Furniture

Corporations

Table 7 - Furniture Companies in North Carolina

Klaussner Furniture Industries1,2

Established in 1964, Klaussner Furniture Industries began as Stuart Furniture in Asheboro, NC. It started as a family-owned business, and was later purchased by Hans Klaussner, a German entrepreneur in 1979. As a privately owned company, Klaussner has grown and expanded its product lines rapidly, and is now one of the top 5 furniture manufacturers in the United States and the largest private manufacturer in the country. Klaussner Furniture Industries employs about 6,648 employees globally, out of which 3,700 were employed in North Carolina(see Table 1).

Klaussner dominates many stages of the production process. For example, it owns an upholstery maker in California and a few furniture distributors around the country. It has 20 plants and support facilities worldwide, with U.S. facilities in North Carolina, California, Mississippi, and Iowa. It exports its furniture products to over 60 countries around the world. Klaussner Furniture Industries owns many branded product lines including Realistic Furniture, Klaussner Furniture, Distinctions Furniture, and Dick Idol. Within each product line, Klaussner enforces a strong segmentation strategy. For example, while Value Realistic provides affordable furniture for first-time homeowners and individuals who are looking for economical but well-designed products, Distinctions Furniture caters to customers who are planning to invest more in home furnishings. On the other hand, Klaussner International provides a wide range of similar products to overseas markets in order to meet the increasing demand for good quality furniture products abroad.

With intense international competitive pressure, the company's strategy is dynamic, changing according to market conditions. Recently, the company has been determined to compete with Italian, South American, and Chinese imports on leather furniture. Klaussner hopes to remain competitive by tailoring its products to three distinct categories of customers. The company's high-end leather products are for the "true leather aficionado" who is willing to pay a premium for the product's quality. The mid-range product goes to the customer who wants to indulge in leather furniture without paying an overwhelming price for it. In this particular case, the company cuts down on costs by having the leather cut and sewn in Mexico, but assembled in Asheboro. Finally, the low-end leather furnishings cater to the price-oriented customer. In this case the finished frames are made in Italy, but the products are assembled wherever is the cheapest. Segmenting its products in this manner allows Klaussner to compete within different target categories and remain competitive.

The purpose of having multiple product lines at all price levels and a wide variety of furniture items is to create a "one-stop shop" for its customers. Retail customers can find almost anything under Klaussner Furniture Industries to satisfy their needs. Retailers can "mix and match" their shipments and products from different product lines and these can all be consolidated into a single shipment. Furthermore, Klaussner's desire to penetrate weak markets has led it to purchase two big furniture distributors with various nationwide locations: Sofa Express and Sofa Connection, which Klaussner plans to consolidate under one name. The company's emphasis on customer relations and service has led it to become a market leader in the United States.

Thomasville Furniture Brands3,4

Thomasville Furniture Brands is a subsidiary of the furniture giant Furniture Brands International, and is in its own right a full line manufacturer, making both case goods (wood furniture, bedroom and dining room furniture, etc.) and upholstery. Thomasville, as an independent entity, apart from the holding company Furniture Brands International that owns Thomasville, is the fourth most recognizable brand name in the United States. Brand awareness and branded retail stores have been Thomasville's principal focus in order to remain competitive in the dwindling furniture market. About 80% of Thomasville's income comes from branded retail stores. Thomasville's upholstered products are sold in more than 400 retail outlets, including 144 Thomasville Gallery stores and 150 Thomasville Home Furnishings stores. Most of the stores are franchise owned while a few remain company owned.

There are only four major companies in this country that have similar brand recognition to Thomasville. La-Z-Boy and Broyhill occupy the top of the less expensive, promotionally priced furniture market, while Thomasville and Ethan Allen reside in high-end furniture. Ethan Allen is Thomasville's most direct branded retail store competitor. But as Thomasville celebrates its 100th year, it has the safety of relying on a century of brand recognition. Over the years the company has put great effort into shelter magazine and TV advertising in order to gain such a prominent position as a premium brand in the consumers mind. Since 1993, when Furniture Brands International acquired Thomasville, the company has continued to build its brand name. Furniture Brands International purchased Thomasville primarily because of its brand recognition and because it filled the middle to upper price range niche that helped make Furniture Brands International the largest furniture manufacturing company in the country.

Thomasville now operates several lower-end companies that sell to stores like Target and Wal-Mart. The specific lines of furniture that are made for such stores carry their own name followed by the phrase "a division of Thomasville." For example, the brand created especially for Target is called Renovations: a division of Thomasville. This important distinction helps convince the customer that the furniture they are purchasing is part of a large, well-known company. Thomasville has capitalized on its brand recognition by also licensing out the name to specialized companies that will then sell to large retail stores such as Home Depot. Through the use of its name, Thomasville works to have a presence in as many markets as possible. As of now, the company has its largest presence in retail stores, but it also exists within the contract furniture market (custom configured furniture, especially for the government), the remodeling and replacement market, and the lighting market.

