Syverson Tile & Stone

Dave Syverson, who runs Syverson Tile & Stone with his brother Steve, admits sales are down a little, but the company hasn’t had to make the massive cuts like others in the trade.

Certainly part of that is due to a comparatively stable economy in the heart of the Midwest, but credit is also due to the Syversons themselves. As the third generation to guide the operation, they still rely on a business philosophy that’s long on seeing each job as a win-win situation for all involved.

Not that they aren’t afraid to take drastic measures, either. What else would you call a strategic decision made earlier in the decade to abandon the retail side of the business to become a wholesale supplier for retail accounts that benefit from the family’s years of experience?

HOBBY SHOP?

It’s perhaps indicative of the Syverson family’s philosophy that Dave Syverson describes the birth of Syverson Tile & Stone as, “a happy accident.” For a young couple in 1932, it probably didn’t initially seem that way.

Ray G. Syverson Sr. learned the tile-setting trade growing up. He might have continued on that course except he developed an allergy to Portland cement and was told by a doctor he’d have to quit doing tile work. Rather than give up completely, he began to train his own crew.

And, he had an ace-up-his-sleeve in his wife, Ruth.

Ruth Syverson had left the family farm and gone to work for a manufacturing company near her Philip, S.D. hometown, learning bookkeeping and handling accounts payable and receivable.

“When she would finish a roll of paper on her adding machine, she would turn it over and use the other side,” recalls Steve Syverson of his grandmother’s frugalness. “It was still perfectly good in her view.”

The couple formed a natural partnership, with Ruth handling the office tasks while Ray Sr. ran the crew. Both knew the value of a hard day’s work, which they passed on to their children and grandchildren.

The current generation of Syversons also grew up hearing stories about how their grandfather would travel around looking for new homes or buildings that were going up so he could sell his services to the site foreman.

“He built a really solid reputation on the quality of his work,” Steve Syverson says. “And, with my grandmother handling the office, they were fair on their pricing and always paid their bills. Over time, they became known as people worth doing business with.”

It’s probably not surprising that their only son, Ray Jr., started working there as a tile setter before moving up to become an estimator and project manager. He took over as president in 1976.

The senior Ray Syverson may have started his business with a bucket of tools, but it didn’t stay that way. By the 1950s, the company had gotten into the tile-distribution business.

“Being where we are, we just had to supply ourselves,” says Dave Syverson. “Our main tile line at the time was American Olean®, and it still is to this day. When we picked them up, it was a good company to have.”

In much the same way, the company first got into doing stonework in the late 1950s. The firm’s first stone shop took up the approximate space of a two-car garage, employed two men, and utilized belt sanders and a hand-cranked saw.

“It was mainly for doing marble vanity tops, fireplaces and curbs,” he says. “My dad used to joke that from the time we got into the stone business until about the early 1980s it was more of a hobby; we really didn’t make any money at it.”

Dave Syverson notes that the addition of some stone-working capabilities wasn’t an issue with marble suppliers in Minneapolis and Milwaukee.

“We simply went from ordering curbs and vanity tops from them to ordering the full slabs,” he says. “My grandpa and dad were friends with them and that friendship continued on.”

Ray Syverson Jr. often lamented the passing of those relationships, his son adds. Particularly in the 1950s it was a time when the Syversons were invited to the big city to attend ballgames, and the family reciprocated with hunting excursions.

“It was a real tight-knit group that was more interested in seeing each other succeed,” says Dave Syverson. “Now it seems like everybody’s out for themselves, but in the early to mid part of our company’s history, a lot of knowledge passed back and forth.”

FAMILY BACK-UP

Certainly some of that knowledge was passed on to Steve and Dave Syverson, who started in the business the way their father did: working on the tile-setting crews or the warehouse during summers and school vacations.

However, the two men took distinctly different paths to get to where they are today.

Steve Syverson knew while he was still in high school that he planned to join the family business. He attended a local college for a year, but has been full time there since the early 1980s.

“I just always knew that this was the place for me.” he says.

Dave Syverson, on the other hand, earned a degree in business administration from the University of Nebraska, and then went to work in marketing for First Data Corp. before joining the company in 1993.

