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Thursday, May 23, 2024

Manufacturing Issues Wear Thin

Like many family-owned companies, Kevork and Salpy Kalaidjian spent a lifetime building their business, making lasts and components for other shoe manufacturers for most of the past 20-odd years, and four years ago, launching their own, hand-made, high-end women’s shoe label, Salpy. Now, with one son soon to graduate college and a daughter in high school, the Kalaidjians are not so sure that they want to see their kids taking over the business, despite their success. “I just worry about the future of manufacturing in California,” said Salpy Kalaidjian. Legend and lore of sons and daughters who preserve the legacy of a family-owned business aside, the Kalaidjians are not alone when they express their concerns for their children’s future were they to take over the business. “You see parents who make a macro analysis that the industry is a dying industry and there are not a lot of opportunities,” said Joel Kabaker, a principal with SAK Financial, a wealth management firm in Encino that works with family-owned and other privately held businesses. “It has nothing to do with the kids. It has to do with the future of the industry. “You’ve got a family running a stationery store and they look around and they say, ‘who buys from a stationery store?” The Kalaidjians’ situation is a bit different. They’ve made a thriving business out of what is essentially a lost art. Kevork Kalaidjian, a craftsman with a long family history of making shoes and himself renowned in the industry for his skill at making shoe lasts, the form from which a shoe is shaped, and Salpy, a former buyer of better dresses at Bullock’s skilled at merchandising and possessing many contacts throughout the retail industry, were a perfect compliment to the task of designing making and marketing shoes when the two married. As most women will tell you, most comfortable shoes are not fashionable, and most fashionable shoes are not comfortable, but Salpy established a niche combining the two. “He just knows how to make a shoe fit,” said Steven Spodek, the owner of Steven Spodek Shoes & Accessories in Dallas. “The combination of having attractive footwear and also being incredibly comfortable is really something. They have single-handedly destroyed my comfort business. They’re so much cuter than the rest of the comfort (category).” The company’s selection, retailing between $200 and $500, features hand carved leather designs, luxurious materials like snakeskin and silks some adorned with elegant broaches and perfectly matched and sculpted wooden soles and heels. The strategy harkens back to Kevork Kalaidjian’s family history of making shoes by hand, but it also is designed to help the company compete in today’s market. Noting that there were at least 50 factories making shoes in the U.S. when the couple married in the early 80s, Salpy Kalaidjian said most have since moved overseas where labor is cheaper. “In the beginning my husband said, ‘why don’t we just make cheap shoes,’ but it didn’t give us a niche,” said Salpy Kalaidjian. “Besides, I’ve always been better and my husband’s talent is that way too. That’s the customer we understand.” Salpy further capitalizes on its niche by allowing its retail customers to purchase very small orders and to customize the shoes. The strategy has helped the company attract about 100 accounts, about 40 added in the past year alone. Business has grown large enough so that in recent months Salpy acquired its own manufacturing facility in Sun Valley, doubling the size of its plant. And there are plans to add about 10 more employees to the current staff of 30. Still, the Kalaidjians figure that they probably could not make their business model work if they were not the principal employees of their company. They worry about the increasing cost of doing business in California, and where the future labor pool will come from, enough so that Salpy’s Latino workers were given the day off recently so they could join in the Day of Immigrants demonstrations. Experts say the Kalaidjians are right to consider more than their own legacy as they ponder the future of their family business. Whether due to the business itself, the family or other factors, only one in about three family-owned businesses survives beyond the first generation. “Here you have somebody who knows how to make it, and someone who knows how to sell it,” said Ralph M. Daniel, a business psychologist whose Santa Barbara-based company, Center for Family Business Dynamics, consults to family-owned and closely held businesses. “They have all the key skills they need to be successful. However, there’s no guarantee that one or more of the children are going to have any or all of the skills sets. That doesn’t mean the children are inadequate. They may be bright and talented, but their talents may not happen to match those requirements. It really behooves the older generation to take a hard, objective look.”

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