Integrity & Accountability


The March 8, 2018 issue in the Seattle Times presents the story of a former Coast Guardsman who injured his leg during a fall in 2011. He went to the Puget Sound VA and had surgery on his leg.  

After having excruciating pain following the surgery and having three more surgeries, he finally went to a private doctor.

The doctor determined that the VA surgeon had inadvertently pushed a surgical screw about a centimeter into a nerve bundle, causing him chronic and excruciating pain.  Despite multiple X- rays by the private physician showing the screw, the VA doctor denied that he had done this and denied medical negligence.   However due to the delay in getting the proper care, the lower leg had to be amputated.

In this case, due to a donation to an organization that uses amputated limbs to train rescue dogs, the limb was still available. A pathologist that examined the leg found that the screw had indeed been pushed into the nerves.



The VA doctor, in the face of this evidence continued to deny any responsibility and claimed that the evidence by the private doctor and the pathologist was “silly”.

Yet, in pretrial mediation the VA agreed to pay the individual $1.75 million to “avoid further litigation.  $1.75 million to an individual who had been in pain for years, lost his job, lost his wife and finally had his lower leg amputated.

In the final blow, the Justice Department had rejected the settlement, offering $1.4 million and denying any wrongdoing by the VA. Exhausted, the individual accepted the settlement.

The Orthopedic Surgeon and his management continue to work for the VA.



We have all read about the horrors outlined by those who have had difficulties with the VA. 

Those who manage the VA, from the top down are focused on avoiding accepting any responsibility for errors made by them and those who report to them.

In this case it was a leg; in others it has been life and death.  But always, admitting an error is to be avoided at all costs.

But what about when it isn’t life or death, but the conduct of your company or business.  Like the VA, rarely do the character flaws of a single individual fully explain corporate misconduct. 

More typically, unethical business practices involve the tacit, if not explicit cooperation of values, attitudes beliefs and behavioral patterns that define an organization’s operating culture.

Ethics and integrity is as much an organizational as a personal issue. 

Managers who fail to provide proper leadership and fail to institute systems and behaviors that insure ethical conduct are as much responsible for those who benefit directly from the lack of integrity of the company.



Executives and managers who ignore ethical behavior run the risk of personal and corporate liability in today’s increasing tough legal environment. New federal sentencing guidelines are increasingly recognizing the organizational and management roots of unlawful conduct by members of the organization.

We see and have seen these issues in companies ranging from the largest to the smallest entrepreneurial business.  Consider the recent Wells Fargo fiasco.

Several years ago, Wells Fargo decided it was not doing enough cross-selling, Cross-selling means getting customers who use one service, such as checking, to use other services, such as savings or credit cards.

Wells Fargo developed a specific strategy to encourage cross-selling, which was to involve its employees in telling customers about other products and services. In order to encourage employees to support the program, Wells Fargo employed the strategy of providing incentives to employees who succeeded at cross-selling. 



This is where everything went wrong. Employees not only responded to these incentives by cross-selling, they manufactured fake accounts in the names of existing Well Fargo customers.

Some customers figured this out, but many didn’t and ended up paying fees on accounts they didn’t even know they had. 

The problem was huge.  In attempting to correct the problem the company fired 5,300 employees including its CEO, John Stumpf.

The Wells Fargo mess teaches a clear lesson which is that you get what you pay for. 

Specifically, you can talk yourself blue in the face about ethics, as many Wells Fargo managers did, but you cannot send employees a clearer signal than their paycheck.



The first reason this is important is that when organizations think about creating an ethical culture, they almost always ignore the organization’s reward system. They print codes of conduct, mandate training and establish ethics hotlines. But if you are rewarding the wrong things, you will get the wrong behaviors.

This is as true of the teller at your local branch bank as it is of the top levels of an investment bank. Organizations signal what they really care about through their reward systems. Remember that the one corporate document every employee reads is their paycheck.

The importance of this lesson goes well beyond ethics. The idea is that you can get better performance out of employees if you abandon pay for performance in favor of one or another strategy that rewards “the whole person” and not just the paycheck. The peak of this phenomenon is, a veritable tangle of cross cutting evaluations and peer-enforced group-think.



