by Alex Vocuolo Special to Delaware Business Times Peggy Hinton has been in the family business for more than 50 years. She joined her father’s brick company right after she graduated from high school to ...
[caption id="attachment_21500" align="aligncenter" width="800"] Peggy Hinton, 70, is president of Delaware Brick, a business her father John Schauber incorporated near Prices Corner in 1946. There are four locations now.[/caption]
by Alex Vocuolo Special to Delaware Business Times
Peggy Hinton has been in the family business for more than 50 years. She joined her father's brick company right after she graduated from high school to help an aging accountant with office work. At the time she wasn't thinking about a career in brick - maybe the Peace Corps - but her father was persuasive.
"He was hoping that I would come in and assist in the office," Hinton said. "And I did that, and I just never left."
Today Hinton is the president of Delaware Brick, a third-generation brick distributor with locations in Wilmington, Dover and two in Maryland. The company sells brick and other masonry products, supplying residential and architectural construction throughout the mid-Atlantic region. It has 48 employees.
Hinton, 70, is also a firsthand witness to how a family business can endure over multiple generations.
Family dynamics have shaped Delaware Brick from the beginning. John G. Schauber, Hinton's father, faced his own quandary about whether to remain in the family business. His father owned a brick plant
in Chestertown, Md., which was largely run by his five sons. After his father died in the early 1940s, Schauber decided to set out on his own.
"There were a lot of children in that small manufacturing plant, and I think after my grandfather's death it changed the family dynamic," Hinton said.
Hinton said she doesn't know why exactly her father left the family business, but suspects he wanted to avoid the tension of running the plant with his four siblings. "My dad was a very calm and peace-loving man," Hinton said.
Schauber moved to Delaware in 1941 and spent the next few years renovating houses around Wilmington while he searched for a location. He found one just south of New Castle, and the business incorporated in 1946. The plant property also held a red clay deposit, which would serve as the source of new bricks for the next three decades.
Meanwhile, as the business struggled to get its footing, Schauber and his wife had 16 children. Many of the 11 girls and five boys would cycle through the family business at some point in their lives. But Hinton was the only girl to stay on as a career. She was joined by four of the five boys.
The first transition came after Schauber decided to retire in 1978. This was around the time that the company had exhausted the red clay deposit and had to either source raw material from someplace else or stop manufacturing. The company already offered brick products from other manufacturers, so the decision to switch over to distribution was a natural one.
Who Schauber would leave the business to was less certain. His main concern, according to Hinton, was balancing the needs of his employees with his desire to keep the business in the family.
"It was real important that he also consider his family of employees," Hinton said. "I think they were every bit as important to him." Many of them, she added, had stuck with the company through its rough early years, and her father felt a deep loyalty towards them.
According to Hinton, Schauber had three options: sell the business to another company, pass it on to family members or pass it on to key employees.
One aspect of the process that both frustrated and drew admiration from Hinton and the other family members in the com-pany was that Schauber made his decision behind closed doors, working mostly with his accountant to hammer out the details.
"My dad chose to make the decision entirely on his own," Hinton said. "Perhaps because of the times or perhaps because it was a generational thing, there was no discussion as to what he was going to do until he knew what he was going to do."
His final decision was nonetheless a compromise. He divided ownership among the five family members who worked at the company and two key employees. One of the employees would become the president, but decision-making was still spread among the owners due to a very active board. Not everyone in the family was happy with the arrangement, especially those outside the business, Hinton said, but ultimately she recognized the decision was her father's to make.
"Delaware Brick was a very unique situation because of the size of the family," said Barry Crozier, director of business development for Belfint, Lyons & Shuman, an accounting firm that assisted with a later transition at Delaware Brick.
He explained that with any family transition it can be difficult for an owner to convey the financial situation to people outside of the company. While a business may seem to be growing, he added, the actual financials may be complicated. Crozier characterized Schauber's approach as fair, however, and noted that the family's overall stability and decency probably helped its case.
The second ownership transition took place in 2009. In that case, the lack of an assertive single owner, Hinton said, actually made the transition more difficult, even if more transparent.
"To my father's credit, I believe he kept the process moving both steady and forward," Hinton said. "I don't believe we learned that lesson well when we started the second transition. We tolerated distractions from
our attorney longer than we should have, were too reticent to question figures offered by our accountant, and too patient waiting to know if a senior stockholder would settle."
Since then, Hinton said, the company has performed well despite the hiccups.
As for Hinton, the last family member in management, she is sticking with the company for now. She still feels needed, she said, and is proud to keep the family name in the 70-year-old company.
Her advice for other companies considering a family succession?
"Stay on it and expect compromise in the process," she said. "There's a real give- and-take in this process but the end result should be that it was a fair transaction. And never be afraid of the change. I believe it's good for business."
This is the first in a series on family-owned businesses. Delaware Business Times will accept nominations in March 2016 for its annual Family-Owned Business Awards.