The Bentley family's double transition
Passing of the baton to sixth-generation management at The Bentley Company has been accompanied by a complete change in business plan.
Closing his fifth-generation family construction business was perhaps the hardest decision Thomas H. Bentley III ever made. He also says it may have been the smartest thing he ever did. “For my son, I was much more likely to create an opportunity for him by looking forward than if I just kept looking back to history,” says Tom, 66. Just a few years after making that tough decision, the Bentleys are preparing for transition to the sixth generation with the same clear-headed, no-nonsense attitude.
Today, Tom and his son Todd, 34, devote their energies to Bentley World-Packaging Ltd., one of the top three export packers east of the Mississippi. Bentley World-Packaging began as stopgap business during World War II and then lay dormant from 1946 until Tom revived it in 1973 as a diversification move during an earlier construction downturn. The company serves more than 300 major manufacturing customers, including General Electric, Westinghouse and Goodyear, and is a major player in packaging of military shipments to Iraq and Afghanistan.
<B>A legacy of prestige</B>
The Bentley Company was founded in Milwaukee in 1848 —the year Wisconsin was admitted to the Union—by John Bentley, an immigrant from Wales who had learned the masonry trade in Middleton, N.Y. The company grew for more than 150 years to become one of the largest contractors in the state, earning a reputation for high-quality construction of historical landmarks like the Villa Louis Mansion in Prairie du Chien, the Music Hall at the University of Wisconsin in Madison and the spectacular Tripoli Shrine Temple in Milwaukee. The company’s reputation for building and restoring religious structures spread through word of mouth; by the mid-2000s, about a third of Bentley’s projects were churches.
Through its five generations, the company took on notable projects across the country, from the Cincinnati Water Works to the San Francisco Post Office, which survived the earthquakes of 1906 and 1989. The Bentley Company nurtured five generations of Bentleys through the Civil War, two World Wars and the Great Depression.
But then came the financial collapse of 2008-09. “We had over 40 competitors in the commercial construction business in Milwaukee,” Tom Bentley explains. “Even before the [downturn] in 2008, it wasn’t a very good business.” Every job attracted a plethora of competitive bids, thus driving down margins. When the downturn came, “The business was horrible,” Tom says. “There were three times as many contractors as there were jobs.”
In early 2008, The Bentley Company started to wind down the construction business. “My ancestors would probably roll over in their graves, but at the end of the day you have to do what you have to do,” Tom says philosophically.
In retrospect, Tom says, he’s glad that he made the decision to get out of construction just as the downturn gathered steam. “I was able to place my people, sell my equipment and [get] rid of my office building,” he reflects. “A year later, I wouldn’t have been able to do any of that.” About ten employees —mostly office and administrative personnel—transferred to the packaging company, representing 20% of the workforce.
Bentley says he had to sign a personal note to his bank for a million dollars to guarantee completion of all remaining projects, pay all subcontractors and service providers, and repay all loans. “I could have just declared bankruptcy, but I live in this town and I was clearly going to do the right thing,” he says. He adds that the decision has paid off; the bank has repeatedly offered him financing for other ventures, he notes.
<B>Packing and real estate</B>
Closing the construction company allowed Tom to devote more energy to the packing company, which had been growing nicely since its resurrection in 1973. It began during World War II as a logical extension of the construction business, Tom says: “We had carpenters and tools, and the country needed all kinds of crates for the war effort.” The company packed Jeeps and other heavy equipment for shipment overseas.
When the war ended, the company’s carpenters went back to work in the surging construction business, and the crating enterprise basically closed down. At the time Tom fired it up again, the company occupied 5,000 square feet of shop space, operated one fork truck and had two men making boxes. Today Bentley World-Packaging has 500 employees, 2 million square feet of space, and so many fork trucks Tom’s not sure of the number. Annual revenues are $70 million. Tom holds the title of CEO.
Bentley World-Packaging focuses solely on packaging for overseas shipments. The company is not involved in warehousing, freight forwarding, trucking, ocean shipping, air freight or other aspects of the logistics industry. “We do industrial crating to ship machinery overseas,” Tom explains. “We build wood crates as big as two-car garages that go in ocean shipping containers.”
The company packs shipments that go to 150 countries. “We prepare it to get there without damage,” Tom says. “The counts and packing lists have to be right. The weights and sizes given to the freight forwarder have to be right. It’s not as simple as it sounds.” Making good on a shipment that arrives damaged in China, or with fewer pieces than expected, “is an unbelievable hassle and expense to our customer,” he says.
The company leases most of its space, primarily with an option to buy. “We are slowly building an industrial real estate portfolio by carefully exercising those options,” Tom says. Today, ten holding companies, under the umbrella of Bentley Management Group, own properties in as many different states.
Todd Bentley has devoted a good portion of his time with the company managing that portfolio, along with other duties, as he expands his role in preparation for the transition to the sixth generation. For three years after college, he worked for Deloitte & Touche as a management consultant before joining the family company in 2003. “Early on, I was split 50-50 between the construction company and the packaging company,” Todd says.
