I first hired Jeff as a carpenter in the early 80's. I was running the boat shop, ordering parts, supervising the construction and handling sales of the Nor'Sea 27.
He worked for me thru the 80's and was a great trim carpenter doing the interior teak trim on the boats. We had other good woodworkers, mechanical installers and tradesmen who worked along with Jeff. Even during the bad times in 83 during the Reagan years when interest rates were 17 percent, I kept Jeff working and busy. We made it through some tough times in the boat business. Often, as many owners of small companies do, I would skip paying myself so the employees never missed a paycheck. That's just the way it is sometimes when you work for yourself. I liked his work and we had a good relationship even to the point of attending his wedding and helping him buy his first house. I considered him a friend and a trusted employee.
In late 1990, after 10 years in Laguna Hills, Ca. we had to move the boat shop, for many reasons. One, the fire department was insisting that we not laminate in our building any longer. 10 years earlier our business was surrounded by vacant lots. Over the years, new buildings were popping up and in 1990, a major hotel was opened right next door. Two, we were out growing our little building. We needed more space and buildings near the coast were becoming costly. Three, Jeff had just bought a new house, 50 miles inland and was wanted to move the factory closer to him. We had orders for the Nor'Sea 37 in hand and in reality we needed a larger building. Jeff wanted to be the production manager and run the factory.
I agreed to let him take over the production of boats at our new factory. We decided on a location in Rialto, Ca. Close to Jeff, but more than a 70 mile drive for me. The new building was more than twice as large as the old building. We had 23,000 square feet with 4 large roll-up doors and nice office space. So we moved.
The plan was that Jeff would run the factory, he would be a signer on the company checking account. He would handle pay-roll through a company we use called "Paychex". He would order parts and material as needed, plan the production of the boats, figure out delivery dates and manage the shop in a professional fashion to deliver the boats in immaculate condition in a timely manner.
We were building perhaps 14 Nor'Sea 27s at the time. We had several orders for the new Nor'Sea 37 and while that model was still under development, we were all confident that the boat would be tooled and in production in a manner of months.
I had been building the Nor'Sea 27 for 10 years at this point. I managed the factory by 'walking around'. I had a great reputation for building extremely high quality boats over that 10 year period and ask people who have one of my boats or know me personally what a stickler for quality I am. A new Nor'Sea 27 leaving out of my factory during my watch as owner/production manager was a thing of beauty.
With Jeff out in Rialto running the factory, I concentrated on marketing. I would drive out to the factory a couple times a week (mistake #1) but really focused on selling boats out of my home office in Dana Point, Ca. When I was running the shop in Laguna Hills, the average boat would take from 6 months to one year to complete. Depending on how busy we were, the average time was perhaps 8 months.
Jeff was confident that production could be increased considerably. We had more room, he hired some more people (some of them friends) and the business was going well. All money that came into the company went into the company checking account. Jeff wrote checks for parts and material as needed. Payroll was done each week when Jeff called in the hours worked of the employees and 'Paychex' delivered the payroll on Friday morning. Jeff would sign the checks and hand them out. My accountant would get the deposit receipts and a monthly statement from 'Paychex'.
After 6 months in the new building and Jeff running the shop, we seemed to be bogged down on getting the boats out in a timely manner. I had many meetings with Jeff as to the reason and he said that he was getting a handle on it and we would be OK in a few more months. We were starting to fall behind. My accountant called and said that our cash flow was slowing down and we were beginning to get behind in boat completions compared with new orders taken. In other words we were taking in orders and not pumping boats out the door. Jeff seemed to be losing it.
I decided that I was going to be in financial trouble for the first time in 11 years. I received a phone call from Mark Haugan who worked for LaFiell Manufacturing. This is the company that made our masts. Mark, who I consider a friend, said "Bob, you've got to get rid of Jeff". Why? I asked. "I delivered 4 masts and booms yesterday out at your Rialto plant and I arrived at 9:00 AM, just in time for the morning break. I waited for 35 minutes while 15 of your employees sat around the shop smoking cigarettes and laughing it up while Jeff was in his air conditioned office reading the USA today sports section". I told Mark about how we were starting to fall behind. He recommended that I get rid of Jeff and hire someone who can run a shop. He felt that too many of Jeff's pals were working at the shop and that its difficult to boss your friends around. While Jeff was a good woodworker, he couldn't organize the production of more than a few Nor'Sea 27s at the same time and we had probably 12 under construction.
