Founder’s maxims still guide modern company
Four generations do business in Bellingham

by Christopher Key

 

 

Robert I. Morse was an early riser and enjoyed morning walks along the Embarcadero in San Francisco. There, he met an older businessman named Pierre B. Cornwall, who would become Morse’s mentor. Morse accompanied Cornwall on a trip to Bellingham Bay in 1883 and responded eagerly when the older man offered him a position managing his interests in the area.

Morse owned some property in San Francisco, which he sold for $3,000. He used the money to purchase hardware, paint, oil, wallpaper and stationery. With his wife and infant son, he set sail for a town called Sehome that, like many western towns, had little to offer except dreams of an indefinable future.

By early 1884, Morse had opened a hardware store on Elk (now State) Street. The building was owned by Isaac Kalloch, who, like Morse, was a native of Maine. Morse paid no rent, but worked on improving the building instead. His family occupied rooms on the second floor and he shared space on the main floor with D. R. Caldwell, who operated a drug store.

Early in his career, Morse developed a philosophy of business that became an enduring motto of the company he founded: “Sell ‘em low – send and get more.” He was also a great believer in the power of advertising. During his first week in business, Morse had a stack of handbills printed up and was handing them out to everyone in the area. Not wanting to wait for business to come to him, he made and printed his own signs, posting them all over the Bellingham Bay area.

He was an early advertiser in the New Whatcom Reveille and, during hard times, was often its only advertiser. Eventually, he would develop signs known as “tin men” that were as ubiquitous in Whatcom County as Burma Shave signs were elsewhere. It worked so well that before the year was out, he had taken over the whole main floor of the building and added general merchandise and a line of seeds to his stock.

In addition to his advertising, the Reveille regularly printed “The Maxims of Robert I. Morse.”

“A square deal for everybody.”

“Have no enemies to punish; many friends to reward.”

“Remember an ounce of loyalty is worth a pound of cleverness.”

More than just a businessman with uncanny judgment, Morse was also a genius at marketing and merchandising. When evangelist Billy Sunday came to town, Morse presented him with a Majestic stove, which was one of the best-selling products in the store. He staged a bicycle parade to promote the brands he sold and kept a black bear in a cage near the store.

While the retail business grew, Morse was also developing a wholesale business to the many small crossroads stores throughout the county. He employed quite a few traveling salesmen to drum up business in the field and he made sure they left people with a good impression.

“A corporation may spread itself all over the world,” he said, “and may employ a hundred thousand men, but the average person will form his judgment of it through his contact with one individual. If this person is rude or inefficient, it will take a lot of kindness and efficiency to overcome the bad impression. Every member of an organization who, in any capacity, comes in contact with the public is a salesman.”

By 1902, the business had prospered to the point that Morse built a new brick and stone structure next door to the frame building on Elk Street. Meantime, New Whatcom became Whatcom, swallowed up Sehome, and eventually merged with Fairhaven to form the city of Bellingham. Morse liked to point out that he had done business in four towns without ever changing locations.

The business was incorporated in 1897 as Morse Hardware Company with an initial capitalization of $25,000. That same year, Morse built his family a Victorian home on Garden Street that was eventually listed in the National Register of Historic Places in 1977.

Robert I. Morse died in 1920 and his oldest son Cecil took over the company. Cecil helped guide the company through the Great Depression without resorting to layoffs, although many employees had to take wage reductions. In order to meet the demands of the mining, timber, fishing and shipbuilding industries, Cecil oversaw a major expansion of the company’s industrial supply arm. He was ably abetted by Robert I. Morse’s youngest son, David, who entered the business as a salesman.

Morse Hardware celebrated its 50th anniversary in 1934 and the Bellingham Herald published a special edition in commemoration of the oldest mercantile business in Whatcom County. By this time, more than 95 percent of the company’s business was in the wholesale trade and there were 56 employees.

World War II brought a surge of shipbuilding business to Bellingham Bay. Most strategically important materials were closely controlled by the government and Cecil Morse positioned the company to bid on the highest priority projects.

The company rode high on the postwar construction boom, especially the many projects going on at the Western Washington College of Education. When the Korean conflict started in the early 1950s, David Morse assumed responsibility for shipbuilding and heavy industry sales. Bellingham Shipyards Company was the primary customer.

In 1953, Mobil Oil started the area’s boom in refinery construction and helped define a new era for Morse Hardware. The company developed a relationship with construction giant Bechtel Corporation, which led to a great deal of other business as further heavy industries sprouted in the area.

After 57 years in the business, Cecil Morse died in 1958, and David Morse became the firm’s third chief executive. He spoke about the company’s philosophy at the 75th anniversary celebration in 1959.

“We’re a service organization first,” David said. “If we ever lose sight of that, we might as well close our doors.”

David put a lot of effort into expanding the company’s business in the new state of Alaska and oversaw development of the company’s steel service center. The first warehouse was located on Railroad Avenue and would become increasingly important as shipbuilding tapered off and the fishing industry began its long decline.

The company moved out of the retail hardware business in 1960 and became a member of PRO Hardware, Inc. PRO was a voluntary association of hardware wholesalers devoted to helping its members build merchandising, marketing and promotional systems for their retail customers.

