The new Jeld-Wen Management Celebrating their IPO Success

The new JELD-WEN management celebrates their IPO success.

Now anyone can buy stock in the largest door and window manufacturer in the world. Quite an accomplishment for a company with humble beginnings in Klamath County. The opening day of the stock was a success, starting at $23 per share, rising 15% in value by the end of trading.

Klamath would have been proud if this IPO happened when Jeld-Wen was at the top of it’s game in 2008; the Wendt family and the employees who invested their wages back into the company would have amassed far more wealth. It is a completely different entity now, leaner, meaner and less sentimental about shuffling assets.  The founder Dick Wendt died a billionaire in 2010 just after the real estate crisis began and his heirs wasted no time in liquidating property assets. Dick was always keen on investing close to home, keeping headquarters and major assets in Klamath. The impact that Jeld-Wen and the Wendt family investments had on Klamath has been largely under-appreciated. It would not be a stretch to attribute in some way, all of the significant growth and renovation that Klamath experienced from 1995 to 2008 to their investments and operations.

Klamath leaders and citizens fail to comprehend how difficult it will be to regain economic stability without a replacement benefactor. There’s nobody left that can fill shoes that big. The only option remaining is to cultivate a new growth company, unlikely as it may be due to the choices made by local government over the past decade. In a delusional haze, Klamath County continues to damn itself with a repulsive regulatory structure. If today’s system had been in place in the 1970s, Jeld-Wen and nearly everything else Klamath later counted as economic success would have never occurred; the town would be nothing more than a train stop. The demise of the economic base began when the federal government cut back timber harvesting. Jeld-Wen responded by seeking raw materials elsewhere and geographically diversifying. Later, it innovated a shift in global real estate by inventing the time share model in the form of Trend West Resorts, which they liquidated for a  huge profit, followed by further diversification into construction and resort development. They invested in significant projects close to home, such as Running Y in Klamath Falls (sold off) and a myriad of upscale resort properties in western states (also sold off after 2010).

Klamath’s Tendency to Bite the Hand that Feeds It

Exploiting the 2003-2008 real estate and construction boom, Klamath County and the City of Klamath Falls imported building codes and regulatory practices from draconian jurisdictions of the Portland, OR and San Francisco, CA ilk. Many such not-so-great ideas spill from junkets where cities and counties meet to exchange methods for exploiting the citizenry. Klamath’s local government either didn’t understand or didn’t care how urban vs. rural factors can sustain or kill economies with the same policy structure. Or more directly–they didn’t comprehend how those policies would sabotage Klamath’s future. They still don’t, as evidenced by the policies that remain in place. County, if you really want to make economic growth possible, dump the new code structure and restore oversight to what it was in 1990: minimal.

regulationEscalating regulations are painful to investors everywhere, but urban economies are better equipped to endure. The scale of activity and population density in big cities compels investors to jump through hoops because the demand ensures compensation for extra costs. The only time investors could stomach similar policies in Klamath was near the end of the real estate bubble. On the tail end of the property investment wave that swept the country, Klamath experienced a limited renaissance when frenzied buyers were willing to cover escalating costs. Eight years later, how is it possible our governments have failed to respond to the obvious: in small communities, regulatory overburden freezes both incremental improvements and new construction. Dick Wendt invested mightily in politicians who were keen on reducing barriers to business, politics being one of the few endeavors he was unable to master.

Now Jeld-Wen is public and ALL of the senior management has been replaced. As recently as 2011 Dick’s son–Rod Wendt–was still running the company. Other people we knew, such as Ron Saxton retained management positions. That was the year Jeld-Wen sold 65% of the company to a private equity firm in Canada. There was little news about the company after that, but they clearly whittled down the old wood. They plodded along, attempting to maintain production capacity for a larger market, hoping construction would recover. Finally, in 2017, home sales are up nationwide and new construction is poised to rise. Venture Capitalists tend to boot old management in favor of ivy league MBAs. The new President and CEO of Jeld-Wen is a Harvard MBA and Jeld-Wen’s headquarters has been moved to North Carolina. The future of the remaining Klamath operations is unclear.

Wake Up to a Different Reality

The Jeld-Wen IPO punctuates the exodus of the largest home-grown enterprise Klamath has ever witnessed. Klamath is on it’s own now, no safety net from private sector or government. President Trump is setting the tone that stupid regulations need not be enforced. If anyone at our local governments thinks that we need to keep the regulations added in the past 20 years to appease Salem, they do so to the detriment of our local economy. Are we really better off enforcing policies written by and for Portland, Eugene and Salem? The worst that could happen if we rolled everything back would be to lose a little infrastructure funding from the state. As long as we don’t harbor illegal aliens, the federal government will fill the deficit. Klamath has never had a better chance to reduce the quagmire, if only our leaders had fortitude to make it so.