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Soap Firm Likes Its Independence : Makers of White King Products Fend Off the Giants

July 29, 1985|NANCY RIVERA | Times Staff Writer

The year was 1860. By the time it ended, Abraham Lincoln would be elected President and the nation would march closer to civil war.

On the other side of the country, a young rancher was trying to clean up the dusty pueblo known as Los Angeles.

1860 was when 17-year-old John Forthmann started Los Angeles Soap Co., which this year celebrates its 125th year of saponification--the sometimes fine art of making soap.

Most of those 125 years have been spent on eight acres surrounding Banning Street (named after another Los Angeles pioneer) and bordering East First Street downtown. There, Los Angeles Soap Co., its White King distribution subsidiary and the constant, perfumey odor of soap occupy a series of rugged brick buildings more reminiscent of old New York than early-day Los Angeles.

The more recent history of the company has been a constant challenge to maintain a niche on the increasingly crowded supermarket shelves, competing with giant household-products makers with equally massive advertising budgets.

"I guess we're the last relatively regional manufacturer that is still independent," said DeWitt Barton, president of Los Angeles Soap. The closely held firm has "remained pretty much in the (Forthmann) family," Barton said, and is headed by 74-year-old Chairman Andrew Forthmann, grandson of the founder, who died in 1922.

"I don't know where time goes," said Barton, who joined the company 26 years ago as sales manager. "The trick is, can we do it for another 125? And should I worry about it?" he joked.

Los Angeles Soap Co. is probably best known for its White King D laundry detergent. But it also produces a popular White King Water Softener and other soaps bearing the White King name, which are sold in the 14 Western states that comprise Los Angeles Soap Co.'s distribution area. In addition, the firm manufactures detergents, bar soaps and fabric softener sheets under the Sun brand, as well as bar soaps under the names Sierra Pine and Frolic.

While the company's own brands make up a substantial (but undisclosed) percentage of Los Angeles Soap's business, the firm also does private-label packing for such chains as Vons, Ralphs, Lucky and Thrifty Drug, takes on contract packing for such companies as Shaklee and Avon, and does industrial work, including manufacturing janitorial supplies and those tiny bars of soap favored by hotels.

"If you go to Las Vegas, most of the soap is ours, though you wouldn't know it," said R. Dale Weber, senior vice president and general manager.

Los Angeles Soap Co. had net sales of $26.2 million in 1984, compared with compared with $9 million in 1970.

But in 1984, competition from consumer-products giant Procter & Gamble and other large soap and detergent manufacturers, an industry-wide price deterioration and flat product demand took its toll. The year's revenues were down slightly from the 1983's $27.66 million in sales, and Los Angeles Soap recorded a loss of $309,563 in 1984, contrasted with net income of $245,415 the year before.

Still, the company has an "excellent balance sheet" with nearly $3 million in cash and short-term investments and no long-term debt, said George Earnest, executive vice president of C. L. McKinney & Co. Earnest has been making a market in the fairly inactive stock for about a year.

Los Angeles Soap has "good products . . . (but) it's difficult for them to get shelf space in retail stores because of the competition from Procter & Gamble and other national brands," Earnest said. As a result, "in the last few years they've been actively seeking private label business," he said.

Los Angeles Soap Co., in its 1985 annual report, said that efforts to increase sales in the private-label product line "are expensive and time consuming, but it is an important investment in our future and mandatory for growth. Your management team will continue to stress the importance of profitability.

"The results for 1985 are substantially dependent upon the timing and magnitude of any improvement in our markets," the report continued. ". . . In 1985, as we prepare for our 125th year, we can be optimistic that our company will grow and prosper."

Because of its long independence and the company's acres of valuable real estate just east of Little Tokyo, rumors occasionally arise that Los Angeles Soap Co. is thinking of a merger or the sale of its properties.

Has Been Approached

Barton acknowledged that Los Angeles Soap has been approached several times by acquisition-minded firms but the company has never been interested.

"It goes with the trend of the times. When there's a big kick on acquisitions, we get more action," Barton said. "We've elected to remain an independent company."

Los Angeles Soap has tried various methods to compete over the years and has maintained a 2% to 3% market share in its 14-state territory, ranking as high as the third or fourth best-selling brand in some markets. In some areas, its water softener ranks No. 1.

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