David Morse was named Merchandiser of the Year in 1969 by Hardware Merchandiser magazine. His sons Robert (Bob) and David, Junior, were elected to the board of directors that year, having grown up in the business.

The success of the steel business was such that the company built a new 27,000 square foot warehouse on property it owned just behind Bellingham Technical College. In 1975, Bob Morse became the fourth family member to head the firm and the advent of the third generation. He led the company into its centennial celebration in 1984.

The hardware business changed dramatically in the ensuing years and in 1994, the company announced that it would no longer be a wholesaler in that market. The industrial supply division was sold in 1998, enabling the company to focus on what had become its core business: steel. But the company offices remain in the building on State Street that has seen so many changes over the years.

Mike Morse, representing the fourth generation of the family, is now president. He did his undergraduate work at University of Puget Sound in Tacoma and received his MBA from Seattle Pacific University. He pursued other interests for seven years before coming back to the family business

“We’re now a value-added distributor,” Mike said, “buying steel from mills all over the country and the world.”

Morse Steel’s customers fall into four categories: original equipment manufacturers (OEM), like cook stove maker Wood Stone; fabricators, like Pederson Brothers; maintenance and repair operations (MRO), like Intalco and the refineries; and construction, consisting mostly of rebar for concrete reinforcement.

Like his predecessors, Mike believes in being on a first-name basis with his 55 employees and in understanding all facets of the business.

“I enjoy one-on-one interaction,” Mike said, “talking with people rather than at them. My passion is to get in there and get my hands dirty. Dad (Bob) had to juggle three divisions and couldn’t get too deeply involved.”

He’s been president of the firm for about six months and appreciates the safety net provided by Dad Bob and Granddad David.

“If I’m not screwing up half the things I try,” Mike said, “I’m not trying enough new stuff.”

While he has worked in most areas of the business, he admits that he would not have been interested in running the company before the divestiture of the other divisions.

“Now we’re just one business, one company,” Mike said, “and that’s a better fit for me.”

The ability of the company to change has contributed greatly to its survival.

“Flexibility allows you to sell off a division that’s not doing well,” Mike said. “Dad is an amazing finance guy. He sold the right pieces of the company at the right time. Selling the industrial supply division was a great move.”

Bob didn’t pressure his son to come into the business.

“When I did decide to come on board,” Mike said, “Dad helped make sure it was the right fit for me and that I reported to people other than him. Our relationship has grown a lot.”

Not that everybody in the family always agrees.

“Grandpa is more sentimental about family and business connections,” Mike said. “Dad is less sentimental about holding on to businesses.”

The company did about $13 million in business last year, but, as Mike points out, top-line growth doesn’t necessarily give an accurate picture of the business. That’s because of the constant fluctuations in price of commodities like steel. Other indicators show a steady growth in profit margin and in tons of steel shipped. The real growth is in processed steel.

“I see a great potential for working more closely with our OEM accounts,” Mike said. “We keep a database of CAD (computer aided design) drawings for our customers. They can call up and tell us they are building five units. We can check the database, find out what parts are needed and ship them out quickly. The customer doesn’t have to spend so much purchasing time on what may be a very cheap commodity.”

Growth can be challenging at times.

“We’re bursting at the seams in Bellingham,” Mike said, “and we have a small branch in Wenatchee. We’ve added a shift to keep up with demand.”

Technology is helping the company stay competitive. They have a new crane at the warehouse that uses electromagnets to lift the steel instead of chains and hooks. This not only improves efficiency, but greatly enhances worker safety. Mike has implemented a new stacking system for inventory that also speeds the filling of customer orders.

“This crane is a real innovation,” Mike said. “We are the first to implement its use in this country. It had the additional effect of freeing up a lot more space for some new rebar equipment.”

He admits that the steel industry hasn’t been as open to innovation as some other industries.

“We struggle with change just like anybody else,” Mike said. “There are a lot of great ideas out there; the challenge is implementing them. The perfect solution is not as good as one you can implement. One change makes the next step easier.”

Not everybody likes the changes at the warehouse.

“What saves hours at the warehouse,” Mike said, “adds hours for the salespeople. So we added another salesperson and some new systems to help things run smoothly.”

Working through such challenges with the people involved helps give employees a sense of ownership in the company.

“They really care about taking care of the customers,” Mike said. “We have to do what’s right for them, not just for our family.”

That attitude is very much a part of the corporate culture at Morse Steel.

“We jump as high as the customer says jump,” Mike said. “It’s a more expensive way to operate, but it pays off in the long run.”

The company recently conducted a survey in order to help prioritize customer service.

“There’s no sense in spending money on customer service initiatives that the customers don’t care about,” Mike said.

He credits his leadership team for providing the resources to get the job done. Jeff Anderson is vice president of sales, Rich Olson is the chief financial officer, and Jim Ahrens, who has been with the company for 35 years, is vice president of operations.

“It’s a neat balance,” Mike said. “Three of us are in our 30s. Jim has a steadying effect on us.”

The learning experience that helped Mike most with running Morse Steel was volunteering to work with high school kids as both a track coach and tutor.

“That helped me learn to be proactive,” Mike said, “and to build relationships. Those skills serve me well here.”

Morse Steel is closing in on the ripe old age of 120. It’s not your grandfather’s hardware store anymore, but it has played a big role in the development of Bellingham. Over the years, its mettle has been tested and judged to be strong.