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Starbucks order pumps up buzz for Ohio pottery town

| Saturday, July 14, 2012, 8:55 p.m.
Mike Price of East Liverpool, OH and an employee with American Mug and Stein Company for 28 years places a mug that has recently been removed from its mold onto a shelf on Tuesday, July 10, 2012. Gwen Titley | Pittsburgh Tribune-Review
Robert Davis, of East Liverpool, Ohio and a glazer with American Mug and Stein Company for 16 years, dips a mug into glaze before it will be shelved and put into a kiln on Tuesday, July 10, 2012. Gwen Titley | Pittsburgh Tribune-Review
Owner of American Mug and Stein Company, Clyde McClellan, holds a mug with a Starbucks logo at the East Liverpool facility on Tuesday, July 10, 2012. Gwen Titley | Pittsburgh Tribune-Review
Mugs wait to be packaged and shipped at the American Mug and Stein Company on Tuesday, July 10, 2012. Gwen Titley | Pittsburgh Tribune-Review
Bill Custer of Newell, WV, places a stein that has just been removed from its mold onto a shelf at the American Mug and Stein Company facility on Tuesday, July 10, 2012. Gwen Titley | Pittsburgh Tribune-Review
Mamie Baumgarner of East Liverpool, Ohio, places mugs on racks that will be placed into a kiln on Tuesday, July 10, 2012. Baumgarner has been working for American Mug and Stein Company for a little over a week. Gwen Titley | Pittsburgh Tribune-Review

EAST LIVERPOOL, Ohio — In this small Ohio River town that a century ago boasted the title “Pottery Capital of the USA,” an unlikely partnership between a West Coast coffeehouse chain and an old-fashioned ceramic mug-making company could revive an industry many considered lost forever to low-cost foreign manufacturing.

American Mug and Stein Co., one of the last two potteries left in East Liverpool, struggled in recent years to fill small orders from government agencies obliged to “buy American.”

The company, like the rest of the American ceramics industry, was battered by overseas competition for decades and nearly dealt a death-blow by the recession of 2009.

Then last fall, Starbucks Corp., the Seattle-based company with 17,000 stores around the world, announced a program to support American jobs and set into motion events that turned American Mug and Stein's fortunes. It focused a spotlight on the decline of East Liverpool and domestic ceramics business.

Starbucks ended up ordering 20,000 mugs from the company, the single-largest order in the company's history, and continuing orders from Starbucks have the small American Mug and Stein factory humming and adding employees.

“What I'm hoping is that with all this attention somebody might look at this town as an opportunity,” said Clyde McClellan, 63, owner of American Mug who enjoyed interviews with national news media during the past six weeks.

‘Meant to be'

At the beginning of November, McClellan got a call from Ulrich Honighausen, owner of Hausenware, a Sonoma, Calif., company that supplies ceramic dinnerware and other products to major retailers, including Starbucks, Crate & Barrel and World Market. Honighausen had just heard about Starbucks' Create Jobs for USA program and he quickly hatched the idea to find an American mug-maker to supply the coffee chain.

“Two different sources led me to basically the last man standing” in the industry, Honighausen said. “Within three hours of learning about the jobs program, I was talking to Clyde. It was like it was all meant to be.”

Starbucks wanted the 20,000 mugs for its Indivisible line, which sends money from sales of specially labeled mugs, roasted coffee and wristbands to an organization that helps small businesses secure loans and create jobs.

The coffeehouse chain started the program on Nov. 1 in partnership with Opportunity Finance Network, a Philadelphia-based national network of community development financial institutions, that provide loans and other financial assistance to benefit low-income communities.

Through June, the program raised $11.5 million in donations, which spurred $80 million in loans and the creation or retention of about 4,000 jobs, Starbucks said.

Orders continue

The Indivisible mugs made by American Mug and Stein started selling on June 12 and mostly sold out. McClellan is pitching Starbucks on another Indivisible design that he hopes the company will sell from its online store.

“For every new product from them, we can add four or five jobs,” he said.

In addition to orders from Starbucks, American Mug and Stein benefitted from loans facilitated by Opportunity Finance Network, which put him in touch with The Progress Fund, a Greensburg community development financial institution, McClellan said. The Progress Fund gave American Mug a debt-consolidation loan and the company's first line of credit in three years.

And McClellan said his company has a steady stream of work making a mug that Starbucks sells in its first store, in Seattle's historic Pike Place Market.

“That place sells hundreds of thousands of coffee mugs a year,” he said.

Out of work

At its peak in the early 1900s, about 90 percent of East Liverpool's residents worked in dozens of potteries that began springing up in the mid-1800s to take advantage of rich clay nearby and easy river transport, according to the Museum of Ceramics in East Liverpool. Today, the industry employs perhaps 1 percent or less of local residents. The region's unemployment rate, which includes Warren and Youngstown, averaged 9.5 percent last year.

Most people still employed in the ceramics industry locally work for Homer Laughlin China Co., maker of popular Fiesta dinner ware. Across the Ohio River in Newell, W.Va., the company in 2010 bought Hall China Inc. of East Liverpool, a move that McClellan said preserved 100 jobs in the community.

Before the Starbucks work, American Mug and Stein had 13 workers producing 8,000 to 10,000 mugs and beer steins a month. Now, McClellan has hired eight people, recorded a sales jump of more than 50 percent, and said his factory pumps out about 15,000 mugs a month through a labor-intensive process that uses no automation.

Workers construct molds, pour clay, load and unload kiln racks, clean up imperfections, and glaze — all by hand.

The result, McClellan said, is “there's an individual look to each one.”

That hand-crafted look comes at a cost, one most companies aren't willing to pay and which has spurred overseas manufacturing.

East Liverpool, a city of about 11,000 on the northern bank of the Ohio River, a couple of miles west of the West Virginia-Pennsylvania line, suffered the consequences. The city's population dropped about 15 percent between 2000 and 2010. The 2010 Census estimated 28 percent of East Liverpool's population lives below the federal poverty level, double the state rate.

“People here are out of work not by choice but because of circumstance,” McClellan said.

‘A start'

That could change. Media attention led companies around the country looking for unique American-made ceramics to call American Mug and Hausenware.

“We've gotten a lot of calls, both Clyde and I,” Honighausen said. “Retailers are asking us how they can do their own made-in-the-USA program.”

The interest led McClellan, Honighausen and the owner of a Japanese ceramics company from whom Honighausen buys, Kazuharu Kato, to form a company, American Pioneer Manufacturing, that will manufacture ceramic products from nearby New Waterford, Ohio.

The partnership purchased a shuttered factory and will install modern, automated manufacturing equipment, Honighausen said. They expect to begin shipping products next year.

“We're going to compete out of here, and we want to export,” he said.

McClellan called the whole experience — the attention, surge in business and potential for more growth with American Pioneer — “surreal.”

After decades of decline, he said he hopes new business comes to East Liverpool and the surrounding region.

American Pioneer expects to hire about 15 employees initially, Honighausen said. “I know its not like 1,000 (workers) but it's a start.”

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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