Orange-based Thompson Enterprises, which sells building materials and equipment, is looking to keep growing through the down-and-out homebuilding and slowing commercial real estate markets.
Like other builder suppliers, Thompson Enterprises rode the housing boom of the past few years. Now the supplier of stone, cement, doors, fountains and other products faces tough going as fewer homes are being built and fewer people are refinancing their homes to pay for improvements.
Founder and President Ken Thompson said the weak housing market and credit crunch poses obstacles for his company, which generates about $500 million in yearly sales through its subsidiaries Thompson Building Materials Inc., Omega Products International Inc., Western Manufacturing Inc., Valori Precast Products and others.
But the company plans to weather the aftermath of the subprime mortgage and housing meltdown just as it has downturns in the past, Thompson said.
“We’ve been in this business for 45 years. We’ve been through the ups and downs,” he said. “We never look at a market as being bad. It’s different from a few years ago, but it’s still good.”
One of the ways the company could seek to weather the downturn is by moving its headquarters and 550 workers from Orange to Corona. It already employs 300 people in warehouses there to make and distribute concrete and wooden and metal doors.
A good chunk of the company’s products are sold to suppliers and contractors that work with major homebuilders such as Newport Beach-based William Lyon Homes, Centex Corp. of Dallas and Florida’s Lennar Corp.
The construction slowdown aside, Thompson said that selling home improvement products to longtime homeowners still is hot.
“We’re just as busy as we were when the housing market was strong,” he said. “We’ve learned the hard way. We don’t just sell to new homes. We go after the customers that have lived in their homes for years. These people are still buying products.”
The company’s Thompson Building Materials still is selling stone, brick, tile and barbecues to customers at its locations in Orange, Fontana, Wilmington, San Diego, Lomita and Camarillo, he said.
Its Fontana-based business, Valori Precast, which makes pots, fountains and yard sculptures, continues to drum up sales by selling to contractors and wholesalers, Thompson said.
Commercial construction is giving Thompson Enterprises a boost, he said.
The construction of industrial buildings and office towers is helping the company attract a steady stream of business from contractors and developers, Thompson said.
Subsidiaries Western Manufacturing,which sells concrete mixers, plaster pumps and fireproofing equipment,and Omega Products International,a maker of plaster and stucco,are generating sales thanks to commercial construction and redevelopment, Thompson said.
Next year could be a different story, as construction ends on the current round of office towers and new projects slow amid less demand for office and industrial space. The number of commercial building permits issued in Orange County is down 14% from last year and residential permits hit their lowest point in 14 years.
The rising real estate prices of the past few years that boosted Thompson Enterprises’ business also have made it tough on the company’s own operations.
Since its businesses store large quantities of stone, brick, tile and other products, Thompson Enterprises needs a lot of space, he said.
The county’s soaring prices for local real estate has made it hard for the company to keep its businesses in OC, Thompson said.
“We’re trying to be the one-stop shop, which means that we have to carry a lot of product at one time. That requires a lot of space. In Orange County it’s pretty expensive,” he said.
In the past six years, Thompson Enterprises outgrew spaces in OC and moved businesses to Corona, where space is plentiful and cheaper.
The company recently moved Thompson Door and Frame, a subsidiary that makes wooden and metal doors for homes and businesses, to Corona from Anaheim.
“That business kept growing and we had to move it,” Thompson said.
Three Thompson Enterprises subsidiaries including Thompson Door and Frame have about 300,000 square feet of space in Corona. A third of its 900 workers are in Corona.
As the company continues to add more workers at its 20,000-square-foot headquarters in Orange, Thompson said it is considering moving the head office to Corona as well.
A move could make communication and business between the headquarters and subsidiaries more convenient, he said.
“Moving the headquarters is not a sure thing but we are thinking about it,” he said.
Relocating the company’s businesses to a less expensive area is part of the company’s strategy to become more profitable as it deals with other issues such as rising labor, energy, transportation and insurance costs, Thompson said.
More acquisitions are possible to grow the business, Thompson said.
Thompson Enterprises has had its own share of buyout offers. But Thompson said he’s not interested. Going public or bringing in a private equity firm aren’t options either, he said.
Thompson, who is in his 70s, wants to pass the business on to his children and grandchildren.
“I have sons and grandsons and a lot of them. That is my exit strategy. I plan on having our business go on for as long as they can do it,” Thompson said.
