L.L. Bean CEO, Steve Smith, Discusses Their Efforts To Aid Hospital Workers On Frontlines & Government Needs To Do More To Help Retail Industry
WHITFIELD: Welcome back. Everyone is trying to do their part. One famous American apparel brand is joining in the effort to make face masks to help curb the spread of coronavirus. L.L. Bean said they are making at least 10,000 masks daily with plans to ramp up production. They are using the company's dog bed liners. And these masks are being tested by the Massachusetts Institute of Technology. As L.L. Bean shifts operations to help in the crisis, the president and CEO of the company says that, on the flip side, the government isn't doing enough to help the retail industry. Joining me now is Steve Smith, the president and CEO of L.L. Bean. Good to see you, Steve.</s>STEVE SMITH, PRESIDENT & CEO, L.L. BEAN, INC: Good afternoon, Fredricka. Thanks for having me.</s>WHITFIELD: Thank you so much. And hope you are well. And clearly you and a lot of your employees are doing well because you are trying to make a dent to try to help out the medical community by making these masks. What was the inspiration behind doing this? SMITH; Yes, it's a great story actually. We're a 108-year-old family owned business. We operate under the stakeholder philosophy and our employees and our customers and communities are really the critical stakeholders there. And when this kicked off early in March, a couple of our employees from our manufacturing center where we make our fantastic Bean boots and totes wanted to know how they could help. They started experimenting in making patterns for masks. They came forward to our leadership team, a strong leadership team and said we want to make masks and we're experiment with our dog bed lining. It's durable, washable, breathable. And that started the process. And we immediately converted over to production of the masks.</s>WHITFIELD: So what about that conversion that you had to do for your production? There are a lot of companies who expressed they want to do something, but perhaps, you know, they don't know how to convert or maybe their assembly lines are not compatible with doing so. How were you able to make that transition?</s>SMITH: The combination of Yankee ingenuity and fantastic employees. We cut and sew. We -- that's what our manufacturing folks do. And they can cut any material into any shape and stitch anything. So they are incredibly innovative and wanted to help. So just immediately jumped in and adapted our cutting machines to cut the right sizes of the materials. We set up a new area in our manufacturing. We, obviously, have lots of sewing machines. So we set those all up with appropriate social distancing and they got at it.</s>WHITFIELD: Obviously, masks for something the medical community really needs. But now the CDC recommendation asking, really, all Americans, you know, to wear some sort of cloth mask to protect, you know, their neighbors and their loved ones. Is this going to be available to the masses or is this strictly for the medical community?</s>SMITH: Right now, we're strictly for the medical community. We have a great partnership with the overall main medical community and specifically Maine Health and also the governor's office, governor mills and her CDC. So all of our production. And we're also using our proprietary supply chain to be procuring PPE for the state of Maine as well. All of that is going to the medical community. And, you know, we're not built for mass production, so 10,000 a day is great. That's about the most we can do. We are just starting to talk about, you know, what would it look like if we created something stylish and fashionable for the future. But we do not have the capacity to do that yet.</s>WHITFIELD: OK. Well, because of this restructuring, another silver lining is, a lot of your employees get to continue working while looking at other industries, retailers, you know, manufacturers, people who are losing their jobs. And they are going to be counting on stimulus money from the government or, you know, having their hands being thrown up trying to figure out what's going to help them put food on the table. You are doing a great service to your employees. But what is your concern about how you think the government could be doing more and, you know, how this unemployment of so many furloughs, so many could be addressed?</s>SMITH: Yes, first, it is great to be able to have hours for our employees to be able to make masks. Also, just to tie back to earlier segment, early on, about three weeks ago, we converted a corner of our fulfillment center. We are an E-com business. It's about two-thirds of our business. And we converted one- third to take over the operations for the Food Shepherd Food Bank here in Maine. Most were retirees and at were high risk. That was also a way to get hours for our employees and to do something as a great purpose in the state of Maine. We're grateful for the government stimulus around enhancing employments. That makes it a lot easier for retailers who are moving to furloughs and layoffs. But it is going to be very, very challenging for the retail industry. The vast majority of the brands that you know and love that are store- based retail, they already have been having a really challenged -- it's a challenged industry already. And to be at zero sales and full rent and having full payroll is a huge challenge. And you just started to see that happen last week around layoffs and furloughs. And that's going to continue. And what we've said is what's needed is really access to working capital so that the retailers, the vast majority of retailers of brands that you love are able to sort of weather the storm for the next 60 or 90 days. That can be rent mitigation, that could be if we could suspend some of the tariffs, anything that could help us conserve cash or allow us, A, to employ our people for a longer period of time but also be able to recover on the back side.</s>WHITFIELD: Hopefully, there are a lot of listening ears listening to your suggestions there. Congrats on the innovation. And many people are very grateful for what it is that you're doing and how you are leading the way. Steve Smith, of L.L. Bean, thank you so much. Stay well.</s>SMITH: Thank you, Fredricka. Have a great afternoon.</s>WHITFIELD: Thank you. And we'll be right back.