Long before Nabisco and Philip Morris, Yamanouchi Consumer and Wasserstein & Co. arrived on the scene, Harry & David was a known quality.
The brand packed enough clout to put the Rogue Valley pear and gift company on hundreds of New York business executives' gift buying list every Christmas.
Drew H. Reifenberger, executive vice president and chief customer officer at Harry & David Holdings, has left the company, according to a Securities and Exchange filing made on Thursday.
According to the filing, Reifenberger departed the Medford-based gourmet food and gift basket company on Jan. 12. The circumstances of his departure were not revealed.
Reifenberger joined the company Feb. 18, 2010. Previously, he held senior management positions at Turner Sports Interactive, a business management consulting company; NASCAR Inc., a sports company; Super Deluxe, and Global Client Solutions LLC.
It was decades of incremental success that attracted national companies, then multi-national corporations and finally private equity players to pay ever-increasing prices for a vertically integrated pear company.
"All around the world people know about this place; it's really what put Medford on the map," said Bill Eckart, a member of the Agri-Business Council of Oregon Board and former general manager of the Fruit Growers League of Jackson County.
Now, the future of Southern Oregon's largest agricultural-related employer is uncertain after Tuesday's disclosure of paltry holiday sales, an expected calendar 2010 loss of $57.6 million and the likely inability to borrow against a $105 million credit line.
"It makes you realize how critical capital is for any business to be operative and successful," said Bill Thorndike Jr., president of Medford Fabrication and a former member of the Portland Branch of the Federal Reserve Bank of San Francisco. "Particularly in something like agriculture, where products are geared for seminal events like holidays, the demand to bring capital to bear so you can take advantage of the market is critical."
Although Harry & David said it hopes to recapitalize in the coming weeks, with large bond dividend payments due March 1, time is short for the cash-strapped company if it hopes to avoid an imposed reorganization. The company has hired two firms that specialize in handling corporate restructuring and bankruptcies.
Harry & David has repeatedly tried belt-tightening in the past, laying off scores of well-paid technical and marketing employees and both middle- and upper-management. Those cuts have rippled through the local economy, creating fewer home buyers and retail shopping dollars.
"Clearly, because of its size, it's a big deal," Thorndike said. "You can think back to a time where so much here was determined on price of lumber or the value of the pear crop, but our economy and communities have diversified and grown so much over the last 50 years. While we know having that kind of traded sector activity (where goods are sold out of the area) is so critical to keeping our economy vibrant, the reality is that it has less of an effect on our community than when we were truly more of one-horse show."
In some people's minds, the die was cast more than six years ago when a group led by private equity firm Wasserstein & Co., acquired Bear Creek Corp. from Yamanouchi in June 2004 for $252.9 million. When an attempt to take the company public in August 2005 went nowhere, the initial public offering was withdrawn in May of 2008.
While the company and its employees have suffered financially, numerous sources say the Wasserstein investors have made a tidy profit.
Former Ashland Mayor Alan DeBoer, whose holdings include Town & Country Chevrolet and the Shoppes at Exit 24, said the wrong approach at the wrong time has hurt the company, if not the investors.
"It's a classic case where somebody bought a highly leveraged company so they could flip it and make a lot of money and then got caught in the downturn," DeBoer said. "The people who bought it with leveraged debt and the people who put the deals together, made millions in fees, with other people's money."
During the Yamanouchi years, Harry & David acquired great access to Comice crops it labeled Royal Riviera pears to assure it had plenty of product to meet demand. Sometimes there were just too many pears and the company merely buried them on its own acreage.
Eckart was present at a presentation when entrepreneurs suggested to Harry & David executives that there was money to be made with the excess pears — including bottled pear-halves to juice.
"They could take the low-hanging fruit and send it to Sabroso or they could use it to develop value-added products." Eckart said. "Instead, they either put it back in the field or would not pick it at all."
Communication among various departments had long been an issue, something present Chairman and Chief Executive Officer Steve Heyer said last summer created redundancy and drove up costs.
The problem was masked, Eckart said, because many key managers had long-term community connections.
"I think part of the culture was sustained because a lot of the upper-level managers had been there a long time, which gave an air of stability in the eyes of new people coming in who were working through the ranks. Then a lot of those managers were let go prematurely and it created a vacuum at the top."
Harry & David is not only a major employer, but it also contracts with a variety of local firms for services such as trucking, storage and ice.
"Everybody I know who owns a business is struggling; it's a tough time," said Mike DeSimone, who owns Cross Creek Trucking. "Harry & David makes up 15 to 17 percent of our business. If people understood what it means to this community, maybe they would send everybody they knew a gift pack next year."
No one knows what will take place in the coming weeks and months, but Thorndike is hopeful Harry & David will rebound one way or another.
"If the cards were played a little differently Harry & David could have become a public company with stockholder equity and a lot of other things in place," Thorndike said. "Unfortunately, the overall world economy became much more challenging for the people who operate in that kind of investment banking business. The reality is that this company has a great reputation, 3,000 acres of beautiful pears that grow better any other place in the world and there's value to that.
"The question in my mind is how to make it attractive to another equity group or a national marketing company who would want to put an offer together."
Reach reporter Greg Stiles at 541-776-4463 or e-mail firstname.lastname@example.org.