The Incredible New Hermes Story Part Two

Copyright © 1983 by Davis Multimedia, Int'l. All Rights Reserved.
As Printed in September/October 2005, Volume 9, No. 2 of The Engravers Journal
www.engraversjournal.com
Bill Kamin   Joe Flamm

      As we saw in Part One, the incredible history of New Hermes actually began in the late 30's when Norbert Schimmel, a German immigrant, was first approached by Gene Kapp with the idea of manufacturing a portable engraving machine in the United States. Being a very enterprising individual anxious to find success in a new country, Norbert founded New Hermes on a shoestring.
      Initially he knew nothing at all about engraving. However, his mechanical background and general knowledge of the marketplace served him well as did his partnership with Werner Dannheisser and the company's early sales force. And as a result, New Hermes became the world's largest manufacturer of pantograph engraving machines.
      Today, there is hardly an engraver, trophy dealer or jeweler in the engraving industry who has not had at least one New Hermes machine on their premises. In fact, the very name New Hermes has become synonymous with the word engraving.
      Part One of this series (Jul/Aug 83) provided a colorful look at the fascinating history of the company, its founder, its sales force and its engraving machines. In Part Two we’ll present a continuation of this exciting story focusing on the more recent past of New Hermes, including its extensive branch system, a general tour of their main office, the company's entry into the computerized engraving age, a change in ownership and a preview of some of the changes to come.
 
Stephen Schimmel    

Bob Domito


      One very interesting aspect of the story of New Hermes lies in the evolution of their extensive branch system. In 1983 New Hermes had six full-operation branches in the United States, plus two Canadian branches (one in Ontario and one in Quebec). The Northeast branch (at 20 Cooper Square) served as the company headquarters or main office. The company's remaining U.S. outlets were situated in key locations across the country, e.g. Midwest (Alsip, IL), West Coast (Garden Grove, CA), Southeast (Decatur, GA), Southwest (Dallas, TX) and Florida (Hialeah, FL).
      The branch system really began in the mid 50s in a most unusual way, resulting from the salesmen's need to have materials and machines readily available to sell. Interestingly, most of Hermes' branches were started not by the company but by some of its pioneer representatives.
      According to company history, the first stocking office and the forerunner of New Hermes' Midwest branch was opened in Chicago by Bill Kamin, Sr. in the early 50s. Bill was a sales representative for New Hermes, covering several North Central states and maintained an office on Chicago's Loomis Avenue. He originally began stocking and selling engraving materials and supplies, mainly as a convenience for his own customers. This laid the groundwork for the establishment of Hermes Plastics Midwest, which served a broader multi-state area. In 1962 Mr. Kamin and Bob Domito organized and ran Hermes' Chicago plant on West 63rd Street, which operated there until the opening of their Midwest facility in Alsip, Illinois in 1975.
      The first regional branch that actually started out as a company owned facility began where the need was greatest, i.e. in California. Joe Flamm was probably the most instrumental in establishing the first regional branch. As New Hermes' West Coast representative, he had a small office in Los Angeles which was a far cry from New York City and a considerable distance from the stock of materials and machines he was trying to sell.

Helen Griggs

 

Ed Griggs

 


      The only way Joe could provide prompt delivery, after the sale, was to maintain a stock of materials and machines of his own, which is what he did. Gradually he made arrangements with New Hermes to expand his office space and obtain a basic inventory of stock items and machines. Therefore Mr. Flamm rented an office with a showroom and plant area, he hired several employees and they were soon doing their own plastic fabricating and minor customer service repairs at the branch, with Joe handling the sales and running the branch.
      As Joe recalls, "I remember the first Los Angeles office was initially just one room, then two, then three. Finally New Hermes arranged to let us lease our own building on Melrose Avenue in Hollywood. We were then able to set up a plastics fabricating section and had storage room for machinery, parts and plastics, plus several offices and a showroom." In 1970 Bob Domito and Stephen Schimmel designed an addition which nearly doubled the size of the Melrose operation. Later this same arrangement was repeated in a similar fashion in key locations around the country including Dallas and Atlanta.
      The Atlanta branch, which was first set up in 1962, was originally situated in a two-room storefront with two employees, a receptionist and a fabricator. Then in 1965 they moved to an 8,000 square foot facility on 14th where they employed six people. By 1972, they moved to an industrial park on the outskirts of the city which was an attractive facility and a much more convenient location for their customers. Finally in 1981, they moved to their next location—a modern facility patterned after the California branch.
      The Texas branch was first established in Dallas in April, 1962, with 1,900 square feet of space. Here a husband and wife team proved to be a successful combination. Dallas had both a branch manager (Helen Griggs) and a rep/sales manager (Ed Griggs).