The Wells Fargo case shows once again the power of paying for performance. Unfortunately, it also showed the power of paying for performance when you pay for the wrong performance.

The performance systems of most organizations are the jealously guarded hostages of either executives or in larger companies, HR.

Executives who want to run truly ethical – and effective – organizations need to take responsibility for ethical behavior before engaging in silly talk about the greater good.  

You will have a lot better chance of avoiding the sort of ethics crisis that Wells Fargo has undergone if you effectively manage your organization’s reward system.



At the other end of the scale, Revitalization Partners was recommended by a bank to assist one of their clients that did not have any financial management.

In attempting to establish proper systems, we discovered that the company was placing funds in another bank, which was in direct violation of their loan agreement.

When challenged on this issue, their response was that they were worried that the bank would stop lending to them.  Additionally, they were signing certification documents that they knew were not correct.

Because of their unethical behavior, the bank elected to ask the company to find a new bank and the company is no longer a client of RP.

Unethical behavior and lack of integrity has a cost. And it is often not only the managers and executives that pay the price.


We specialize in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations.

Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Turnaround Management



The following article has been updated from an article published in the May, 2006 editions of the Orlando, Tampa Bay and South Florida Business Journals.

Selecting a Turnaround Professional

Even the most realistic, savvy business people underestimate the difficult challenges of successfully managing a troubled business.

In most instances, changes in both the internal and external business environments that bring a company to a crisis situation do not happen overnight.

Typically, many subtle warnings occur well before the business crisis occurs.

Initially, pricing leverage shifts heavily to the customer, margins are squeezed, a key customer duel sources its needs with a competitor, internal business processes begin to falter, underlying assumptions on optimistic financial budgets are unrealistic or sales personnel lower pricing to meet the competition.

Generally, as sales decrease or pricing decreases the situation worsens.



The stories are all different, but remarkably similar. Cash must be managed closely. Management hopes begin to hinge on increased volume, a strengthened economy or a competitor’s failure. The independent auditors “qualify” their opinion on the company’s financial statements, citing “going concern” considerations.

As a crisis deepens, liquidity often becomes a day-to-day consideration. Payments to vendors are stretched. Financial covenants under existing financing facilities are breached. The industry rumor mill questions the company’s continued viability. Lenders and customers grow anxious about the company’s future. Employee morale begins to falter. Key employees leave for greener pastures.

In today’s business climate, the turnaround professional that can focus on rapidly creating “internal liquidity” can have a significant impact on the ultimate outcome of the crisis.



Like a deer caught in the headlights of an oncoming car, most incumbent management teams suffer some degree of decision-making paralysis. They have never been down this road.

In extreme cases, senior management retreats into a “bunker” and refuses to face reality. Ultimately, the company, its shareholders, employees and creditors all suffer.

Action to save a troubled company must be prompt and decisive. The window of opportunity is often limited and the task at hand is generally difficult. All situations are unique and generally require difficult decisions.

The management skills that are often required to deal effectively with a crisis situation are usually different than what is required when the company is profitable and thriving.

It is difficult for senior management to accept that different skills and outside help are necessary in a crisis situation.  Even sophisticated businessmen decide not to hire turnaround professionals where they are necessary. They often conclude that there is no money to pay a turnaround professional. In many of these situations, the reality is they cannot afford NOT to hire a turnaround professional.

The sooner the company accepts the reality of the crisis and seeks help from a turnaround professional, the more likely effective help can be provided. Much like oncologists, the turnaround professional often gets a client visits after it is too late. In those situations, the troubled business becomes a broken business and it is ultimately liquidated – all stakeholders are harmed.



Quality turnaround professionals bring specialized crisis management experience and an objective, unemotional assessment of the reality of the situation, outlook and potential solutions, if any. In many situations, an experienced turnaround specialist is able to alter the status quo and renew employee and stakeholder expectations with fresh, disciplined processes to address the ills of a financially distressed business.

Once the decision to hire a turnaround professional is made, business people usually view industry experience as the most important factor. While specific industry experience may in limited circumstances be helpful, this qualification should generally rank low on the list of decision making criteria.