Mark suggested that I hire Allen Massey a respected and former production manager at Pacific Seacraft. A Japanese company had purchased Pacific Seacraft and moved in a number of their own people. Allen certainly had good credentials and I told Mark that I would consider that idea.
I felt that Jeff couldn't be replaced at this critical time because he knew the boat so well. By the time I could train someone else too much time would be lost. (mistake #2) I had another conversation with Jeff...Kind of a pep talk and yelling match. Jeff said we needed more parts and materials. Maybe more people. So......
I decided to go ahead and re-finance my house. I had bought this house for cheap in the early 80's when you could get them cheap. Most advisors would tell you not to mortgage your biggest asset when you needed cash, but I really wanted to get caught up and get the 37 in production. I obtained new loan on my house and pulled $101,000 out and put every dime into the company.
We built a stream of probably 10 boats yet Jeff still couldn't meet the delivery dates and I was getting angry phone calls from customers who wanted their boat. Jeff said we still needed more money so I took all my credit cards and obtained cash advances to the tune of more than $75,000. I stupidly figured that once we had the boats caught up and the 37 in production I could pay them off. (ya, I am a dummy).
During this time period (27 months that Jeff was production manager) I began getting angry letters from dissatisfied customers. Letters from Dr. Steve Gross who sent me photographs of his boat with gelcoat flaws, paint scratches, cracks in the gelcoat and a water leak in the stern pulpit area. Letters from people who found beer cans and trash in the bilge and in seat lockers. One man found a tape measure painted over in the sail locker. Al Stevens had a cigarette burn on his teak rubrail indicating that someone had set a cigarette on the surface and just forgot about it. It burned a 2 inch black line in the rubrail. I don't smoke and there is a no smoking rule at the factory. Jeff is a heavy smoker. A customer from the east coast had a severe leak in his stern caprail and sent me photos of the re-work he had to do. Another from the Northwest found an incredible amount of trash including hamburger wrappers and beer cans in his boat. Others complained that Jeff was looking for a 'bonus' to get their boat finished. I was in a panic.
Parts were missing and I knew it. Jeff called one day and admitted to selling a kit boat buyer some parts under the table. He said it was about $2500 worth and he felt bad about it. He said I could deduct $100 a week from his $900 a week paycheck. (1992 dollars). The man who had bought the parts called me a few weeks later and had no idea that Jeff was pocketing the cash. I think (my opinion) that Jeff knew the man would be calling me and decided to admit stealing from me. I was very upset at this news. I had always thought Jeff was trying his best to get us caught up and this was bad news that I had a production manager that was behind in production, stealing from his company and couldn't take the time to spend 15 minutes looking for problems before a boat was shipped to the customer.
Jeff was firing some of our best people and replacing them with relatives and friends. One man he fired was a fantastic carpenter named Alonso. Alonso has worked for me since 1988 and still does in 2001. But one day Alonso was gone and I asked Jeff where he was. Jeff said he was fired for screwing up. Years later in late 1993 when I called Alonso to come and work for me, Alonso told me the truth. Alonso said the Jeff's pal Jim E. had been working a night shift because he lived in San Clemente and the long drive was too much. Alonso had known that Jim E. was just mostly sleeping and that Jeff was clocking him in at the time clock even when the guy never showed up. Alonso was going to talk to me about it but got fired first. Another revelation happened just last month (May 2001) at the Newport Dunes Boat show I was doing for the Montgomery Boats. I ran into Frank P. who also worked for us in the early 90's. He walked up and we shaked hands. "Frank" I said, "How have you been"? Frank had just gotten hired by Duffy Boats, who build the best electric boats in the world. They hired him as a carpenter on their new model. We were just chatting and I asked him, "So why did Jeff fired you"? (Jeff told me he fired Frank) Frank said "Jeff didn't fire me, I quit"! Why? I asked. "Well Jeff said he needed to borrow $300 dollars so he could buy his wife a gift but the next day Jeff shows up at work with some dope, asking me if I wanted any". "I was so pissed, I quit that day". So now I know what happened to two of my best men, 10 years ago.
Other things were happening. Someone smashed the front window at the factory and grabbed the computer system we had. It was a computer we used for tracking parts and inventory. I had many calls from former employees that worked at that Rialto factory during those years and while I can't prove it, they all said the computer theft was an inside job. (net loss $2800 but I didn't replace it) We had an engine turn up missing. We had 5 to 7 on the floor in crates and no one knows where it went.
