A Manufacturer with an Edge What ‘Made in America’ Means to England Furniture

Despite a challenging economic environment, American manufacturers that stick to what they do best and maintain high standards have a distinct advantage over their domestic and foreign counterparts. England Furniture exemplifies such a company.

The furniture company formed in the 1960s by members of the England family in eastern Tennessee hasn’t strayed from its founding principles. Quality craftsmanship, the use of top quality materials, a highly responsive customer service department and an industry-leading record for delivering orders on time has set the company apart from competitors. While ownership of the company has changed hands since Dwight England, his father and brother created the company in 1964, England Furniture has withstood shifting fashion trends and economic uncertainties thanks to its consistent emphasis on satisfying customers.

Much has been made in recent decades about the United States losing its competitive edge in manufacturing. Lower cost overseas labor has allowed foreign manufacturers to undercut their domestic counterparts on price and win market share. This trend has contributed to the large U.S. trade gap with imports into our country outpacing exports, which many economists worry will become a permanent imbalance that drags down overall economic activity.

Revitalizing the U.S. manufacturing sector has become a rallying for politicians from all parties and President Obama has set a goal of doubling U.S. exports by 2015. As the president put it in an address at a North Carolina community college: “We want to create and sell products all over the world that are stamped with three simple words: ‘Made in America’.”

The emphasis on helping American manufacturers appears to be paying off. Exports have been on the rise and the manufacturing sector has grown at a pace three times faster than the rest of the economy. A renewed sense of purpose has helped the U.S. economy emerge from recession and the country can take pride in its manufacturing capability, which has always been an engine powering economic activity. The United States remains the world’s largest producer of manufactured goods and out-produces China by more than 40%. In 2009, the U.S. economy created nearly $1.7 trillion in goods. Economist Ian Shepherdson of High Frequency Economics in Valhalla, New York, stated it bluntly in a Bloomberg article: “I don’t think there’s much wrong with the manufacturing sector.”

The credit belongs to companies including England Furniture that have quietly gone about their business serving customers and reinforcing their good reputations in the process. The continuing success of firms like England proves that demand for durable, high-quality goods backed by the guarantees of reliable manufacturers will prevail despite any challenges their competition presents.

The reasons for the continued successes are complex and multi-faceted. One notable source of strength is the ability of U.S. manufacturers to offer consumers more freedom of choice. “We offer choices that importers don’t” says Otis Sawyer, president, England Furniture. “We can pick out any fabric you want. We’re all about choices. America continues to love the ability to make choices about the products they purchase.”

Another reason behind strong U.S. manufacturers is their ability to meet consumer demand in a timely fashion. Overseas manufacturing often necessitates planning orders months in advance and eliminates the ability to respond to market fluctuations. It also creates bottlenecks, causing delays for the consumers awaiting delivery.

“At England Furniture, we deliver everything within 21 days in most of the country, 98% of the time,” notes Sawyer. “We manufacture 350,000 units each year and if any customer has a problem we have live customer service representatives who act as intermediaries with dealers to resolve the situation to our customers’ satisfaction.”

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England Furniture in the Wall Street Journal

Tennessee Producer Tries Tactic in Sofas:  Speed
As Some Turn to Imports, Custom Couch In 3 Weeks Is Like ‘Greased Lightning’

By DAN MORSE

Staff Reporter of THE WALL STREET JOURNAL

EDGAR, Wis. — On Sept. 29, Grace Riehle walked out of her white farmhouse, climbed into the car and embarked on an urgent mission: shopping for a sofa.

Thanksgiving,  when 35 relatives would be headed over for turkey, smoked kielbasa and all the trimmings, was just two months away, and the 57-year-old grandmother wanted to be ready with an L-shaped sectional to match her new burgundy drapes.

At her first stop, a sofa salesman in nearby Wausau, Wis., showed her various styles, along with a burgundy fabric swatch. He said a sofa might arrive by Thanksgiving  — if he could fax an order to the furniture factory that day. “I better think about that,” Mrs. Riehle said on her way out.

Store No. 2, down the road, offered more hope. Salesman John Steffeck assured her that her $1,475 sofa would arrive in plenty of time. Sold.

Did it arrive in time? The answer turns on one company’s drive to solve a business problem that — in an era of space travel and spliced genes — remains surprisingly intractable: getting a sofa delivered quickly. The company is England Inc., at the base of the Appalachian Mountains in New Tazewell, Tenn. It makes about 11,000 sofas and chairs a week, all built to order. England delivers to local furniture stores in places such as Wausau, generally within three weeks. “In the furniture business, that’s like greased lightning,” says Tom Rose, owner of Thomas Everett’s Fine Furniture in Abilene, Texas.

Becoming fast has never been more important for the U.S. factories — and their 73,000 workers – that make upholstered furniture. At England, employees need look no farther than their local Wal-Mart to see why. For sale: Chinese-made leather recliners — in black or cream — for $199, ready to take home.

“Our whole industry has set itself up for this China thing by being archaic on delivery,” says Otis Sawyer, chief financial officer of England, which has been owned since 1995 by La-Z-Boy Inc., now the nation’s second-largest furniture company.

