Have a heart, Harry

It takes a smart business plan and even smarter managers to create a successful company. But it takes more than smarts to create a great company — it takes heart.

For decades, Harry & David was both successful and great in becoming the Rogue Valley's leading employer and one of its greatest benefactors. But recent times have produced a reversal of fortunes that has the Medford company bleeding red ink and the community worried its franchise business may go the way of the timber industry giants that once populated the valley.

Beyond that, the actions and words of the company's new owners and managers have many in the community questioning if the Harry & David we see today is the same company we've known for all those decades.

Harry & David's story is well-known locally. Its roots date back a century, to 1910, when Samuel Rosenberg bought 240 acres of pear orchard. His sons, Harry and David (who changed their last name to Holmes to avoid anti-Semitism), took over the business and in 1934 launched what would become one of the largest mail-order food and gift businesses in the country.

The company ships out gourmet fruit, candy and other food gifts by the truck and freight-car load to individuals and businesses around the country and even around the world. But the size of those loads has dropped in recent years, as a bleak economy pushed luxury gifts out of the budgets of many cost-conscious consumers and business owners.

There have been ups and downs before as Harry & David has gone through a succession of owners over two decades. One of its more recent corporate holders was Yamanouchi Pharmaceutical, a Japanese company that eventually sold Harry & David to Wasserstein & Co., a New York private equity firm.

If the words "New York private equity firm" send a chill down your spine, you're not alone. Private equity firms, from New York or elsewhere, are first and foremost in the business of making money for their investors. The companies they buy, the employees who work for them and the communities where they're located are farther down the list.

Harry & David felt the sting of that fact when Wasserstein leveraged the company to pay off its investors and then put the new debt on the Medford company's books, leaving it with a $20-million-a-year debt payment. That's the interest on the $245 million in debt Wasserstein swung to cover its purchase.

Compound that with the Great Recession and Harry & David recorded a $20.2 million loss in 2009 and a $39.2 million loss in the 2010 fiscal year. Enter Steve Heyer, the company's new chairman and chief executive officer, who replaced longtime CEO Bill Williams earlier this year.

Heyer comes to the job with top management credentials from Starwood Hotels, Coca-Cola and Turner Broadcasting. Those who have talked with him say he has introduced a number of needed changes and has a host of good ideas to help turn the company's fortunes around.

But he and others from Wasserstein also have raised concerns — and occasionally ire — in the company and the community with their actions and comments. Wholesale changes were made in the company's management, jobs were outsourced, benefits were cut and raises were suspended. Harry & David dropped off the charts as a go-to company for community organizations. Heyer regularly commutes to Medford from his home in Atlanta, where his family lives.

There's no doubt that some change was needed to turn the fortunes of Harry & David, and everyone in the community hopes those changes are successful. But change can be handled gracefully, something that seems sorely lacking in this case. Wasserstein saddled Harry & David with massive debt, lined the pockets of its investors and managers and then suggested that the problem with the company lies at the feet of its former managers.

In doing so, they forget that those former managers are valued members of this community. They live here, their children went to school here, they served on numerous charitable boards and were active members in the community. Harry & David invested in its community because it was connected to its community and knew that success is measured in more than return on investment and bonuses paid to executives.

Everyone in the Rogue Valley hopes the owners and operators of Harry & David will be successful and put the company back on solid footing. But they also hope they will honor the legacy and culture of a company that has survived the ups and downs for decades, all while managed by residents of the Rogue Valley.

The company has new leadership that is promising big changes. We can only hope those changes come with a big heart.

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