UHY GLOBAL JANUARY 2019 CLIENT STORY


KEEPING IT IN THE FAMILY


The UHY network's combination of local knowledge, global reach and personal service makes it an attractive choice for family-owned companies, with their own unique structure and requirements. Here we profile two very different, long-standing family businesses, the House of Gübelin and Hannay Reels, Inc., and the UHY member firms that help them thrive. UHY member firms work with a significant number of family-owned businesses, often through successive generations, and have in-depth experience of the issues and difficulties that can arise. THE HOUSE OF GÜBELIN The House of Gübelin is an internationally renowned family-owned firm known for its high-end jewellery, gemstone expertise, and as purveyors of some of today’s most sought-after luxury watch brands. Founded in 1854, this Swiss company remains wholly owned by the Gübelin family, and employs around 250 people, many of them experts in jewellery, gemmology and horology. Headquartered in Lucerne, the firm operates eight boutiques in Switzerland and a private salon in Hong Kong. Its three Gübelin Gem Labs, in Lucerne, New York and Hong Kong, produce reports and gem analysis for famous auction houses, royal families and collectors. The Gübelin Academy is based in Hong Kong and Switzerland. The House of Gübelin has always been about authenticity, expertise and inspiration. Creations from the luxury brand, Gübelin Jewellery, are inspired by the inner world of coloured gemstones. Throughout the 20th century, Gübelin’s reputation for excellence spread, first through Europe and then further afield but it has always remained firmly rooted in its home country. By the year 2000 the company operated boutiques in Switzerland (Lucerne, Zurich, Berne, Basel, Lugano, Geneva, St Moritz) alongside its jewellery atelier and gemmological laboratory. Though it had an international reputation it did not yet have an international presence. As the new century began, the company started planning their global expansion. The House of Gübelin opened its first overseas gemmological laboratory, in Hong Kong, in 2010, followed by a private salon in Hong Kong in 2013. That same year, the Gübelin Academy was founded in Hong Kong. Today Gübelin runs a third gem lab in New York. Overseas expansion was a challenge for a family-owned company with deep central European roots. Asian markets, in particular, can present cultural, fiscal and regulatory difficulties for businesses without specialist local knowledge. GÜBELIN AND UHY With the challenges of international expansion in mind, The House of Gübelin asked Balmer-Etienne AG, UHY’smember firm in Switzerland to support its plans. Raphael Gübelin, President of the House of Gübelin in its sixth generation says, "We needed a partner who was well connected internationally and luckily our long-term accountants, Balmer-Etienne AG, were able to support us through the UHY network – especially its Hong Kong member firm, Tai Kong CPA Limited." Another accountancy firm was considered but Urs Matter, head of audit, and his team at Balmer-Etienne AG, based in Lucerne, Switzerland, developed a deep understanding of Gübelin’s culture and requirements. Raphael says, "We were able to continue with the people who were already familiar with our company and our expansion plans." UHY member firms now provide audit services in Switzerland and Hong Kong, tax compliance work, as well as social security compliance advice and legal support. AN INTERNATIONALBRAND The local knowledge of member firms across the network and UHY’s proven retail expertise have been invaluable for Gübelin’s successful international operations. Gübelin acknowledges that UHY’s expertise enabled a smooth expansion into Asia and North America. "We have grown from a national company to an internationally operating luxury brand and Balmer-Etienne AG has been with us every step of the way," says Raphael. As well as core accountancy services, Balmer-Etienne AG’s detailed knowledge of Gübelin’s business and the retail sector, together with close collaboration between them and Tai Kong CPA, have delivered unexpected savings and efficiencies. "We are delighted with the audit work we receive from Balmer-Etienne AG and its UHY partners," says Raphael. "At board level, we feel confident that the numbers are verified carefully and as president of the family company, I know that our partners go beyond the basic assignment, pointing out possible improvements to our tax position or processes." Contact: Urs Matter, Balmer-Etienne AG, Lucerne, Switzerland A PRECIOUS HISTORY 1854: Mauritz Beretschmid opens a watchmaker’s shop in Lucerne, Switzerland 1861: Eduard Jakob Gübelin takes up an apprenticeship with Beretschmid 1886: Eduard marries Beretschmid’s daughter, Bertha Sophie, and becomes his business partner 1899: Eduard takes over the business 1903: Opening of Gübelin’s boutique in the former Hotel d’Angleterre in Lucerne 1923: Founding of in-house jewellery atelier and a small gemmology lab under Eduard’s son, Eduard Moritz 1931-1944: Opening of boutiques in St Moritz (1931), Zurich (1932) and Berne (1944) 1945: Eduart Moritz’s sonWalter takes on the overall running of the business, while his other son Eduard Josef becomes responsible for the gemmology lab 1972: Opening of boutique in Basel 1988: Walter’s son, Thomas, takes over the business 2000: Thomas’s daughter, Sara, joins the firm 2007: Sara and Thomas’s son, Raphael, join the Gübelin Board of Directors 2010: Opening of Gübelin’s Gem Lab in Hong Kong 2011: Raphael becomes Gübelin’s chief executive officer 2013: Founding of the Gübelin Academy in Hong Kong, offering modular gemmology courses GEMMOLOGY'S GUIDING