W&WP December 2003
One on One:
Brian Stowell, president of Crown Point Cabinetry of Claremont, NH, discusses his experience meeting President Bush and making the new tax laws work for his business.
By Bernadette Freund
It's not everyday that a woodworker has his company mentioned in a speech by the President, but Brian Stowell, president of Crown Point Cabinetry of Claremont, NH, had just that experience.
On October 9, 2003, President Bush spoke to the Greater Manchester Chamber of Commerce in Manchester, NH, to address how businesses, such as Crown Point Cabinetry, use of new tax laws are improving the economy and helping win the war on terror. "I twice led the United States Congress to pass historic tax relief for the American people...I proposed and signed these measures to help individuals and families, but also knew the effect it would have on small businesses," President Bush said.
Crown Point Cabinetry began in 1979 in Brian Stowell's father Norm Stowell's garage. Today the business is run by four of Norm's children. Over the years, the company has grown to employ 90 people and plans to add another 25 over the next two-and-a-half years.
The company plans to spend $800,000 on new equipment in the coming months. The Jobs and Growth Tax Relief Reconciliation Act of 2003 signed into law by President Bush in May of this year was a major factor that facilitated this decision.
The tax relief act increases small business expense limits from $25,000 to $100,000 for equipment purchased between May 5, 2003 and Jan. 1, 2005. Companies can purchase equipment and qualify for accelerated depreciation up to $400,000.
Crown Point Cabinetry's use of these incentives did not go unnoticed. Stowell was contacted by the White House after the National Federation of Independent Business let it know about Crown Point Cabinetry's investment plans.
Wood & Wood Products contacted Stowell to discuss his business growth plans, use of the new tax relief program and his experience of meeting the President.
To read President Bush's entire Oct. 9 speech visit www.whitehouse.gov /news/releases/2003/10/print/20031009-15.html.
How did the tax relief package help benefit your particular business?
$800,000 was the amount I estimated for new equipment. Our total tax savings was estimated at approximately $110,000. This number was arrived at by estimating fiscal year profits and the taxes due on those profits with and without the accelerated depreciation tax credits. As the payment on this loan is approximately $11,000 a month, that is like getting my first 10 payments made by the federal government based on 6 percent for seven years.
The reduction in the overall tax rates also saves us money. While it was not nearly as substantial, it changed our tax liability by about $25,000.
Would you have made this large of an investment without the accelerated depreciation schedule?
You can see that when you add both numbers together, it covers the first years' worth of payments. This is considerable when one looks at all of the costs involved in moving and expanding a business. Because it is not a permanent program, it was our opportunity to do it now and save. Without the extra incentive, I would have put off at least half of the purchases and stretched them out over a two to three year time frame. When one does this, there is always the possibility things change and you hold off even further or do something entirely different.
As I understand it, the President wanted this program "now" because he wanted people to have incentive to spend money "now" instead of holding off into the future. I would think other companies are looking at it the way I did and taking advantage of it while they can.
My company has taken advantage of it by purchasing a long list of equipment: a moulder, spray booths, air make-up units, a flash chamber, an oven, a forklift, a lathe, an overhead sander, an overhead router, dust collection equipment, material racks, lift tables, a gang ripsaw, a horizontal sander, an edge sander, two saws, and the electronic measuring devices that go with them.
Had you been putting these purchases off before the Tax Relief Act was passed?
Most of these items were being put off until the decision was made to move and expand. The only items we were going to put in this building were the lathe and moulder. When the decision was made to expand, I made decisions on purchasing equipment based on: one, what is costs; two, how long the payback would be; and, three, how much I saved by doing it now with the accelerated depreciation versus without it.
The truth is I would like to buy another $750,000 worth of equipment to take advantage of the incentive, but I do have certain financial limits I will not cross for the long-term health of the company.
What were your plans for growth before the tax credits were created? Did it help jump-start your plans for expansion sooner?
I make very few major decisions based on one factor. In order for those types of decisions to be made, I really need to have a lot of "ducks in a row." I have been looking at expanding for the last five years, and looking very seriously at expanding the last three years. The combination of continuing low real estate costs, for our part of the state, low interest rates for financing, reduction in tax rates and the accelerated depreciation tax credits completed the puzzle for me.
When compared to what all of these things would most likely look like two to three years down the road, I felt it was now or never. Real estate was not going down between now and then, interest rates could only go up and the tax programs, as important as they are to all of us in the woodworking industry, were likely to evaporate.
How and why were you picked to meet the President?
It was actually the National Federation of Independent Business that let the President know what we were up to. The White House wanted to talk to manufacturing companies in New Hampshire because of his impending visit. When they heard what I was up to and why, they were very interested.
To begin with, I told them that my decision to make this move was based on optimism in the belief we have "turned the corner" as a country since 9/11. Without this optimism, I stay put and spend little to no money.
I also pointed out that the accelerated depreciation tax credit allowed me to buy equipment that would put people to work not just in New Hampshire, but at other manufacturing facilities in the United States. Over 75 percent of the equipment I am buying is made in the United States.
Finally, I told them we had just hired four new designers to increase our sales volume that will then allow us to hire 25 more cabinetmakers in the next two years. We sell everything direct, so it is important to increase that staff first.
What was it like to have your business mentioned by the President?
It was quite amazing to actually meet the leader of the Free World. I met him before his speech and he greeted me with, "You are the cabinet guy." I told him I appreciated what he has done for our country since 9/11 and what he has done to help small business like ours.
I also asked him to mention my father, Norman, as he founded the company and ran it for more than 20 years. He put his hand on my shoulder and said, "Brian, I would be happy to... I love my Dad too."
I also told him not to let his detractors wear him down on the economy or Iraq, as I felt he was doing the right thing for the country in both instances. He looked right at me and said, "I do not care what they say, I was elected to do a job and I will see it through."
I replied that it must begin to wear him down somewhat, and he said, "Brian, I do not care. I will finish this job." I was awestruck by his steadfast conviction.
It was beyond flattering to have him mention our company and to actually quote me. And of course he told everyone that I wanted him to mention my Dad. My only surprise that he used our company as an example was that four days earlier I did not even know he was coming to New Hampshire. Now there I was meeting him backstage and listening to him talk about our family business. Our business has not changed because of it, but I will have the honor of always knowing the President felt we were worth talking about.
Did you offer any advice to the President about tax relief for small businesses, and if not, what advice would you give him now if you had the chance?
I have no other advice to give him as I believe he thinks the way a small business person thinks. He understands that tax incentives do not mean less tax revenue for the federal government, contrary to some opinions. He knows that businesses will do what I did, spend money, and that helps all of us. He understands that the majority of jobs in the United States are created by small businesses. He understands that employees benefit if small business benefits.
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