PORTLAND — Larry Adlerstein doesn’t understand the steady reports of economic gloom and doom.

“It’s confusing,” said Adlerstein, president of Portland-based Artist & Craftsman Supply. “I don’t actually see it as a tough time for business.”

Adlerstein said that 2010 has been a great year for his business, which has 17 stores and 106 employees nationwide. In the last year, he has opened up new stores in Los Angeles, Chicago and North Boston, while expanding stores in Wisconsin and Brooklyn.

Meanwhile, his 18th store is scheduled to open later this fall in New Jersey.

Adlerstein said his company has been able to capitalize on the real estate market, leasing space for only a fraction of what it would have cost in a booming economy.

But Adlerstein admits his opportunities have also been fueled by the misfortunes of his closest competitor, Pearl Paints, which is in bankruptcy. 

“We’ve been opening stores where they have closed,” he said.

Twenty-five years ago, Adlerstein, who at the time was a contract carpenter, decided to open an art supply store in a Yarmouth storefront that couldn’t attract a tenant.

Within six months, Adlerstein decided to move to Portland to be closer to his market. It was there, he said, that business took off, forcing him to move several times for larger spaces, most along Forest Avenue.

The business is now at 540 Deering Ave., just off Forest Avenue at Woodford’s Corner.

In 1995, Adlerstein said he realized he needed to add more locations for his business to survive. Since opening a second store in Seattle, he hasn’t looked back.

Adlerstein attributes his success to his workforce, which is largely made up of artists and local people who have worked for him for more than 10 years. Employees gather twice a year for retreats to keep moral high, he said.

“Everyone is happy,” he said. “When you come into the one of my stores, you can feel the joy.”

Assistant General Manager Tom Konieczko has worked at the store for 10 years. The 30-year-old said he sees the company doing more than simply stocking artists and craftsmen with both basic and exotic art supplies.

“This company has really helped the arts community grow,” he said.

Adlerstein, 67, is now preparing for his retirement, and is transferring ownership of the store to his employees through an employee stock  plan. In December, he transferred 49 percent of the company’s holdings to his workers, giving them a vested interest in the company’s success.

“That’s their retirement,” he said. “As we grow, they get more secure.”

General Manager Steve Kenney has worked at Artist & Craftsman Supply since the store was in a gutted single-family house 18 years ago on Forest Avenue.

The 40-year-old said he believes the stock transfer is motivating an already motivated workforce. “It’s a really good incentive plan,” he said.

While the company has a website, Adlerstein said the company does not generate a lot of online sales.

And he knows why.

“Our strength is the quality of the people we employ,” he said. “We haven’t yet learned how convey that over the Internet. We just like to look someone in their eyes and shake their hands.”

Randy Billings can be reached ay 781-3661 ext. 100 or rbillings@theforecaster.net

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Assistant General Manager Tom Konieczko, left, and General Manager Steve Kenney outside the distinctive Artist & Craftsman Supply store on Deering Avenue in Portland.

General Manager Steve Kenney, left, and Assistant General Manager Tom Konieczko inside Artist & Craftsman Supply in Portland.