“I’ve always been more on the sales and marketing side of the business, while Steve is more on the operational side,” says Dave Syverson. “We’ve got a little different personality types, and his strengths are my weaknesses and vice versa. Both of us have been able to find something to do here, we can have our own successes, but we’re able to back each other up, as well.”

And, it isn’t like that’s not much to do. As the company took shape under Ray Syverson Jr., it expanded its distribution of tile products, culminating with Syverson Tile & Stone opening a second location in Fargo, N.D.

As with the Sioux Falls operation, Fargo started modestly, with manager Lisa Dirk selling tile from her home. From there, it expanded to a small store and warehouse, and then a larger warehouse. Later, stone fabrication joined the tile operation.

Finally, in 2003, the Fargo operation moved into its current 20,000 ft² facility that includes a 5,000 ft² stone fabrication shop.

The stone side of the operation also continued to grow in Sioux Falls, although not too spectacularly at first. Dave Syverson says when the company moved into a new building in 1979, the stone shop expanded slightly and added a used Park Industries Pro-Cut saw to replace the hand-cranked Cardinal saw they’d purchased 20 years before.

At about the same time, with marble on the decline, the shop did its first granite countertops and hired a third employee.

The Syversons haven’t been afraid to seek out new and different opportunities, and at one point also sold brick and exterior stonel. The sale of that part of the operation to a North Dakota company in 2002 allowed the building of the new facility in Fargo, as well as funding the expansion of the Sioux Falls stone shop and warehouse.

Dave Syverson explains that the new owners of the brick company also leased the prior stone shop for use as a warehouse, allowing Syverson Tile & Stone to build a new 8,640 ft² stone shop.

“It’s about 50 feet from the old shop, but we did tilt-up construction and put in an overhead crane,” he says. “We designed the shop to have a little bit more flow. We’ve got raw product coming in one side, a nice staging area where we can put everything together and map it out. It then flows down the shop and gets loaded out as finished product through the other door.”

The facility has a water-recycling system, and air, water and power in several spots around the perimeter to give some flexibility in how it’s used. And, the company has gone to a complete array of Park Industries equipment, including a Destiny CNC, two Pro-Edge® edge machines, a Wizard and a Yukon saw (which still works side-by-side with the old Pro-Cut).

The Fargo shop is similarly equipped, except for the Pro-Cut, which Steve Syverson compares to a Volkswagen Beetle which may have 700,000 miles on it, but is still being use for the daily commute.

“We think it’s a testament to Park’s machinery,” he says. “Here’s a saw we actually bought used, but as long as we maintain it properly and we have Park nearby to take care of our problems, we’ve been able to use it every day and it still makes us money.”

GOING WHOLESALE

The steady growth of Syverson Tile & Stone would have warmed Ray Syverson Sr.’s heart. And, he probably would have approved of the 2002 decision to take the company wholesale, as well.

Dave Syverson says particularly as the tile-distribution and stone-fabrication portions of the business grew, it ran into conflicts with people who were representing its lines in outlying areas.

“Sioux Falls is a natural trade area for a lot of these places,” he says. “Someone would drive into town and look in our showroom. Sometimes they wouldn’t even tell us they were working with one of our dealers. They’d buy and then we’d get a call from one of our customers saying, ‘I sent Mrs. Smith to see you and you sold the job; so why should I show your samples?’”

It was at about the same time that the Big Box stores were first looking at moving into Sioux Falls, and the Syversons realized they were also concerned about jeopardizing the business with the contractors, cabinet shops, kitchen and bath shops, designers, architects and specifiers who had been their clients for years.

“We looked at all the accounts we have in our entire trade area and projected what we thought they could do,” Dave Syverson says. “Then we decided we were going to focus on the wholesale distribution and fabrication rather than the retail side of the business. We figured if we could help our customers who are local business people to grow their businesses, they would stay loyal to us and they have.”

He admits that some clients were skeptical when the company made the switch to wholesale only, and the first year the company’s sales dropped by almost $1 million. However, for a firm that until recently enjoyed an annual growth rate of 12 percent to 15 percent, the numbers bounced back quickly, and today it has more than 600 active accounts spread over four states.