U.S. sofa makers do have a critical edge over imports: Shoppers usually want a sofa to match the rest of the room. Thus, many sofa makers offer customers an array of fabric choices, and then build and deliver the sofa. That’s something factories overseas, with shipping times stretching to four months, are hard-put to match. Generally, shoppers who buy imported furniture must make do with what’s already in stock.

Still, instant gratification is also a big draw, as is the relatively low price and rising quality of much imported furniture. Already, imported wood furniture is hammering American manufacturers, by some estimates accounting for more than 40% of the U.S. market. Upholstered furniture imports take a smaller slice — generally estimated at 11% to 15% — but their share is rising rapidly.

So England is attempting a tricky balancing act: offer customers enough choice to make choice an advantage, but keep prices in check — England’s sofas generally retail for $500 to $1,500 — and deliver, if not instantly, at least before the customer has redecorated again.

That means building 85 different styles of frames and keeping 550 different fabrics on hand. It means that even if it has been a slow couple of weeks in Laramie, Wyo., the company will still swing a truck over there to drop off three couches.

Most of all, though, it means discipline. England refuses to take orders that arrive even five minutes after weekly production deadlines. “No one in this industry can say no,” says the company’s president, Rodney England, 51, a former Army drill instructor. “That creates chaos.”

England pushes fabric suppliers on speedy deliveries, dropping those it feels can’t keep up. And it runs its own trucks, unusual among sofa makers. To recoup transportation costs, four England employees work the phones and the Internet seeking paying loads to haul back to Tennessee. Among recent cargoes: Sheep brains, competitors’ furniture, frozen turkeys and a corpse. In order to handle more types of loads, England has equipped 22 of its 445 trucks with refrigeration.

All this has let England cut delivery times by one-half to one-third compared with five years ago. At La-Z-Boy’s headquarters in Monroe, Mich., Chairman Pat Norton is pushing the rest of his company to move as quickly. “I wish we could,” Mr. Norton said. “We would own the market.”

Some retailers say the company — in its quest for speed — doesn’t offer enough modern styles and fabrics to be a true custom player. Too frumpy.

Other retailers say England’s furniture actually costs a bit much for middle-market shoppers. Indeed, because it offers more than 40,000 possible frame/fabric combinations, England must make short, and thus more-costly, production runs. The better strategy, these people say, is to offer far fewer models while staying on top of style.

“You can’t offer all those fabric choices,” says Chuck Vogel, a longtime executive at Ashley Furniture Industries Inc., a big manufacturer that also tries to make a name for itself with midpriced speed. “It screws up your whole system.”

 

Bucking a Trend
Yet England’s sales are growing, bucking the industry trend. Sales jumped 8.3% to $201 million for the fiscal year that ended April 27. Sales for the entire domestic upholstery-manufacturing industry fell 9.3% to $9.8 billion in 2001. England increased its work force by 7.4% to 1,901 in

2001, even as the industry work force fell by 9% nationwide in 2001, according to the Labor Department. England and La-Z-Boy officials say England is profitable but decline to provide specific numbers.

For England, moving quickly means resorting to a few tricks. Unlike computer maker Dell Computer Corp., England can’t start on an order the minute, or even the day, it is received. That’s because the furniture maker is constantly working to build up its delivery loads so it won’t go broke on transportation costs.

In Wausau, Mrs. Riehle ordered her sofa from the Furniture & Appliance Superstore on a Sunday, a typical sofa buying day nationwide. The store had until 4 p.m. Eastern Time on Monday to phone, fax or e-mail that week’s orders to England.

On Monday nights, England’s computers take all those orders and plot out delivery schedules. While orders and deliveries for most of the stores England serves are scheduled weekly, stores farther away must compile their orders for two or more weeks. The extreme: West Coast stores such as Harkness Furniture in Tacoma, Wash., which collects orders for four weeks before England starts building the sofas. Still, says Harkness sales manager John Opland, England zips the furniture out, making the company’s custom-built deliveries still faster, on average, than nearby sofa makers in Oregon and California.

Mrs. Riehle’s sofa was assigned — still unmade — on Monday, Sept. 30 to a truck that would carry 82 other pieces of furniture to eight stores in Wisconsin.

The next step was to plot out the manufacturing of hundreds of furniture components so that her sofa would come off the assembly line and go right onto its assigned truck. Adopting an idea from other industries, England does this by using computers to schedule specific production tasks down to the minute, printing out bar-code tickets that are attached to various parts.

To build Mrs. Riehle’s sectional sofa, England workers would have to cut 126 pieces of burgundy fabric, 137 pieces of wood and 21 pieces of foam. They would sew in zippers and stuff in Dacron. And they would piece together 60 small metal parts, assembling the internal mechanisms to work the two reclining seats at each end of the L-shaped sofa.

It would be easier to build all these sofas inside one assembly plant. But England grew up in pieces — a sewing plant here, a frame-cutting operation there. And the terrain in and around its headquarters in New Tazewell is hilly, rocky and scattered with caves. Building a big plant would cost an estimated $3.5 million just to blast and grade the site. So nine England workers spend their days driving trucks among the company’s eight plants, hauling sofa components past cows, cemeteries and school buses.

