Oreck Corporation

Another Family Business Profile from FBE…

The history of the vacuum cleaner has its roots in the industrial age, when dust and soot from manufacturing operations became too much for brooms to handle. What followed was a long line of innovators and entrepreneurs whose ever-improving products still bear their names to this day. Melvin Bissell invented the carpet sweeper in 1876. James Kirby's first cleaner used water for dirt separation and a later model used cloth to filter the dirt. James Spangler, a janitor and inventor, sold his patent for a motor-driven cleaner to William Hoover in 1908.

"All recognizable names and great contributors to their industry, but perhaps none were as charismatic and endearing as David Oreck," notes top family business expert Don Schwerzler.

Schwerzler, who has been studying and advising family businesses for more than 40 years, is the founder of the Family Business Institute

David Oreck founded Oreck Corporation in 1963 after developing a lightweight upright vacuum cleaner for the hotel industry that was so effective hotel personnel wanted them for their own use at home. That led to the idea of marketing the upright vacuum cleaner to the general public. Today, after decades of proving himself a marketer extraordinaire - especially on television - the family-run Oreck Corporation sells products throughout North and South America, as well as Europe and Asia. The company operates 475 Oreck Clean Home Center stores in the U.S. and employs 1,500 people, most of who work in the company's Long Beach, Mississippi plant.

A Crisis Of "Biblical Proportions"

On August 29, 2005, Oreck's New Orleans headquarters and the Long Beach plant were slammed by Hurricane Katrina. Advance planning saved vital data and operations, but the destruction wrought by the hurricane reached "biblical proportions." The picture was bleak, but the Oreck family and employees executed an incredible comeback that had the company operating with ten days of the event. How it happened is the stuff of legends but the essence of the story has to be the family spirit that pervades the entire company.

First, Tom Oreck, CEO and David's son, rallied the management team and established lines of communication with people in the company. They delivered a message to personnel that "If you had a job at Oreck before the storm, you still have a job at Oreck." To help employees recover, the company purchased trailer homes and set them up in the parking lot of the Long Beach plant, they trucked in food and water, and they brought in trauma doctors and insurance specialists to help people with claims. Then, after the lights came on nine days after the storm, the Oreck leadership team invited employees and their families to come together for a cookout. The idea was to provide them with a sense of normalcy and a spirit of hope in the midst of an otherwise devastating crisis.

Secrets To Success:

... respect and sense of responsibility for their employees

That Oreck was able to reestablish operations within ten days of Hurricane Katrina is testament to both the resiliency of its people and the spirit of interdependence that pervades the family-owned company. Over a third of the company's personnel lost their homes and possessions and the Oreck family did what they felt they had to do to help them recover. They demonstrated their respect and sense of responsibility for their employees and the employees in turn saved the company.

That respect and sense of responsibility are the same principles of character and integrity that David Oreck passed on to his son, Tom, who took the reins of leadership in 1998. David Oreck's presence is still felt and he continues to star in Oreck ads, but when the baton was passed, the father let go and let the son run with it.

... transition... I stepped aside and he runs the show.

"The only way to make a transition like we have is to make it a clear-cut deal," says David Oreck. "I stepped aside and he runs the show. He tolerates my points of view, but there are no problems about who is the boss. The recovery from Katrina fell entirely on Tom's shoulders and he did a masterful job. Because of that, what could have been a disaster was not because he took the ball and ran with it."

Family Business Experts Understands
Family Values and Business Systems

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