Tacony Corporation - Company Profile, Information, Business Description, History, Background Information on Tacony Corporation

1760 Gilsinn Lane
Fenton, Missouri 63026-0730

Company Perspectives:

The company's mission is to profitably grow our leadership position in the industries we serve, creating success for our customers, our associates and all others that depend on us.

History of Tacony Corporation

Based in Fenton, Missouri, privately owned Tacony Corporation manufactures, imports, and sells sewing machines, vacuum cleaners, ceiling fans, janitorial equipment, and accessories. The company is comprised of more than a dozen divisions. The Amazing Designs Embroidery division offers 3-dimensional embroidery designs to hobbyists by way of CD, floppy disk, or memory card. Baby Lock USA Sewing Products manufactures and sells the popular Baby Lock line of sergers, sewing, and embroidery machines. Blakeman's Floor Care Parts & Equipment is a wholesaler of floor care equipment and parts. CFR Carpet Cleaning Machines manufactures commercial carpet cleaning equipment. Elna USA Sewing Products manufactures and retails home sewing machines and accessories. Industrial Sewing Products imports and distributes major brands of industrial sewing machines. Nancy's Notions is a sewing, quilting, and embroidery catalog company launched by Nancy Zieman, host of PBS's "Sewing With Nancy" television series. Origins Software provides the kind of software required by contemporary home embroiderers and is capable of making embroidery designs from any number of sources, including original art work. Tacony Sewing Central is a wholesaler of home and industrial sewing machine parts, as well as notions and accessories. Powr-Flite Commercial Floor Care Parts & Equipment manufactures and distributes vacuums, carpet dryers, floor machines, and other commercial janitorial equipment. Regency Ceiling Fans designs and distributes high-end ceiling fans, ceiling fan lighting, and accessories. Riccard American Sewing & Vacuum Products manufactures high-end sewing machine and vacuum cleaners sold through its dealer network. Simplicity Sewing Machines serves the hobbyist market. Simplicity Vacuum Cleaners offers both canister and upright vacuum cleaners sold through independent retailers. Tacony's 103,000-square-foot headquarters includes a warehouse, sewing lab, and company training center. Tacony also maintains an in-house advertising and printing operation. The company is headed by Ken Tacony, the son of founder Nick Tacony.

Tacony Launched in Postwar Era

Tacony Corporation was founded in 1946 in St. Louis by Nick Tacony, who invested his entire savings to begin buying sewing machine parts for servicing sewing machines and fixing up some for resale. He originally set up shop in his basement, but by the end of the decade was able to move into a storefront location in St. Louis. During the 1950s, he expanded his business by directly importing sewing machines, replacement parts, and accessories from Europe and Asia, then selling them wholesale to Midwest sewing machine retailers. Tacony took his business national by acquiring a pair of East Coast competitors.

In 1970, Tacony was joined by his son, Ken, who had just completed a four-year stint in the U.S. Air Force after earning a degree in business administration. At this stage the company was generating some $3 million in annual sales. Much of its growth during the 1970s was the result of Tacony Corporation introducing the Baby Lock, the first serger for home sewers. Like the industrial "overlocker" sewing machine, the multi-needle home serger could perform three functions in one pass: sewing, trimming the seam allowance, and overcasting. The Baby Lock proved so popular that it revitalized a declining sewing market and led to industry-wide growth. It would also prepare the ground for the rise of the hobbyist market.

In 1984 Nick Tacony died and his son took over the family business. Sales had now reached $23 million, but the company faced an uncertain future due to societal changes. An increasing number of women were now working outside the home, leaving many without the time or inclination to use sewing machines to mend or make clothing. As a result, the sale of sewing machines in America was trending downward, and it was becoming clear that if Tacony Corporation was to maintain growth it would have to make some adjustments to its core sewing business while taking steps to diversify beyond it.

