X hits on this document

PDF document

American-Furniture-Industry-Survival-ABTV-rpt.pdf - page 8 / 16





8 / 16

The focused niche players fare better in this chaotic structure, because they are more agile; but the large, publicly held companies continue to struggle.

  • La-Z-Boy managed to lose a modest $13.5 million on sales of $1,450.9 during fiscal 2008, and in 2009 the company watched sales drop 15.4% and reported losses of $121.3 million. By stressing upholstery over casegoods and targeting the middle price points, management has avoided the big losses.

  • Furniture Brands, on the other hand, managed to lose $385.9 million on sales of $1,743,176 in fiscal 2008. For an encore, they lost another $20.2 million on a 30% drop in sales in the first half of 2009.

  • Ethan Allen, historically the best company in the business, reported a loss of $52.7 million on sales of $674.3 million in fiscal 2009. For the fourth quarter, sales declined a staggering

    • 41.5

      %, resulting in a loss of $16.9 million.

The smaller, privately held companies suffer in silence without the need to report results publicly. Finding a bright spot is not easy, but one company certainly merits recognition. Ashley Furniture, based in Arcadia, Wisconsin far from the industry base in High Point, has captured the #1 position as a retailer and the #1 position as a supplier. They have done this by stressing customer service and information technology.

Lean Really Works, but…

With nearly all wood production and a healthy chunk of upholstery manufacturing already relocated off shore, it is easy to ignore the need to improve operations, but the cost is high. Furniture casegoods construction has traditionally relied on lots of work-in-process parts stacked on carts getting pushed through the factory using lots of indirect labor roughly following a flexible schedule. Management was expected to pack a certain amount of dollars per day but the items they packed may or may not have been on the schedule. As long as you could afford excess inventory, inaccurate delivery promises, and heavy indirect labor costs, the system worked well enough.

In the early 1990s, Masco and others tried to introduce so called Lean Manufacturing techniques that would permit the production of one item at a time. They were right to do so, but they botched the job and the old-line wood production people rejected the idea. Later, it took hold in a few places and began to pay big dividends at Henredon and Hickory Chair. Among the benefits were dramatic reductions of inventory, improved quality and fewer repairs. Finally, 20 years after the introduction of the idea, it is taking hold. Furniture Brands cited it in their second quarter conference call, and Ethan Allen announced a complete transformation of their domestic wood manufacturing to essentially a custom operation.



Document info
Document views75
Page views75
Page last viewedSun Jan 22 19:15:07 UTC 2017