SPIRIT Image: CC BY 3.0 (https://creativecommons.org/licenses/by/3.0), via Wikimedia Commons The House of Gübelin today describes gemmologist Eduard Josef Gübelin as its 'guiding spirit'. Eduard developed a keen interest in stones and minerals as a child, and went on to study Mineralogy at Zurich and Vienna. After completing his doctorate, in 1939 he earned the distinction of becoming only the second European to be certified by the Gemological Institute of America. In 1945, Eduard became responsible for Gübelin’s gemmology lab in Lucerne, embedding the expertise that has led to its renown for excellence in gem analysis. Among the instruments he developed were a simple mobile light source to examine gemstones, the first desk-model gemmological spectroscope, the coloriscope, the gemmolux, the fluoroscope and the magnoscope. By the time of his death in 2005, Eduard was recognised as perhaps the most important and influential gemmologist of the twentieth century. HANNAY REELS, INC. Cable, wire, rope and hose. Businesses and contractors around the world need to let them out, reel them back in, and store them safely. The equipment that performs that task is unflashy and uncelebrated – but absolutely vital. US company Hannay Reels, Inc., located in the village of Westerlo, 20 miles south of Albany in New York State, is the largest producer of industrial reels in the world. The company’s products are used in dozens of industries, from fire and rescue, aviation and fuel delivery to lawn care, pest control and municipal waste treatment. Agriculture, maritime and mining are other sectors that have a wide requirement for Hannay Reels’ equipment. With excellent products and diverse demand, business is good. Hannay Reels sells to companies on six continents, employs about 165 people and posts revenues of around USD 65 million. The business started in 1933, and four generations later continues to be owned by the Hannay family. Eric Hannay, great grandson of the firm’s founder, Clifford B. Hannay, is its current CEO and president. FOUR GENERATIONS IN BUSINESS The story of Hannay Reels, Inc. dates back to 1933. Clifford B. Hannay (pictured, above) was approached by a local kerosene delivery man, in Westerho, New York State, who wanted an easier way to transport fuel to his customers. He asked Clifford to build a unit that could pump fuel directly from his truck, resulting in the construction of the first ever Hannay reel, and marked the birth of Clifford B. Hannay & Sons. As the business grew and demand increased, Clifford’s sons, Dwight and George, joined their father. By the mid-1950s, the firm was constructing around 3,600 reels a year. As the client base expanded across the United States, Hannay began to establish dealer partnerships. During the 1960s, George’s son, Roger, and Dwight’s son, Robert, joined the business. In the following decade, exports increased and the product range grew to accommodate demand for more specialist uses and custom requirements. The fourth generation – and Hannay’s current owners – became part of the family business in the 1990s, when Roger’s son Eric and daughter Elaine came on board. 2018 marked Hannay’s 85th anniversary. Despite having become the world’s largest manufacturer of industrial reels, the business continues to be based in Westerho, where it first began. Its first manufacturing building now houses a museum dedicated to the company’s history. HANNAY AND UHY For most of its history, Hannay has been working with the same accountancy firm. In the 1940s, the company contracted the practice that would become the Albany offices of UHY LLP. For many of those years it has dealt specifically with managing director Marilyn Pendergast, who has been a dedicated servant of UHY LLP for over 50 years. Marilyn was recently awarded one of banking's highest honours – Keybank's Key4Women Achieve Award (which you can read about in our story Lasting impressions in issue 5 of UHY Global). It is perhaps no wonder that Hannay Reels never felt the need to go anywhere else. Eric Hannay, CEO and president at Hannay Reels, Inc, says: "As an independently owned and managed family business with estate and succession issues to be constantly aware of ‒ including issues that have come about through multiple changes in tax law ‒ UHY LLP and Marilyn have always been there with sage advice, and have helped us through the planning and execution of a number of these transitions." ADVICE BASED ON UNDERSTANDING UHY LLP perform a full spectrum of traditional accountancy services for Hannay Reels, including financial statements, the preparation of federal and state corporate and payroll- related returns, the annual audit and state nexus tax consulting. As an increasingly global business, the company also appreciates that, if required, the UHY member firms in the US can turn to member firms around the world for local advice wherever Hannay Reels operates. "We value the continuity of the relationship, access to senior management and a strong local presence, while also benefiting from UHY LLP’s national and international resources," says Eric. "But overall, it’s the counsel and advice we get that shows a true understanding of our business." UHY LLP and its predecessors have been advising Hannay Reels for almost as long as this historic, close-knit business has been around. By developing a deep understanding of the company’s products, processes and customers, as well as the unique challenges of a one-family business, it is no exaggeration to say that UHY LLP has become a member of Hannay Reels’ extended family of trusted advisors. Contact: Marilyn Pendergast, UHY LLP, Albany, New York, US


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