Natural Entrepreneur: Old Hancock Glass Tile Inc.

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Editor’s Introduction:

For this premiere issue of Natural Entrepreneur of NH, we have elected to profile Old Hancock Glass Tile Inc. of Antrim, NH for a number of reasons. Like this newsletter itself, Old Hancock is starting out on a new venture which is a natural outgrowth of the work they’ve been doing up to this point.

Old Hancock also seems to embody both old New Hampshire values of craftsmanship and enterprise, with aspects of today’s business and technology, including process automation and global competition. Chris Baker-Salmon, owner, is a skilled artisan with significant domain knowledge who is venturing to fulfill a market demand for his product, not unlike similar challenges facing many entrepreneurs, even software or biotech gurus et.al., who are starting and growing their own businesses.

Old Hancock Glass Tile Inc.

Transitioning from Craftsman to Manufacturer

It was a warm beautiful spring day when we took a drive out to Antrim NH, about 15 miles north of Peterborough, and nearly drove past the small wooden circa-1800 reproduction building on Route 9, to meet with Chris Baker-Salmon, owner of Old Hancock Glass Tile Inc. (OHGTile). New Hampshire has a long tradition in glassworks; four of the most famous 19th century glassworks were in New Hampshire, within five miles of where Old Hancock Glass Tile is located. Today, Chris is looking towards robotics to achieve the same handcrafted results.

Now in his 50’s, Mr. Baker-Salmon has been working with glass since high school. He has a Master’s degree from the Rhode Island School of Design, and has been a glass blower and artisan all his life. Chris was recently awarded a U.S. patent for his unique method of creating bas-relief glass tiles. His technique produces glass wall tiles that carry the same quality and characteristics of hand-pressed glass made centuries ago.Wall tile has become an essential element in modern residential and commercial construction.

OHGTile reports that the overall wall-tile market has doubled in the US in the past 6 years, and is predicted to double or triple over the next decade. Demand for glass tile, in particular, is growing at a much faster rate. Given Chris’s decades of experience in the craft, an apparent recession resistant growing market, and a track record of colleagues (especially on the West coast and overseas) who have grown similar businesses into multi-million dollar enterprises, he is confident and optimistic that his unique offerings and process automation will give him the competitive edge he needs to succeed. And he’s betting the business on it.

While Baker-Salmon could easily sustain his current “lifestyle business”, making glass tiles with his largely manual technique limits his business to small jobs. He regrets having turned away potential large-scale projects and resellers. “Clearly,” Baker-Salmon states, “the demand for my product exists. Right now, I am wrestling with how to increase my production capacity and deliver product in volume, on time, and with consistent quality.”

In response, Mr. Baker-Salmon has assembled an outside team of managers, advisors and consultants with expertise in finance, marketing, sales, product development and mechanical engineering, drawing upon experience from organizations like CMGi, Byte Magazine, the NH Small Business Development Center (SBDC), as well as the engagement of firmly established tile industry experts based in New York City and San Diego.

Baker-Salmon has also designed, and is in the process of prototyping a custom robotics-based machine that removes much of the manual, hands-on labor now required to create the tiles. With current hand press methods, they're limited to producing up to 200 tiles per day. When the new custom equipment and automation process goes on line, production will be boosted to as much as 4500 tiles per day and improve yield on each batch. Equally important, tiles produced with the new equipment are expected to retain the same handcrafted character and quality that OHGTile customers have come to expect.

In addition to their aesthetic value and quality, OHGTile products utilize low-cost post-consumer recycled glass. In fact, the product itself is considered a “green” material sought after by architects looking to earn environmental credits.

Old Hancock maintains a limited catalog of popular glass tile designs with bas-relief depicting a fish, bird’s nest, foliage, dragonfly, and other natural and geometric images, that sell for $6 to $20 retail, depending on the tile type. It is also possible to produce tiles from an original custom design, whether digital or hand drawn, with a setup fee.

Once the full production system is in place, Old Hancock Glass Tile anticipates nearly $4M gross sales per year with potentially wide margins. Since the company owns the building used for its manufacturing facility and small showroom, the primary start up cost is for capital equipment to establish the automated production line. Secondary costs include labor for several employees to run the production, and marketing expenses to establish brand recognition and generate new sales. The company is seeking $500,000 investment capital or debt financing to implement the phased production factory and grow its market reach.

Analysis

Chris’s business is truly in an early startup stage, considering its effort to transition from a crafts shop to a manufacturing business. The rural location does not pose much of a problem as they get most of their customers through word of mouth and by exhibiting at the industry’s largest annual trade show, the International Tile and Stone Exposition. There are several other annual conferences where Old Hancock could also participate if and when they’re ready to support larger sales volumes.

Most sales are direct to customers. When asked about distribution channels, Chris quips, “In this business, distributors are just people looking for steep discounts.” That is, orders tend to be project based, and contact tends to be directly with project managers, whether at an architecture firm, construction company, or interior design company, who want to work with Old Hancock directly if they can, rather than through an intermediary. Distributors do not usually stock inventory.

Risks include competitive pressures both domestic and from abroad, potential cash shortfalls during production runs, and equipment failures. The company plans to compete on both price and quality. It may turn out that some markets, such as high-end custom homes, are not as price sensitive especially on smaller orders (e.g. several dozen tiles at a time). Yet larger volume orders will pose price pressures from imports and retailers.

Close attention will need to be given to cash management, especially if larger orders require longer production times with receivables spread over extended periods. On the other hand, there are minimal fixed expenses and cost of goods, including facilities and raw materials (recycled glass) which helps alleviate this pressure. The company plans to build up an inventory of stock items.

While the current capital equipment plan appears to accommodate some redundancy (e.g. one extra robot on hand, and it's a model usually available on the secondary market), down time could have a serious effect on the business. Steps to mitigate this risk might include insurance, backup equipment, and/or other plans.

No doubt there are strong sales channels for product like this, including direct, retail, and distribution. OHGTile’s plans seem to include all of the above. While it’s prudent to maintain multiple revenue channels for a given product, focusing on a niche strategic market should be considered while starting up, such as something like mid-sized commercial architectural firms in major metropolitan areas on the East Coast.

Overall we see a real entrepreneurial spirit at work here, and a good opportunity for success. Mr. Baker-Salmon appears to have the experience in the technology, the manufacturing processes, as well as the target market for his products. And where necessary, such as business and sales functions, he is willing to engage additional resources to help.

-- by Jonathan Linowes
and Lisa Linowes
June 2, 2004

Company: Old Hancock Glassworks
Owner: Chris Baker-Salmon
Location: Antrim, NH
Web: www.ohgtile.com

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