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Workers stick by Jore during tough times

Robert Deneault fills trays with drill bits before
they are anodized at the New Joree Corp.
facility. Deneault worked at the company
when there were only 12 workers.

Dave Reese/ Daily Inter Lake

Each day for about the past year, Grace Lee would come to work at Jore Corp.
not knowing whether the doors to the company would be padlocked.

The Ronan company that makees tool accessories was mired in $90 million in
debt, wallowing in bankruptcy and facing a possible closure by bankruptcy court.

But Lee came to work nonethless.

It was people like Lee, who came to work and kept a positive attitude, that likely
saved the company from death, said Jerry McConnell, who was hired to
restructure the company and bring it back from the precipice.

"They had every reason to throw in the towel," McConnell said. They lost stock,
their 401s, health insurance and suffered pay cuts. "But they decided to stay," he
added. "The people here are really what made it work."

In April, dozens of Jore Corp. employees filled a bus to attend what would be the
final bankruptcy to determine the company’s fate in Missoula. The hearing would
determine whether the company would stay in a Chapter 11 reorganization, or
be forced to liquidate assets and close down under a Chapter 7 bankruptcy. The
employees brought along two songs to choose from after the hearing: Queen’s
"We are the Champions," and Johnny Paycheck’s "Take This Job and Shove It."

The Queen song was played that afternoon, when an angel appeared in the form
of business tycoon Frank Tiegs. The farmer and businessman from eastern
Washington bought the troubled company for $33 million, and renamed it New
Jore.

Things now are looking up at the company, which is housed in several
nondescript metal buildings near the base of the Mission Mountains.

Sales are up 40 percent over this time last year, and the company posted record
earnings in the first quarter of 2002.

Jore sells specialized tools and accessories, like drill bits and screwdrivers. It
also manufactures the plastic cases that hold tool sets sold at Home Depot,
Sears and Lowe’s hardware stores.

The company, which basically makes millions of widgets, "was a classic
business-school study," McConnell said.

The company was started on a good idea that went all the way to the top — only
to stumble after it got there.

One day, while building a swing set, Matt Jore thought there ought to be a better
way to hold a screw in a cordless drill. He designed the tool, patented it and
began manufacturing it. He oversaw its growth and hoped for the company to
one day be the world dominator in its field of tool manufacturing.

In that effort, the company in 2000 raised $40 million in a public stock offering.

But it was that infusion of cash that McConnell points to as being the demise of
the company. While the company was being run by a spirit of entrepreneurs, it
lacked solid financial management, he said. "There needed to be someone
there with the green eyeshades," watching costs.

While the initial public offering brought in $40 million, the company then
borrowed against it for another $30 million.

Meanwhile, sales were falling and costs escalating. McConnell saw the
all-too-familiar signs that he’d seen in other restructuring he’d done. Once the
downhill slide begins, "These things take on a life of their own," he said.

The offering, underwritten by D.A. Davidson, came at a time when "you could go
public with a dogcatcher’s license," McConnell said. "It’s a huge temptation. A lot
of companies got tempted by that, and it came back to bite them."

Within 18 months the cash was gone; the company had used it to buy equipment
and create inventory that didn’t readily translate into cash. Bankruptcy was
forthcoming, and the banks saw it. As part of the turnaround plan, the creditors
demanded that founder and CEO Matt Jore step down.

Pentair, another tool company, stepped in to buy the company, but it was Tiegs’
offer that the bankruptcy court approved. McConnell said either entity — Tiegs or
Pentair — could have worked as the new owner, but Tiegs provided a better fit
for the community of Ronan. Pentair, McConnell said, would have been "another
big company," and the workers might have been back in the same situation of
wondering if they’d have jobs in another year.

Tiegs also brought something else of intangible value: integrity. He paid
"hundreds of thousands of dollars" in employee medical claims, some of which
had lingered since before the company went bankrupt, according to McConnell.

"He had no obligation to pay them, but he did," McConnell said.

New Jore is moving ahead with a leanness and focus that emerges when
companies go through tough times.

"When times are good you lose your focus," McConnell said.

McConnell, 60, had worked at General Electric for 20 years and had done
similar business resuscitations. This one, though, was Montana’s largest-ever
bankruptcy, and the company was the largest employer in Lake County.

In other business turnarounds, McConnell saw how displaced workers could
have merely gone down the street and gotten another job — they didn’t needn’t
the perseverance that local Jore employees did.

Unemployment is at 8.6 percent in Lake County, one of the highest rates in the
state. Despite Jore staying open, that figure is the highest in five years for Lake
County. Were the company to close, hundreds of people like Lee would be out
on the streets on the Flathead Indian Reservation in a town whose main
economy is agriculture.

"It would have been catastrophic to the community had it failed," McConnell said.
"We knew if this failed, a lot of people would have gone down."

McConnell must make difficult choices in his line of work turning around a
struggling business.

"It takes a special stomach," McConnell said. "It’s like the difference between a
surgeon and an emergency room doctor. You have to like damage."

DURING THE retrenchment, McConnell directed New Jore to focus on only three
customers: Home Depot, Lowe’s and Sears, companies who are dependable
and pay their bills on time, McConnell said. He also moved the sales and
marketing staff to Atlanta and Chicago to better serve Sears, Home Depot and
Lowe’s customers.

Little things done by the employees also might have helped. During the
bankruptcy an inspirational song like "I Will Survive" or "Stayin’ Alive" was played
over the company’s computer network.

New Jore depends on a robust economy to drive sales at home-improvement
stores, and the Saturday after Sept. 11 of last year its sales nose-dived. A week
later, though, sales went through the roof, from people wanting to stay around the
house and fix things up.

Consumer demand seems to be strong now, but McConnell wonders how long
that will keep up. As a backup, he plans to broaden Jore’s fundamentals by
tapping into the industrial market, which has larger profit margins and more
stable demand.

With the worst behind the company, McConnell is now focused on the future.
He’d like to see earnings double or triple in the next three years, and with no
debt, he thinks the company has that potential.

From her front desk at Jore, Lee says her priorities are similar — but hers hit a
little closer to home.

"I’m happy I have a future here," she said. "It’s comforting to know my family is
taken care of."

Reporter Dave Reese may be reached at 758-4438 or by e-mail at
[email protected]

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