April 10, 2005

Oven maker heats up

By Leslie Wright

Blodgett achieves double-digit growth

By Leslie Wright

At the company's Fourth of July cookout two years ago, Blodgett Oven Co. president Phil Dei Dolori announced that he wanted the company to do something that hadn't been done at the commercial oven maker in two decades: achieve double-digit growth.

The announcement earned him the moniker "double-digit Dolori."

Eighteen months later, the Burlington manufacturer delivered. After the company became leaner and more nimble, Blodgett sales jumped 23 percent to $61 million in 2004. After years of struggle, one of the best-known brands in commercial kitchen equipment had finally turned the corner.

"I feel like we're entrepreneurs in a public company," Dei Dolori said.

Tall order Dei Dolori's call for double-digit growth was an ambitious order. He was plotting change at a time when the food-equipment business, which is closely tied to the restaurant business, was! still shaking off a recession. Sales in the $5.5-billion food-service equipment industry dove 7 percent in 2001 through 2002. In 2003 and 2004, the industry saw growth of between 1 percent and 2 percent, according to the North American Association of Food Equipment Manufacturers. This year isn't expected to be much different, said Charlie Souhrada, membership director for the association. "Nine-eleven really killed a lot of the restaurant business, and sales have been flat for the past few years," Souhrada said.

As a rule, the commercial-kitchen equipment industry is known for slow, steady growth and isn't subject to big swings, he said. The industry's best years were from 1997 to 2000 when sales grew 4 percent to 5 percent each year, he said.

Still, Blodgett's corporate parent, The Middleby Corp., based in the Chicago area, was undeterred. Middleby bought Blodgett in 2001 just as after the Sept. 11 terrorist attacks dealt the industry a major blow in an already struggling economy.

"No risk, no return. That's our philosophy," said Dei Dolori, who was hired by Middleby in 2001 shortly after the company bought Blodgett.

Turn around Appliance giant Maytag Corp. sold Blodgett to Middleby for $95 million, four years after Maytag bought the company for $142.5 million. Both sales included New Hampshire-based Pitco, maker of deep fryers, and MagiKitch'n, maker of char broilers. Annual sales at Blodgett were about $48 million in 2001 and were declining, as were profits, said Dei Dolori, who also oversees Pitco and MagiKitch'n.

 "The business was, frankly, not performing at an acceptable level to any investor," he said of Blodgett. "The only thing that held through all of this was the brand." Middleby wanted the brand. The Midwestern equipment manufacturer, like Blodgett, was on the hot side of the business, meaning it sold cooking equipment as opposed to refrigerators or dish machines. Middleby's brands include Southbend ovens and ranges, Toastmaster toasters and CTX conveyor ovens. Blodgett's products complemented Middleby's, adding a high-end oven line, and rounded out the company's offerings with fryers and char broilers, Dei Dolori said.

Despite its lackluster performance, Blodgett remained a respected heavy-equipment maker for the food-service industry, said Dei Dolori, who at that time was president of competitor Vulcan-Hart, maker of Vulcan commercial ovens. Middleby shelved Maytag's plans for a new 200,000- square-foot plant not far from Burlington headquarters, opting to make do with the company's cobbled-together complex of brick buildings, not far from General Dynamics on Lakeside Avenue, which date to 1946. Instead, Middleby started to look for ways to make the 153-year-old oven maker more efficient. That meant cutting jobs and consolidating operations, what Dei Dolori called a painful chapter in the company's history. "On a global scale, we have to have a cost structure that will compete," he said.

When Middleby bought Blodgett, the work force stood at about 325 divided over three locations -- Burlington, Shelburne and Williston. Middleby shipped Blodgett's conveyor pizza oven manufacturing out to the Midwest to be folded into Middleby's conveyor pizza oven operation -- a loss of about 30 jobs in Burlington. Plants in Shelburne and Williston were closed. A layer of middle and senior management, about 30 employees brought in by Maytag, was eliminated, said Gary Mick, Blodgett general manager. Now management totals about a dozen employees.

Middleby also revamped the sales team. Under Maytag, the Blodgett sales force sold several brands, including Pitco and MagiKitch'n, and didn't necessarily know Blodgett's lines, Mick said. "Maytag added a lot of complexity in order to manage the organization," Dei Dolori said. "What we did at Middleby is we removed the complexity."

Today, Blodgett has half the employees it had in 2001, yet production averages about 65 ovens a day, compared to 52 when Maytag owned the company. In an industry that's barely growing, Blodgett has seized market share from competitors, Dei Dolori said. He singled out Blodgett's work force as a dedicated group of craftsmen who were instrumental to the company's survival and success.

Double-digit year

The strategy to return the company to double-digit growth included introducing new products to Blodgett's oven offerings. Six new products, including convection ovens, steamers and a bread-baking oven, started to come to market in 2003, and by the end of 2004 accounted for 22 percent of sales. Dei Dolori admitted the past 18 months have been "pandemonium" at times with so much change and so many new products. Last summer, production reached 80 ovens a day and the number of employees swelled to 200 to keep up with demand. Blodgett was the fastest- growing brand in the corporation last year, accounting for 22 percent of Middleby's sales in 2004, Dei Dolori said.

This year, the company is on track to surpass $70 million in sales, another double-digit year. Dei Dolori wants to see sales hit $100 million in the next three to five years. Even with the recent success, the question of Blodgett's future along the shores of Lake Champlain lingers. Competition is sure to come from overseas as markets such as China take off, raising the question of whether it makes sense to make ovens in Vermont and ship them overseas. Middleby is launching an assembly line in China to make economy fryers for the Chinese market. Ovens made in China are not the same quality as Blodgett and, at this point, most of the expansion comes from U.S. chain restaurants -- such as KFC, Boston Market, Cracker Barrel, Olive Garden and Red Lobster -- familiar with the Blodgett brand, Dei Dolori said.

The cost of shipping has quelled any attempts by overseas competitors to take U.S. market share, Mick said. If Blodgett continues to stay competitive, the company will stay where it is, he said. "As long as we are running an efficient, effective organization no one is going to move us," Mick said. "I see us being here another 100 years."