Diversity Sought in 1980s

In 1985 Tacony became a licensee of Simplicity sewing machines to tap into the market for less expensive sewing machines, priced under $300. Studies indicated that most sewing machine sales in the United States now took place at the lower price point. Tacony also reorganized its efforts to distribute parts and accessories with increased customer support. In 1989 it formed the Tacony Sewing Central sales division. The idea behind it was to offer a wide selection of sewing machine parts for both home and industrial machines, as well as accessories and notions--25,000 items in all--supported by a staff of specialists. The new unit was also positioned to sell proprietary sewing products as Tacony acquired or developed them, setting the company up to sell into foreign markets using the Sewing Central infrastructure. Also during the 1980s, Tacony supplemented its sewing business while achieving diversity by acquiring Riccar America Company in 1988. The California-based company not only produced a superior sewing machine, it also manufactured a high-end line of vacuum cleaners. A year later, Tacony built on its new vacuum cleaner business by using the Simplicity name to launch a new line of quality vacuum cleaners.

The success of Ken Tacony's efforts during the 1980s were demonstrated on the balance sheet. Sales had virtually doubled since he took over for his father, and the company was ready to enjoy even greater growth in the 1990s. Not only was Tacony ready to build on its non-sewing product lines, it began benefiting from an unexpected change in the sewing marketplace. The sewing machine, which made its mark in the 1800s as an everyday household tool, now became the province of the hobbyist. Rather than sewing because they had to, people were now sewing for fun. The craft niche grew out of the introduction of embroidery machines in the early 1990s. They were more expensive, offering a higher margin to sellers, and the more features the machines offered, the more features customers wanted. They became high-tech machines capable of completing the most complex of designs. In turn, embroidery designs also became a profit center, as an array of new looks and patterns were offered on floppy disks, CDs, and memory cards. There was also the rise of heirloom sewing--the production of ornate clothing and other items, such as pillow cases and bags--intended to be kept as family heirlooms. The growth of the embroidery market was also spurred by the rise of the Internet. People could download designs and communicate with fellow enthusiasts. Rather than passing a sewing machine on to the next generation, people were trading up after a few years, as well as buying computer upgrades. The sheer number of embroidery machines in use may have paled in comparison to the penetration of the traditional sewing machine in America in years past, but the margins were excellent and the possibility for accessory sales seemed endless. With Sewing Central in place, Tacony was able to quickly tap into this explosive new market and offer a range of product lines: specialty threads, stabilizers, memory cards, and sewing machine software.

By making strategic acquisitions in the 1990s, Tacony took advantage of the resurgence in sewing while continuing to pursue its efforts at diversification. In 1991, it acquired Blakeman's to enter the wholesale floor care parts and equipment field. Tacony then completed a pair of acquisitions in 1996. By purchasing Elna USA, Tacony added the well known Elna brand. Founded in Switzerland in the 1930s, Elna developed the first portable sewing machine to rely on a free arm. Tacony would apply the Elna name to a wide range of sewing machines and related products, including a broad range of sewing and embroidery machines, sergers, sewing and serger feet with added capabilities, an Heirloom sewing kit, and software. Also in 1996, Tacony added to its janitorial products and growing floor care business by acquiring Texas-based Powr-Flite, which manufactured and distributed products such as floor scrubbers, burnishers, sanders, sweepers, commercial vaccums, wet/dry vacuums, extractors, dryers, and ozone generators used to eliminate odors in cleanup efforts. Another new product area for Tacony in the 1990s was ceiling fans, the result of the acquisition of Regency Ceiling Fans. Regency designed and distributed a wide range of commercial and home ceiling fans, including children's fans and patio fans, as well as blades, shades, light kits, and an assortment of accessories such as remote controls, pull chains, and specialty bulbs. Tacony's efforts at changing its product mix were so successful that in 1996 sewing machines and related products accounted for just 51 percent of sales, with the floor care sector contributing 38 percent and ceiling fans 11 percent.

