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Business in mothballs: $3 million Hot Springs company grapples with growth.

Business In Mothballs $3-Million Hot Springs Company Grapples With Growth

American Cedar Inc. at Hot Springs makes mothballs. The company claims they last forever.

But the American Cedar's owner and president, Julian McKinney, understands the company's rapid growth will not last forever if not properly managed.

A seasonal line of cedar products for Avon Products Inc., new markets in France and Japan and a growing mail-order business are contributing to American Cedar's success.

The firm makes mothballs, closet accessories, cut-to-order cedar lumber and household decorative gifts.

Those buying American Cedar's products often don't know it.

Consider that American Cedar:

* Produces cedar shoe racks and pieces of shoe trees for Allen-Edmonds Shoes.

* Sells cedar closet accessories through stores operated by The Limited Inc.

* Sells products through Target Stores and Michaels Arts & Crafts.

* Supplies name catalog companies such as Land's End and Hanover House.

"Sales have doubled every year since 1987, exceeding the target each year," McKinney says. "And this year, the growth pattern is better than ever.

"I expect to hit $3 million this year, grow to $5 million or $6 million, settle in and then diversify and move forward again."

The interest in cedar as a natural insect repellent has grown in connection with the American public's increased concern for the environment.

Annual growth in the 100 percent range may sound glamorous, but ultimately it can be deadly.

Managing finances and employees are two of the most critical challenges in growth, according to McKinney.

"I had been managing it by myself," he says. "I had worn all the hats, but you're spread too thin. You sometimes can't afford to do what you would like [hiring], but you can't afford to do nothing."

McKinney believes his current staff is "rolling the dice just like I am."

If the company continues to do well, so will the employees.

American Cedar employs 60 people with seasonal employment levels reaching as high as 80.

Time To Move

American Cedar faced a common dilemma for growing companies. It needed more office and manufacturing space, but the financial commitment was daunting.

"When you're short on space, it's like being short of money," McKinney says. "It costs you."

The company moved from 15,000 SF of lease space to an existing 40,000-SF building it purchased at the Garland County Industrial Park in November 1988.

American Cedar since has expanded production and made equipment investments with the help of loans guaranteed by the Small Business Administration.

American Cedar was founded in 1977. McKinney had a partner then, but the partnership was dissolved in 1987.

"I learned to pay more attention to what is happening," he says of the split. "So even though it was unpleasant, I'm glad it happened."

McKinney says that following the split, he re-evaluated his goals and more clearly focused the company's efforts.

Four years later, American Cedar is far from being in mothballs. But only in a financial sense.

PHOTO : THE SMELL OF SUCCESS: Julian McKinney's company, American Cedar Inc. of Hot Springs, sells its products through nationally known companies such as The Limited Inc., Land's End and Allen-Edmonds Shoes.
COPYRIGHT 1991 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Arkansas Entrepreneur; American Cedar Inc. at Hot Springs, Arkansas
Author:Ford, Kelly
Publication:Arkansas Business
Article Type:company profile
Date:Aug 26, 1991
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