Todd says he’s more involved in day-to-day operations than his father is. “It’s different every day,” Todd explains. “I get everything from proposed acquisitions to major proposals [for] customers. Tom tries to focus on the sales side of the business. The operations and financial matters are my focus.”
<B>Planning for the future</B>
Todd was CFO until early 2012, when he became executive vice president. “He needs to get away from the numbers and go out and take a well-rounded tour of the company from operations to sales and meet the customers,” Tom says. “After two years of doing that, the plan is, I’ll become chairman of the board and he will move up to CEO.”
“Every week or month that goes by, I take on more and more,” Todd says. “Sometimes it’s planned, and other times it’s just things that need to get done. Officially and unofficially, the transition is happening now. Ownership is being transferred on an ad hoc basis through stock purchases based on appraised value. There is no defined plan at this point, but there is an annual process that takes place.”
It all sounds simple, but day-to-day squabbles sometimes get in the way. “Like any family, there are days that are really ‘up’ and days that are challenges,” observes Dennis Axelson, chairman of The Bentley Company’s four-person advisory council and executive coach to the senior management team. “Dads are always harder, in my opinion, on their sons than they are on the independent people working for them. They have higher expectations.” Axelson was formerly the executive vice president and CFO for Johnson Financial Group, a subsidiary of SC Johnson and Son, another fifth-generation family business based in Wisconsin.
“Overall, they are doing very well.” Axelson says of the Bentleys. “They have very open debates,” he notes. Tom “probably wins 60%” of these debates, a percentage to be expected when a father and son argue, he notes. “But Todd is very good at articulating his points,” Axelson observes.
Todd agrees with that assessment. “It was difficult at first because it’s hard to differentiate the line between father-son and employer-employee,” he says. “I’m held to a different standard than other employees—and rightfully so. At the same time, I’m probably a little quicker to criticize. Early on, it led to some heartache and strife until I learned when to speak my piece and when to let issues slide.”
Todd says of his father, “There are areas where he will never delegate,” such as sales and marketing. “When it gets to the things he doesn’t enjoy as much, he doesn’t mind.” On the other hand, Todd says, “I have a lot of authority in terms of pricing, purchasing decisions and matters like that. I sometimes may go to him to keep him in the loop.” Todd says he recognizes that he needs his father’s blessing on large-scale decisions, “but it’s not strictly defined.”
Tom points out that this transition is vastly different from the one he went through when his father, Thomas H. Bentley Jr., handed him the reins. “My father was a pretty passive guy,” Tom recalls. “He was running a nice firm, working about 40 hours a week, and he was comfortable with that. He wasn’t driving very hard. To his credit, he was very relaxed and got to spend a lot of time with his kids.” Tom’s three younger sisters were not involved in the business.
“It made it pretty easy for me to go in there,” Tom says. “He wasn’t very opinionated and he never preached or second-guessed me a whole lot.”
In addition, Tom points out, the family enterprise that Todd will lead, and the economic conditions in which it operates, are very different from the business environment in 1983, when he became president of the company. “The business is far more challenging than the one I went into,” Tom says, “so there is more for us to disagree about. It’s much more complicated, so you’re not going to find yourselves on the same page all the time. Todd and I clearly have to work through more—and more difficult—questions than my dad and I ever did.”
Axelson says the Bentleys have a big advantage, though. “Unlike a lot of executives,” Axelson says, “they are more than willing to have an independent person like myself step in and help them talk things out.”
Among the many questions they’re working through is how the company will advance in the years ahead. “We real-ly want to grow the packaging business, both organically by helping our customers succeed and by making strategic acquisitions that offer broader geographic options for our customers,” Todd says. “There are many advantages to offering services in multiple locations.”
In the last five years, the Bentleys bought a competitor in Wisconsin as well as a company in Pittsburgh. More recently, they bought another packing company serving Dayton and Cincinnati and another in Baltimore, and Tom says they expect to acquire one or two every year for the near term.
“The typical export packing company is a mom-and-pop affair,” Tom explains. “It will have 40 or 50 customers with a million and half in sales and 15 employees. We have advantages in purchasing and contacts as well as expertise in military shipping, so we’re on the acquisition trail. Many of the owners are nearing retirement age, don’t have sons or daughters in the business, and see nothing but bad news in the headlines every day. It’s usually an easy meeting for me.”
Now may be a good time to be a buyer, but that’s at least partly because the packing business is soft. As U.S. troops are withdrawn from Afghanistan, military shipments will decrease. That’s coming at a time when softness in the economies of Europe and China is reducing demand for exports to those markets as well. Tom is keeping a wary eye on international developments. “Let’s hope the world’s economy doesn’t collapse,” he says. “A trade war and high tariffs would be disastrous.”
Todd, as befits the next generation, takes a longer view. “Our plan is to continue to grow the way we have, expanding our role as the market leader in our industry,” he says. “We intend to keep it a family-owned company.”
<I><B>Dave Donelson</B> is a business writer in West Harrison, N.Y., and the author of</I> The Dynamic Manager Guides and Handbooks.
Copyright 2012 by <i>Family Business</i> Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permssion from the publisher. For reprint information, contact <a href="mailto:firstname.lastname@example.org">email@example.com</a>.