Tharp Cabinet still not a finished product

LOVELAND – When Don and Kayleen Fraley acquired Tharp Cabinet Corp. three years ago, the Loveland business was a healthy concern by most measurements.

Sales were growing, having reached nearly $4 million the previous year. The Tharp family – which founded the business in 1971 – had recently expanded operations into a new plant in east Loveland.

“The challenge was how to get it to the next level,” Don Fraley said.

By most measurements, the Fraleys – who left careers in the medical products industry – have done just that.

Tharp Cabinet has strung together consecutive years of better than 20 percent growth, and is on pace to do the same in 2005. Sales topped $7.7 million last year, and could reach $9.5 million this year, Fraley estimates.

Tharp’s numbers outstrip the national industry, which reports robust numbers as well. According to the latest report from the Kitchen Cabinet Manufacturers Association, cabinet sales in the U.S. grew by 16.8 percent in 2004, and were up by 12.8 percent over the first two months of this year.

For its part, Tharp has hit its stride for a number reasons:

– Northern Colorado, Tharp’s key market, continues to experience a strong housing market. Fraley estimates 95 of the company’s sales are to builders of new homes. Furthermore, 85 percent of the company’s business falls within 20 miles of the Tharp factory.

– Customers are demanding higher quality products. As recently as 2000, a majority of Tharp’s business was in oak finishes. Tharp’s clients prefer more expensive wood finishes, a fact that supports top line growth. Dollars per order were up 31 percent in 2004.

– The Fraleys invested in new technology and implemented new manufacturing systems to improve productivity at Tharp.

“The companies that seem to pick up more market share are the ones who really have been able to integrate automation into their process,” Fraley said.

Tharp went from two computers to 20. The company now produces cabinets at a rate of five homes per day, double the company’s rate four years ago.

– Two years ago Tharp added high-end countertops to its product line, which generated nearly $500,000 in sales last year.

– The company’s corporate structure was designed to accommodate growth.

“The company used to be run through two people,” Fraley said. “Now there are six key people.” The hierarchy includes some of the Tharp family. Five Tharps still work for the company, which as been pivotal to the new ownership. As Fraley said, “We didn’t have to worry about learning to make cabinets.”

The run of success continued recently when the company won a contract to supply Sheffield Homes, which is currently building in five subdivisions in the Denver market. The Sheffield deal adds to other ongoing builder contracts with Loveland-based Rust Construction, Fort Collins-based Parkside Homes, and Custom On-Site Builders of Loveland.

“The biggest thing for them (Tharp) is they have the ability to do more volume work,´ said Ed Rust, a Tharp customer since the mid 1990s. “They have the ability to take on a half dozen new builders. Before they were up to their eyeballs with what they had.”

Rust, in fact, stood in line before the Tharps would agree to take him on as a customer because cabinetmaker was so busy.

Rust praises the Tharp’s showroom upgrades, which allows his customers to view three-dimensional models of cabinets on computers before choosing the product for Rust’s custom or semi-custom homes.

“They help us as a builder to sell our product through their product,” Rust said summarily.

Tharp’s next big move is to expand the Loveland plant, a project that’s due for completion by late June. That’s when the factory will grow to 60,000 square feet from its existing 43,000, a 39 percent addition.

Fraley figures the $1 million expansion will allow the company to double its volume over the next five years.

Tharp’s toughest decision may be how fast it’s willing to grow. If it decides to expand its customer base south of Denver, the company doesn’t want to give up the kind of close-to-the-client service it now offers by focusing on Northern Colorado.

Rather than build a second plant, Fraley thinks he could set up licensing agreements with existing cabinetmakers in other markets that could work with the builders and provide installation services on a contract basis.

What Fraley doesn’t see is a change in philosophy.

Major national cabinet companies target home improvement stores and kitchen design firms to resell the product – representing about 80 percent of all cabinet sales in the country.

Small custom cabinetry shops, which account for most of the 1,100 cabinet businesses in Colorado, generate top notch work, but can only serve a few homes a year. Tharp’s model is to work directly with builders, and to work one-on-one with the homebuyer when last-minute adjustments are necessary.

“We fit in the middle” of the cabinet market, Fraley said.

If the numbers are any judge, it’s a good fit.

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