Davey Tree Flipbooks

57 56 Growth Rings e employee acquisition of 1979 proved a pivotal moment for Davey Tree. In terms of historical significance, it ranks alongside the publication of e Tree Doctor in 1901 and the company's survival of the Great Depression in the 1930s. From an employee standpoint, the acquisition served all the objectives that employee-ownership is designed to meet. It preserved the culture of the Davey Company, and employees, if they so chose, had an immediate financial stake in the company that meant their own work and labor would prove profitable from an investment standpoint. And the rewards were obvious almost immediately. By the end of 1979, company revenue would increase by 14 percent over 1978 to a total $60.2 million – one of the largest single-year increases in company revenue in almost a decade. Still, the hard part was not over. "e company incurred a very heavy debt during the acquisition days, as did the employees who committed to the acquisition in the form of personal debt," Joy recalled in a 1987 interview. But as it turned out, "the volume of the company, the sales volume of the company, more than doubled, and the earnings quadrupled. is was so important because it did enable us to pay down the large debt in which we had an interest cost that was so significant. But it also allowed us to invest back into the company $30 million in the form of new equip- ment, new programs, new buildings and properties and resources. And it truly was a period that was so important in order to prove that employee ownership was a viable way for a business to proceed." During the employee-acquisition process, the continued operation of the company was a necessity if the employees hoped to purchase anything of value. As the employee committee worked to buy the company, Davey Tree embarked on a path to define its service lines in a way that would set the operational structure for the next five decades. e company established specific capital and overhead budgets by service line, and management created sales and profit forecast plans. By Jan. 1, 1978, each service (Tree Care, Utility, and Lawnscape) and the operations within the services had specific monthly and yearly goals to achieve. "For the first time in its history, the company service lines were separated by operating functions," the 1978 annual report states. "Responsibility for the performance of the service lines was placed in the hands of operating managers assigned to each of the services." Again, a series of appointments and promotions were made to assign responsibility and management along each service line. With Jack Joy serving as president, the company's board of directors made several executive management appointments. Jim Pohl was named executive vice president. Doug Cowan was named vice president of finance. Howard Eckel was promoted to senior vice president of operations. Ted Baer was named vice president and assistant to the president. Bill Heim was named vice president and general manager to oversee utility operations in the east, and several managers comprised the corporate field management group to assist Heim. ey included: T.E. Efird, vice president and Southeast area manager; Merle Talbot, Southwest area manager; and Don Biehl, North Central area manager. Ted L. Booth continued as the utility contract administrator, monitoring the ongoing details of Davey's many utility contracts. Out West, the Davey Tree Surgery Company continued to be led by Gene Haupt, vice president and general manager. Bob Oyen served as vice president of finance with Paul Daniel serving as vice president of operations. Don Shope was named vice president and general manager of tree care operations. Supporting Shope were A.B. McKinstry, area manager for the North Central tree care operations, and Ray Smith, area manager for the Northeast tree care operations. Smith was assisted by Roy Ferry, Northeast operations manager, and George Gaumer, sales coordinator. Hank Schmid, corporate marketing director, assisted the service line by developing and coordinating sales and advertising campaigns with Gaumer. Gordon Ober was named general manager of the Lawnscape service in October 1978 and was charged with expanding growth. Bert Stamp served as senior vice president overseeing corporate administrative functions of personnel, safety, equip- ment, property and purchasing. Vernon axton served as director of purchasing, Ross McCafferty served as personnel director, Bob Holt was the safety director, and Ralph Ferry served as equipment manager. John Miller continued as vice president and general manager of Canadian operations. e service lines came under great financial scrutiny. Closely monitoring the sales and profit forecast plans, management watched 10 tree care operations that had been on the decline in previous years. e offices continued to be off their specific individual sales and profit plan in mid-year, and when management realized the operations would not reach their sales and contribution plan, they were promptly closed down. Similarly, utility operations were just as carefully monitored. In the first six months of 1978, several utility contracts were determined to have high costs with little or no opportunity for pricing increases to offset the higher expenses. So, management opted to either immediately terminate the contracts or not renew them. e employees and equipment were transferred to more profitable operations wherever possible. Such scrutiny helped steer a first-quarter loss of $1.1 million in 1978 into an overall profitable conclusion for the year, which reached a total revenue figure of about $52.1 million – a 17.6 percent increase over 1977. "e service line concept combined with detailed advance planning, disciplined capital budgeting, and prorated overhead allo- cations allowed the respective service line managers to make the necessary decisions, as required on specific operations, to either turn them into a profitable situation or terminate the operation," the 1978 annual report states. "Business decisions were based on accurate financial data and performance to plan." But it wasn't just fiscal prudence and an improved management structure that drove success. e company benefitted from rebounding market conditions after the recession of the mid-1970s. In his January 1978 economic report to Congress, then U.S. President Jimmy Carter noted that the U.S. economy was recovering faster than most other developed nations around the world. Four million new jobs had been created in the U.S. in 1977, and wages and income were rising while inflation rates were slowly falling. From a market standpoint, services to utility clients grew dramatically. Sales of utility services rose by 22 percent in 1977. ey jumped again in 1978 by 24 percent. Residential tree care services saw a substantial upswing in the second half of 1978 that would carry into 1979. Lawnscape sales, although modest, enjoyed a continued upward trend both in 1977 and 1978. By the end of 1979, sales or service volume for all three service lines and the Canadian operations were on a skyward trajectory. At the end of their 1979 annual report to shareholders, President and CEO Jack Joy and Chairman Martin L. Davey, Jr., echoed a cautiously optimistic tone. "While we recognize that economics make future predictions difficult, we nevertheless look forward with confidence that the years ahead will be productive and rewarding to our customers, shareholders and hard-working team of people throughout the company," the report concluded. Chapter 3

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