 
Figure 1   Figure 2

      Here, the Griggs maintained an inventory of plastics (cut to size), holders and other engraving materials. Later, engraving machines, type, cutters and cutter resharpening services were also made available right at the branch.
      Four years later, in April 1966, they opened a new Dallas branch which had 8,000 square feet of space. Then in 1976, additional space (3,000 square feet) was added to keep up with the rapid growth in the region.
      Their next expansion was in March 1982 in the fabricating and shipping areas. The Dallas branch then had 21,500 square feet of space.
      The Florida branch was first opened in 1972. A new plant was designed and built by Stephen Schimmel in 1978, which was an outstanding example of modern architecture. It was situated near Miami in Hialeah, FL and serviced Central and Southern Florida as well as the Caribbean.
     The early branches functioned mainly as a mini-warehouse and did very little fabricating. They offered mainly plastic supplies, e.g. plate-holders, badge blanks, brass, etc. The two primary reasons behind the formation of these early branch systems were: 1) the time and distance associated with getting materials out of New York and 2) an interest by a few of the "pioneer" sales representatives in solving this problem.
      In 1975 Stephen Schimmel, Norbert's son, was appointed Vice President of Branch Operations. He was working out of the California branch at that time and could see the need for larger, more modern, more strategically located branches. Starting in California, he embarked on a lengthy project—the modernization and improvement of the branch system throughout the country.
      It is noteworthy that many of New Hermes' early regional branches evolved in somewhat of a hit-and-miss fashion. In several cases, the original facilities were small storefronts somewhat off the beaten path in their locality. Then as growth dictated expansion adjoining storefronts would be acquired and a hole cut through the common wall to provide more space


    
 
Figure 3   Figure 4

      Beginning with the California branch and continuing on with the Florida and Atlanta branch, Stephen Schimmel personally selected everything from the building site, architecture and general layout down to the selection of furniture and office accessories for almost all of New Hermes' regional branches. To his credit, the result was five tasteful, efficiently-arranged, contemporary plants of which New Hermes was very proud of.
      This first "new" branch was the company's Garden Grove, CA facility (Fig. 1). The 25,000 square foot branch was completed in 1978. It was an immediate source of pride to the company, to the employees who worked there and to the customers who found the showroom/demonstration area quite inviting.
      The California branch was to be the prototype for all the other branches to follow. As each branch was modernized (Texas and Chicago) and new ones were constructed, they included the following: 1) general offices, 2) a spacious showroom/demonstration area, 3) a plastics fabrication section, 4) warehouse and 5) service area.
      Most of the branches were examples of award-winning architecture, comfort and efficiency, thanks largely to Stephen Schimmel. Figure 2, the Atlanta branch showroom, provided an interior view of one of these contemporary, highly functional new branch facilities.
      At the same time that Stephen was renovating and building new branches across the country, he was also trying to establish the concept of a branch manager to run each branch—a person distinct from the sales representative. The sales representatives had originally been managing their own branches.
      In 1979 Stephen also set up the network for the entire computer system the company used.

 
Figure 5   Figure 6: TOP ROW left to right: Joe Tomio, Miquelina Albarron, Lodovina Vega, Hilda Rapp, Peter Paradiso, Delores Altonaga. BOTTOM ROW left to right: Gil Figueroa, Delores Quiles, Mary Gartner, Al DeFilippis.

      Through the years there were a series of moves as well as changes at the main office in New York City. New Hermes had come a long way from their small office on 42nd Street (1938-39), to the seven story "Flat Iron" building they occupied at 20 Cooper Square. However, there were several stops along the way: an office in the "Flat Iron" building (1939-40), an engraving plant at 12th and Broadway (1940-43), an assembly plant and plastic fabrication facility at 13 University Place (1943-46) which was later moved to 154 West 14th Street in 1946. Finally in 1965, New Hermes moved into the top five floors of a seven story building at 20 Cooper Square. Here they were finally able to consolidate the New York facilities, i.e. the executive offices, machine assembly division, engraving division, plastic fabrication and main branch operations into one location.
      The building at 20 Cooper Square (Fig. 3) is a well-known landmark going back to Civil War times when it was used as an arms-making plant. Until recently the top five floors were occupied by New Hermes and the first two floors and basement of this 138,000 square foot building were leased out to a long-term tenant.
      Then in 1982, when the previous tenant's lease expired, the new owners of New Hermes entered into an agreement to occupy the entire building at 20 Cooper Square. Immediately, a total reorganization of the main branch/ main office facility was initiated. All of the branch functions previously scattered throughout the building were consolidated on the first floor.
      As Bob Domito, vice president of sales explained, "In 1982 we began to move our previous main office showroom, which was familiar to so many, down to an impressive new showroom area on the ground floor. This new showroom was completed in June of '83 and was truly an engraving emporium—a supermarket of engraving machines and supplies that allowed customers to buy all of their engraving needs at once."

