Andersen Corporation Business Information, Profile, and History

History of Andersen Corporation

Andersen Corporation is the world's largest wood window manufacturer and is believed to control roughly 15 percent of the domestic market. The 90-year-old company manufactures a wide variety of window styles, available in over 1,100 different sizes, at a single 63-acre plant in Bayport, Minnesota, alongside the St. Croix river. Although the majority of the company is owned by Andersen family members, some 27 percent of the stock is held by the employees of the company. Employee turnover is practically nonexistent at the company, which from the beginning has emphasized employee satisfaction as a top priority. Andersen relies on a nationwide network of dealers, particularly lumberyards and building supply stores, to sell its products. The dealers receive Andersen products from nearly 120 wholesale distributors.

The company was founded in 1903 by Danish immigrant Hans Jacob Andersen, on the other side of the St. Croix River, in Hudson, Wisconsin. Andersen had years of experience as a lumber dealer and manufacturer; during the 1880s, he acquired his own sawmill in St. Cloud, Minnesota. Later on, he managed a mill in Hudson, bringing with him some of his best St. Cloud employees. According to a company retrospective, when the Hudson owners asked that the workers be let go during the off-season, 'Hans refused to be disloyal to these men and resigned on the spot. He then launched his own retail lumber yard and hired the men to work for him,' assisted by his sons, Fred and Herbert.

The lumber yard was ideally situated to take advantage of the large stretches of white pine in the St. Croix river valley; another yard, in Afton, Minnesota, also began operations in 1904. Within a year of incorporation, the Andersen Lumber Company became more than just a lumber business when Hans and his sons hit upon the idea of manufacturing standardized wood window frames out of the raw pine to which they had ready access. Suppliers and builders, the Andersens believed, would realize the wisdom of accepting standard window measurements.

The venture revolutionized the window industry, for as yet there was no dependable, mass-produced window frame on the market. A success from the start, the Andersen frame business brought in $74,000 in sales during its first year. In 1905, the company signed its first distributor and adopted a 'two-bundle' method of packaging its horizontal and vertical frame pieces. Three years later, the Andersens sold their two lumber yards in order to concentrate on the window frame business; the family would reenter the lumber business in 1916 and considerably expanding its holdings before again selling off its yards beginning in the 1930s. By 1912, the company required more space, and a site was found on the other side of the St. Croix; a new plant was completed within a year and began operations with 59 employees. Sales more than doubled during the company's first decade. With Hans Andersen's death in 1914, Fred was elected president, and Herbert became vice-president, secretary-treasurer, and factory manager. That year, the company provided employees with a generous profit-sharing plan--the third oldest in the nation.

In 1921, Herbert died at the age of 36. But, as Kenneth D. Ruble noted in The Magic Circle, Fred Andersen 'proved to be a 'Jack of all trades' and master of every one--business manager, inventor, salesman, purchasing agent, civic leader, accountant, mechanic, manpower recruiter, teacher and above all one who loves and believes in his fellow man.' Fred fully implemented the business vision of cooperation and achievement contemplated by his father, whose first English words-- together boys'--were learned on the job and never forgotten.

The new Andersen president established an enduring corporate philosophy, which he called the Magic Circle. Consisting of eight links, the circle included: 1) highly trained and motivated employees; 2) sound management; 3) ongoing research; 4) a strong sales organization; 5) a distributor-dealer network based on repeat business and good will; 6) builders and architects interested in quality products; 7) consumers interested in paying for the best materials; and 8) 'the premise that in better homes and buildings on the one hand--and in a higher standard of living on the other--there is benefit to all members of the Magic Circle, from maker to user.'

In 1928, the company surpassed the one million mark in the number of frames produced. The following year, the company changed its name to the Andersen Frame Corporation, symbolizing its ascendancy to the top of the high-end window manufacturing industry. The following decade was characterized by several innovations, beginning with the production of a Master Frame, complete with locked sill joint, in 1930. Two years later, an employee named Earl Swanson (who would become the company's first non-family president in 1960, when Fred Andersen retired) designed and introduced the casement ('crank-out') window, which was the first complete Andersen window unit and the first factory-made window, as the responsibility for securing the frames to window glass previously resided with the builder or retailer. Two years later, the company introduced its first basement window. In 1937, a final name change was in order to signal the company's evolution from frame-maker to full-fledged window manufacturer.

The Andersen Corporation opened the 1940s auspiciously, with the unveiling of a new concept in window design, the gliding window. Also during this time, consumer advertising, beginning with the Home Planner's Scrap Book in 1943, became increasingly important to the company. Growth during the 1950s was fueled by the Flexivent awning window, which featured welded insulating glass and helped eliminate the need for conventional storm windows. The invention was so popular that it doubled Andersen's market share within two years, and, by 1963, ten million Flexivent windows had been shipped. The 1960s saw the introduction of the gliding door and the Perma-Shield system. Featuring a low-maintenance vinyl cladding designed to protect wood frames from exposure to the elements, Perma-Shield was, according to the company, 'perhaps the most monumental innovation by Andersen,' one which 'became the standard of the industry.'

In 1978, a year after the dedication of a new research and development facility, the window maker celebrated its 75th anniversary. Sales totaled $280 million, 75 percent directly traceable to Perma-Shield products. Through the 1980s and into the 1990s, Andersen dedicated itself to remaining 'the most popular window name in America' and maintaining its loyalty to its now greatly expanded Bayport plant and workforce. As the vast resources of raw material in the Upper Midwest had been depleted, Andersen began importing its pine primarily from the Pacific Northwest. However, through Andersen's pioneering efforts, the Upper Midwest remained the basin in which the leading U.S. window manufacturers (including such Andersen competitors as Marvin Windows of Warroad, Minnesota, and Pella Corp. of Pella, Iowa), as well as several smaller window businesses, were located.

In 1988, Kate Fitzgerald reported for Advertising Age that Andersen was facing especially stiff competition from both Pella and Peachtree Doors and that the battle was fueling increased ad spending. By that time, Andersen and Pella had moved into patio door manufacturing to complement their window specialties, while Peachtree remained a recognized leader in entry doors. Between 1984 and 1994, Andersen tripled its revenues through the addition of more customized and environmentally state-of-the-art products, claiming that it outsold its closest three competitors combined. In July 1993, Marianne Wilson reported in Chain Store Age Executive on the construction of a prototype Wal-Mart store in Lawrence, Kansas: 'The store has a sophisticated skylight system that allows 40% more daylight into the building than conventional skylights. Developed by the Andersen Corp., it features nine skylights fashioned with an 'eyebrow' design that captures early morning and late evening sun.' Andersen's unique, specially designed prototype units featured solar-optic films that dispersed sunlight evenly, resulting in energy savings of up to 50 percent annually.

In 1994, the Wall Street Journal's Joe Pine reported on Andersen's Window of Knowledge, a 'multimedia kiosk' available to retailers, enabling them to specially design their own window combinations. Implementation of the software program translated into a reduction in order errors, an increase in production efficiency, and average sales increases of 20 percent for well-trained retailers who regularly used the system. Clearly, the Magic Circle concept continued to thrive at Andersen. 'Many experts have referred to Andersen as 'the Cadillac of the window industry,' wrote Ruble, 'but a host of employees and retirees insist the reverse is true--that Cadillac is the Andersen of the automobile business.' In fact, the company's 3,700 employees--many from families in which employment at Andersen is a tradition--prided themselves on efficiency and inno-vation and were handsomely rewarded for their contributions.