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Yesterday’s newsletter reproduced the invitation Buffett wrote in his annual letter to Berkshire shareholders for company bosses to contact him to suggest that Berkshire buy most or all of their shares. In reponse to that advertisement, long-time Berkshire Hathaway shareholder Robert Heldman, chairman of Fechheimer Brothers wrote (January 1986) to Buffett explaining that the company in which his family wanted to keep its 16% shareholding met the criteria Buffett had set out. I’m not sure that Buffett was convinced at first because Bob Heldman tells us that he “wrote several times” pointing out his company’s virtues before getting a response (Buffett had never heard of it).
They met in Omaha Spring 1986, which gave Heldman a chance to explain the business. Since 1842 it had supplied uniforms to public service organisations and the military. Greatly boosted by the Civil War and the two world wars, by the 1980s it was a trusted supplier of dress uniforms to the U.S. Navy, and it sold to police forces around the country, as well as fire departments, postal and public transport workers. Its uniforms were even precisely specified for baseball umpires.
Fechheimer had a network of three dozen or so company-owned stores as well as arrangements with scores of independent dealers under a variety of trading names. The high-street presence provided the opportunity of face to face interaction with customers, building long-term relationship as well as being convenient – something competitors lacked.
Less than half of the merchandise it sold was manufactured at its factories, but that portion was very important because it was a key differentiator:
- First, military and postal uniforms must, by law, be produced in the USA. Also, some police departments have a policy of only buying domestically-produced product.
- Second, Fechheimer’s manufacturing expertise allows it to find bespoke solutions for customers.
- Third, its Flying Cross brand was recognised and respected in many public service organisations; its logo spoke a heritage of quality and service.
- Fourth, it was t…
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