. Carter Beard says he welcomed the chance to hone his skills under the two older men. “I was glad,” he recalls. “I was only 35 and not ready to be president or run the company. I felt I needed more seasoning, a little more experience. We had bought a large competitor and were ‘borrowed up.’ We hadn’t had a good year, and I didn’t feel comfortable taking over the company in that situation. Joe and Lindley were in their mid-50s and had 30 years of experience.… It seemed like the right combination of a financial guy and someone with a sales/marketing background.”

All three cousins got a chance to interview the executives. “Under different circumstances,” Beard acknowledges, “if we were smaller or had not recently bought a competitor, maybe I would have been comfortable enough [to lead the company]. But I felt that having several years under these guys, I could really learn a lot.” LaPaglia became president; Scarlett was named executive vice president. When LaPaglia retired in 2008, Scarlett stepped into that position until he retired in 2011.

Scarlett had worked in niche markets for years, most recently as president of a gift business in Philadelphia, and he thought he could make a difference in marketing U.S. flags. “I just really liked the company, it was something of value and it was a nice fit,” Scarlett says.

Annin’s story is ripe for a business school case study. The plan sounded good but could have gone terribly wrong. It worked, for two reasons: Everyone was on board and there were no problem egos. Scarlett says of the sixth-generation team, “We really liked their dedication to the business, and when people are like that, you want to help develop them and spend as much time giving them the experience to make them successful long-term. I think everyone wanted to be successful, and that opened the door to learning from each other. They had to teach us part of the business, and then we taught them the other skills they needed to broaden themselves.”

One lesson the two new leaders imparted was the importance of showing customers that Annin wanted to help them grow their business. Annin actually brought ideas to their accounts and helped them develop websites, “because Annin had the sophistication to do it,” explains Scarlett. “We could keep up with all the changes happening in Internet marketing. It’s difficult for a dealer to run their business and stay on top of all the new things happening out there.”

LaPaglia updated the business software to SAP for manufacturing planning, purchasing and forecasting. The Dettra acquisition had been a bit complicated and challenging, Scarlett notes, but it was a smart decision that added to Annin’s capacity and helped the company meet the challenge after 9/11 when its dealers needed more flags.

Scarlett says he and LaPaglia were open to good ideas, and Beard came up with an excellent one: increasing sales by getting into specialty or custom flags used in advertising. The company had sold U.S. and international flags for decades, but Beard was instrumental in obtaining the new, innovative equipment that would allow Annin to produce the flags in the U.S. competitively. “It really made a difference in the business,” Scarlett says.

Beard drove the acquisition of another competitor, FlagZone, two weeks before Scarlett retired. The retiree described the effort as a smooth transition “because everyone had learned by then not to move so fast to close plants, and to take advantage of synergies.”

Annin today

Annin makes a wide variety of flags: for states, for the military and for boating and marinas. The company also is a supplier to the United Nations, providing flags of every country in different sizes. In addition, it makes custom flags and banners. During his tenure, Scarlett told the New York Times, “We even make flags that display the swastika, but only for movie studios making films about World War II.” The two main plants are in South Boston, Va., and Coshocton, Ohio, and there’s a small one in Verona, N.J. (The Bloomfield factory, where Carter Beard first became drawn to the family business, closed in 1998.)

In 2011, the company generated between $75 million and $100 million in revenues, Beard says. Van Lieu says the industry is still very competitive, even though Annin has purchased several competitors. “My generation is all about growth and investing in technology,” she says. She describes Beard as an excellent leader who’s especially good at continually building the business. They work well together, she adds. She reports that they visit each other’s offices for both informal and important talks and meet every other week with 11 executives from the different departments.

Beard is not worried about overseas competition. “Imported flags are not a large issue for us. It makes better press than the reality,” he insists. However, Van Lieu counters that if Annin doesn’t manage international competition, it will become a threat. At one point, there were a handful of U.S. competitors working against each other, she says. To encourage U.S. firms to work together, in light of the increased demand for flags after 9/11, she helped found the Flag Manufacturers Association of America (FMAA), which she chairs. The association also certifies flags that are made in the U.S.

Succession planning has not yet begun because Beard’s three children are young. Although Van Lieu doesn’t have children, the son of one of her sisters worked in the company for a summer. There’s just no telling what the future will bring, she notes. Sounding as though she’s speaking from experience, the senior vice president advises, “As a family business person, you want to expose children to the business but you don’t want to force them. You want them to come to you.”

At present, the fifth generation still holds the company’s shares. They’re split among Beard’s father, his father’s brother and sister, and Van Lieu’s father and his sister. (Each family owns 50% of the total shares.) “Carter is CEO, and I vote my family’s shares,” Van Lieu says. “While the structure may seem a little unusual, it all works.”

Patricia Olsen is a New Jersey writer whose work has appeared in the New York Times, On Wall Street, USA Weekend, Hemispheres and other publications.

 

 

 


 

 

 

Copyright 2013 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

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