Generally, the Company’s officers, directors, managers and employees possess all the needed industry experience. A turnaround professional manager without preconceived notions about the industry often adds more value by addressing and considering all viable alternatives, not just those which have been employed in one particular industry. In this fashion, the turnaround manager brings something unique to the situation – – a fresh perspective.

In selecting a turnaround professional, the company should be extremely careful not all “Turnaround Specialist” are the same. The term “turnaround managers” can cover professionals with a variety of different skills sets, business experiences and abilities.



Turnaround efforts are often directed at fixing underlying functional operational problems such as production inefficiencies, organizational structure, sales policies, product cost, etc. In other situations, the immediate concern is maintaining the operational and financial integrity of the business intact through tight cash management and cash forecasting, negotiations with vendors, lenders, unions and other stakeholders, or instituting emergency cost reduction/ cash saving measures.

With other companies many of these issues must be addressed simultaneously. There are major differences between the activities and expected outcome of fixing the operational aspects of the business and fixing the overall capital structure. They both generally involve different skill sets.

Not all professionals who consult and advise with troubled companies possess all the skills and experience to deal effectively with all of the necessary issues. While some turnaround and restructuring professional are adept at both fixing underlying operational problems and managing a severe crisis, other consultants skills, experience are only suited for specific operational issues (e.g., supply chain management, logistics, production efficiency, etc.)



In many instances, it is advisable to hire a turnaround firm with which has different individuals addressing different areas, thereby maximizing the strengths of all of the professionals.

When a business’s survival is on the line, it is extremely important to select a turnaround professional that can alter the outcome. Find a turnaround manager that has actually “been there and done that,” i.e., actually turned around troubled businesses and/or restructured their capital structures. Conduct an extensive interview process to assess both qualifications and personal comfort with the individuals.

Once the decision is made, provide the specialist with full support to get the job done. Do not let egos block the path to a recovery. The stakes are too high.

The 6 Panaceas for Corporate Recovery


This article was originally authored by Dr Mike Teng (DBA, MBA, BEng) who is the author of best-selling book, “Corporate Turnaround: Nursing a Sick Company back to Health.” He is often referred to as the “Turnaround CEO in Asia”. It has been adopted for use in the United States by Revitalization Partners.

Panaceas for Corporate Recovery – Proper Treatment

Companies do fall sick and die; However, there are panaceas that can turn a critically ill organization around into a healthy one. Proper treatment is necessary as the remedies can sometimes be worse than the disease.



Sun Tzu, the strategist in The Art of War said: “If you know yourself and the enemy, you need not fear the result of a hundred battles.” Though it is important to know your competition, one should not do so at the expense of neglecting one’s customers.

Merely knowing the competitor is equivalent to a person driving a car and constantly looking out for the competitor’s car at his side. He is so pre-occupied with the competitor that he fails to look at the road ahead and may run into hazards.

Knowing only the customer’s present needs is also merely treating the symptom and not the ailment. Today’s customers are more demanding – they want more of those things they value. If they value cheaper prices, they want even lower ones. If they value convenience or speed at the time of purchase, they want it even easier or faster. Hence, companies’ efforts may yield temporary results if they only deliver what the customers want now. These attempts may not sustain the company’s long-term growth, as they are unable to optimize on profitability, resource allocation and opportunities.

To insure a successful business and continued long-term growth, companies must strive to drive the market. They need to pre-empt both the customers’ and competitors’ present and future developments. 3M’s Post It notes, which nobody had asked for previously, are now one of the most commonly used office products. Microsoft’s operating software, Windows, came not from responding to customers’ demands or competitive threat, but from anticipating their needs. The 1980 launch of CNN by Ted Turner was ridiculed by TV veterans CBS, NBC and ABC. They failed to tap a niche that no one had yet asked for: a 24-hour news service. Other great innovations of our time including the personal computer, jet airplanes and the Internet were created without any customers or competitors in sight. Therefore, one has to understand the market, otherwise it may destroy you.