At the same time, Dave Syverson says what the company does really hasn’t changed that much, although on the stone side of the operation its customers today range from large regional cabinet shops to smaller kitchen and bath dealers to tile contractors offering countertops to expand their own operations.

“Probably 90 percent of our jobs are furnished and installed by us where we also do the template,” he says. “We do all the legwork, and if they need to come in and look at stone in our showroom, we show them the stone and tell them the story behind the slabs. If they want to talk sinks or layouts, we do that. But, if our customer has a showroom and wants to work from there, that’s okay, too.”

The Sioux Falls showroom is about 3,500 ft² and designed to be more of a selection gallery. Due to its location, there really isn’t a full-service stone distributor in the immediate area, and so the company buys regionally and does some of its own stone importing, as well as offering CaesarStone® quartz surfaces.

If a customer wants to go out to the yard to pick out a particular slab from the company’s inventory of about 300 slabs, that’s encouraged by the sales staff.

Syverson says perhaps the most-difficult part of making the change to selling wholesale has been developing a pricing structure, because of different discounts the company offers to its clients.

“It’s been a learning curve, but we always quote a retail price in our showroom per-square-foot,” he says. “And, we still get people who came in who bought direct from us when they built their house in 1975, and they want to again. We explain that we’ve made a change, and we’ll put them in touch with somebody in the trades to handle their project for them.”

BUILDING FOR THE LONG HAUL

While the idea of helping others grow is certainly a fine one, the Syversons also found that going wholesale avoided the heavy drop in sales the brothers heard about from industry friends when they attended Coverings this spring.

“Even adding in some of the bigger flooring stores on the tile side, our biggest account is less than three percent of our total sales volume,” says Dave Syverson. “Guys can go up and guys can go down, but we don’t have all our eggs in one basket. We’ve got a pretty nice collection of big, medium and small accounts spread across our trade area.”

After being flat in 2008, he estimates sales are off about nine percent this year, but the company hasn’t had to resort to laying off any of its approximately 85 employees. That’s partly due to the versatility of its installation crews.

The 18 installers include three crews who started in tile, then learned stone fabrication and installation. Additionally, many of the tile setters are trained to put in stairs, risers, tops and similar stone items.

The stone shop in Sioux Falls employs 12 fabricators and puts out about 1,200 ft² of finished product per week, while the Fargo team is half that size and does about half the output.

And, then there’s that expanding trade area. Along with Sioux Falls and Fargo, the company serves parts of western Minnesota and northwest Iowa, and has a growing stone presence in western South Dakota with a 7,500 ft² tile-distribution facility in Rapid City, managed by Kristi Myhrer. Like Fargo, they are starting small and hope to grow with the market.

While Syverson Tile & Stone has template/install customers in that area, the company has also sent its own installers out on larger jobs, such as a new hotel being built in nearby Deadwood, S.D.

“We’re fabricating and installing the entire hotel,” Steve Syverson says. “They considered prefab direct from China, but the owner and the contractor decided to go with us because they knew we’d get it done right and get it installed properly.”

Because the entire Black Hills area is attracting new residents happy to put in large homes, one future possibility for the company would be to add a stone-fabrication shop in Rapid City to complement its tile operation.

“Right now, we’re going to keep one eye on the national economy and one eye on what we’re doing and probably let things stay the same for awhile,” Dave Syverson says. “That’s one possibility, but we’ve also asked ourselves if we should consolidate our stone fabrication and put it in one central location. If we did that, we’d have to go digital for all three markets.

“If it looks like the recession starts to ease next year, we’ll go back into more of a planning mode.”

One area where the brothers are taking it easy is with the next generation of Syversons. Steve has two children and Dave has four, and while they feel they’re building for the long haul, they don’t want them to feel pressured to go into the business, just as they weren’t.

“We know there are few companies that make it to the second generation, let alone the third,” Dave Syverson concludes. “There are many external factors that can take a company down, even if you’re doing everything right. We’re hopefully laying the right foundation so we can hand them something that will be prosperous and enjoyable.

“I want them to look forward to going to work every day, just like I do.”

This article first appeared in the September 2009 print edition of Stone Business magazine. ©2009 Western Business Media Inc.