I was stuck with Jeff. I had many talks with him about production and getting the boats finished. While many would have fired Jeff on the spot, I felt that I had to stick it out at least until he could finish off the boats and perhaps get ahead for a change. I didn't have the extra money at this time to hire and train a new production manager. Jeff was now doing some woodwork at my insistence. I had planned to fire Jeff and hire Allen Massey (a well respected and professional production manager from Pacific Seacraft). I talked to many people about this problem and I think that Jeff (and his pal Jim E. who was not doing a good job either) knew his days were numbered. But I couldn't dwell on anything except to do the best I could to finish the estimated 6 boats I was behind on. The problem at hand was to raise some money. I had put every dime I could borrow into the company and we would have to finish some boats to get paid.
We had many people that owed us money. One was a man that had gone bankrupt (a nice person) but we couldn't wait any longer to get paid for this boat. His accountant told us that he didn't see any hope in the future for this man being able to pay us. In fact the accountant had requested we write a letter stating that we had adsorbed the boat for liquidated damages and we complied with his request. We decided to go ahead a spend our company money and materials and finish the boat. We finished, I obtained a loan on it for $60,000 (to get some of our money back) and put every dime into the company checking account. The loan payment was $650.25 per month and while I didn't relish making payments on a boat I didn't need, I had no choice if we were ever to get paid for our work. We named the boat "WINDSONG" and put it in a slip at Dana Point Harbor. The loan was through Ganis Corp., a company that financed quite a few of our boats over the many years. (I never missed a payment and the loan was paid off by Whitney Gilman in September of 1994. See Whit Gilman section for details)
Like I said, many people owed us money and those people will be discussed as you cruise through this site.
While the months and years are drifting by from January 91 thru April 93 (when Jeff left and I moved the company) I had already put in more than $250,000 to help Jeff get his act together and get us caught up.
Things went from bad to worse. I was getting very upset with the entire situation. I longed for the days when I was in control and we were building only 4 boats at a time. All my money was gone. I was in debt $250,000 for money I had put into the factory and my production manager knew he was going to get canned.
(I would later lose the house)
In April of 1993, I was at the limit. We had no money and 6 boats at the factory unfinished. Try as I could It was to no avail. While we had produced 30 boats in 27 months from 1/91 to 3/93. (Jeff says 27 boats) it wasn't enough to make it.
Jeff quit. I decided to do what I could to get to a smaller building, without Jeff, and finish those 6 boats.
I wanted to get back to the shop and be the production manager again. No more Jeff. No more screw ups and No more $900 a week going out.
I decided to call the owners and tell them that we were going to close for one month while I moved the company. The landlord of our building was putting pressure for a rent check before we moved.
Jeff had decided to take the phone numbers home of everyone that was our customer. That included 27 people and 2 Nor'Sea 37 customers. Jeff called them all and told them that I was going bankrupt and they had better cancel their orders. They did.
I talked to Gerry VanWesep who's boat wasn't finished yet and asked him to send me some money so I could pay the rent. He agreed and sent money. During that time frame Jeff convinced Van Wesep and another customer named Charlie Pepper to let him finish their boats at a boat shop or location he would find. I agreed and Jeff worked on those two boats for a short time at the Rialto location and them moved them to his own shop. Jeff had turned me into the villain in this situation but I understood that they didn't want to wait another month while I moved the factory to a new location and they didn't trust me anyway. Jeff was the woodworker and he was the one who could finish the boats with the least hassle. It was ironic that the man who couldn't catch up after I sunk a quarter of a million dollars into the boat shop, would now profit for finishing 2 of the boats. And charging a small fortune in the meantime.
It didn't end with Pepper and VanWesep. Others were contacted by Jeff and a phone network began. In a matter of days I was the villain. Rumors flew that I had 7 million stashed. I was certainly going bankrupt according to Jeff.
Jeff had a vision of taking over the building of Nor'Seas.
While Charlie and Gerry had taken their boats to Jeff's shop, they had also signed hold harmless agreements. But Gerry had a vendetta going now. He decided to do as much harm to me (and to other customers) that he could.
He wrote a letter to Practical Sailor magazine and everyone else he could after he got his boat finished. I had asked both of them to please avoid harming future Nor'Sea 27 owners that were under construction at the new factory. But, once they got their boats they decided to try and shut down (with Jeff Daniels help) our new factory without regard for other customers who would suffer needlessly. I guess that one of the weaknesses of human nature is once you get yours.....screw everybody else.