There are many companies falling sick due to corporate diseases such as global economic recession, rapid changes brought about by globalization, terrorist attacks and incompetent management. When a company falls sick, it needs to undergo the three phases of corporate turnaround, namely:

  • Phase 1: Surgery: To restructure the troubled organization to face the harsh new reality and quickly improve its cash flow.
  • Phase 2: Resuscitation: To revitalize the business so as to increase its sales revenue and profits.
  • Phase 3: Nursing: To rehabilitate a strong and healthy corporate immune system or culture in order to sustain long-term growth.

For complete corporate recovery, it is important to finish the full course of antibiotics prescribed in all the three phases. Restructuring alone is not good enough.   As the doctor said: “The surgery was successful, but the patient died.”

Without the resuscitation and nursing phases, it is like merely upgrading a cancer-stricken patient to another ward in the hospital – it does not cure the disease.  Building a strong and healthy company takes a long time – it is not a one-time inoculation. It is like taking vitamin pills every day for the rest of your life in order to build a strong corporate culture which can manage change.



Restructuring is not a slash-and-burn exercise, but one that calls for the surgeon’s skills. It does not require the use of a machete or knife but the surgeon’s scalpel. During a restructuring exercise, remember the 4Cs.

  1. Communication: The manager needs to personally communicate with the staff; not delegate this important activity; just as a doctor does not delegate to a nurse the task of briefing the patient about his ailment and treatment. You need to communicate the restructuring plans truthfully. People are not against bad news per se but they want to see quick results.
  2. Concentration: The surgeon operates on only one patient at a time. Similarly, the sick company needs to concentrate on its core competence. In bad times, you need to concentrate even more as resources are scarce. If possible, divest non-core businesses.
  3. Cost control: Cut costs to the bone without injuring the muscles and organs. If circumstances permit, amputate non-profitable businesses rather than try to bandage and apply stitches.
  4. Cash flow improvement: Cash flow is your life blood. Slipping into losses may give you a headache, but a sudden shortfall in cash flow will cause an immediate massive migraine. Try to create internal liquidity by cutting inventory, purchases, perks, credit to customers, outstanding debt and related items without damaging the basic structure of the company.



During the turnaround phase when the company is on the brink of bankruptcy, there are time and resource constraints. The company needs to concentrate all its resources on doing a few major things right. You should have a laser-sharp focus just as a surgeon focuses on only one operative field during surgery. If you are a patient, you will be worried if your surgeon operates on you and another patient simultaneously.

Similarly, an ailing company needs to concentrate only on its core competence and try to rid itself of businesses that do not help the bottom line or immediately improve its cash flow. In such a critical situation, you often can succeed at a far lower cost by ensuring that you do a better job with the businesses and skills you already have.

In order to release resources for its core business, the ailing company has to divest any unprofitable or non-related businesses. Quite often, in their bid to bolster sales performance, troubled companies clinch lots of sales contracts that have poor profit margins. This is tantamount to buying sales which often turn into subsequent financial losses. Such a scenario is equivalent to having a lot of sizzle but no steak.

It is better to amputate all loss-making ventures and unprofitable sales whenever possible. According to the standard surgical procedure, if there is pus, get it out. In fact, the famous Chinese military strategist Sun Tzu believed in the principle of concentration to fight a war. He said: “The strength of an army does not depend on large forces. Do not advance relying on sheer numbers. Rather, one must concentrate one’s forces and anticipate correctly the movement of the enemy in order to capture him.”



Unnecessary cost is always your number one enemy. You must attack it by justifying and challenging every expense that you incur. Whether your company is in trouble or not, cost will kill you even if you come up with better products. If your cost to make something is your competitor’s selling price, you cannot stay in business for long.

Any first-year business student knows how to cut costs. The key here is how the costs can be cut to restore financial health in the short term without hurting the ailing company in the long term. The turnaround manager should discuss the relevant details with the respective department managers, soliciting their advice as this can improve remarkably the chances for full co-operation and success.

Sometimes, staff can offer valuable suggestions to save time or money or both for the company. Remember, this is not the time to create unnecessary stress by finger pointing. The key is to foster a cohesive environment for problem-solving, establish solidarity and put everybody’s self-interest to work for future gains.

Sometimes, cost reduction can be achieved through streamlining procedures and operations. Through this, duplication and inefficient methodologies can be pared down to a minimum. In some instances, similar or more superior results are achieved through outsourcing.