 
Figure 7 Figure 8   Figure 9

      Before we take you on a tour of some of the other departments, we would first like to introduce some of the people who have, in their own way, served New Hermes' customers from the main branch for an average of 29 years (Fig. 6). They are (top row) from left to right: Joe Tumio, 24 years, Production Manager/Machine Division; Miquelina Albarron, 30 years, Inspection/Engraving Division; Lodovina Vega, 25 years, Engraver/Machine Operator; Hilda Rapp, 36 years, Production Office/Machine Division; Peter Paradiso, 35 years, Manager/Plastics Production/ Division; Delores Altonaga, 28 years, Manager/International Administration.
      In the bottom row (from left to right) we see: Gil Figueroa, 27 years, Supervisor/Type Department; Delores Quiles, 27 years, Badge Production; Mary Gartner, 27 years, Bookkeeper; and Al DeFilippis, 30 years, Manager/ Type Department.
      Now as we continue our tour of 20 Cooper Square, we move up to the third floor which houses New Hermes' main plastics fabricating facility where Peter Paradiso manages the plastics division. Figure 7 shows a table saw operator cutting a sheet of Gravoply into custom sizes as per customers' specifications. In Figure 8 a series of automatic beveling machines are shown in operation. The cut pieces of plastic are fed into hoppers which are then taken by conveyer belts through the beveling operation. Custom plastic fabrication often includes the drilling of mounting holes as shown in Figure 9. In Figure 10 we see a badge clip fusing machine in operation. Here fasteners are thermally fused to engraving material to produce badge blanks.
      Zenon Kozak is vice president of manufacturing and production and also runs the custom engraving department which is situated on the 4th floor. Here New Hermes did custom engraving, badges and master templates along with some custom engraving. In Figure 11, an operator is shown setting up type for a multiple line job on the Model ITU-V Universal.



 
Zenon Kozak   Figure 10

      The master copy type division is also situated on the 4th floor. Here, New Hermes cut their own brass and made type fonts and master templates. In Figure 12 Gil Figueroa is shown supervising engraving being done on New Hermes VB engraving machines. More than 3,000,000 type characters and templates were made during this past year. The employee shown in Figure 13 is checking master copy type.
      Figure 14 shows a partial view of New Hermes' machine production facilities. Visible in the foreground are the ITU-V/GTU-V machines at various stages of assembly. Each machine is closely inspected to insure precise engraving.
      In Figure 15 the operator is calibrating a GTV machine for centering and straight lining. Precision adjustments and tight manufacturing tolerances insure the quality of the engraving. The operator shown in Figure 16 is using a lathe to machine gear hubs to precision sizes for sub-assembly. The gears are then mounted on work-holders to engrave on cylindrical objects with ITV/GTV or ITU-V/GTU-V machines.
      Figure 17 provides an overall view of the cutter department which was located on the 6th floor. The tool grinders shown in the foreground are used to grind engraving cutters. Behind the tool grinders are finishing machines used for tipping the cutters. Optical comparators are then used to measure the accuracy and quality of cutter dimensions and tip sizes. As a final step, cleaning and polishing machines (shown in the background) provide a final finish.
      The actual machine assembly department was located on the 6th floor. Executive offices are located on the 5th floor with finance, purchasing and data processing located on the 7th floor.
      In the order processing department (Fig. 18), which is located on the first floor, all orders are processed through the computer system.
      After seeing the evolution of their extensive branch system and taking a general tour of their main facility, it’s apparent that New Hermes grew a lot over those 45 years. In 1983 New Hermes employed a sales force of approximately 35, plus 400 branch and main office employees.