Ever since the late 1980s, Tacony began to realize the necessity of manufacturing its own vacuums rather than rely on imports from Taiwan, fearful that growing direct marketing operations would significantly cut into the business of distributors. However, it was not until the Powr-Flite acquisition that management decided to investigate more deeply the idea of manufacturing vacuum cleaners in the United States. The example of Powr-Flite's Fort Worth plant was a key selling point. It employed about a dozen assemblers and without the benefit of computers was able to produce about $20 million in annual sales. Tacony turned to Mid-America Manufacturing Technology Center, a service organization that helped small and mid-sized manufacturers, for assistance in evaluating whether it was wise, given high labor costs in the United States, to launch a large-scale domestic manufacturing operation. Some of the data MAMTC uncovered was eye opening. Other than the plastic housing, Taiwan manufactured none of the parts it assembled into vacuum cleaners. In fact, most were made in the United States, which meant that Tacony could save some money in this regard by manufacturing at home. Moreover, MAMTC estimated that the costs of shipping from Taiwan, as well as duties, accounted for 6.5 percent of the cost of vacuums made in Taiwan. With these cost savings factored in, Tacony was wil- ling to test the idea of bringing manufacturing back to the United States. It hedged its bet somewhat by forming a joint venture in 1997 with its Taiwanese partner. They launched USA Vacuum Industries and opened a plant located some 90 minutes south of St. Louis in St. James, Missouri. The subsidiary was an immediate success, due in large measure to the high number of less-expensive plastic parts available locally. Tacony now transferred all of the manufacturing for Simplicity and Riccar vacuums to St. James, then in 1999 bought out its partner. With the help of MAMTC, Tacony also added product designers to develop its own lines of vacuum cleaners.

Major Upgrades in the 2000s

Despite making a number of advances in the 1990s, Tacony experienced a loss in momentum late in the decade. Sales of $119 million in 1999 were only a slight improvement over 1998. In response, Tacony upgraded its computer infrastructure and modernized its warehousing operations, while speeding up product development. In addition, it opened a new plant in Fort Worth, Texas, to manufacture commercial janitorial equipment. Sales grew to more than $130 million in 2000 and the company was set up for further growth in the new century. Tacony added to its janitorial equipment business by acquiring Texas-based CFR Corporation in 2000. Founded in 1985, CFR manufactured a state-of-the art line of high-end commercial carpet cleaning equipment. It pioneered the concept of recycling and filtering cleaning solutions for an environmentally sound cleaning system. CFR's list of products grew to include vacuums, a blower/dryer, and an ozone generator. Tacony also expanded on its core sewing business in 2000. It acquired six-year-old The Finishing Touch Thread Co., a Knoxville, Tennessee-based company that distributed embroidery products aimed at the hobbyist. In addition, Tacony introduced the Origins line of home embroidery software, capable of creating designs from a range of sources, including scanned images and original artwork. The patented digitizing software translated the original into an embroidery design, complete with stitch type, stitch sequence, design segments, color sequencing, and color match. Tacony then bolstered its presence in the embroidery marketplace in 2003 with the acquisition of Nancy's Notions, the catalog operation of Nancy Zieman, host of the popular PBS television series Sewing With Nancy.

Aside from embroidery, there was another growing hobby in America that might have an influence on Tacony's future: "scrapping." Estimated as a $2.5 billion industry in 2004, scrapping involved the decoration of scrapbooks that contained family photos and other memorabilia. Rather than an individual activity, scrapping was emerging as a modern day version of the quilting bee, an excuse for women to get together and socialize while at the same time preserving family history. It grew out of the same heirloom tradition associated with embroidery, prompting Tacony to modify some of its embroidery machines so that they were also capable of personalizing paper scrapbook pages. Whether scrapping would ever have a major impact on Tacony's revenues, which grew to some $150 million in 2003, remained to be seen. However, as had been the case throughout its history, Tacony was nimble enough to change with the times and as a result was likely to prosper for the foreseeable future.

Principal Subsidiaries: Baby Lock USA; Blakeman's Floor Care Parts & Equipment; CFR Corporation; Elna USA; Nancy's Notions; Regency Ceiling Fans; Riccar America Company.

Principal Competitors: Singer N.V.; Hirsch International Corp; Necchi S.p.A.


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