 

Higher Productivity
England figures the hills cost it about two production days for each sofa. But there are advantages to New Tazewell. The company pays most of its factory workers $10 to $14 an hour, which, because it’s higher than many factory jobs in the area, allows England to demand higher productivity for physically exhausting work, according to both workers and managers.

The firm has gained local support for things such as roads and sewers to serve new plants partly because it isn’t afraid to demonstrate its economic impact. England takes out full-page newspaper ads to congratulate entire shifts for avoiding on-the-job injuries. And for many years, the company paid its twice-yearly, profit-sharing bonuses in $2 bills, which made clear to area merchants exactly where the cash was coming from.

Depending on how many orders England gets each Monday, executives immediately adjust labor needs — telling workers they won’t be needed on Friday in slow weeks, or adding overtime hours in busy ones. Other sofa makers argue that it’s better to smooth out troughs and valleys with more consistent production schedules. “They think what we do is ridiculous,” Mr. England says.

England’s workers would like more consistent hours, and some have quit over this. But many stay, attracted by the relatively high wages and England’s health-insurance benefits.

All the production scheduling in the world is no good, of course, if England doesn’t have supplies on hand, particularly fabric. This is a traditional bottleneck in the industry.

It’s impossible to predict exactly which fabrics consumers will like. England executives admit this, even as they buy roughly 140 new styles and colors a year from textile mills. “Fifteen of them will be dogs,” says Dennis Valkanoff, England’s head buyer.

“And three of those will have fleas on them,” Mr. England adds.

So the company presses fabric suppliers for smaller, more-frequent deliveries. That way it won’t get stuck with too many yards of a pattern that turns out to be a dog, and England can quickly get more stock if a pattern is a surprise hit. Since arriving at England about seven years ago, Mr. Valkanoff has culled his list of fabric vendors to four from more than 40. The remaining suppliers now deliver in one to three weeks instead of six to eight.

“He beats the c–p out of us,” says Robb Tomlin, more in admiration than malice. Mr. Tomlin, a top merchandiser at Joan Fabrics Corp. in Tyngsboro, Mass., sold Mr. Valkanoff the Ambassador Merlot fabric used in Mrs. Riehle’s sofa.

To reward his big suppliers, Mr. Valkanoff places large orders in June, July and August, when mills can be slow and hungry for business. That helps him lean on the mills in busy times. “I don’t care who you have to kick out. I don’t care if it’s my parent company,” Mr. Valkanoff will tell his vendors. “I need my covers.”

By having weekly order cutoffs, England garners some production efficiencies, because it can group production by various styles. The goal: Don’t cut one layer of fabric patterns when you can just as easily cut a stack of 50. Don’t program the automatic wood routers to cut a single frame, when you can program them to cut 50 frames. In its quest for speed, though, England produces in smaller batches than many competitors.

By Monday, Oct. 7, the various pieces of Mrs. Riehle’s sofa had arrived at England’s main assembly plant, which is roughly the size of eight football fields. Workers on the plant’s 29 assembly lines push sofas along elevated tracks, piecing together the frames, cushions, backs and legs as they go. There’s a constant thump-thump-thumping of heavy-duty staple guns.

The fastest crews here can earn as much as $16 an hour. Each person in a nine-member crew is paid the same wages, based on how quickly the whole crew works. So most everyone shows up on time. Some crews rib each other to keep things moving — crews such as Line 3, which handled Mrs. Riehle’s sofa. One new member of that crew, Cody Jones, 22, is a budding preacher who was issued a warning upon his arrival.

“You won’t be a preacher long if you come here,” Line 3 crew members said, only half in jest. Each sofa style has a posted time to try to beat. Some times are easier to beat than others, which means higher wages. The sofa Mrs. Riehle ordered represented one such opportunity.

“Here comes the gravy,” Mr. Jones told his new crewmates as Mrs. Riehle’s piece started coming down the line.

Over the next 24 hours, Mrs. Riehle’s sofa was finished, wrapped in a foam-plastic blanket, stacked in a staging area and loaded onto a trailer truck. On Wednesday morning, Oct. 9, driver Larry Carroll showed up to begin the four-day trip to Wisconsin and back.

Twenty-eight hours later, he pulled into Wausau. Mr. Carroll helped unload the sofas, hoping to squeeze a few more stops in for the day. He still had to get to Waupaca, Wis., to pick up a load of brake drums for the trip home.

And so it was that on Oct. 10, 11 days after Mrs. Riehle ordered her sofa, it arrived at the store. Sheila Brainard, the store’s upholstery buyer, says England’s discipline and speed are the best she has seen: “They really have their stuff together.”

The next morning, one of her sales staffers called Mrs. Riehle and left a message on the answering machine. Mrs. Riehle had already headed off to work at the IGA grocery in Edgar. Her husband, Chuck, eventually retrieved the message. Three days later, as they were returning home from dinner at a daughter’s house, he turned to his wife with news: “The furniture store called.”

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