Outsourcing provides you with the advantage of being able to focus on those areas that are vital to the company’s operations, instead of being distracted by things that have little impact on the company’s success. People-related expenses can be reduced remarkably through cross-fertilization of multi-disciplinary skills. Productivity can be improved by deploying staff to perform high value-added duties. Remember, every cent of cost saved or cut goes right into the bottom line.



Downsizing is like an amputation which removes part of one’s body but creates side effects such as low staff morale and bad reputation. It is not the only remedy available to managers to improve a company’s performance. Other remedies include increasing sales revenue and non-personnel cost control measures.

There is no problem in removing the corporate fats, dysfunctional personnel or cancerous tumors in the company. The problem with one-size-fits-all downsizing is that good people also get fired in the process. In some instances, ‘corporate genocide’ or the deliberate extermination of a healthy business is often committed in the name of maximizing shareholders’ returns. However, in some instances, downsizing is inevitable.

But one has to carefully manage the aftermath of the downsizing exercise. As the saying goes: “Even rats will desert a sinking ship.” Hemorrhage or the exodus of good caliber staff may take place and deal quick and severe blows to the company’s vital organs. The ailing company is unable to attract good caliber staff to replace those who have left, since its reputation in the marketplace is tarnished.

You must try to win over the trust of the existing staff after a downsizing exercise. Silence is not golden. Communicate to the staff the reasons for this exercise and the plans to execute the corporate recovery. Be humane in treating the people to be fired. The golden rule in a downsizing exercise is: ‘Do not do unto others that which you do not want done to yourself’. For one day, you may be the person to be fired.

Sometimes Even An Interim Executive Has To Say …


At Revitalization Partners we are often asked to serve as interim executives for companies ranging from startups to those with $100 million or more in revenue. This is the strange story of one Startup Company that we became involved with.

It begins when we were approached by a friend to look at a company in the alternative energy space.

The founders were two scientists, neither with any real management experience, but with what seemed like a true breakthrough idea in the market they were targeting.


New Idea, Old Market …

While the idea was new, the market wasn’t.  In fact, ten’s of millions had been invested in the market by quality venture capital firms with no real commercial success. 

So how could a couple of guys from Seattle, working in the equivalent of their garage, come up with a breakthrough in the space?   And more importantly, given their inexperience and no real team, how could they build a company?

After burning through the small amount they raised from family and two years of trying to raise money, they had gotten nowhere. So they asked us to serve as interim executives and to raise money to take the company forward. Since we believed that, in this case, the VC’s, despite the money seemingly wasted in related technologies, were wrong, we agreed.


We’ve Heard This Before …

The first thing we did was have a smart, aggressive business development person, who was also serving as an interim executive with the company, talk with potential customers.

The feedback was pretty much the same: “We’ve heard the claims you’re making before. We believed them, even invested in them and none of them worked out.   Bring us a fully formed working device with the characteristics you’re talking about and we’ll be very interested.”

How to get from a demonstration in a lab to a fully formed prototype with no money?  The budget said the company needed several hundred thousand dollars to get the device built.  

Since there are, even in this financial climate, quality VC firms investing in pre-revenue companies, it was just a question of time before one of them saw the potential.  In the meantime, a bridge loan from angel investors could keep the company moving.


Liked Idea, But Not Loan Financing …

The company received several firm commitments to the bridge loan.  One of the introductions made was to an experienced angel investor in California.  He liked the idea, but not the bridge loan. 

He suggested he bring in one of his friends who headed a small investment bank to do a seed round.  Within two weeks we had a term sheet. The proposed valuation was very low by almost any standard, but it was a term sheet.

They indicated that they might be willing to change the terms following some due diligence.

The potential investors came to Seattle and even brought in a local expert in the field from the University of Washington. Following due diligence, they came back with a new term sheet.


Higher Valuation, But …

The valuation increased slightly. The terms proposed that the investors take control of the company. They did not like the fact that the company was being managed by interim executives and wanted to bring in their own management team “right out of central casting”.

The founders would have about 40% of the company prior to any dilution for management or future offerings.  They would not hold board or management positions.

