When Ron Simon came up with a plan to compete with Taiwanese cabinetmakers, the new owners of Perma-Bilt Industries called him crazy. Then he resigned.
So in 1989, at age 55, Simon left the company his father had founded and used the rejected plan to start RSI Home Products, a maker of bathroom and kitchen cabinets that counts yearly sales of more than $600 million.
“This validated my lifelong belief that adversity creates opportunity,” Simon said.
He’s the majority shareholder of RSI and serves as chairman of RSI Holding Corp., which oversees the company from Newport Beach.
RSI is the top seller of bathroom cabinets. The company’s products are sold through home improvement stores such as Home Depot and Lowe’s, cabinet dealers and homebuilders. Kitchen cabinets should become the largest portion of RSI’s business in a couple of years, Simon said.
Since RSI’s founding, the company has averaged about 25% growth per year. As you’d expect with the housing and mortgage refinancing slowdown, growth has been lighter this year, Simon said.
One of Simon’s biggest challenges is a familiar one to manufacturers here: recruiting.
“A company is no more than the people working in it,” Simon said. “It has been a challenge to find additional talent to support our growth.”
RSI has about 6,000 workers in California, North Carolina, Kansas and Mexico. About 1,800 are employed in Mexico.
In Anaheim, RSI has 600 workers at a 674,000-square-foot plant, massive by Orange County standards.
Like other manufacturers, RSI has been expanding faster outside California.
Doing business here is tough with environmental restrictions, legal issues, taxes and high workers’ compensation, housing and healthcare insurance costs, Simon said.
“Frankly, if California were as business friendly as North Carolina and Kansas, we’d have more employees here,” he said.
A good workforce and Simon’s love of California keep him here, he said.
RSI has its roots in Perma-Bilt Industries, a maker of medicine cabinets started by Simon’s father. Simon started working with his dad when he was 25.
At first Simon was leery about making a career at Perma-Bilt. He said he was more aggressive in business than his father, who was born in England and came to America by way of Canada.
After earning a two-year degree in engineering from Los Angeles City College, Simon went to work for Layne Bowler Pump Co. After five years, he said he was ready to start his own pump business.
But his dad convinced him to join Perma-Bilt instead, he said. Simon eventually took over the business, growing it to be the largest maker of bathroom medicine cabinets, vanities and marble countertops.
In 1987, Simon sold Perma-Bilt to an Australian company at a time when the cabinet business was changing.
Big home improvement stores were creating more demand. Low-cost makers in Taiwan were making it tough for U.S. makers to compete.
Simon came up with a straightforward plan to compete: cut costs, increase productivity and expand ties with cabinet dealers and retailers.
The new owners of Perma-Bilt rejected the idea. A few years later, the company went out of business.
By that time, RSI was getting a foothold.
Three years ago, the company started selling to homebuilders and counts nine of the 10 largest as clients.
The housing downturn could have an upside for RSI, according to Simon.
“Homebuilders have become more cost conscious, we like that,” he said.
Simon said he has an ambitious goal, $1 billion in sales in the next two to three years.
RSI competes with Chinese manufacturers.
“China today is what competing with Taiwan was like then,” Simon said.
RSI seeks to compete on cost, he said. Its other advantage: speed. The company can deliver cabinets faster than Chinese makers that ship by sea, which takes weeks.
“But if this were easy everyone would do it,” Simon said.
RSI’s entrepreneurial culture is what sets the company apart, he said. It stresses efficiency, openness and constant improvement.
The company’s motto: “better every day.”
“We want to go to the Super Bowl every year,” Simon said.
If RSI has a quarterback, it’s Chief Executive Alex Calabrese. He’s been with the company for more than 15 years and makes the company’s day to day decisions.
“He’s the epitome of our culture,” Simon said. “He’s carrying the torch for us, and it’s burning brighter than ever.”
Companies have fallen apart when they lose touch with the culture that allowed them to succeed, Simon said. He learned the hard way about bringing in outsiders to run a company, he said.
RSI gets buyout offers, Simon said. It would be a waste of the company to have its culture changed by a new owner, he said.
Managers are encouraged to feel like entrepreneurs, according to Simon. People are encouraged to speak their minds.
You’ll hear shouting at his meetings, but that’s a good thing, Simon said.
“Everyone is passionate about their job,” he said.
At big companies people don’t want to take blame, he said. Mistakes at RSI are considered part of a learning process, he said.
“I don’t want people to be afraid to look stupid,” Simon said.
He said he encourages ideas that can boost efficiency and help RSI adapt to a changing market.
Simon, who flies by private jet these days, had a decidedly humble upbringing.
He was born in Los Angeles to immigrant parents,his mother was from Russia.
Growing up, Simon said he worked part-time jobs, played sports, taught himself to play the piano and excelled at math and mechanical operations.
“I’m fortunate to have come from a poor immigrant family because it taught me the value of discipline and hard work at an early age,” he said.
Simon, who lives with wife Sandi in Newport Beach, is intent on helping students and families who want to achieve independence and self-sufficiency. Simon does so through the Ronald Simon Family Foundation.
His daughter, Kathy Simon Abels, lives in Atlanta. Son Steve Simon lives in Santa Fe, N.M. They each run branches of the Ronald Simon Family Foundation, which Simon started after he saw a need to give disadvantaged kids a better chance to prepare for college.
The foundation has given more than $4 million in scholarships to students in OC, Atlanta and Santa Fe.
The six-year scholarships start in a student’s junior year of high school and include a computer, test preparation courses, tutoring, college application coaching and life skills and leadership training.
“I don’t want to just write checks and tell the students to do their best,” Simon said. “I want our foundation to be very hands on and to provide scholarship recipients with these needed tools to allow them to be very competitive when they reach college.”