 
Figure 11   Figure 12

      Up until the mid 1970s, New Hermes had virtually no competition, enjoying an estimated 90% of the market for small engraving machines, materials and supplies. This is perhaps the most incredible aspect of New Hermes—that one company could enjoy being in such a position for nearly 40 years. But gradually this all began to change as other companies arrived on the scene offering engraving machines and related equipment, plastics, engraving supplies, etc.
      For the first time New Hermes found that it had to stand up to the competition. This proved to be a healthy situation for it was this increased competition in the mid to late 70's that led to some very significant changes for New Hermes in the 80's.
      The year 1981 will probably go down as one of the most eventful years in the history of New Hermes. First came the company's "sales force conversion." In preparation for selling the company, top management made the decision to change the sales force to company salesmen (salaried) instead of representatives (who worked on commission). The immediate result was the loss of about half of the sales force, including much knowledge and experience and a significant drop in sales. Fortunately however, the new management was quick to see the error of such a move and within a year returned to the sales representative type of sales organization and recouped several veteran salesmen.
      The second major event of 1981 was the introduction of the Concept 2000, New Hermes’ computerized engraving system. It’s interesting to note that New Hermes, the company that popularized the pantograph originally, saw little potential at first in computerized engraving and as a result they were the last company in the industry to introduce a computer system—a delayed move that cost them both market share and sales.
      Probably the most significant event of that year took place in December 1981, when the ownership of New Hermes was transferred to Chinook, Inc. from Norbert Schimmel and Werner Dannheisser, who had owned and managed the company for nearly 44 years. The principal owners of Chinook, Inc. were Richard Dowling, former chairman of Chinook, Inc.; Tom Kuhnen, a private investor with extensive investment banking background; and Jim Myers, former executive vice president of Questor Corporation of Toledo, OH.

 
Figure 13   Figure 14

      Chinook—a company dating back to the 1930s—made recreational vehicles until the gas crunch in the late 70's when they suffered a large tax loss. As a result, Chinook, Inc. was anxious to acquire an operating company with good earnings. As Tom Kuhnen, New Hermes' chairman explains, "What initially attracted us to New Hermes was the fact that: 1) it was a very liquid company, 2) it wasn't encumbered by a lot of debt, 3) it had a very fine name in this industry, 4) there was a broad customer base and 5) from an earnings standpoint there were many opportunities for future development and growth."
      Following the acquisition in December 1981, Tom Kuhnen became chairman of the board and Jim Myers was elected president of New Hermes. Tom Kuhnen describes Jim Myers as "One of the best operating people I've had the privilege of working with. He is a very fine motivator of people. Jim operates quite differently from the previous management in that he involves the company organization in the planning process. Instead of directives being sent down to the managers, the managers have become a part of the decision making process and as a result have become a more supportive management team. In addition, they were very fortunate in being able to attract a bright, young board of directors, all of whom have had broad operating experience.
      "As we came to know the employees better and began to realize where we were headed," said Tom, "we shifted them around within the company, into roles that both they and we thought they were better suited for. Although we initially brought a few people in from the outside, we have a general policy of promoting from within and will be concentrating on this even more in the future."
      Bob Domito, who joined the company in 1947 and was a sales representative until 1982, was promoted to vice president of sales. In addition, Maury Kaufman, their "writer in residence" continued as the National Manager of Special Accounts and Services. Of the former management team, only George Berlant, former vice president of engraving and Stephen Schimmel, former vice president of branch development have left New Hermes to pursue other interests.


 
Figure 15   Figure 16

      "Mr. Schimmel and Mr. Dannheisser, the former owners, continued providing advice and counsel," explains Mr. Myers. "And just as they have always stressed quality and service throughout those many years, so also will we."
      One chapter in the company's history is still in the process of unfolding: the company's entry into computerized engraving. The Concept 2000, (New Hermes' computerized engraving machine) promotion was initiated in September 1981 and the system was unveiled in December 1981, along with the announcement to the industry of a change in the company's ownership. As Chairman Tom Kuhnen remarked, "We know a lot more about computerized engraving today than we did then and we are now making significant strides forward."
      The launch to computerized engraving not only represented a new growth area for New Hermes but also a major challenge to the new owners. The Concept 2000 offered tremendous engraving capabilities for those who had the work capacity to benefit from its use.
      In discussing the introduction of the Concept 2000, Jim Myers remarked, "The initial reaction was very strong and as with any new product, timetables were probably more aggressive than realistic. However, by the middle of the year (1982) when we began shipping, we were able to catch up with the earlier orders.
      "The second half of the year was mainly spent developing new customers and making system modifications. During that time the Concept 2000 went through a number of enhancements with most changes taking place in the software. There were a tremendous number of applications available to help the engraver to do a better job."
      To make it easy for their computer customers to exchange ideas, New Hermes provided a special mailing to all of their computer customers keeping them informed of the latest developments and also providing space for the exchange of ideas. This idea exchange proved to be very helpful to everyone including New Hermes.
      "We are continuously researching and developing new software packages," said Jim, "and customer input is very important. As soon as new software packages are perfected, we immediately introduce them through direct mail to all of our customers and to the general engraving industry through advertisements in The Engravers Journal and a few specialty publications."


