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Industrialist of the year: knock on wood.

Known for wood products and pianos, Kimball International is more. It's a diverse, family-run Fortune 500 company with a solid future.

Douglas A. Habig doesn't really want to be named Indiana Business Magazine's Industrialist of the Year. The Kimball International president and chief executive officer thinks any credit should go to his whole Chairman's Committee "team" as Industrialists of the Year.

Well now, sorry, Doug, but there just isn't room on the magazine's cover for seven executives' portraits. However, we do understand that credit sharing is the way of life at Jasper-based Kimball International. Personnel are "empowered" and offered a voice. Teams of workers are given official stature. Cadres of five to 10 employees are formed at every level to get the jobs done.

The people-clout management style works famously for the Fortune 500 company. In fiscal 1992 it had a record $617.3 million in sales, up 11 percent from 1991, and $38.6 million in net income, up 29 percent. It employs nearly 8,000 people. The firm's operations blanket Southern Indiana, radiating from Jasper to Borden, Salem, Santa Claus, West Baden, French Lick, Dale and Evansville. The network crosses the country with manufacturing plants, sales offices and showrooms in 12 states. Add showrooms in Canada, two manufacturing plants in Mexico, two factories and a showroom in England and two factories in Austria.

At its various facilities, Kimball makes a wide variety of products. It sells many under its own brand names, but makes many others on contract for other companies. "Kimball is not just a furniture company," observes Raymond H. Diggle Jr., an expert on Indiana public companies and vice president-research in the Indianapolis office of Robert W. Baird & Co. "With expertise in electronics and semi-conductor manufacturing and assembly, well-established brands in keyboard instruments, and strong marketing relationships in producing TV and stereo cabinetry, the company is unique."

Its office furniture, seating and furniture systems carry brand names including Kimball, National, Harpers and Cetra. It makes Kimball and Bosendorfer pianos, Kimball hospitality and health-care furniture, Harmony Woods home-office furniture and Kimball Victorian and French furniture reproductions. It produces speaker cabinets and installs electronics for the RCA Surround Sound Home Theater system from Indianapolis-based Thomson Consumer Electronics. It makes control modules used in Kelsey-Hayes Co. antilock brake systems, which eventually wind up in several automakers' vehicles.

Consider this: The after effects of recession continued through much of the company's most recent fiscal year, yet sales and profits increased. That's all the more remarkable when one considers the cyclical nature of some of the fields Kimball is in. Most of them were hit hard during the recent recession.

"In 1991, virtually all segments of its business were impacted by the recession," Diggle notes. "Furniture demand for the hotel-motel market was cut sharply by overbuilding in the '80s. Demand for modular furniture was cut by the collapse in commercial office building. Piano sales were impacted by declining consumer confidence."

But as 1992 figures already indicate, Kimball has placed itself in line to benefit handsomely from the economic recovery. According to Diggle, "The picture currently is much brighter. Young-adult baby boomers are now buying pianos for their children. Demand for antilock brake subassemblies is up. Upscale furniture and cabinets such as a TV-stereo entertainment center that looks like an armoire are selling well."

As we noted, Habig himself shies away from taking all the credit for Kimball's wise business decisions. He points to his team as accolades are handed out. The Chairman's Committee includes Habig, the president and CEO; Tom Habig, chairman of the board; John Habig, senior executive vice president, manufacturing; John Thyen, senior executive vice president, marketing and sales; Ron Thyen, senior executive vice president, manufacturing; Jim Thyen, senior executive vice president, chief financial and administrative officer and treasurer; and Gary Critser, senior executive vice president, secretary. That's three Habigs, three Thyens and a Critser; all but one are family.

That family control is a real asset, Diggle says. "It allows them to run the enterprise for cash flow and long-term return on equity. They don't have to be as concerned about short-term swings."

"The concentration of founding family names at the top is more a function of the fact that a lot of us were involved very early," Habig says. "We grew up in the business. Those names are not prevalent down through the organization."

Kimball's way of doing business has been happening since Arnold F. Habig and his partners, including H.E. Thyen, revved up the saw to make cabinets at the Jasper Corp. in 1950. Habig, Thyen and their six boys have shown competition their dust ever since by working in teams from the Chairman's Committee down the line to conceptional R&D through recycling and marketing.