Here in North Carolina, Thomasville operates all of its upholstery factories, mostly within the western part of the state. Three primary factories are located in Troutman, Hickory and Conover counties plus an additional three support factories for upholstery. Lenoir County has one primary case goods factory while the town of Thomasville has two factories of its own that make primarily bedroom and dining room furniture. While most dining room table manufacturing has moved offshore, North Carolina still plays host to an assembly factory that manufactures high-end dining room tables for the state department as part of Thomasville's contract divisions as well as assembling some chairs. As an example of productivity in North Carolina, one case-good factory can make somewhere between $180-200,000 dollars worth of merchandise a day with employing around 280 workers.

Interview with Thomas G. Tilley, Jr.

Interview with Thomas G. Tilley, Jr.
CEO of Thomasville Furniture Industries, Inc.
November 19, 2004, Thomasville, NC

Q: Furniture Brands International acquired Thomasville in 1993. What niche does Thomasville occupy within the furniture industry?

A: Thomasville is one of the largest manufacturers in the industry. Of course it's a fullline manufacturer, meaning we make both case goods, which is wood furniture, bedroom, dining room, and occasional furniture (occasional meaning, cocktail tables, end tables, accent pieces, entertainment centers, etc.), as well as a full line of upholstery. We also have a contract division, which supplies furniture for the government, for the State Department, and for assisted-living facilities for hotels and motels. We have a division we call our Virginia operations, which produces our lower end, more promotional-priced products, with our largest customer there being Target. We do a significant amount of business with Wal-Mart and Sam's out of that division as well.

Q: What is Thomasville's place in the furniture industry overall?

A: Thomasville's position is generally in the upper-middle price points of furniture products and we have a significant presence in terms of our brand. Thomasville is one of the four best-known brands in the industry. In fact, when we analyzed the industry and we analyzed unaided consumer brand recognition, there are only four that are significant. Two of those are higher end, Thomasville and Ethan Allen, and two are more promotionally priced, and those are La-Z-Boy and Broyhill; they are a little more blue-collar, and Thomasville and Ethan Allen are perceived to be a little higher quality.

Q: You've mentioned a lot of different things that Thomasville has done, but as far as the North Carolina locations, could you summarize what is going on here?

A: We have our upholstery operations here, in Troutman, Hickory, and Conover, which is in the western part of the state. Three primary producing factories, plus three support factories for upholstery are located in this region. In Lenoir, which would also be considered the western part of the state, there is a major case goods factory, then we have the two factories here in Thomasville, NC, a bedroom factory and a dining room factory that produce case goods. We have a chair facility that assembles dining room furniture and it does some manufacturing of tables, primarily for the State Department and our contract divisions. They also make domestic dining room tables today in that factory, but most of those products have moved offshore.

Q: Do you have any insights as to why North Carolina is faring worse in comparison to other states?

A: A higher percentage of the jobs here were in the industries that are hardest hit by offshore manufacturing, textiles and furniture being two that are centered here in North Carolina. And of course the tobacco issues we're all familiar with, they have caused a lot of change as well. But I think that's really it. These industries, furniture and textiles in particular, have historically been heavily labor intensive and labor is very cheap in Asia. If we would have been technology driven or something else, such as building computers or some other type of product that wasn't totally labor intensive, we'd probably have a better chance of retaining the jobs here. But I think that's probably the biggest reasons for the extraordinary loss in jobs, at least I can say it's certainly true for the furniture industry. It's not just state taxation or other policies, you know, incentives…it's not that. It's the fundamental shift in the industry.

Q: Do you see the furniture industry as becoming more disintegrated in a sense, where you go out and you sub-contract these things that you need?

A: A lot of it is. A lot of these companies have grown up in North Carolina. Because furniture manufacturing is located here, it's like Dell supporting companies that will be around them. Many of those people are being forced to compete with the world market as well. It's changing pretty dramatically.

There is a history of furniture manufacturing embedded in the state and we don't want to lose that, so anything we can do to keep the industry up in terms of its presence and visibility with state lawmakers is going to be helpful. Las Vegas is one of the markets that are being developed that could be a threat to North Carolina. [n.b. A 7.5 million sq. ft. complex is being built in Las Vegas with facilities for hosting trade shows, furniture showrooms and a design center. It is over twice as big as North Carolina's IHFC building at High Point. Many domestic and international furniture buyers will likely be attracted to visit Las Vegas instead of High Point.] There is a reason for why it can be a threat to North Carolina long term, not short term. We're not going to show our furniture in Las Vegas and a lot of the major companies will not show there either. As more manufacturing moves to Asia, it's closer to Las Vegas than it is to North Carolina, so longer term, North Carolina needs to be thinking how do we continue to encourage High Point to be the Mecca for furniture with its showrooms and furniture markets. And long term, how do we encourage manufacturers to come back here to the United States and build world-class factories here from the logistics side. How do we encourage the ports to be more responsive?

For the complete interview click here.

References

1. Klaussner Industries, Klaussner Industries Corporate Website, Various pages. Last accessed August 9, 2007. [http://www.klaussner.com]
2. Hoover's, "Klaussner Industries: Company Profile." Last accessed August 9, 2007.
3. Thomasville Industries, Thomasville Industries Corporate Website, Various pages. Last accessed August 9, 2007. [http://www.thomasville.com]
4. Hoover's, "Thomasville Industries: Company Profile." Last accessed August 9, 2007.