Originally published in Business Digest, October 1997

A Teddy Bear's Modest Proposal

by Edna Tenney

An ambitious project is being proposed for a Shelburne meadow that could bring together up to 50 Vermont manufacturers in a cooperative manufacturing, demonstration and marketing setting. The site is the Shelburne South Commerce Center, a 52-acre business park purchased by the Vermont Teddy Bear Co. in 1995, and home to its colorful manufacturing and retail/showroom facility.

Spencer Putnam, Vermont Teddy Bear vice president, says the idea for the "Made in Vermont Product Exhibition Center," the tentative name for the project, is based on the success of Vermont Teddy Bear in attracting visitors to its site by offering factory tours. "Ever since 1987, three locations ago," says Putnam, "we have been encouraging tours as a way to build visitor interest and knowledge -- to give our consumers an understanding of the true costs of American manufacturing."

Putnam is convinced that this effort to create an interested and informed consumer has resulted in increased sales of the company's products (up 40 percent this year over last at that retail location), and that this approach is a natural for other quality Vermont products. "People have a fascination with how things are made," he says, adding that the teddy bear facility serves as a prototype for the project being envisioned.

According to Bob Cronin, senior vice president at Northland Advisors Inc., a Newton, Mass. real estate brokerage, the idea originated about a year ago when his firm was engaged by Liz Robert, chief financial officer of the Vermont Teddy Bear Co., to arrange a sale/leaseback of the company's corporate headquarters facility. Cronin and Northland Advisors successfully completed the real estate sale and leaseback transaction between the teddy bear manufacturer and W.P. Carey Co. of New York City, a national sale-leaseback company.

W.P. Carey Co. bought the 62,000-square-foot headquarters facility and its 15-acre site, leaving Vermont Teddy Bear with ownership of the 37-acres of additional development land. "Carey liked the company, its management and the facility, but they were a little overwhelmed by the land deal," Cronin says, referring to the other zoned building lots on the site.

In 1994 when the Vermont Teddy Bear people were looking for a new location, they originally purchased just the 15-acre parcel that they built on. "Then we bought the surrounding area because we wanted a say in the kind of neighbors we would have," Putnam says, "and we still want to be able to do that." But the firm's plan to sell or lease the other lots has not met with success so far.

"The commercial real estate market over the last couple of years has been pretty much stable," Cronin says, "it didn't progress as they had hoped." And the zoning limitations on the site require that less than a quarter of the space be devoted to retail, effectively ruling out any kind of direct retail or outlet mall approach, which is the kind of business that could take advantage of the established pattern of visitors to the teddy bear factory. Then Robert came up with the concept of a made-in-Vermont manufacturing/exhibition park, a unifying idea that Putnam and Cronin think is a marketable plan that makes the most of the site's unique advantage -- an almost steady stream of visitors.

"We have documented over 130,000 visitors in each of the last two years -- people who have taken our tour," Putnam says. "But unfortunately we have no reliable way to measure the sizeable number of people who came but didn't take the tour." Visitors follow the traditional tourist pattern--highest in July, August, September and October--"and on all rainy days and poor skiing days," Putnam says.

If that's what one manufacturer, albeit one with an unusually engaging product, can draw, what kind of numbers could a site that exibited and sold teddy bears and -- maybe chocolates, cheeses, snow boards, winged-dog carvings, skis and ski racks, maple syrup, and blown-glass objects draw? Or maybe apples, native lamb's wool, all kinds of wooden furniture, salsas, knit hats, a variety of micro-brewed beers, silk-screened Vermont scenes, snow shoes, black and white cow cut-outs, specialty meats and gourmet coffees?

"For Vermont manufacturers," Cronin enthuses, "it could be a place to display wares to potential investors or joint venture partners, and for the state to display to out-of-state companies how great it is to be a Vermont-based business."

Cronin is also looking beyond the typical set of manufacturers you might think of when talking Vermont products -- like Burton, Cabot or McKenzie -- he talks about groups like the Vermont Ski Areas Association presenting videos about recreation options from all over the state in one convenient location.

Cronin and Putnam took the idea to Tom Cullins of Truex Cullins & Partners, the architect who designed the teddy bear building. "We asked him to expend some speculative energy on our behalf," Cronin says, "to come up with a conceptual plan to take to the state and prospective tenants."

Cullins came up with a two-phase plan, each phase consisting of 100,000 square feet of space, divided into modules or pods with common space for a theater or exhibition hall. Businesses could lease or buy one or several units to set up an actual manufacturing line or a demonstration line to engage and educate visitors and convert them to customers on site or off.

In mid-September, Putnam, Cronin, Cullins and Dale Sutherland from Truex Cullins met with Tom Altemus, secretary of travel and marketing, to present their idea in the hopes of garnering some state support -- both moral and monetary. Cronin describes the meeting as constructive.

Undeterred, Cronin, armed with some conceptual drawings and a list of manufacturers supplied by the state commerce and community development office, talked to a lot of prospects. "Everyone was generally intrigued by the concept," he says, "however they expressed concerns about the capital investment requirement." Cronin doesn't quote actual prices, only mentioning $10 million as a price range for the overall project, and that investors don't become interested until they see the majority of the units pre-sold.

He says the feedback from some manufacturers suggested that he come up with a plan that "moves more incrementally to the overall goal." That's something they are always considering, he says, adding that this is just the first round. "Or maybe we'll just find a philanthropist who likes the concept."