Diversification is a tradition here. Two years after the company switched on its first sander, it purchased the Borden Corp. in Borden, Indiana, to make office furniture. In 1959 a world-class piano and organ maker named W.W. Kimball Co. of Chicago was welcomed into the fold. From there came the name of the corporation, officially adopted in 1974, just before the stock went public. Kimball reasoned its piano business was its best-known among consumers, so the Kimball moniker stuck.

It is no late starter in international trade either. In 1965, the company acquired a major interest in a firm from England that built "actions," those internal mechanisms that make a piano perform. The Bosendorfer Piano Co. in Vienna, Austria, was bought in 1966. During the mid-'70s Kimball opened its doors in Canada and Mexico.

Environmentalism bloomed at Kimball before the word was coined. Kimball's Woodland Division team maintains, cultivates and replants 10,500 acres of timberland owned or leased in Southern Indiana, Ohio and Kentucky. On average, 18 trees are planted for every one harvested.

How did Kimball come around to the people-power, teamwork way of thinking? Says Doug Habig, "Well, we didn't go to Japan and change our organization. We've been doing it for a long time. I think part of it is that we live in small communities and share a fairly tight-knit set of values. We've known each other for years and have a lot of hallway conversations and that type of thing."

Kimball never developed a lot of heavy layers of management, Habig adds. "We stayed horizontal. That is more a function of the talent and willingness to assume responsibility of our people than management's forethought. Is it perfect? No, we have a few too many overhead layers in some areas but we are reducing those. We haven't had to go through the kind of restructuring that a lot of companies have. We believe in the horizontal, the flat organization."

On management style: "The company has been vertically integrated, since its inception, in the wood portion from raw materials up through the final product. Managing the organization in most cases is by the particular process involved, for example, manufacturing a product for a given market segment. That is opposed to what happens in functionally based organizations, where you have accounting in one area, sales in another area, marketing in another area and manufacturing in another area. This process orientation aids networking throughout the company."

Kimball International works in three general market segments:

* Furniture and cabinets, $424.8 million--This segment includes its office, home, hospitality and health-care furniture; television and stereo cabinets; pianos and piano cases, keys and actions; and other products.

* Electronic contract assemblies, $132.5 million--This covers Kimball's electronic and electromechanical products, and electronic assemblies which are manufactured on a contract basis to customer specifications.

* Processed wood products, $60.0 million--This segment contains lumber, lumber-bonded particleboard, dimension lumber, plywood, veneer, plastic components, saws, fleet and automotive services, and other products and services.

Kimball has 50 divisions with a whole flock of business units or profit centers mixed into them. For instance, under Furniture and Cabinets is a unit called the Lodging Group that handles "hospitality" furniture for hotels and motels.

"The company was originally involved in original-equipment manufacturing primarily on contract with other companies for home furniture and TV cabinets," Habig says. "We moved into consumer products with the purchase of Kimball in 1959. In 1970 we entered the office-furniture business under the Kimball brand name. We went into metal office-furniture manufacturing as a complement to our wood office furniture. We are in the electronics business as a spinoff from the organ business, and that has taken on a whole new character. There are no Kimball organs any longer and pianos are not as prominent."

At home among more than a thousand Kimball products, the dapper, 46-year-old Habig is reflected in the mirror polish of an executive desk. He nods his head, topped with sandy hair, and beams a ready, straight-across-the-face smile. His right cheek dimples as he recalls college days at St. Louis University. With a chuckle in his poised, baritone voice, he says, "I wanted to live in a large city but found it is much more difficult. You don't recognize the advantages here until, for instance, you experience the commuting time there. In Jasper, it takes me five minutes to get to work."

After his metropolis encounter he attended Indiana University Graduate School of Business in tranquil Bloomington to earn his MBA. He joined the company in 1975, and before he took over as president in 1982 he had served as chief financial and administrative officer and treasurer. In 1990, he became CEO. He lives with his wife and three kids in Jasper.

How about Kimball's future? Look for gains to be more steady than spectacular. "We're managing our costs assuming there is very little chance of an unexpected boom overtaking us," Habig says. "It is going to be slow. If we are pleasantly surprised, that will be fine. We can handle it."
COPYRIGHT 1992 Curtis Magazine Group, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Kimball International Inc. President Douglas A. Habig
Author:Johnson, J. Douglas
Publication:Indiana Business Magazine
Article Type:Cover Story
Date:Dec 1, 1992
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