Nearly 70% of family-owned businesses fail or are sold before the second generation gets a chance to take over, according to an article in the Harvard Business Review.
The Twinings have long surpassed the norm.
Edward “Butch” Twining Jr. is the fourth-generation chief executive and majority owner of Long Beach-based Twining Inc., an engineering and construction materials quality-control company.
The company accepted the Business Journal’s Family Owned Business Award in the large-employer category at a luncheon and awards reception at Hotel Irvine on July 29 (see related stories, pages 1, 4, 5 and 7).
Twining thanked the family CEOs that came before him for sustaining the business long enough for him to take over.
Beginnings
Twining Inc. was founded in 1989 in Fresno by Twining’s great-grandfather, who initially focused on chemistry and production of pesticides to support the burgeoning agricultural market in central California.
Two devastating earthquakes in the early 1900s quickly emphasized the need for reform in the testing and use of construction materials, and Twining said his great-grandfather realized how many structures failed in the earthquakes and that he saw a market opportunity.
“The company really evolved as a direct result of the earthquakes,” he said. “From the mid-’30s on, it was really ‘game on’ for construction materials testing, and that’s when we started a testing lab.”
Twining’s great-grandfather transferred equal ownership interests to his son and grandson (Twining’s father) in 1954. The two then split the company into Fresno and Long Beach locations and operated the businesses independently. The Fresno location later split off to form a separate company.
Twining Inc. now has six offices in California, including an office and lab in Irvine, and employs nearly 400. Twining transitioned to the role of president in 1983 after working for the company in various capacities since his college days, but the later transition to majority owner and chief executive wasn’t as smooth.
Twining’s father became ill and died unexpectedly in 2000, creating uncertainty about the future ownership of the company.
“At the time, there was no succession plan,” Twining said. “It was like—OK, now what are we going to do? So I said I would buy the business from my mom. I was given 45 days to come up with a letter of intent from a bank to give me a little over $5.5 million. I knew I had to figure it out.”
Twining and his business partner, veteran Twining employee Rob Ryan, scrambled to get the money and documents together within the requisite 45 days.
“When Rob and I left the attorney’s office after signing all the paperwork, we looked at each other and said, ‘What did we just do?’ ” Twining said. “It was really difficult for many years, and we were living by the skin of our teeth.”
Twining described the following five years as uncertain, riddled with stress headaches and salary concessions.
“It was tight, but we were growing,” he said. “In 2004, we were doing $22 million a year in business, and this year we will do $55 million. When you grow like that, it can be painful.”
But now Twining said the business has worked out most of the kinks and is doing over $1 million a week of work.
He said Twining Inc. provided the third-party, quality-control services for two large construction projects in L.A.—the extension of the Metro Rail to the Beverly Hills/Westside area, and the Wilshire Grand Center—a downtown skyscraper owned by Korean Air.
The Wilshire Grand project earned a spot in the Guinness Book of World Records for the world’s longest continuous concrete pour, which took 20 hours and 2,000 truckloads to complete. Over 80 Twining employees monitored the concrete throughout the process.
Twining said he attributes much of the company’s growth and success to the workers.
“If there was one thing that my father taught me, it was to surround yourself with the very best talent available,” he said. “I know the other laboratories out there, and I know my competitors. Nobody is surrounded by the level of talent that we are here. My dad was right.”
Re-Evaluation
Twining said that with rapid growth comes the need to re-evaluate the tradition of keeping the business primarily family-owned. His 26-year-old son, Max, has been working for the company for two years and is being groomed to contribute in the future, though the succession plan might look different than years past.
“My goal is that this is going to be an employee-owned company with Max as part of it,” Twining said. “As he grows and learns more about the business, I hope he will play an important role here, but as the ship gets bigger, we need more people to steer it.”
Talin Espinoza, vice president of strategic growth at Twining Inc., said that no matter the structure, the Twining family’s values will remain.
“We want to make sure the family cultures stays,” Espinoza said. “This company has always been about integrity, service to the community, and giving more than you take. If you know the Twining family, that’s just the way they are.”