 
Figure 17  

      Clearly the Concept 2000 represented a new growth area for New Hermes. Generally speaking, computerized engraving offered tremendous benefits to engravers who had high usage or duplications and repetition of jobs. However, the standard pantograph was expected by New Hermes to remain the fundamental choice for most engravers. Recognizing this important fact, New Hermes was also focusing on ways to promote and improve upon their standard line of pantograph engraving machines both in the United States and abroad.
      According to Mr. Kuhnen, "We have done some product line consolidation worldwide and will be constantly evaluating and discontinuing overlapping types of machines. The idea is to have fewer but more basic machines that can be expanded upon."
      As Jim Myers elaborated, "More of the specialized features will be available as attachments instead of separate models. We will have some new machines to introduce in 1983.
      "In the materials line we will also have new and better quality materials, textures and colors available. In addition we are continually adding new items to our engravables line.
      "Another one of our goals has been to provide greater and more extensive services and materials through the branches," said Tom Kuhnen. "I don't think we have filled that goal as yet to the extent we would like to. We're still going through the process of fortifying the branches with the requirements needed."
      Bob Domito, vice president, described some of the branch changes that had already occurred. "The branches had come a long way from the early days. There were managers at each of the branches responsible for the activities of the branch. There were no sales managers per se. Instead there were five or six representatives that feed business through each of the six major branches. There was an average of 25 to 30 employees at each branch.
      "The service to the customer was far better. They had a total product line in place within a few hundred miles of most points in the United States. In addition a greater inventory of parts, accessories and materials was readily available at the branches. A lot of inventory once kept in New York was moved out to the branches.
      "Also, since everything at the branch, e.g. bookkeeping, order processing, inventory, etc. was decentralized, there was greater communication and closer ties were established between the branches and the central office at Cooper Square," said Bob.
      "Anytime you have distant locations, there are some communication gaps," explains New Hermes president Jim Myers. "We tried to recognize the need at the branches to be kept informed and be able to participate. We gathered our people from the branches, the sales force and Cooper Square about four times a year. This way they could share their problems and good ideas as well and as a result got the greatest multiplication of wisdom possible. I also tried to visit the branches at least once a quarter and attended the major shows."
      In an effort to acquaint customers with the services, materials and equipment available, all of the branches held open houses every few months. The customers were invited to come in and see demonstrations on the various machines as well as computerized engraving. For a customer who had never been in one of the branches, the open house offered the perfect opportunity to see what the branch had to offer.


 
Figure 18  

      When asked what are New Hermes' future goals were, board chairman Kuhnen replied, "We will be bringing some new innovations to the industry—a better quality and selection of materials and some interesting new products for the engraver. In addition, we have been searching worldwide for items that lend themselves to engravability. Through our ever-expanding, improved product line, we hope to inspire the industry and through more and better service, we hope to make it easier for customers to do business with us."
      Certainly New Hermes has gone through some dramatic changes over the years and all indications were that the company was making excellent progress toward the goals they had set for themselves.
      As we reflect back over the first 45 year history of New Hermes and recall some of the exciting and unusual events that took place through the years, we see an incredible success story—one that many of today's young business-school graduates would find hard to believe.
      Their success story becomes even harder to believe when you consider the following: New Hermes—once the world's largest manufacturer of pantograph engraving machines—was started on a shoestring by German immigrants who arrived in this country knowing nothing at all about engraving. Twice in the early history of the company its customer base vanished almost overnight, forcing the company to completely redirect the business. How many young companies today have such flexibility?
      What company today could find a sales force so dedicated that they could sell the entire country on a product that was previously unknown and causing the name New Hermes to become a household word among engravers across the country? And what major company today could leave the establishment of their entire branch system up to their sales representatives?
      Clearly the history of New Hermes is out of the ordinary. But what really makes it so incredible is the fact that New Hermes had virtually no competition for nearly 40 years. But as we saw in the late 70's that all began to change and once again New Hermes must rise to the challenge. Why not? They've faced challenges before and New Hermes is one incredible company!


 
Tom Kuhnen   Jim Myers

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