|Oct 01, 2012 --
Outline of Need:
Over its 15-year history, wood door manufacturer Pacific Pine has seen its share of good times and tough times. In 2007, the company was running strong with solid sales and nearly 70 employees. To sustain the momentum and continue to grow, they decided to take on short-term debt for large machinery and equipment. It wasn’t long, however, before the housing market and overall economy slid downhill, taking the company’s sales along with them. By 2009, Pacific Pine had reduced their staffing level to 30 and made dramatic changes to operations. At the same time, many conventional banks were having problems of their own. As a result, Pacific Pine’s lender decided they would not continue to carry Pacific Pine’s line of credit.
“We were absolutely in survival mode,” says the company’s vice president, Greg Larson, who approached a number of banks only to find they were not willing to make a loan given the economic climate.
How Rural Development Helped:
Shut out by the big lenders, Larson finally connected with a local loan officer from eastern Oregon-based Old West Federal Credit Union who took the time to build a relationship with Pacific Pine. After gaining an understanding of the business and its needs, the lender suggested USDA’s Business and Industry (B&I) guaranteed loan program as a good option. Larson admits he was skeptical at first, but he soon found the USDA guarantee to be the entryway allowing Pacific Pine and Old West to develop a consolidated loan with favorable rates and terms. Together, they reduced the company’s monthly debt load from $30,000 to just $5,000.
“USDA is real, and they can help,” Larson said.
Not only did the refinancing package improve cash flow, but it bought the company time to reinvent their customer base. They used the opportunity to court clients who were becoming increasingly dissatisfied with the rising prices, timelines and shipping expenses for products manufactured overseas.
As a result, Pacific Pine is on track to have a record year for 2012, hammering out roughly 5,000 doors each month for both upscale residential markets as well as bulk retailers.
The implications for the overall community are significant. One of the largest private employers in the county, the company now employs 80 workers with a monthly payroll of more than $230,000.
With hardship and, ultimately, success, Larson knows the story isn’t over. “I have humility from what we went through and confidence that we have momentum moving forward.”
Program: Business and Industry Loan Guarantee
Lender: Old West Federal Credit Union
Community: Lakeview, Oregon