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New strategies help furniture makers to beat the recession.


Contrary to the general sales decline hitting most other furniture manufacturers in 1991, RTA magnate O'Sullivan Industries said it is sitting pretty, on the right side of "a double-edged sword."

"Our furniture is generally less expensive, and in the grand scheme of things, when the economy is down, people tend to gravitate to our type of furniture. When times are bad, our business seems to get better," said Tom O'Sullivan, national sales manager.

Business should improve for the rest of the furniture industry within the next few months. According to both Jerry Epperson, of Mann, Armistead & Epperson, and Glenn Goodwin, account executive with BDO Seidman, the furniture industry should begin recovering in the late third or early fourth quarter of this year, balancing out much of the dismal first half.

Projections for 1991 furniture shipments are $15.2 billion, down slightly from 1990's total of $15.5 billion. This continues the decline in shipments since 1989's $15.9 billion, Goodwin said.

"We're expecting the recession to bottom out in May, and sales should start moving back up late in the third quarter, to where they were last August," Goodwin said. Declining consumer income and a heavy debt overhang accounted for much of the recession, with the Gulf War having only a "temporary effect" on the U.S. economy, he added. "While the desire to buy furniture is there, the (spending) ability is somewhat limited," he said, adding that real personal income has declined 1.4 percent from last year.

Acquisitions, expansions continue

Despite the downshift in consumer spending, company investments into new equipment and acquisitions are still occurring. For example:

* Pulaski Furniture invested almost $2 million last year in the startup of its new residential division, Accentrics. In addition to purchasing a used factory for the startup, Pulaski bought and upgraded NC routers and moulders. Future purchases may include computer-controlled boring machines, said John Wampler, Pulaski vice president.

* LADD purchased several CMS CNC multi-spindle routers in the past few years for carving bed posts and other items.

* Douglas Furniture enlarged its West Coast facility by over 300,000 square feet.

* Leggett & Platt, which purchased Dresher Inc. last June, recently acquired the No-Sag operations of Lear Siegler, including plants that produce urethane foam products for home furnishings. No-Sag's Kendallville, Ind., and London, Ont., Canada, plants are now part of Leggett & Platt's furniture components group.

* Bush Industries, which purchased another RTA furniture maker, Case-Casard, last fall, also acquired Eric Morgan, a manufacturer of home entertainment centers, late last year. The company's furniture sales increased by $10.3 million between 1989 and 1990.

Entries into home office

Product diversification is becoming a fast-growing alternative to acquisitions as a way to increase overall sales. On the target list for assembled furniture manufacturers is the home office industry, once the almost exclusive domain of the RTA industry.

At least two of WOOD & WOOD PRODUCTS' 1991 Top 25 residential furniture manufacturers, Stanley Furniture and Bassett Furniture Industries, have introduced home office collections.

From Stanley, "The Office" is offered in 18th century and contemporary styles and includes credenzas, hutches, bookcases, filing cabinets and computer furniture. The 18th century look complements Stanley's American Craftsman occasional package and the contemporary blends with its Meridian collection.

Bassett is offering computer friendly furniture in country and traditional styling. Its "Home Office" program is available in cherry and country oak finishes.

Epperson called the transition from residential to home office furniture construction "a natural thing." The increased interest in the home office field is also substantiated by recent LINK Resources research which indicated by 1992 some 31 million people will work at home.

W&WP's Top 25 companies already firmly entrenched in the home office market include: Bush, Hooker, O'Sullivan and Bernhardt. (See Top 25 chart, "primary products" column, on following page.) Riverside Furniture, which tied for No. 25 last year, said home office furniture accounted for 50 percent of all its sales.

New strategy cooking for Ethan Allen

Under a new strategy to have the company perceived as a complete home resource center, Ethan Allen began limited marketing of four different kitchen configurations that include cabinets, countertops, lighting, flooring, dinettes and appliances. The kitchens are offered in pine, oak and other finishes coordinated with Ethan Allen's Farmhouse Pine, Canterbury Oak and Country French collections.

The program could increase sales by more than $100 million by 1993.

COPYRIGHT 1991 Vance Publishing Corp.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Author:Koenig, Karen Malamud
Publication:Wood & Wood Products
Date:Jun 1, 1991
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