The bank was in the process of doing a reverse merger into a public shell. The new public entity would make the investment.  If the founders finished the prototype within six months, they would each get a small bonus.

On the basis of the prototype being finished and the “story” that would generate, the “bank” would take the company public.  And yes, the bank had done this several times before in the past.

Sometimes it worked out, sometimes it didn’t, but the insiders always made money.   In fact, the shell that the bank was merging into was a medical device company that had failed after its public offering due to never getting its technology productized.


They Heard “Public’ & “Bonus” …

The inexperienced founders heard “public” and “bonus” and decided to go in that direction despite the advice from their entire very experienced interim executive management team.

We decided to not go forward with this adventure in financing.  And long after the time for due diligence has expired, the “investors” are still asking for more information.

When a company of any size brings in interim executives, they do so in order to get the experience brought by those people. 

Most individuals serving as interim executives have a focus is on creating value for all of the stakeholders.  And when necessary, they are often willing to stick with and support their client companies over a long time horizon, creating “real” value as opposed to the value of a quick hit.

While it may seem that “money is money”, the quality of the source of that money is often the difference between creating a “story” and building a company.

Adaptability Key to Pendleton’s Longevity

By Cami Joner, , Published: March 10, 2012, 4:00 PM

What: One of Oregon’s largest and oldest family-owned businesses, famous for its Pacific Northwest-inspired wool apparel and Native American blanket designs. Its products are sold by retailers and through Pendleton’s stores and website, as well as by mail-order catalog.

Headquarters: 220 N.W. Broadway, Portland.

Executives: Bill Lawrence, CEO; Broughton (Brot) Bishop, vice chairman; C. M. (Mort) Bishop III, president; Dennis Simmonds, CFO; John Bishop, vice president and chairman of the board; Charles Bishop, vice president; and Peter Bishop, vice president.

Total employees: 830.


Pendleton Washougal mill

The company’s largest wool-weaving mill, where deliveries of raw wool fibers are processed into yarns that are dyed and made into fabrics.

General helper Jeff Hamilton works inside the spinning house at the Pendleton Woolen Mill in Washougal on Wednesday February 29, 2012. (Zachary Kaufman/The Columbian)

Where: 2 Pendleton Way, Washougal.

Division manager: Charles Bishop.

Employees: 190.

Hours: 24 hours a day, Monday-Friday.

Mill tours: Phone 360-835-1118 to schedule.


WASHOUGAL — Machines at the Pendleton Woolen Mill hum as watchful workers oversee automation that cards raw wool and robes it onto spools. Others manage rows of mechanical spinners that twist yarn onto wooden bobbins. At another station, workers use computers to control the mixing of dyes, dipping spools of yarn into stainless steel vessels.

Earplugs are mandatory in some of the mill’s noisiest areas, such as the weaving room, where operators feed and oversee machines costing $250,000 apiece that weave the yarn into a kaleidoscope of plaids and solids. Throughout the 300,000-square-foot factory, employees and machines work together to produce wool fabric that is tailored into traditional Pendleton suits, shirts, blankets and rugs, shown on New York fashion runways and sold to manufacturers that make everything from hunting apparel to upscale office furniture.

The busy Washougal mill is evidence that textile manufacturing is not dead in America. Staffed by 190 employees who keep it going 24 hours a day, five days a week, the factory marks its 100th anniversary under the Pendleton banner this year. It is going strong at a time when politicians and economists are wringing their hands about the state of industry nationally. Yet Pendleton is still finding opportunities for growth, said Charles Bishop, 53, vice president and division manager of the Portland-based company and a member of its fifth-generation family ownership.

Pendleton’s secret? Adapting to an evolving global economy with inventive yet traditional design and attention to quality — not quantity. In fact, by coupling innovative designs with smaller production runs, Pendleton has kept its supply of materials tight while increasing demand for a brand that’s popular with consumers at home and gaining attention abroad.

“The world changes, so we have to be constantly changing,” said Bishop, adding that the company still faces relentless competition.

It’s not just labor costs, according to Bishop, who said business costs continue to rise on everything from disposing of wastewater to safety compliance. In Bishop’s opinion, public policies should change to encourage more manufacturing.

