Core of DeVos' business background is with Amway

Renamed Alticor, company has been called controversial

Lansing State Journal/September 26, 2006
By John Gallagher

On the campaign trail, GOP gubernatorial candidate Dick DeVos touts his business experience as an antidote for Michigan's economic ills.

"I speak business," he tells voters. "I'm a job maker."

In 1989, he founded Windquest, a privately held manufacturer of closet-organizing furniture in western Michigan that employs 145 workers.

From 1991-93, he ran the business side of the Orlando Magic basketball franchise; during the 1990s, he was among the civic activists who pushed a downtown revitalization in Grand Rapids.

But the centerpiece of DeVos' business resume is the 25 years he spent with Ada-based Amway - which he renamed Alticor in 2000 - the home-products company his father, Rich DeVos, and business partner Jay Van Andel founded in 1959. DeVos was Amway's president from 1993-2002.

Investing in China

Gov. Jennifer Granholm and other Democrats have relentlessly attacked Dick DeVos for two things he did at Amway: investing in China in the mid-1990s and, a few years later, cutting at least 1,000 jobs in Michigan. DeVos and others, including former Gov. John Engler, have responded that the attacks are bizarre because pursuing international business - which now represents 80 percent of Alticor's revenues - has saved jobs in Michigan.

Almost off the campaign radar has been what some critics say should be the larger question about DeVos: his unabashed promotion of Amway's system of selling what it calls "soap and hope," recruiting ordinary Americans with no sales background to sell products with the promise that hard work can produce great wealth.

The Federal Trade Commission investigated Amway in the late 1970s and concluded the company was not an illegal pyramid scheme, but the FTC also found it misled potential distributors and ordered the company in 1979 to spell out how much money distributors earn.

"This is an extremely contentious, controversial business model," said Robert FitzPatrick, a business consultant and consumer advocate based in Charlotte, N.C., and the author of "False Profits," a critical examination of Amway and similar so-called multilevel marketing companies.

The company says it doesn't mislead anyone and that people become distributors for many reasons, including just to buy discounted products.

Dick DeVos declined to meet with the Detroit Free Press for this story, but his brother, Doug DeVos, now president of Alticor, said of distributors: "If they're willing to do the work, they can be very successful. We have families in the second and third generation who are still actively building that business."

Founder's eldest son

As the eldest son of Amway's cofounder, Dick DeVos seemed destined to run the company.

DeVos, 50, joined Amway in 1974, when he was in his late teens. While taking night classes at Northwood University in Midland, he spent five years in Amway training.

"I did every job there was to do at Amway," he said in 1993.

As the heir apparent, he moved quickly into executive positions. He spent six years as head of Amway's international division. In what became a hallmark of his career, he rapidly expanded the company's business to other nations as the company's U.S. revenues stagnated.

In the mid-1990s, Dick DeVos was among the first U.S. executives to push deeply into the Chinese market. Over several years, the company invested about $200 million in manufacturing facilities and offices in China, an Alticor spokeswoman said.

Supporters say that, in an age of globalization, manufacturers must do business overseas. General Motors Corp. and many other companies have followed a similar strategy.

In that sense, DeVos was unusual. He didn't use China as a source of cheap labor to make goods for sale in the United States. Alticor's China manufacturing operations make goods for sale there.

Reorganizing cuts jobs

Under Dick DeVos and other leaders, Amway also was investing about $700 million in its western Michigan facilities between 1992 and 2005, a company spokeswoman said. Most of that was for upgrading production lines.

DeVos has said in campaign ads that this investment helped save the company's 4,000 jobs in western Michigan.

In 1998-2000, with discounters taking an increasing share of the market for home products, Amway's sales slumped, and DeVos led a companywide reorganization.

As part of the reorganization, DeVos eliminated 635 jobs in 1998, including 400 in Michigan, mostly with voluntary buyouts. Another 1,300 jobs were eliminated in 2000, including at least 900 in western Michigan.

Overall, the western Michigan workforce was reduced to 4,000 from about 5,000 before the reorganization, the company said.

DeVos has said the reorganization helped save many more Michigan jobs than were lost.