So the letter writing and phone campaign began with Gerry Van Wesep, Charlie Pepper (the 2 boats that Jeff finished, at great expense according to them) and they in turn recruited Jim Montgomery to join in this exercise to shut down Nor'Sea Marine with its new factory of boats being built and delivered. (including Jims)
They wrote to Cruising World, Ocean Navigator, Sail and others. People from
these magazines called me. I took the time to explain the situation and they ALL
understood that our going broke was just another failure in a long line of boat
factory failures during the recession of 1991-92. One editor thought I was
crazy for putting my home and credit cards on the line, saying "I've never heard
of a CEO or business owner who mortgaged his personal property to try and save
the ship". Others said to do what all the other boat factories were doing,
declare Bankruptcy and walk away. I responded that while that was an option, I
really thought I could finish these boats at a new factory with me as the
production manager once again.
The only magazine that decided to write a story about Nor'Sea Marine was Practical Sailor. They decided to write a drama filled, inaccurate article that would be full of outright lies and un-true statements. (read Practical Sailor section).
Once we had moved to our new factory, business picked up. Boats were getting finished and considerable progress was being made on the (now only) 3 boats left to finish.
Those being Fred Booth (who changed his order to a new boat), Whit Gilman (who now wanted a green hull) and Jim Montgomery (who was trying as hard as he could to close us down)
(and still is. Stalker Jim).....
We had increased production at our new shop and with fewer people. The quality was back. The spirit of the employees was high. We enjoyed our new building and soon we would be caught up on our commitments.
But Jeff Daniels still had a dream of getting Nor'Sea Marine. He was still calling customers like Jim Montgomery, Whit Gilman and Fred Booth. He was telling them to pull their boats to his new shop. He was calling our employees at home in the evening and telling them to quit or to ask for a big raise. One man quit, after Jeff (through another) told him that the Immigration people were going to be called. His name was Cain. Jeff was filling out affidavits saying we painted another color on this hull or that hull and were switching hull numbers from one to another. (all made up).
Jeff persuaded Whit Gilman (who we were building a new Green hulled Nor'Sea 27 for) to take us to court and try and get another mans (documented) Nor'Sea 27. Whit followed Jeff's advice and caused a lot of trouble for everyone. Of course, Whit lost.
Jeff was working hard for Jim Montgomery. As we were waiting for Jims frivolous lawsuit to come to trial, (about a 2 year wait in the LA area), Jeff would be across the parking lot of the new factory taking photos of the 12 boats inside with a telephoto lens, while we worked away.
Jeff had run out of work and people to get money from. He had finally finished (at great expense) Gerry Van Wesup and Charlie Peppers boats and now he had an empty shop.
My shop had more than a dozen boats inside and while 3 of them were 'catch-up' boats from the old factory, the other 9 were fresh orders. (All these boats were built, delivered and are still sailing today, almost 10 years later)!
So Jeff had nothing to do, except work at closing us down.
At Jim Montgomery's failed 'Fraud' trial against me, Jeff showed up to testify and present his secret 'photos' of our new (for the last 2 years) Factory. The Judge wasn't impressed. So what? Big deal!
Jim Montgomery lost the Fraud Trial.
The years have gone by........ What happened to Jeff and his crew of
professional boat builders? (as Jim Montgomery likes to call them) Jeff remodels
kitchens. Before that he worked inspecting roofs. The last we heard of Jim E.
(Jeff's lazy pal) he was wearing a red bib and working at Home Depot. Don't know
what happened to his brother-in-law. Scott Steskel had to leave the state for
legal reasons. (meth lab?) Maurice Steskel, Scott's brother, went into a 7-11 to
buy a pack of cigarettes in may, 2000 (I may have the date wrong). He had a
loaded AK-47, but paid cash for the cigarettes. At the same time a Sheriff drove
up to the 7-11 in a squad car just to get a soda. Maurice walked out with his
cigarettes and his AK-47, saw the deputy and unloaded the entire 30 round clip
thru the windshield into the young, innocent Deputy.
Maurice then went home. Later that day someone saw the video on the news and called the Police. What a shame.
To summarize:
A quote from the Practical Sailor article of Oct. 15, 1994:
"Moad (my attorney) said Eeg blames much of trouble on a former "Key Employee" who not only ran an inefficient shop but later bad-mouthed Nor'Sea to current and prospective customers and "stoled some of his customers away from him".
Tom Gannon of Practical Sailor got that quote right.....
For those of you who are businessmen, I hope you never have a Jeff Daniels working against you.
Just my opinion