“That’s what’s going to provide jobs and that’s what is going to fund our public needs,” said Bishop, a descendant of the English weaver Thomas Kay, who essentially started the business when he came to Oregon in 1863.

The Pendleton name originated with the family’s first woolen mill in Pendleton, Ore., launched in 1909 by the three sons of Thomas Kay’s daughter, Fannie, and her husband, retail clothier C.P. Bishop. The sons — Clarence, Roy and Chauncey — purchased the Washougal weaving mill in 1912 in the name of the Pendleton brand.

“Clarence had two sons, my dad and his brother Mort,” Bishop said. “Now, (the company) is managed by me, my two brothers and a cousin.”

Bishop declined to share revenue figures. However, Pendleton prides itself on being profitable, according to Cheryl Engstrom a spokeswoman for the business.

“This company always operates in the black,” Engstrom said. “It’s a very well managed company when it comes to profitability.”

Business tactics

Part of keeping the business in the black is recruiting top talent. The Bishops are not opposed to hiring non-family members, especially experts who can handle the retail side of Pendleton’s business. Example: they appointed a new chief executive officer, Bill Lawrence, in 2011. Family managers liked Lawrence’s 30-year retail background. He was hired to lead a strategy to draw international attention to the Pendleton brand, Bishop said.

Lawrence has done that by developing new Pendleton retail stores — the company now operates 70 — and a new catalog business. He has also worked to improve Pendleton’s e-commerce business to transform the enterprise.

“Now, we’re marketing directly to the consumer rather than being strictly a wholesale business,” Bishop said.

The approach has helped capitalize on an emerging worldwide interest in American heritage products.

“It’s hard to believe we could be exporting fabric and apparel made in the United States to Europe or Asia, but we’re working hard at it and we’re encouraged by the results,” Bishop said.

The focus on overseas buyers doesn’t surprise textile industry expert David Trumbull, vice president of international trade for the National Textile Association in Boston.

“Consumers around the world know the United States is a design leader,” Trumbull said, adding that U.S. textile suppliers often couple the innovation with smaller production runs.

“If you’re nimble and can come up with a few thousand new designs a year and issue it in short runs, you can be very attractive to the consumer who wants individuality,” Trumbull said.

Aside from producing fabric for its own line of upscale apparel, Pendleton’s Washougal mill makes fabric for about 100 specialty customers, including office furniture companies Herman Miller and Steelcase.

“This is how we’ve been able to stay competitive, by making just a few fabrics so we don’t have to compete with China,” Bishop said.

In the meantime, labor and materials costs have increased for textile manufacturers that outsource to China, according to a recent article published by What’s Working, the Association of Washington Business magazine. The turn of events has created a more balanced playing field when coupled with shipping costs, Trumbull said.

Moreover, a U.S.-Dominican Republic-Central American free trade agreement has also buoyed U.S. textile manufacturing by allowing South American-made garments to enter the United States duty free if they are made with U.S. fabric.

Since the agreement’s 2010 passage, “We’ve seen business coming back to the region,” Trumbull said.

The agreement also has set up a handy marriage between the labor-intensive garment makers of the developing world and North America’s capital-intensive fabric mills, such as Pendleton’s Washougal plant.

Fashion scheme

Trumbull said Pendleton has also benefited from operating in the midst of its own market.

“It’s a real advantage for textile makers here to pick up on the nuances of what the American consumer wants,” he said.

Bishop said the concept is continually being explored by the company’s new chief creative officer, Mary Richter, a former Nordstrom executive, and new designers for its traditional menswear and women’s apparel lines. Pendleton also recently hired a trio of young designers to create a new fall line — the Portland Collection — which infuses youthful fashion with traditional fabric design.

“They (Pendleton) have taken advantage of opportunities where they could,” said Paul Dennis, a business expert and head of the Camas-Washougal Economic Development Association.

But Dennis said Pendleton Woolen Mills has built its success on high-quality clothing items and a reputation that traces its roots to the mid-19th century.

“You have fads that come and go,” Dennis said. “They’re a company that has transcended that and that’s why they’ve lasted so long.”

Cami Joner: 360-735-4532;